Company Continues to Control Costs and
Receives Additional Financing
TORONTO, May 6, 2021 /CNW/ - (TSX: CGX) - Cineplex Inc.
("Cineplex" or the "Company") today released its financial results
for the three months ended March 31,
2021. Unless otherwise specified, all amounts are in
Canadian dollars.
"Throughout the pandemic, Cineplex has controlled costs,
solidified its financial and liquidity position and is prepared to
capitalize on the pent-up demand for social experiences as
restrictions are lifted and things get back to normal," said
Ellis Jacob, President & CEO,
Cineplex.
"During the first quarter, we remained prudent in managing costs
and reported an average monthly cash burn of $26.9 million. Key liquidity actions included the
receipt of $57 million for the
completed sale-leaseback of our Head Office in Toronto and $250
million in the form of Second Lien Secured Notes – an
offering that was significantly oversubscribed and a testament to
the market's faith in our business and our recovery. In addition,
we obtained further relief from certain financial covenants under
our Credit Facilities."
"These strategic initiatives, combined with our ongoing focus on
minimizing cash burn, provide the runway we need to see us through
the pandemic recovery period. Encouraged by recent global box
office results and the strong film release schedule, we are
confident in our position and eager to welcome our guests back."
Mr. Jacob concluded.
First Quarter Financial Results
|
|
|
|
|
2021
|
2020
|
Period over
Period
Change (i)
|
Total revenues
(ii)
|
$
|
41.4
|
million
|
$
|
282.8
|
million
|
-85.4%
|
Theatre
attendance
|
0.4
|
million
|
10.7
|
million
|
-96.1%
|
Net loss from
continuing operations (iii)
|
$
|
(89.7)
|
million
|
$
|
(174.2)
|
million
|
-48.5%
|
Net loss from
discontinued operations
|
$
|
—
|
million
|
$
|
(4.3)
|
million
|
-100.0%
|
Net loss
(iii)
|
$
|
(89.7)
|
million
|
$
|
(178.4)
|
million
|
-49.7%
|
Box office revenues
per patron ("BPP") (iv)
|
$
|
9.20
|
|
$
|
10.36
|
|
-11.2%
|
Concession revenues
per patron ("CPP") (iv)
|
$
|
6.12
|
|
$
|
6.79
|
|
-9.9%
|
Adjusted EBITDA
(iv)
|
$
|
(30.1)
|
million
|
$
|
46.5
|
million
|
NM
|
Adjusted EBITDAaL
(iii) (iv)
|
$
|
(62.1)
|
million
|
$
|
2.4
|
million
|
NM
|
Adjusted EBITDAaL
margin (iii) (iv)
|
(149.9)
|
%
|
0.8
|
%
|
-150.7%
|
Adjusted free cash
flow (iv)
|
$
|
(78.8)
|
million
|
$
|
(0.2)
|
million
|
NM
|
Adjusted free cash
flow per common share of Cineplex ("Share") (iv)
|
$
|
(1.244)
|
|
$
|
(0.003)
|
|
NM
|
Earnings per Share
("EPS") from continuing operations - basic and diluted
(iii)
|
$
|
(1.42)
|
|
$
|
(2.75)
|
|
-48.4%
|
EPS from discontinued
operations - basic and diluted
|
$
|
—
|
|
$
|
(0.07)
|
|
NM
|
EPS - basic and
diluted (iii)
|
$
|
(1.42)
|
|
$
|
(2.82)
|
|
-49.6%
|
|
|
i.
|
Period over period
change calculated based on thousands of dollars except percentage
and per share values. Changes in percentage amounts are calculated
as 2021 value less 2020 value.
|
ii.
|
All amounts are from
continuing operations.
|
iii.
|
2021 includes
expenses related to the Cineworld Transaction in the amount of $2.4
million (2020 - $1.3 million).
|
iv.
|
Adjusted EBITDA,
adjusted EBITDAaL, adjusted EBITDAaL margin, adjusted free cash
flow per common share of Cineplex, BPP and CPP are measures that do
not have a standardized meaning under generally accepted accounting
principles ("GAAP"). These measures as well as other Non-GAAP
financial measures reported by Cineplex are defined in the
'Non-GAAP Financial Measures' section at the end of this news
release.
|
KEY DEVELOPMENTS IN THE FIRST QUARTER OF 2021
The following describes certain key business initiatives
undertaken and results achieved during the first quarter of 2021 in
each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- During the first quarter, a majority of Cineplex's theatres
remained closed or under strict operating restrictions resulting in
a 96.1% decrease in theatre attendance. As a result, Cineplex
reported box office revenues of $3.8
million.
- BPP was $9.20, a decrease of
$1.16 (11.2%) compared to the prior
period BPP of $10.36.
Theatre Food Service
- Mandatory closures of theatres and strict operating
restrictions on theatres negatively impacted theatre food service
revenues in the quarter. Cineplex continued to focus on food home
delivery services and reported $3.8
million of food delivery revenues in the quarter.
- CPP was $6.12, a decrease of
$0.67 (9.9%) compared to the prior
period CPP of $6.79, partially as a
result of concession restrictions in select regions in Quebec.
Alternative Programming
- Alternative Programming continued with classic films and other
repertory film programming during this period. With the limited
reopening of Quebec theatres,
Cineplex released 100% Wolf in theatres across the
province.
Digital Commerce
- Total registered users for Cineplex Store increased 33% from
the prior year period, reaching 2.0 million registered
users.
MEDIA
- Media revenues continued to be negatively impacted by the
mandatory closures of theatres, retail and digital out of home
locations, resulting in a decline in advertising revenue. During
the quarter, media revenues were primarily driven by digital
place-based media revenues specifically from network management,
creative services and media hardware sales.
- A long-term arrangement with Torstar Corporation was announced
whereby Torstar will acquire publishing and exclusive theatre
distribution rights of Cineplex Magazine. Torstar will
continue both print and digital publications of the magazine under
the brand Star Cineplex.
AMUSEMENT AND LEISURE
Amusement Solutions
- P1AG's revenues for the period were primarily earned through
route operations including Family Entertainment Centres ("FEC")
locations and equipment sales, primarily in the United States which commenced limited
reopenings during the quarter.
Location-based Entertainment
- During the quarter, a majority of Cineplex's LBE venues were
closed due to government mandated lockdown measures and enforced
operating restrictions resulting in a material negative impact on
revenue during the quarter.
- Cineplex opened the third location of Playdium in
Dartmouth, on February 26, 2021 to strong results.
LOYALTY
- Membership in the SCENE loyalty program remained flat during
the period ended March 31,
2021.
CORPORATE
- During the quarter, Cineplex completed a sale and leaseback
transaction for its head office buildings located at 1303 Yonge
Street and 1257 Yonge Street, Toronto,
Ontario for gross proceeds of $57.0
million. Fifty percent of the net proceeds were used to
permanently reduce the amount outstanding under Cineplex's Credit
Facilities.
- On February 8, 2021, Cineplex and
Cineplex Entertainment Limited Partnership entered into the Third
Credit Agreement Amendment with The Bank of Nova Scotia providing Cineplex with certain
financial covenant relief in light of the COVID-19 pandemic and its
effects on Cineplex's business.
- On February 26, 2021, Cineplex
completed the $250.0 million Notes
Payable offering. Cineplex used the net proceeds raised in part to
permanently repay $100.0 million
of its Credit Facilities. The Notes Payable bear interest at a rate
of 7.50% per annum and mature on February
26, 2026.
OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2021
Total revenues
Total revenues for the three months ended March 31, 2021 decreased $241.4 million (85.4%) to $41.4 million as compared to the prior year
period. A discussion of the factors affecting the changes in box
office, food service, media, amusement and other revenues for the
period is provided below.
Non-GAAP measures discussed throughout this news release,
including adjusted EBITDA, adjusted EBITDAaL, adjusted store level
EBITDAaL, adjusted EBITDAaL margin, adjusted store level EBITDAaL
margin, adjusted free cash flow, theatre attendance, BPP, premium
priced product, same theatre metrics, CPP, film cost percentage,
food service cost percentage and concession margin per patron are
defined and discussed in Non-GAAP measures section of this news
release.
