Cineplex Inc. Reports First Quarter and Announces Dividend Increase
TORONTO, May 9, 2019 /CNW/ - (TSX: CGX) - Cineplex Inc. ("Cineplex") today released its financial results for the three months ended March 31, 2019. Unless otherwise specified, all amounts are in Canadian dollars.
First Quarter Results
2019 |
2018 |
Period over Period |
|||||
Total revenues |
$ |
364.9 |
million |
$ |
390.9 |
million |
-6.6% |
Theatre attendance |
15.0 |
million |
17.8 |
million |
-15.6% |
||
Net (loss) income |
$ |
(7.4) |
million |
$ |
15.2 |
million |
NM |
Box office revenues per patron ("BPP") (ii) |
$ |
10.44 |
$ |
10.21 |
2.3% |
||
Concession revenues per patron ("CPP") (ii) |
$ |
6.35 |
$ |
6.09 |
4.3% |
||
Adjusted EBITDA (ii) |
$ |
77.4 |
million |
$ |
53.5 |
million |
44.7% |
Adjusted EBITDAaL (ii) (iii) |
$ |
34.3 |
million |
$ |
49.5 |
million |
-30.6% |
Adjusted EBITDAaL margin (ii) (iii) |
9.4% |
12.7% |
-3.3% |
||||
Adjusted free cash flow (ii) |
$ |
29.1 |
million |
$ |
38.6 |
million |
-24.6% |
Adjusted free cash flow per common share of |
$ |
0.460 |
$ |
0.609 |
-24.5% |
||
Earnings per Share ("EPS") - basic |
$ |
(0.12) |
$ |
0.24 |
NM |
||
EPS - diluted |
$ |
(0.12) |
$ |
0.24 |
NM |
||
i. |
Period over period change calculated based on thousands of dollars except percentage and per share values. Changes in percentage amounts are calculated as 2019 value less 2018 value. |
ii. |
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. |
iii. |
Prior period figures have been revised to conform to current period presentation. |
"Although the Q1 results were impacted by the anticipated soft box office product, we continued to execute upon our diversification strategy and are encouraged by the results from our new businesses which resulted in Q1 records for media revenue, amusement revenue and other revenue," said Ellis Jacob, President and CEO, Cineplex.
"Total revenue for the first quarter of 2019 decreased 6.6% due to a 13.7% decrease in box office and an 11.9% decrease in food service. These decreases can largely be attributed to the 15.6% decrease in theatre attendance, which was a result of the quarter's expected weaker film product and the tough comparator quarter with last year's record success of the film Black Panther. Partially offsetting the theatre attendance decline is a record first quarter box office per patron of $10.44, and record first quarter concession per patron of $6.35, which increased $0.23 and $0.26 respectively from the prior year period. Although there was a decrease in box office revenue in Q1, this was expected given the January and February 2019 release schedule. As we look to Q2 and beyond we are encouraged by the recent record-breaking performance of Avengers: Endgame, which had the largest global opening weekend ever, and are confident in the strong film product scheduled for the remainder of the year.
As we continue to grow our diversified businesses, partially offsetting the Exhibition business decreases was a 17.2% increase in amusement revenue to an all-time quarterly record of $58.5 million as a result of P1AG and The Rec Room; and a 7.7% increase in total media revenue to a Q1 record of $35.0 million, largely due to a 21.9% increase in digital place-based media revenue as a result of higher project installation revenue.
The Q1 results are significantly impacted by the adoption of International Financial Reporting Standards ("IFRS") 16 - Leases and we encourage you to refer to our Financial Statements and MD&A for further details. For the quarter, adjusted EBITDAaL (adjusted EBITDA after lease payments) decreased 30.6% primarily as a result of the theatre attendance decline as a result of the soft box office. Net income was negatively impacted by approximately $3.3M related to the adoption of IFRS 16 in the current period and approximately $6.4 million or $0.10 per share as compared to Q1 2018.
Key accomplishments during the quarter included the opening of our sixth location of The Rec Room in Mississauga, Ontario; the expansion of alcohol beverage service to an additional 19 theatre locations, now totaling 54 locations; and our SCENE loyalty program reached 9.7 million members.