Box office revenues
The following table highlights the movement in box office
revenues, theatre attendance and BPP for the quarter (in thousands
of dollars, except theatre attendance reported in thousands of
patrons and per patron amounts, unless otherwise noted):
|
|
Box office
revenues
|
First
Quarter
|
|
2021
|
2020
|
Change
|
Box office
revenues
|
$
|
3,818
|
$
|
111,002
|
-96.6%
|
Theatre attendance
(i)
|
415
|
10,710
|
-96.1%
|
Box office revenue
per patron (i)
|
$
|
9.20
|
$
|
10.36
|
-11.2%
|
BPP excluding premium
priced product (i)
|
$
|
8.84
|
$
|
9.33
|
-5.3%
|
Same theatre box
office revenues (i)
|
$
|
3,818
|
$
|
110,152
|
-96.5%
|
Same theatre
attendance (i)
|
415
|
10,609
|
-96.1%
|
% Total box from
premium priced product (i)
|
11.5%
|
28.7%
|
-17.2%
|
(i) See Non-GAAP
measures section of this news release.
|
|
|
Box office
continuity
|
First
Quarter
|
|
Box
Office
|
Theatre
Attendance
|
2020 as
reported
|
$
|
111,002
|
10,710
|
Same theatre
attendance change
|
(105,842)
|
(10,194)
|
Impact of same
theatre BPP change
|
(492)
|
—
|
Disposed and closed
theatres (i)
|
(850)
|
(101)
|
2021 as
reported
|
$
|
3,818
|
415
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year
comparative period.
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2021
Top Cineplex Films
|
3D
|
%
Box
|
First Quarter 2020
Top Cineplex Films
|
3D
|
%
Box
|
1
|
Tom &
Jerry
|
|
19.3
|
%
|
1
|
1917
|
|
9.7
|
%
|
2
|
The Croods: A New
Age
|
|
16.1
|
%
|
2
|
Star Wars: The Rise
Of Skywalker
|
√
|
9.2
|
%
|
3
|
Wonder Woman
1984
|
|
15.5
|
%
|
3
|
Jumanji: The Next
Level
|
√
|
9.1
|
%
|
4
|
The Little
Things
|
|
5.1
|
%
|
4
|
Bad Boys For
Life
|
|
8.7
|
%
|
5
|
News Of The
World
|
|
4.2
|
%
|
5
|
Sonic The
Hedgehog
|
|
6.4
|
%
|
Box office revenues decreased $107.2
million, or 96.6%, to $3.8
million during the first quarter of 2021, compared to
$111.0 million reported in the same
period in 2020. The decrease was due to the 96.1% decrease in
theatre attendance to 0.4 million as a result of continued
mandatory lockdown measures, capacity and operating restrictions in
venues that remained open and limited first run film product
availability. As a result of the emergence of more transmissible
variants of COVID-19, there has been the onset of a third wave of
the pandemic across a majority of provinces resulting in expanded
government mandated lockdown measures which continue to negatively
impact Cineplex's box office revenues.
BPP for the three months ended March 31,
2021 was $9.20, a $1.16 decrease (11.2%) from the prior year
period. The decrease in BPP was primarily due to a lower percentage
of box office revenue from premium priced offerings, lower ticket
pricing on previously released content, SCENE promotions and
limited new film releases.
Food service revenues
The following table highlights the movement in food service
revenues, theatre attendance and CPP for the quarter (in thousands
of dollars, except theatre attendance and same theatre attendance
reported in thousands of patrons and per patron amounts):
|
|
Food service
revenues
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Food service -
theatres
|
$
|
2,539
|
$
|
72,681
|
-96.5
|
%
|
Food delivery -
theatres
|
3,778
|
—
|
NM
|
Food service -
LBE
|
171
|
6,684
|
-97.4
|
%
|
Food delivery -
LBE
|
37
|
—
|
NM
|
Total food service
revenues
|
$
|
6,525
|
$
|
79,365
|
-91.8
|
%
|
|
|
|
|
Theatre attendance
(i)
|
415
|
10,710
|
-96.1
|
%
|
CPP (i)
(ii)
|
$
|
6.12
|
$
|
6.79
|
-9.9
|
%
|
Same theatre food
service revenues (i)
|
$
|
2,538
|
$
|
72,242
|
-96.5
|
%
|
Same theatre
attendance (i)
|
415
|
10,609
|
-96.1
|
%
|
(i) See Non-GAAP
measures section of this news release.
|
(ii) Food service
revenue from LBE and delivery is not included in the CPP
calculation.
|
|
|
Theatre food
service revenue continuity
|
First
Quarter
|
|
Theatre Food
Service
|
Theatre
Attendance
|
2020 as
reported
|
$
|
72,681
|
10,710
|
Same theatre
attendance change
|
(69,415)
|
(10,194)
|
Impact of same
theatre CPP change
|
(289)
|
—
|
Disposed and closed
theatres (i)
|
(439)
|
(101)
|
2021 as
reported
|
$
|
2,538
|
415
|
(i) See Non-GAAP
measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the
prior year
comparative period.
|
Food service revenues are comprised primarily of concession
revenues, which includes food service sales at theatre locations
and through delivery services including Uber Eats and Skip the
Dishes. Food service revenues also include food and beverage sales
at LBE venues, The Rec Room and Playdium.
Food services revenues have continued to be materially impacted
by the COVID-19 government mandated closures and capacity
restrictions of theatres and LBE venues. For a majority of the
current period, indoor dining was prohibited in most markets in
which The Rec Room and Playdium operate also
contributing to the material decrease in food service revenues.
Food service revenues decreased $72.8
million, or 91.8% to $6.5
million due to the impact of the 96.1% decrease in theatre
attendance, limited concession menu options and operating
restrictions on Cineplex's theatre circuit and LBE venues. Food
delivery sales continue to provide steady results with total food
delivery sales of $3.8 million during
the period.
CPP decreased 9.9% to $6.12
compared to $6.79 in the prior year
period. The decrease in CPP compared to the prior year period is
due to limited concession menu options and operating restrictions
on Cineplex's theatre circuit and LBE venues. For example, Cineplex
re-opened theatres in the Quebec
region but was unable to offer concessions at a majority of
re-opened locations due to government restrictions on concessions,
contributing to the decrease in CPP when compared to the prior year
period.
Media revenues
The following table highlights the movement in media revenues
for the quarter (in thousands of dollars):
|
|
Media
revenues
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Cinema
media
|
$
|
1,899
|
$
|
17,262
|
-89.0
|
%
|
Digital place-based
media
|
7,175
|
14,895
|
-51.8
|
%
|
Total media revenues
from continuing operations
|
$
|
9,074
|
$
|
32,157
|
-71.8
|
%
|
|
|
|
|
Media revenues from
discontinued operations
|
—
|
382
|
-100.0
|
%
|
Total media
revenues
|
$
|
9,074
|
$
|
32,539
|
-72.1
|
%
|
Total media revenues from continuing operations decreased
$23.1 million or 71.8% compared to
the prior year period to $9.1
million. During the period, media revenues were primarily
driven by digital place-based media revenues specifically from
network management, creative services and media hardware sales. The
decrease in media revenues compared to the prior year period is due
to a $15.4 million decrease in cinema
media revenues with the decline in show-time and pre-show
advertising revenues due to prolonged theatre closures, and
$7.7 million decrease in digital
place-based media revenues, due to continued mandatory lockdown
measures which resulted in mall and retail closures, leading to a
decline in installation and media advertising revenue.
Amusement Revenues
The following table highlights the movement in amusement
revenues for the quarter (in thousands of dollars):
|
|
Amusement
revenues
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
|
Amusement - P1AG
excluding Cineplex exhibition and LBE (i)
|
$
|
12,559
|
$
|
34,961
|
-64.1
|
%
|
Amusement - Cineplex
exhibition (i)
|
72
|
2,196
|
-96.7
|
%
|
Amusement -
LBE
|
1,243
|
10,180
|
-87.8
|
%
|
Total amusement
revenues
|
$
|
13,874
|
$
|
47,337
|
-70.7
|
%
|
(i) Cineplex receives
a venue revenue share on games revenues earned at in-theatre game
rooms and XSCAPE Entertainment Centres. Amusement -
Cineplex
exhibition reports the total of this venue revenue share which is
consistent with the historical presentation of Cineplex's amusement
revenues. Amusement - P1AG
excluding Cineplex exhibition and LBE reflects P1AG's gross
amusement revenues, net of the venue revenue share paid to Cineplex
reflected in Amusement -
Cineplex exhibition above.
|
Amusement revenues decreased 70.7%, or $33.5 million, to $13.9
million in the first quarter of 2021 compared to the prior
year period. The decrease was primarily due to continued government
mandated closures of P1AG route locations, Cineplex theatres
and LBE venues, and mandated capacity restrictions in
locations that were able to open.
Other revenues
The following table highlights the other revenues which includes
revenues from the Cineplex Store, promotional activities,
screenings, private parties, corporate events, breakage on gift
card sales and revenues from management fees for the quarter (in
thousands of dollars):
|
|
Other
revenues
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
|
Other revenues from
continuing operations
|
$
|
8,121
|
$
|
12,940
|
-37.2
|
%
|
Other revenues from
discontinued operations
|
—
|
199
|
NM
|
Total other
revenues
|
$
|
8,121
|
$
|
13,139
|
-38.2
|
%
|
Other revenues from continuing operations decreased $4.8 million or 37.2% in the first quarter
of 2021 compared to the prior year period due primarily due to the
suspension of the recognition of deferred revenues on gift cards
and other related products during the shutdown of theatre and LBE
venues. In addition, the mandatory closures of theatres and LBE
venues reduced other ancillary revenues generated from theatres
such as venue rentals.
Film cost
The following table highlights the movement in film cost and the
film cost percentage for the quarter (in thousands of dollars,
except film cost percentage):
|
|
Film
cost
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
|
Film cost
|
$
|
1,235
|
|
$
|
56,500
|
|
-97.8
|
%
|
Film cost percentage
(i)
|
32.3
|
%
|
50.9
|
%
|
-18.6
|
%
|
(i) See Non-GAAP
measures section of this news release.
|
Film cost varies primarily with box office revenues, and can
vary from quarter to quarter based on the relative strength of the
titles exhibited during the period, impacted by film cost terms
varying by title and distributor. Film cost percentage during the
first quarter of 2021 was 32.3%, a 18.6% decrease from the prior
year period. Film costs decreased during the period compared to the
prior year period due to limited releases of first run product and
lower settlement rates on older and classic film product.
Cost of food service
The following table highlights the movement in cost of food
service and food service cost as a percentage of food service
revenues ("concession cost percentage") for both theatres and
LBE for the quarter (in thousands of dollars, except
percentages and margins per patron):
|
|
Cost of food
service
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Cost of food service
- theatre
|
$
|
1,333
|
|
$
|
20,201
|
|
-93.4
|
%
|
Cost of food service
- LBE
|
79
|
|
2,008
|
|
-96.1
|
%
|
Total cost of food
service
|
$
|
1,412
|
|
$
|
22,209
|
|
-93.6
|
%
|
|
|
|
|
Theatre concession
cost percentage (i)
|
21.1
|
%
|
27.8
|
%
|
-6.7
|
%
|
LBE food cost
percentage (i)
|
38.1
|
%
|
30.0
|
%
|
8.1
|
%
|
Theatre concession
margin per patron (i)
|
$
|
4.83
|
|
$
|
4.90
|
|
-1.4
|
%
|
(i) See Non-GAAP
measures section of this news release.
|
Cost of food service at the theatres varies primarily with
theatre attendance as well as the quantity and mix of offerings
sold. Cost of food service at LBE varies primarily with the
volume of guests who visit the locations as well as the quantity
and mix of food and beverage items sold.
The lower food service revenues for both segments as a result of
the government mandated temporary closures and operating
restrictions placed on Cineplex's theatres and LBE locations in
response to COVID-19 resulted in lower cost of food sales. The
decrease in theatre concession cost percentage compared to the
prior year is due to the higher costs arising on the sudden closure
of the theatres in 2020 which required the reduction of inventory
and included, donations of perishable food items to those in need,
including to local food banks. The increase in LBE food cost
percentage as compared to the prior period is primarily due to
higher costs arising from prepackaged products associated with food
delivery services and decreases in groups and events bookings which
have historically reduced the average cost of food purchases.
Depreciation and amortization
The following table highlights the movement in depreciation and
amortization expenses during the quarter (in thousands of
dollars):
|
|
Depreciation and
amortization expenses
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
|
Depreciation of
property, equipment and leaseholds
|
$
|
26,783
|
$
|
30,689
|
-12.7
|
%
|
Amortization of
intangible assets and other
|
2,726
|
3,273
|
-16.7
|
%
|
Sub-total -
depreciation and amortization - other assets
|
$
|
29,509
|
$
|
33,962
|
-13.1
|
%
|
|
|
|
|
|
Depreciation -
right-of-use assets
|
26,318
|
35,533
|
-25.9
|
%
|
Total depreciation
and amortization
|
$
|
55,827
|
$
|
69,495
|
-19.7
|
%
|
The quarterly decrease in depreciation of property, equipment
and leaseholds of $3.9 million
or 12.7% as compared to the prior year period is primarily due to
fully depreciated property, equipment and leaseholds.
The quarterly decrease in amortization of intangible assets
compared to the prior period is due to fully amortized intangible
assets.
The decrease in depreciation of right-of-use assets is primarily
due to modifications to lease agreements as a result of COVID-19
which reduced the corresponding right-of-use asset and depreciation
recognized.
Impairment of long-lived assets, goodwill and
investments
The following table highlights the movement in impairment of
long-lived assets and goodwill during the quarter (in thousands of
dollars):
|
|
Impairment of
long-lived assets and goodwill
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Impairment of
property, equipment and leaseholds
|
$
|
—
|
$
|
33,949
|
NM
|
Impairment of
right-of-use assets
|
—
|
50,610
|
NM
|
Impairment of
goodwill
|
—
|
88,495
|
NM
|
Impairment of
long-lived assets and goodwill
|
$
|
—
|
$
|
173,054
|
NM
|
Cineplex generally performs its annual test for impairment of
goodwill and indefinite-lived intangible assets in the fourth
quarter, in accordance with the policy described in its annual
consolidated financial statements. Assessment of impairment for
long-lived assets, including property, equipment, leaseholds,
right-of-use assets, intangible assets and goodwill is performed
more frequently as specific events or circumstances dictate
triggering events and changes in circumstances indicate that the
carrying amount of the asset group may not be fully
recoverable.
On March 31, 2021, Cineplex
reassessed the underlying key assumptions and inputs used during
the impairment testing completed at December
31, 2020 and determined that there were no material changes
in those key judgements and conclusions.
In early 2020, in response to the outbreak of the COVID-19
pandemic as declared by the WHO, governmental authorities announced
mandated closure of schools, public facilities and non-essential
businesses. Consequently, effective March
16, 2020 and continuing throughout the remainder of the
year, Cineplex had to either temporarily close its theatres and
location-based entertainment venues or operate with strict capacity
restrictions across Canada,
resulting in material decreases in revenues, results of operations
and cash flows and a material decrease in Cineplex's market value
due to a sharp decline in its share price. These represented
triggering events at each balance sheet date in 2020. As a result
of the triggering events, Cineplex performed impairment testing and
recognized non-cash impairment charges in each of the three months
ended March 31, September 30, and December
31, 2020 as follows:
|
|
Impairment of
long-lived assets, goodwill and investments
|
2020
|
|
|
|
|
|
|
Q1
|
Q3
|
Q4
|
Total
|
Impairment of
property, equipment and leaseholds
|
$
|
33,949
|
$
|
—
|
$
|
5,243
|
$
|
39,192
|
Impairment of
right-of-use assets
|
50,610
|
—
|
21,236
|
71,846
|
Impairment of
goodwill
|
88,495
|
65,634
|
26,906
|
181,035
|
Impairment of
investments
|
—
|
—
|
2,790
|
2,790
|
Impairment of
long-lived assets, goodwill and investments
|
$
|
173,054
|
$
|
65,634
|
$
|
56,175
|
$
|
294,863
|
In assessing long-lived assets and goodwill for impairment,
Cineplex compared the aggregate recoverable amount of the assets
included in the relevant Cash Generating Units ("CGUs") to their
respective carrying amounts. The recoverable amount was determined
based on the fair value less costs of disposal of the groups
CGUs.
The determination of fair value less costs of disposal is
sensitive to the growth rates, discount rates, and long-term growth
rates used. The risk premiums expected by market participants
related to uncertainties about the industry and assumptions
relating to future cash flows may differ, depending on economic
conditions and other events. Accordingly, it is reasonably
possible that future changes in assumptions may negatively impact
future assessments of the recoverable amount for groups of
CGUs.
If the return to business continues to be delayed as a result of
actions outside of the control of management, including but not
limited to additional changes to the film slate release schedule,
ongoing government restrictions impacting the re-opening of
entertainment venues and delays in the vaccine roll out,
management's estimates of operating results and further cash flows
for the forecasted period may be negatively impacted. As a result,
cash flows may be insufficient to support the recoverability of
goodwill and long-lived assets in certain CGUs, thus requiring
further impairment charges. Cineplex will continue to evaluate the
recoverability of goodwill at the CGU level on an annual basis
during its fourth quarter and whenever events or changes in
circumstances indicate there may be a potential impairment.
Impairment of intangible assets - discontinued
operations
The following table highlights the movement in impairment of
intangible assets - discontinued operations during the quarter (in
thousands of dollars):
|
|
Impairment of
intangible assets - discontinued operations
|
First
Quarter
|
2021
|
2020
|
Change
|
|
|
|
|
Impairment of
intangible assets - discontinued operations
|
$
|
—
|
$
|
5,135
|
NM
|
Intangible assets included in assets held for sale were written
down to reflect their expected net realizable value in the prior
period. On June 29, 2020, Cineplex
sold all of its interest in WGN for a nominal amount. No other
operations were classified as a discontinued operation in the
current period.