Although the first quarter film product was soft, the second quarter has been strong and we are encouraged by the outlook of the 2019 film slate. We remain confident in our strategic direction as we continue to build scale in our other businesses, prudently manage our costs and execute on Cineplex's diversification strategy for future growth. As such, we are pleased to announce a 3.4% dividend increase to $1.80 per share on an annual basis from the current $1.74 per share. This increase will be effective with the May 2019 dividend, which will be paid in June 2019."
KEY DEVELOPMENTS IN THE FIRST QUARTER OF 2019
The following describes certain key business initiatives undertaken and results achieved during the first quarter of 2019 in each of Cineplex's core business areas:
FILM ENTERTAINMENT AND CONTENT
Theatre Exhibition
- Reported first quarter box office revenues of $156.5 million, a decrease of $24.9 million (13.7%) from $181.4 million reported in the prior year period due to a 15.6% decrease in theatre attendance from 17.8 million in 2018 to 15.0 million in the first quarter of 2019 due to a weaker film slate.
- BPP was $10.44, a first quarter record for Cineplex, an increase of $0.23 (2.3%) over the prior year period BPP of $10.21.
Theatre Food Service
- Reported first quarter theatre food service revenues of $95.2 million, a decrease of $13.1 million (12.1%) from $108.2 million reported in the prior year period as a result of the decrease in theatre attendance.
- CPP was $6.35 for the period, a first quarter record for Cineplex, and $0.26 (4.3%) higher than the prior year period.
- During the quarter, Cineplex added alcohol beverage service to an additional 19 theatres, now totalling 54 (excluding VIP).
Alternative Programming
- Alternative Programming (Cineplex Events) in the first quarter of 2019 included the release of Dragon Ball Super: Broly, Carmen from The Metropolitan Opera and the concert event BTS World Tour: Love Yourself in Seoul.
- Cineplex international film for the first quarter of 2019 included strong performances from The Wandering Earth and Gully Boy.
Digital Commerce
- Total registered users for Cineplex Store increased by 42% in the first quarter of 2019 as compared to the prior year period.
- Online and mobile ticketing represented 30% of total admission during the first quarter, up from 26% in the prior year period.
- Cineplex Store registered a 107% increase in device activation over the prior year period.
- Monthly active users of The Cineplex Store increased by 57% as compared to the prior year period.
MEDIA
- Reported a first quarter record for total media revenues of $35.0 million, an increase of $2.5 million, or 7.7% as compared to the prior year period.
Cinema Media
- First quarter cinema media revenues of $21.4 million increased nominally from $21.3 million in the prior year period despite the significant theatre attendance decline.
Digital Place-Based Media
- Reported a first quarter record with revenues of $13.6 million, an increase of $2.4 million (21.9%) compared to the prior year period due to higher project installation revenues.
AMUSEMENT AND LEISURE
Amusement Solutions
- Reported an all-time quarterly record with revenues of $50.5 million ($2.8 million from Cineplex theatre gaming and $47.7 million from all other sources of revenues), an increase of $7.5 million (17.4%) over the prior year period. The increase was primarily due to an increase in distribution sales and increased route revenues in the United States.
Location Based Entertainment
- The Rec Room reported first quarter revenues of $16.4 million which included food service revenues of $7.9 million and amusement revenues of $8.0 million.
- On March 18, 2019, opened The Rec Room at Square One Shopping Centre in Mississauga, Ontario, the sixth location of The Rec Room.
- During the quarter, Cineplex announced plans to open Atlantic Canada's first Playdium location in Dartmouth, Nova Scotia at the Dartmouth Crossing Shopping Centre, scheduled to open in 2020.
eSports
- On March 24, 2019, WGN hosted the Madden 19 Canadian Challenge held at Live Nations's The Lounge in Toronto.
- During the first quarter, WGN hosted the Winnipeg Jets NHL 19 Tournament with the finals held at the Bell MTS Place in Winnipeg on February 18, 2019.
LOYALTY
- Membership in the SCENE loyalty program increased by 0.1 million members in the period, reaching 9.7 million members at March 31, 2019.
CORPORATE
- During the quarter, Cineplex was named by Waterstone Human Capital one of Canada's 10 Most Admired Corporate Cultures in the large enterprise category for 2018, the third time that Cineplex has won the award that celebrates best-in-class Canadian organizations.
OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2019
Total revenues
Total revenues for the three months ended March 31, 2019 decreased $25.9 million (6.6%) to $364.9 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 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 the 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 |
|||||
2019 |
2018 |
Change |
||||
Box office revenues |
$ |
156,496 |
$ |
181,380 |
-13.7% |
|
Theatre attendance (i) |
14,988 |
17,765 |
-15.6% |
|||
Box office revenue per patron (i) |
$ |
10.44 |
$ |
10.21 |
2.3% |
|
BPP excluding premium priced product (i) |
$ |
9.03 |
$ |
8.79 |
2.7% |
|
Canadian industry revenues (ii) |
-13.1% |
|||||
Same theatre box office revenues (i) |
$ |
152,958 |
$ |
180,279 |
-15.2% |
|
Same theatre attendance (i) |
14,700 |
17,684 |
-16.9% |
|||
% Total box from premium priced product (i) |
40.9% |
41.1% |
-0.2% |
|||
(i) See Non-GAAP measures section of this news release. |
||||||
(ii) Source: Gross box office receipts (inclusive of all taxes) from The Movie Theatre Association of Canada industry data adjusted for calendar quarter dates. |
||||||
Box office continuity |
First Quarter |
||
Box Office |
Theatre |
||
2018 as reported |
$ |
181,380 |
17,765 |
Same theatre attendance change |
(30,426) |
(2,985) |
|
Impact of same theatre BPP change |
3,105 |
— |
|
New and acquired theatres (i) |
3,538 |
288 |
|
Disposed and closed theatres (i) |
(1,101) |
(80) |
|
2019 as reported |
$ |
156,496 |
14,988 |
(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 |
|||
First Quarter 2019 Top Cineplex Films |
3D |
% Box |
First Quarter 2018 Top Cineplex Films |
3D |
% Box |
||
1 |
Captain Marvel |
√ |
16.3% |
1 |
Black Panther |
√ |
22.2% |
2 |
How To Train Your Dragon: The Hidden World |
√ |
7.2% |
2 |
Jumanji: Welcome To The Jungle |
√ |
10.1% |
3 |
Aquaman |
√ |
7.0% |
3 |
Star Wars: The Last Jedi |
√ |
5.8% |
4 |
The Lego Movie 2: The Second Part |
√ |
5.1% |
4 |
Peter Rabbit |
3.8% |
|
5 |
Spider-Man: Into The Spider-Verse |
√ |
4.3% |
5 |
Fifty Shades Freed |
3.3% |
|
Box office revenues decreased $24.9 million, or 13.7%, to $156.5 million during the first quarter of 2019, compared to $181.4 million reported in the same period in 2018. The decrease was due to the 15.6% decrease in theatre attendance to 15.0 million guests, partially offset by higher BPP. The theatre attendance decrease was due to the weaker film slate in the first quarter of 2019 compared to the first quarter of 2018. The prior year period is a tough comparator due to the success of Black Panther which became the third highest grossing film of all-time in North America, and the carryover strength of Star Wars: The Last Jedi and Jumanji: Welcome To The Jungle from the fourth quarter of 2017.
BPP for the three months ended March 31, 2019 was $10.44, a $0.23 increase (2.3%) from the prior year period, and a first quarter record for Cineplex. The increase in BPP was due to price increases in selective markets as compared to the prior year.