(Gain) loss on disposal of assets
The following table shows the movement in the loss on disposal
of assets during the quarter (in thousands of dollars):
|
|
(Gain) loss on
disposal of assets
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
(Gain) loss on
disposal of assets
|
$
|
(30,060)
|
$
|
817
|
NM
|
The change in the (gain) loss on disposal of assets as compared
to the prior year period is due to the sale of the head office
building for gross proceeds of $57.0
million completed during the quarter. Cineplex will continue
to occupy its head office buildings as a tenant.
Other costs
Other costs include three main sub-categories of expenses;
theatre occupancy expenses, which capture associated occupancy
costs for Cineplex's theatre operations; other operating expenses,
which include the costs related to running Cineplex's film
entertainment and content, media, as well as amusement and leisure;
and general and administrative expenses, which include costs
related to managing Cineplex's operations, including head office
expenses. Please see the discussions below for more details on
these categories.
The following table highlights the movement in other costs for
the quarter (in thousands of dollars):
|
|
Other
costs
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
|
Theatre occupancy
expenses
|
$
|
6,782
|
$
|
17,971
|
-62.3
|
%
|
Other operating
expenses
|
47,806
|
134,548
|
-64.5
|
%
|
General and
administrative expenses
|
14,117
|
5,029
|
NM
|
Total other costs
from continuing operations
|
$
|
68,705
|
$
|
157,548
|
-56.4
|
%
|
|
|
|
|
|
Other costs from
discontinued operations
|
—
|
1,606
|
-100.0
|
%
|
Total other
costs
|
$
|
68,705
|
$
|
159,154
|
-56.8
|
%
|
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy
expenses for the quarter (in thousands of dollars):
|
|
Theatre occupancy
expenses
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Cash rent - theatre
(i) (iv)
|
$
|
22,222
|
$
|
40,356
|
-44.9
|
%
|
Other
occupancy
|
14,307
|
18,437
|
-22.4
|
%
|
One-time items
(ii)
|
(982)
|
(580)
|
69.3
|
%
|
Total theatre
occupancy including cash lease payments
|
$
|
35,547
|
$
|
58,213
|
-38.9
|
%
|
|
|
|
|
Cash rent related to
lease obligations (iii)
|
(28,765)
|
(40,242)
|
-28.5
|
%
|
Theatre occupancy as
reported
|
$
|
6,782
|
$
|
17,971
|
-62.3
|
%
|
(i) Represents the
cash payments for theatre rent paid or payable during the
quarter.
|
(ii) One-time items
include amounts related to both theatre rent and other theatre
occupancy costs. They are isolated here to illustrate Cineplex's
theatre rent and
other theatre occupancy costs excluding these one-time,
non-recurring items.
|
(iii) Cash rent that
has been reallocated to offset the lease obligations.
|
(iv) The 2021 balance
includes $1.1 million (2020 - $1.1 million) of cash rent paid
not pertaining to the current period. See Non-GAAP measures section
of this
news release.
|
|
|
Theatre occupancy
continuity
|
First
Quarter
|
|
Occupancy
|
2020 as
reported
|
$
|
17,971
|
Impact of disposed
theatres
|
(517)
|
Same theatre rent
change (i)
|
(11,322)
|
One-time
items
|
(403)
|
Other
|
(10,424)
|
|
|
Impact of IFRS 16
adoption:
|
|
Cash rent related to
lease obligations
|
11,477
|
2021 as
reported
|
$
|
6,782
|
(i) See Non-GAAP
measures section of this news release.
|
Theatre occupancy expenses as reported decreased $11.2 million or 62.3% during the first quarter
of 2021 compared to the prior year period. This decrease was
primarily due to rent relief measures Cineplex has undertaken with
landlord partners resulting in lower theatre rent related expenses.
In addition, Cineplex recognized realty tax subsidies of
$4.4 million and rent subsidies of
$6.5 million during the quarter, both
charged against and further contributing to the decrease in theatre
occupancy expenses.
Other operating expenses
The following table highlights the movement in other operating
expenses during the quarter (in thousands of dollars):
|
|
Other operating
expenses
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
Theatre
payroll
|
$
|
3,635
|
$
|
31,430
|
-88.4
|
%
|
Theatre operating
expenses
|
9,353
|
26,489
|
-64.7
|
%
|
Media
|
8,284
|
18,911
|
-56.2
|
%
|
P1AG
|
15,570
|
34,422
|
-54.8
|
%
|
LBE (i)
|
3,818
|
13,076
|
-70.8
|
%
|
LBE pre-opening
(ii)
|
228
|
745
|
-69.4
|
%
|
SCENE
|
4,744
|
2,573
|
84.4
|
%
|
Marketing
|
1,117
|
2,921
|
-61.8
|
%
|
Other
(iii)
|
5,520
|
8,735
|
-36.8
|
%
|
Other operating
expenses including cash lease payments
|
$
|
52,269
|
$
|
139,302
|
-62.5
|
%
|
Cash rent related to
lease obligations (iv)
|
(4,463)
|
(4,754)
|
-6.1
|
%
|
Other operating
expenses from continuing operations
|
$
|
47,806
|
$
|
134,548
|
-64.5
|
%
|
|
|
|
|
Other operating
expenses from discontinued operations
|
—
|
1,606
|
-100.0
|
%
|
Total other operating
expenses
|
$
|
47,806
|
$
|
136,154
|
-64.9
|
%
|
(i) Includes
operating costs of LBE locations. Overhead relating to management
of LBE portfolio are included in the 'Other' line.
|
(ii) Includes
pre-opening costs of LBE.
|
(iii) Other category
includes overhead costs related to LBE and other Cineplex internal
departments.
|
(iv) Cash rent that
has been reallocated to offset the lease obligations.
|
|
|
Other operating
continuity from continuing operations
|
First
Quarter
|
|
Other
Operating
|
2020 as
reported
|
$
|
134,548
|
Impact of disposed
theatres
|
(537)
|
Same theatre payroll
change (i)
|
(27,521)
|
Same theatre
operating expenses change (i)
|
(16,873)
|
Media operating
expenses change
|
(10,627)
|
P1AG operating
expenses change
|
(18,852)
|
LBE operating
expenses change
|
(9,258)
|
LBE pre-opening
change
|
(517)
|
SCENE
change
|
2,171
|
Marketing
change
|
(1,804)
|
Other
|
(3,215)
|
|
|
|
|
Impact of IFRS 16
adoption:
|
|
Cash rent related to
lease obligations
|
$
|
291
|
2021 as
reported
|
$
|
47,806
|
(i) See Non-GAAP
measures section of this news release.
|
Other operating expenses from continuing operations during the
first quarter of 2021 decreased $86.7
million or 64.5% compared to the prior year period. The
overall decrease was a result of the temporary closures and
operating restrictions on theatres, P1AG route locations and LBE
locations. Cineplex continued to benefit from government subsidy
programs in Canada and
the United States to partially
offset other operating costs with $14.4
million of subsidies recognized in the quarter, comprised of
$11.9 million of payroll subsidies of
which $6.1 million was offset against
theatre payroll, and $2.5 million of
non-theatre rent, realty tax and utility subsidies.
General and administrative expenses
The following table highlights the movement in general and
administrative ("G&A") expenses during the quarter, including
Share-based compensation costs, and G&A expenses net of these
costs (in thousands of dollars):
|
|
G&A
expenses
|
First
Quarter
|
|
2021
|
2020
|
Change
|
|
|
|
|
G&A excluding the
following items
|
$
|
10,618
|
$
|
17,254
|
-31.8
|
%
|
Restructuring
|
—
|
360
|
-100.0
|
%
|
Transaction /
Litigation costs
|
2,430
|
1,271
|
91.2
|
%
|
LTIP (i)
|
1,304
|
(11,437)
|
NM
|
Option
plan
|
399
|
(2,241)
|
NM
|
G&A expenses
including cash lease payments
|
$
|
14,751
|
$
|
5,207
|
183.3
|
%
|
Cash rent
paid/payable included as part of lease obligations (ii)
|
(634)
|
(178)
|
NM
|
G&A expenses as
reported
|
$
|
14,117
|
$
|
5,029
|
180.7
|
%
|
(i) LTIP includes the
expenses for RSUs and PSUs, as well as the expense for the
executive and Board deferred share unit plans.
|
(ii) Cash rent that
has been reallocated to offset the lease obligations.
|
G&A expenses increased $9.1
million during the first quarter of 2021 compared to the
prior year period. The change was primarily due to a significant
decrease in LTIP expense in the prior year period due to the sharp
decline in Cineplex's Share price as a result of the impact of the
COVID-19 pandemic on Cineplex's business. Share based compensation
reflects the fair value of the share price, which fell from
$33.90 at the beginning of the prior
year period to $11.70 per Share at
March 31, 2020. Employee benefit
costs were reduced by $2.9 million under the CEWS program.
Cineworld litigation-related costs of $2.4
million were incurred in the first quarter of 2021 (2020 -
costs of $1.3 million were incurred
with respect to the Cineworld Transaction, prior to its
termination). Costs incurred in the current quarter are with
respect to the ongoing litigation arising from the termination.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND
AMORTIZATION ("EBITDA") (see Non-GAAP measures section of this news
release)
The following table presents EBITDA, adjusted EBITDA and
adjusted EBITDAaL for the three months ended March 31, 2021 as compared to the prior year
period (expressed in thousands of dollars, except adjusted EBITDAaL
margin):
|
|
EBITDA
|
First
Quarter
|
|
2021
|
|
2020
|
|
Change
|
|
|
|
|
|
|
EBITDA
|
$
|
(2,524)
|
|
$
|
(126,135)
|
|
-98.0
|
Adjusted
EBITDA
|
$
|
(30,105)
|
|
$
|
46,472
|
|
NM
|
Adjusted
EBITDAaL
|
$
|
(62,090)
|
|
$
|
2,390
|
|
NM
|
Adjusted EBITDAaL
margin
|
-149.9
|
%
|
0.8
|
%
|
-150.7
|
%
|
Adjusted EBITDAaL for the first quarter of 2021 decreased
$64.5 million, as compared to the
prior year period. The decrease was primarily due to the material
negative effect that the COVID-19 pandemic had on all aspects of
Cineplex's businesses. The third wave of COVID-19 due to increased
number of cases involving more transmissible variants has led to
prolonged mandatory lockdown measures and operating restrictions,
resulting in the closure of Cineplex's theatres and LBE venues for
the majority of the first quarter of 2021. In computing adjusted
EBITDAaL, cash rents paid or payable have been partially offset by
the quantified lease-related savings negotiated with landlords as a
result of the COVID-19 closures. This includes agreements with
landlords that are evidenced by way of written confirmation of the
terms agreed upon up to the date of this MD&A, and are in the
process of being formally documented. Adjusted EBITDAaL
margin is calculated as adjusted EBITDAaL divided by total
revenues.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of
this news release)
For the first quarter of 2021, adjusted free cash flow per
common share of Cineplex was $(1.24)
as compared to $0.00 in the prior
year period. The declared dividends per common share of Cineplex
were nil in the first quarter of 2021 and $0.15 in the prior year period. During the 12
months ended March 31, 2021, Cineplex
generated adjusted free cash flow per Share of $(3.80), compared to $2.18 in the prior 12 month period. Cineplex
declared dividends per Share of $0.00
and $1.50, respectively, in each 12
month period. The payout ratios for these periods were 0.0% and
68.7%, respectively.
NON-GAAP FINANCIAL MEASURES
EBITDA and Adjusted Free Cash Flow
EBITDA and adjusted free cash flow are not measures recognized
by GAAP and do not have standardized meanings in accordance with
such principles. Therefore, EBITDA and adjusted free cash flow may
not be comparable to similar measures presented by other
issuers.
EBITDA is calculated by adding back to net income or net loss,
income tax expense, depreciation and amortization expense, and
interest income from continuing operations. Adjusted EBITDA
excludes the change in fair value of financial instrument, (gain)
loss on disposal of assets, foreign exchange, impairment of
long-lived assets, goodwill and investments, the equity loss
(income) of CDCP, the non-controlling interests' share of adjusted
EBITDA of TG-CPX Limited Partnership, and depreciation,
amortization, interest and taxes of Cineplex's other joint ventures
and associates. Adjusted EBITDAaL modifies adjusted EBITDA to
deduct current period cash rent paid or payable related to lease
obligations net of quantified savings negotiated with landlords as
a result of the COVID-19 closures, including savings negotiated
after the period end. This includes agreements with landlords that
are evidenced by way of written confirmation of the terms agreed
upon to the date of approval of the financial statements and
MD&A, and are in the process of being formally documented.
Cineplex's management believes that adjusted EBITDAaL is an
important supplemental measure of Cineplex's profitability at an
operational level and provides analysts and investors with
comparability in evaluating and valuing Cineplex's performance
period over period. EBITDA, adjusted for various unusual items, is
also used to define certain financial covenants in Cineplex's
Credit Facilities. Management calculates adjusted EBITDAaL margin
by dividing adjusted EBITDAaL by total revenues.
Adjusted free cash flow is a non-GAAP measure generally used by
Canadian corporations, as an indicator of financial performance and
it should not be seen as a measure of liquidity or a substitute for
comparable metrics prepared in accordance with GAAP. For a detailed
reconciliation of net income or net loss to EBITDA, adjusted EBITDA
and adjusted EBITDAaL and from cash provided by operating
activities to adjusted free cash flow, please refer to Cineplex's
management's discussion and analysis filed on www.sedar.com.
Earnings per Share Metrics
Cineplex has presented
basic and diluted earnings per share net of this item to provide a
more comparable earnings per share metric between the current
periods and prior year periods. In the non-GAAP measure, earnings
is defined as net income or net loss attributable to Cineplex
excluding the change in fair value of financial instrument.
Per Patron Revenue Metrics
Cineplex reviews per patron
metrics as they relate to box office revenue and theatre food
service revenue such as BPP, CPP, BPP excluding premium priced
product, and concession margin per patron, as these are key
measures used by investors to value and assess Cineplex's
performance, and are widely used in the theatre exhibition
industry. Management of Cineplex defines these metrics as
follows:
Theatre Attendance: Theatre attendance is calculated as
the total number of paying patrons that frequent Cineplex's
theatres during the period.
BPP: Calculated as total box office revenues divided
by total paid theatre attendance for the period.
BPP excluding premium priced product: Calculated as total
box office revenues for the period, less box office revenues from
3D, 4DX, UltraAVX, VIP ScreenX and IMAX product; divided by total
paid theatre attendance for the period, less paid theatre
attendance for 3D, 4DX, UltraAVX, VIP, ScreenX and IMAX
product.
CPP: Calculated as total theatre food service
revenues divided by total paid total theatre attendance for the
period.
Premium priced product: Defined as 3D, 4DX,
UltraAVX, IMAX, ScreenX and VIP film product.
Theatre concession margin per patron: Calculated as total
theatre food service revenues less total theatre food service cost,
divided by theatre attendance for the period.
Same Theatre Analysis
Cineplex reviews and reports
same theatre metrics relating to box office revenues, theatre food
service revenues, theatre rent expense and theatre payroll expense,
as these measures are widely used in the theatre exhibition
industry as well as other retail industries.
Same theatre metrics are calculated by removing the results for
all theatres that have been opened, acquired, closed or otherwise
disposed of subsequent to the start of the prior year comparative
period. For the three months ended March 31,
2021 the impact of the four locations that have been closed
or otherwise disposed of have been excluded, resulting in 157
theatres being included in the same theatre metrics.
Cost of sales percentages
Cineplex reviews and reports
cost of sales percentages for its two largest revenue sources, box
office revenues and food service revenues as these measures are
widely used in the theatre exhibition industry. These measures are
reported as film cost percentage and concession cost percentage,
respectively, and are calculated as follows:
Film cost percentage: Calculated as total film cost
expense divided by total box office revenues for the period.
Theatre concession cost percentage: Calculated as total
theatre food service costs divided by total theatre food service
revenues for the period.
LBE food cost percentage: Calculated as total LBE food
costs divided by total LBE food service revenues for the
period.
Lease-related cash saving
Quantified savings
negotiated with landlords as a result of the COVID-19 disclosures.
This includes agreements that are evidenced by way of written
confirmation of the terms agreed upon to the date of the MD&A,
and are in the process of formally documented.
Net cash burn
Calculated as adjusted EBITDAaL less
cash interest expense (excluding amounts with respect to lease
obligations), provision for income taxes and net capital
expenditures.