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 |
||||
2019 |
2018 |
Change |
|||
Food service - theatres |
$ |
95,172 |
$ |
108,230 |
-12.1% |
Food service - The Rec Room |
7,886 |
8,718 |
-9.5% |
||
Total food service revenues |
$ |
103,058 |
$ |
116,948 |
-11.9% |
Theatre attendance (i) |
14,988 |
17,765 |
-15.6% |
||
CPP (i) (ii) |
$ |
6.35 |
$ |
6.09 |
4.3% |
Same theatre food service revenues (i) |
$ |
92,309 |
$ |
107,551 |
-14.2% |
Same theatre attendance (i) |
14,700 |
17,684 |
-16.9% |
||
(i) See Non-GAAP measures section of this news release. |
|||||
(ii) Food service revenue from The Rec Room is not included in the CPP calculation. |
|||||
Theatre food service revenue continuity |
First Quarter |
||
Theatre Food |
Theatre |
||
2018 as reported |
$ |
108,230 |
17,765 |
Same theatre attendance change |
(18,152) |
(2,985) |
|
Impact of same theatre CPP change |
2,909 |
— |
|
New and acquired theatres (i) |
2,863 |
288 |
|
Disposed and closed theatres (i) |
(678) |
(80) |
|
2019 as reported |
$ |
95,172 |
14,988 |
(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 |
|||
Food service revenues are comprised primarily of concession revenues, which includes food service sales at theatre locations. Food service revenues also include food and beverage sales at The Rec Room. Food service revenues decreased $13.9 million, or 11.9% mainly as a result of the $13.1 million (12.1%) decrease in theatre food service revenue. The decrease in theatre food service revenue resulted from the 15.6% decrease in theatre attendance, partially offset by the 4.3% ($0.26) increase in CPP to $6.35. Food service revenue from The Rec Room is not included in the CPP calculation.
Food services revenues from The Rec Room decreased $0.8 million (9.5%) compared to the prior year period to $7.9 million as bad winter weather conditions in the first quarter reduced evening business at several locations resulting in the food service decline. In addition, locations which have been opened for 12 to 24 months begin to move past the honeymoon phase and begin to settle into their expected long-term run-rate levels. Newer locations of The Rec Room typically experience higher sales volumes in the first year of operations.
CPP of $6.35 is a first quarter record for Cineplex. Expanded offerings outside of core food service products, including offerings at Cineplex's VIP Cinemas and Outtakes locations, have contributed to increased visitation and higher average transaction values, resulting in the record CPP in the period.
Media revenues
The following table highlights the movement in media revenues for the quarter (in thousands of dollars):
Media revenues |
First Quarter |
||||
2019 |
2018 |
Change |
|||
Cinema media |
$ |
21,383 |
$ |
21,332 |
0.2% |
Digital place-based media |
13,630 |
11,181 |
21.9% |
||
Total media revenues |
$ |
35,013 |
$ |
32,513 |
7.7% |
Total media revenues increased $2.5 million (7.7%) compared to the prior year period to a first quarter record of $35.0 million. Cinema media revenues increased nominally (0.2%) compared to the prior year period despite the significant theatre attendance decline. This increase was due to a 21.9% or $2.4 million increase in digital place-based media revenues as a result of higher project installation revenues. During the quarter, digital place-based media added 345 new locations for a total of 13,847 locations (an increase of 5% over the prior year period).
Amusement Revenues
The following table highlights the movement in amusement revenues for the quarter (in thousands of dollars):
Amusement revenues |
First Quarter |
||||
2019 |
2018 |
Change |
|||
Amusement - P1AG excluding Cineplex exhibition and The Rec Room (i) |
$ |
47,673 |
$ |
40,238 |
18.5% |
Amusement - Cineplex exhibition (i) |
2,784 |
2,737 |
1.7% |
||
Amusement - The Rec Room |
8,043 |
6,930 |
16.1% |
||
Total amusement revenues |
$ |
58,500 |
$ |
49,905 |
17.2% |
(i) Cineplex receives a venue revenue share on games revenues earned at in-theatre game rooms and XSCAPE Entertainment Centres. Amusement - Cineplex |
|||||
Amusement revenues increased 17.2%, or $8.6 million, to an all-time quarterly record of $58.5 million in the first quarter of 2019 compared to the prior year period. The growth was due to an increase in distribution sales as well as in route revenues in the United States in part due to the Cinemark agreement signed in the second quarter of 2018. The additional location of The Rec Room in the current year contributed to an increase of $1.1 million to amusement revenues.