Net cash
burn
|
Last Twelve
Months
|
2021
|
2020
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Adjusted
EBITDAaL
|
$
|
(247,295)
|
|
$
|
(62,090)
|
|
$
|
(65,948)
|
|
$
|
(46,725)
|
|
$
|
(72,532)
|
|
Cash interest expense
excluding lease obligations
|
(45,940)
|
|
(13,429)
|
|
(13,412)
|
|
(11,317)
|
|
(7,782)
|
|
Provision for incomes
taxes
|
63,292
|
|
—
|
|
12,355
|
|
16,497
|
|
34,440
|
|
Net capital
expenditures
|
(28,544)
|
|
(5,055)
|
|
(7,272)
|
|
(8,198)
|
|
(8,019)
|
|
Total net cash
burn
|
$
|
(258,487)
|
|
$
|
(80,574)
|
|
$
|
(74,277)
|
|
$
|
(49,743)
|
|
$
|
(53,893)
|
|
Average monthly net
cash burn
|
$
|
(21,541)
|
|
$
|
(26,858)
|
|
$
|
(24,759)
|
|
$
|
(16,581)
|
|
$
|
(17,964)
|
|
Certain information included in this news release contains
forward-looking statements within the meaning of applicable
securities laws. These forward-looking statements include, among
others, statements with respect to Cineplex's objectives, goals and
strategies to achieve those objectives and goals, as well as
statements with respect to Cineplex's beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. The words
"may", "will", "could", "should", "would", "suspect", "outlook",
"believe", "plan", "anticipate", "estimate", "expect", "intend",
"forecast", "objective" and "continue" (or the negative thereof),
and words and expressions of similar import, are intended to
identify forward-looking statements. Forward-looking statements
also include, statements pertaining to:
- Cineplex's outlook, goals, expectations and projected
results of operations, including factors and assumptions underlying
Cineplex's projections regarding the duration and impact of a novel
strain of coronavirus ("COVID-19") pandemic on Cineplex, the movie
exhibition industry and the economy in general, as well as
Cineplex's response to the pandemic related to the closure of its
theatres and location-based entertainment ("LBE") venues, employee
reductions and other cost-cutting initiatives and increased
expenses relating to safety measures taken at its facilities to
protect the health and well-being of guests and employees;
- Cineplex's expectations with respect to net cash burn,
liquidity and capital expenditures, including its ability to meet
its ongoing capital, operating and other obligations, and
anticipated needs for, and sources of, funds; and
- Cineplex's ability to execute cost-cutting and revenue
enhancement initiatives in response to the COVID-19
pandemic.
The COVID-19 pandemic has had an unprecedented impact on
Cineplex, along with the rest of the movie exhibition industry and
other industries in which Cineplex operates, including material
decreases in revenues, results of operations and cash flows. The
situation continues to evolve and the social and economic effects
are widespread. As an entertainment and media company that operates
spaces where guests gather in close proximity, Cineplex's business
has been significantly impacted by the actions taken to control the
spread of COVID-19. These actions include, among other things, the
temporary closure of theatres and LBE venues, the introduction of
social distancing measures and restrictions including those on
capacity. There is limited visibility on when these restrictions
will be lifted in many of the markets in which Cineplex operates
and how quickly guests will return to Cineplex's locations once its
operations resume due to prolonged safety concerns and adverse
economic conditions. Cineplex is actively monitoring the situation
and is adapting its business strategies as the impact of the
COVID-19 pandemic evolves.
By their very nature, forward-looking statements involve
inherent risks and uncertainties, including those described in
Cineplex's Annual Information Form ("AIF"), and MD&A for the
year ended December 31, 2020 ("Annual
MD&A") and in this news release. Those risks and uncertainties,
both general and specific, give rise to the possibility that
predictions, forecasts, projections and other forward-looking
statements will not be achieved. Certain material factors or
assumptions are applied in making forward-looking statements and
actual results may differ materially from those expressed or
implied in such statements. Cineplex cautions readers not to place
undue reliance on these statements, as a number of important
factors, many of which are beyond Cineplex's control, could cause
actual results to differ materially from the beliefs, plans,
objectives, expectations, anticipations, estimates and intentions
expressed in such forward-looking statements. These factors
include, but are not limited to, the duration and impact of the
COVID-19 pandemic on Cineplex, the movie exhibition industry and
the economy in general, as well as Cineplex's response to the
COVID-19 pandemic as it relates to the closure of its theatres and
LBE venues, employee reductions and other cost-cutting initiatives,
and increased expenses relating to safety measures taken at its
facilities to protect the health and well-being of customers and
employees; Cineplex's expectations with respect to
liquidity and capital expenditures, including its ability to meet
its ongoing capital, operating and other obligations, and
anticipated needs for, and sources of, funds; Cineplex's
ability to execute cost-cutting and revenue enhancement initiatives
in response to the COVID-19 pandemic; risks generally encountered
in the relevant industry, competition, customer, legal, taxation
and accounting matters; the outcome of any litigation surrounding
the termination of the Cineworld transaction; and diversion of
management time on litigation related to the Cineworld
transaction.
The foregoing list of factors that may affect future results
is not exhaustive. When reviewing Cineplex's forward-looking
statements, readers should carefully consider the foregoing factors
and other uncertainties and potential events. Additional
information about factors that may cause actual results to differ
materially from expectations and about material factors or
assumptions applied in making forward-looking statements may be
found in the "Risks and Uncertainties" section of Cineplex's
MD&A.
Cineplex does not undertake to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
Canadian securities law. Additionally, Cineplex undertakes no
obligation to comment on analyses, expectations or statements made
by third parties in respect of Cineplex, its financial or operating
results or its securities. All forward-looking statements in this
news release are made as of the date hereof and are qualified by
these cautionary statements. Additional information, including
Cineplex's AIF and Annual MD&A, can be found on SEDAR at
www.sedar.com.
You are cordially invited to participate in a conference call
with the management of Cineplex (TSX: CGX) to review our first
quarter. Ellis Jacob, President
and Chief Executive Officer and Gord Nelson, Chief Financial
Officer, will host the call scheduled for:
Cineplex Inc. Q1 2021 Analyst Conference Call Details:
Date:
|
Thursday, May 6,
2021
|
|
|
Time:
|
10:00 a.m. Eastern
Daylight Time
|
|
|
Audio
Webcast:
|
Available here
or on the Company's investor website homepage
at http://ir.cineplex.com/.
|
|
The webcast will be
available for one year.
|
|
|
Dial-in
Option:
|
647-490-5367
(Toronto) or 1-800-823-1563 (Canada/US Toll-free)
|
|
Conference code:
2780293
|
Analysts who cover the Company, should use the dial-in option to
participate in the live question period. All attendees should join
the event 5-10 minutes prior to the scheduled start time. When
prompted, please provide the confirmation code or event title.
Media are welcome to join the call in listen-only mode.
About Cineplex
Cineplex (TSX: CGX) is a top-tier Canadian brand that operates
in the film entertainment and content, amusement and leisure, and
media sectors. As a leading entertainment and media company,
Cineplex welcomes millions of guests annually through its circuit
of theatres and location-based entertainment ("LBE") venues across
the country. In addition to being Canada's largest and most innovative film
exhibitor, Cineplex also operates successful businesses in digital
commerce (CineplexStore.com), food service, alternative programming
(Cineplex Events), cinema media (Cineplex Media), digital
place-based media (Cineplex Digital Media "CDM") and amusement
solutions (Player One Amusement Group "P1AG"). Additionally,
Cineplex operates an LBE business through Canada's newest destinations for 'Eats &
Entertainment' (The Rec Room), and entertainment complexes
specifically designed for teens and families (Playdium).
Cineplex is a joint venture partner in SCENE, Canada's largest entertainment loyalty
program.
Proudly recognized as having one of the country's Most Admired
Corporate Cultures, Cineplex employs approximately 10,000 people in
its offices across Canada and the
United States. To learn more visit Cineplex.com or download
the Cineplex App.
Cineplex Inc.
Interim Condensed Consolidated
Balance Sheets
(Unaudited)
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2021
|
|
2020
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
19,503
|
|
|
$
|
16,254
|
|
Trade and other
receivables
|
39,083
|
|
|
51,834
|
|
Income taxes
receivable
|
58,725
|
|
|
66,551
|
|
Inventories
|
21,123
|
|
|
21,712
|
|
Prepaid expenses and
other current assets
|
10,721
|
|
|
11,613
|
|
|
|
|
|
|
149,155
|
|
|
167,964
|
|
|
|
|
|
Non-current
assets
|
|
|
|
Property, equipment and
leaseholds
|
521,694
|
|
|
555,340
|
|
Right-of-use
assets
|
849,907
|
|
|
881,418
|
|
Interests in joint
ventures and associates
|
5,428
|
|
|
8,644
|
|
Intangible
assets
|
84,994
|
|
|
84,922
|
|
Goodwill
|
635,475
|
|
|
635,582
|
|
|
|
|
|
|
$
|
2,246,653
|
|
|
$
|
2,333,870
|
|
Cineplex Inc.
Interim Condemned Consolidated
Balance Sheets …
continued
(Unaudited)
(expressed in thousands of Canadian
dollars)
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2021
|
|
2020
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
77,712
|
|
|
$
|
82,992
|
|
Share-based
compensation
|
691
|
|
|
482
|
|
Income taxes
payable
|
819
|
|
|
802
|
|
Deferred
revenue
|
222,113
|
|
|
219,983
|
|
Lease
obligations
|
108,649
|
|
|
97,259
|
|
Fair value of interest
rate swap agreements
|
8,375
|
|
|
7,202
|
|
|
|
|
|
|
418,359
|
|
|
408,720
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Share-based
compensation
|
3,766
|
|
|
2,670
|
|
Long-term
debt
|
739,005
|
|
|
725,271
|
|
Fair value of interest
rate swap agreements
|
14,478
|
|
|
19,157
|
|
Lease
obligations
|
1,057,761
|
|
|
1,073,666
|
|
Post-employment
benefit obligations
|
10,614
|
|
|
11,503
|
|
Other
liabilities
|
67,988
|
|
|
68,649
|
|
|
1,893,612
|
|
|
1,900,916
|
|
|
|
|
|
Total
liabilities
|
2,311,971
|
|
|
2,309,636
|
|
|
|
|
|
|
|
|
|
Shareholders'
(deficit) equity
|
|
|
|
|
|
|
|
Share
capital
|
852,422
|
|
|
852,379
|
|
Deficit
|
(993,082)
|
|
|
(903,394)
|
|
Hedging reserves and
other
|
(131)
|
|
|
(131)
|
|
Contributed
surplus
|
76,403
|
|
|
75,882
|
|
Cumulative translation
adjustment
|
(930)
|
|
|
(502)
|
|
|
|
|
|
Total shareholders'
(deficit) equity
|
(65,318)
|
|
|
24,234
|
|
|
|
|
|
|
$
|
2,246,653
|
|
|
$
|
2,333,870
|
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Operations
(Unaudited)
(expressed
in thousands of Canadian dollars, except per share amounts)
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
Revenues
|
|
|
|
Box office
|
$
|
3,818
|
|
|
$
|
111,002
|
|
Food
service
|
6,525
|
|
|
79,365
|
|
Media
|
9,074
|
|
|
32,157
|
|
Amusement
|
13,874
|
|
|
47,337
|
|
Other
|
8,121
|
|
|
12,940
|
|
|
|
|
|
|
41,412
|
|
|
282,801
|
|
|
|
|
|
Expenses
|
|
|
|
Film cost
|
1,235
|
|
|
56,500
|
|
Cost of food
service
|
1,412
|
|
|
22,209
|
|
Depreciation -
right-of-use assets
|
26,318
|
|
|
35,533
|
|
Depreciation and
amortization - other assets
|
29,509
|
|
|
33,962
|
|
(Gain) loss on
disposal of assets
|
(30,060)
|
|
|
817
|
|
Other
costs
|
68,705
|
|
|
157,548
|
|
Share of loss of
joint ventures and associates
|
2,414
|
|
|
735
|
|
Interest expense -
lease obligations
|
14,359
|
|
|
11,678
|
|
Interest expense -
other
|
13,665
|
|
|
16,886
|
|
Interest
income
|
(26)
|
|
|
(72)
|
|
Foreign
exchange
|
230
|
|
|
(1,927)
|
|
Impairment of
long-lived assets and goodwill
|
—
|
|
|
173,054
|
|
|
|
|
|
|
127,761
|
|
|
506,923
|
|
|
|
|
|
Loss from
continuing operations before income taxes
|
(86,349)
|
|
|
(224,122)
|
|
|
|
|
|
Provision for
income taxes
|
|
|
|
Current
|
3,339
|
|
|
(233)
|
|
Deferred
|
—
|
|
|
(49,734)
|
|
|
|
|
|
|
3,339
|
|
|
(49,967)
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(89,688)
|
|
|
$
|
(174,155)
|
|
|
|
|
|
Net loss from
discontinued operations, net of taxes
|
—
|
|
|
(4,259)
|
|
|
|
|
|
Net
loss
|
$
|
(89,688)
|
|
|
$
|
(178,414)
|
|
|
|
|
|
Net loss from
continuing operations attributable to:
|
|
|
|
Owners of
Cineplex
|
$
|
(89,688)
|
|
|
$
|
(174,154)
|
|
Non-controlling
interests
|
—
|
|
|
(1)
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(89,688)
|
|
|
$
|
(174,155)
|
|
|
|
|
|
Net loss
attributable to:
|
|
|
|
Owners of
Cineplex
|
$
|
(89,688)
|
|
|
$
|
(178,413)
|
|
Non-controlling
interests
|
—
|
|
|
(1)
|
|
|
|
|
|
Net
loss
|
$
|
(89,688)
|
|
|
$
|
(178,414)
|
|
|
|
|
|
Net loss per share
attributable to owners of Cineplex - basic and
diluted:
|
|
|
|
Continuing
operations
|
$
|
(1.42)
|
|
|
$
|
(2.75)
|
|
Discontinued
operations
|
—
|
|
|
(0.07)
|
|
|
|
|
|
Total
operations
|
$
|
(1.42)
|
|
|
$
|
(2.82)
|
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Comprehensive Loss
(Unaudited)
(expressed in thousands of Canadian dollars)
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Net loss from
continuing operations
|
|
$
|
(89,688)
|
|
|
$
|
(174,155)
|
|
|
|
|
|
|
Other
comprehensive (loss) income from continuing
operations
|
|
|
|
|
Items that will be
reclassified subsequently to net income:
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(428)
|
|
|
5,644
|
|
Other
comprehensive (loss) income
|
|
(428)
|
|
|
5,644
|
|
|
|
|
|
|
Comprehensive loss
from continuing operations
|
|
(90,116)
|
|
|
(168,511)
|
|
|
|
|
|
|
Net loss from
discontinued operations, net of taxes
|
|
—
|
|
|
(4,259)
|
|
Foreign currency
translation adjustment from discontinued operations
|
|
—
|
|
|
(538)
|
|
|
|
|
|
|
Comprehensive
loss
|
|
$
|
(90,116)
|
|
|
$
|
(173,308)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
from continuing operations attributable to:
|
|
|
|
|
Owners of
Cineplex
|
|
$
|
(90,116)
|
|
|
$
|
(168,510)
|
|
Non-controlling
interests
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
|
$
|
(90,116)
|
|
|
$
|
(168,511)
|
|
|
|
|
|
|
Comprehensive loss
attributable to:
|
|
|
|
|
Owners of
Cineplex
|
|
$
|
(90,116)
|
|
|
$
|
(173,307)
|
|
Non-controlling
interests
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
|
$
|
(90,116)
|
|
|
$
|
(173,308)
|
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Changes in
Equity
(Unaudited)
(expressed in thousands of
Canadian dollars)
For the periods ended March 31, 2021 and 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
Contributed
surplus
|
Hedging reserves
and other
|
Cumulative
translation adjustment
|
Deficit
|
Non-
controlling interests
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2021
|
$
|
852,379
|
|
$
|
75,882
|
|
$
|
(131)
|
|
$
|
(502)
|
|
$
|
(903,394)
|
|
$
|
—
|
|
$
|
24,234
|
|
|
|
|
|
|
|
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(89,688)
|
|
—
|
|
(89,688)
|
|
Other comprehensive
loss
|
—
|
|
—
|
|
—
|
|
(428)
|
|
—
|
|
—
|
|
(428)
|
|
Total
comprehensive loss
|
—
|
|
—
|
|
—
|
|
(428)
|
|
(89,688)
|
|
—
|
|
(90,116)
|
|
Share option
expense
|
—
|
|
399
|
|
—
|
|
—
|
|
—
|
|
—
|
|
399
|
|
PSU/RSU
expense
|
—
|
|
225
|
|
—
|
|
—
|
|
—
|
|
—
|
|
225
|
|
Settlement for
cancelled options
|
—
|
|
(60)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(60)
|
|
Issuance of shares on
exercise of options
|
43
|
|
(43)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
$
|
852,422
|
|
$
|
76,403
|
|
$
|
(131)
|
|
$
|
(930)
|
|
$
|
(993,082)
|
|
$
|
—
|
|
$
|
(65,318)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1,
2020
|
$
|
852,379
|
|
$
|
4,052
|
|
$
|
(131)
|
|
$
|
(887)
|
|
$
|
(264,310)
|
|
$
|
(109)
|
|
$
|
590,994
|
|
|
|
|
|
|
|
|
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(178,413)
|
|
(1)
|
|
(178,414)
|
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
5,106
|
|
—
|
|
—
|
|
5,106
|
|
Total
comprehensive loss
|
—
|
|
—
|
|
—
|
|
5,106
|
|
(178,413)
|
|
(1)
|
|
(173,308)
|
|
Dividends
declared
|
—
|
|
—
|
|
—
|
|
—
|
|
(9,500)
|
|
—
|
|
(9,500)
|
|
Conversion to
equity-settled option plan
|
—
|
|
3,944
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,944
|
|
|
|
|
|
|
|
|
|
March 31,
2020
|
$
|
852,379
|
|
$
|
7,996
|
|
$
|
(131)
|
|
$
|
4,219
|
|
$
|
(452,223)
|
|
$
|
(110)
|
|
$
|
412,130
|
|
Cineplex Inc.
Interim Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(expressed
in thousands of Canadian dollars)
|
|
|
|
Three months ended
March 31,
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
Cash provided by
(used in)
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
Net loss from
continuing operations
|
|
$
|
(89,688)
|
|
$
|
(174,155)
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization of property, equipment and leaseholds, and intangible
assets
|
|
29,509
|
|
33,962
|
|
|
Depreciation of
right-of-use assets
|
|
26,318
|
|
35,533
|
|
|
Unrealized foreign
exchange
|
|
211
|
|
(1,429)
|
|
|
Interest rate swap
agreements - non-cash interest
|
|
(3,528)
|
|
9,386
|
|
|
Accretion of
Debentures and Notes Payable
|
|
3,738
|
|
—
|
|
|
Other non-cash
interest
|
|
447
|
|
349
|
|
|
(Gain) loss on
disposal of assets
|
|
(30,060)
|
|
817
|
|
|
Deferred income
taxes
|
|
—
|
|
(49,734)
|
|
|
Non-cash share-based
compensation
|
|
624
|
|
3,944
|
|
|
Impairment of
long-lived assets, goodwill and investments
|
|
—
|
|
173,054
|
|
|
Net change in
interests in joint ventures and associates
|
|
3,216
|
|
1,891
|
|
|
Changes in operating
assets and liabilities
|
|
23,581
|
|
(10,428)
|
|
|
|
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
(35,632)
|
|
23,190
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Proceeds from
disposal of assets, net
|
|
56,664
|
|
—
|
|
|
Purchases of
property, equipment and leaseholds
|
|
(8,715)
|
|
(37,503)
|
|
|
Intangible assets
additions
|
|
(3,086)
|
|
(3,721)
|
|
|
Tenant
inducements
|
|
3,660
|
|
11,877
|
|
|
Net cash received
from CDCP
|
|
—
|
|
3,128
|
|
|
|
|
|
|
|
Net cash provided by
(used in) investing activities
|
|
48,523
|
|
(26,219)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Dividends
paid
|
|
—
|
|
(19,000)
|
|
|
(Repayments)
borrowings under credit facilities, net
|
|
(234,000)
|
|
40,000
|
|
|
Repayments of lease
obligations - principal
|
|
(19,457)
|
|
(33,819)
|
|
|
Issuance of notes
payable, net
|
|
243,996
|
|
—
|
|
|
Financing
fees
|
|
(321)
|
|
—
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
(9,782)
|
|
(12,819)
|
|
|
|
|
|
|
|
Effect of exchange
rate differences on cash
|
|
140
|
|
(950)
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents from continuing operations
|
|
3,249
|
|
(16,798)
|
|
|
Cash flows used in
discontinued operations
|
|
—
|
|
(2,138)
|
|
|
Cash and cash
equivalents - Beginning of period
|
|
16,254
|
|
26,080
|
|
|
|
|
|
|
|
Cash and cash
equivalents - End of period
|
|
$
|
19,503
|
|
$
|
7,144
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
Cash paid for
interest - lease obligation
|
|
$
|
12,605
|
|
$
|
11,355
|
|
|
Cash paid for
interest - other
|
|
$
|
15,594
|
|
$
|
5,479
|
|
|
Cash (received) paid
for income taxes, net
|
|
$
|
(4,487)
|
|
$
|
1,482
|
|
|
Cineplex Inc.
Interim Condensed Consolidated
Supplemental Information
(Unaudited)
(expressed
in thousands of Canadian dollars)
Reconciliation to Adjusted
EBITDAaL
|
|
Three months ended
March 31,
|
|
|
2021
|
2020
|
|
|
|
|
Net loss from
continuing operations
|
|
$
|
(89,688)
|
|
$
|
(174,155)
|
|
|
|
|
|
Depreciation and
amortization - other
|
|
29,509
|
|
33,962
|
|
Depreciation -
right-of-use assets
|
|
26,318
|
|
35,533
|
|
Interest expense -
lease obligations
|
|
14,359
|
|
11,678
|
|
Interest expense -
other
|
|
13,665
|
|
16,886
|
|
Interest
income
|
|
(26)
|
|
(72)
|
|
Current income tax
recovery
|
|
3,339
|
|
(233)
|
|
Deferred income tax
recovery
|
|
—
|
|
(49,734)
|
|
|
|
|
|
EBITDA from
continuing operations
|
|
$
|
(2,524)
|
|
$
|
(126,135)
|
|
|
|
|
|
(Gain) loss on
disposal of assets
|
|
(30,060)
|
|
817
|
|
CDCP equity loss
(i)
|
|
2,238
|
|
590
|
|
Foreign exchange loss
(gain)
|
|
230
|
|
(1,927)
|
|
Impairment of
long-lived assets and goodwill
|
|
—
|
|
173,054
|
|
Non-controlling
interest adjusted EBITDA
|
|
—
|
|
1
|
|
Depreciation and
amortization - joint ventures and associates (ii)
|
|
—
|
|
24
|
|
Taxes and interest of
joint ventures and associates (ii)
|
|
11
|
|
48
|
|
|
|
|
|
Adjusted EBITDA
from continuing operations
|
|
$
|
(30,105)
|
|
$
|
46,472
|
|
|
|
|
|
Cash rent
paid/payable related to lease obligations (iii)
|
|
(33,861)
|
|
(45,174)
|
|
Negotiated
lease-related cash savings for the period (iii) (iv)
|
|
751
|
|
—
|
|
Cash rent paid not
pertaining to current period
|
|
1,125
|
|
1,092
|
|
|
|
|
|
Adjusted EBITDAaL
(iv)
|
|
$
|
(62,090)
|
|
$
|
2,390
|
|
|
|
|
|
(i)
CDCP equity loss not included in adjusted EBITDA as CDCP is a
limited-life financing vehicle that is funded by virtual print fees
collected from distributors.
|
|
(ii) Includes
the joint ventures with the exception of CDCP (see (i)
above).
|
(iii) The cash
rent paid or payable includes negotiated lease obligations savings
of $0.8 million through March 31, 2021.
|
(iv) See
Non-GAAP measures section of this news release.
|
Cineplex Inc.
Interim Condensed Consolidated
Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars, except number of
shares and per share data)
Adjusted Free Cash Flow
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
|
|
2021
|
2020
|
|
|
|
|
|
|
|
|
Cash (used in)
provided by operating activities
|
|
$
|
(35,632)
|
|
$
|
23,190
|
|
Less: Total capital
expenditures net of proceeds on sale of assets
|
|
(8,715)
|
|
(37,503)
|
|
|
|
|
|
Standardized free
cash flow
|
|
(44,347)
|
|
(14,313)
|
|
|
|
|
|
Add/(Less):
|
|
|
|
Changes in operating
assets and liabilities (i)
|
|
(23,581)
|
|
10,428
|
|
Changes in operating
assets and liabilities of joint ventures and associates
(i)
|
|
(802)
|
|
(1,156)
|
|
Principal component
of lease obligations
|
|
(19,457)
|
|
(33,819)
|
|
Principal portion of
cash rent paid not pertaining to current period
|
|
1,106
|
|
1,071
|
|
Growth capital
expenditures and other (ii)
|
|
8,461
|
|
34,526
|
|
Share of income of
joint ventures and associates, net of non-cash
depreciation
|
|
(165)
|
|
(73)
|
|
Non-controlling
interest
|
|
—
|
|
1
|
|
Net cash received
from CDCP (iii)
|
|
—
|
|
3,128
|
|
Adjusted free cash
flow
|
|
$
|
(78,785)
|
|
$
|
(207)
|
|
|
|
|
|
Average number of
Shares outstanding
|
|
63,334,317
|
|
63,333,238
|
|
|
|
|
|
Adjusted free cash
flow per Share
|
|
$
|
(1.244)
|
|
$
|
(0.003)
|
|
Dividends
declared
|
|
$
|
—
|
|
$
|
0.150
|
|
(i) Changes in
operating assets and liabilities are not considered a source or use
of adjusted free cash flow.
|
(ii) Growth capital
expenditures and other represent expenditures on Board approved
projects, exclude maintenance capital expenditures, and
are
|
net of proceeds
on asset sales. Cineplex's revolving facility is available to
Cineplex to fund Board approved projects.
|
(iii) Excludes the
share of loss of CDCP, as CDCP is a limited-life financing vehicle
funded by virtual print fees collected from
distributors.
|
Cash invested
into CDCP, as well as cash distributions received from CDCP, are
considered to be uses and sources of adjusted free cash
flow.
|
SOURCE Cineplex