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 |
||||
2019 |
2018 |
Change |
|||
Other revenues |
$ |
11,871 |
$ |
10,126 |
17.2% |
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 |
||||
2019 |
2018 |
Change |
|||
Film cost |
$ |
78,721 |
$ |
95,204 |
-17.3% |
Film cost percentage (i) |
50.3% |
52.5% |
-2.2% |
||
(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. This is due to film cost terms varying by title and distributor. Film cost percentage during the first quarter of 2019 was 50.3%, a 2.2% decrease from the prior year period. The decrease in film cost percentage is attributable to the reduced concentration of box office revenues from a few titles, with the top five film in the current period accounting for only 39.9% of box office revenues in the period (2018 - 45.2%). Top films tend to have higher settlement rates than the other films in the slate due to their strong performance.
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 The Rec Room for the quarter (in thousands of dollars, except percentages and margins per patron):
Cost of food service |
First Quarter |
||||
2019 |
2018 |
Change |
|||
Cost of food service - theatre |
$ |
21,271 |
$ |
22,436 |
-5.2% |
Cost of food service - The Rec Room |
2,165 |
2,340 |
-7.5% |
||
Total cost of food service |
$ |
23,436 |
$ |
24,776 |
-5.4% |
Theatre concession cost percentage (i) |
22.4% |
20.7% |
1.7% |
||
The Rec Room food cost percentage (i) |
27.5% |
26.8% |
0.7% |
||
Theatre concession margin per patron (i) |
$ |
4.93 |
$ |
4.83 |
2.1% |
(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 The Rec Room 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 decrease in the theatre cost of food service compared to the prior year period was due to the lower theatre food service revenues which was partly offset by the increase in the theatre concession cost percentage from 20.7% in the prior year period to 22.4% in 2019.
The theatre concession margin per patron increased 2.1% from $4.83 in the first quarter of 2018 to $4.93 in the same period in 2019, reflecting the impact of the higher CPP during the period.
The decrease in The Rec Room cost of food service as compared to the prior year period was due to the lower food service revenues.
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 |
||||
2019 |
2018 |
Change |
|||
Depreciation of property, equipment and leaseholds |
$ |
28,857 |
$ |
27,259 |
5.9% |
Amortization of intangible assets and other |
3,998 |
3,935 |
1.6% |
||
Sub-total - depreciation and amortization - other assets |
$ |
32,855 |
$ |
31,194 |
5.3% |
Depreciation - right-of-use assets |
36,462 |
— |
NM |
||
Total depreciation and amortization |
$ |
69,317 |
$ |
31,194 |
122.2% |
The quarterly increase in depreciation of property, equipment and leaseholds of $1.6 million (5.9%) is primarily due to investments in the amusement and leisure businesses, including the opening of The Rec Room at the Square One Shopping Centre.
The increase of $0.1 million (1.6%) in the amortization of intangible assets was primarily due to internally developed software for digital products including the Cineplex mobile app and website platform.
The quarterly increase in depreciation of right-of-use assets was as a result of the adoption of IFRS 16. The right-of-use assets are depreciated over the lease term. The current quarter expense represents the depreciation charge for the quarter.
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):
Loss on disposal of assets |
First Quarter |
|||||||
2019 |
2018 |
Change |
||||||
Loss on disposal of assets |
$ |
477 |
$ |
210 |
127.1% |
|||
Other costs
Other costs include three main sub-categories of expenses; theatre occupancy expenses, which capture the rent and 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 includes 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 |
||||
2019 |
2018 |
Change |
|||
Theatre occupancy expenses (i) |
$ |
18,407 |
$ |
51,898 |
-64.5% |
Other operating expenses (i) |
148,183 |
147,407 |
0.5% |
||
General and administrative expenses (i) |
18,852 |
18,149 |
3.9% |
||
Total other costs |
$ |
185,442 |
$ |
217,454 |
-14.7% |
(i) See Accounting policies section of the Management's Discussion & Analysis ("MD&A"). |
|||||
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for the quarter (in thousands of dollars) with the prior period presentation revised to provide comparability to the impact of the transition to IFRS 16:
Theatre occupancy expenses |
First Quarter |
||||
2019 |
Revised |
Change |
|||
Cash rent - theatre (i) (vii) |
$ |
39,879 |
$ |
38,470 |
3.7% |
Other occupancy |
18,418 |
18,667 |
-1.3% |
||
One-time items (ii) |
(179) |
(1,272) |
-85.9% |
||
Total theatre occupancy including cash lease payments |
$ |
58,118 |
$ |
55,865 |
4.0% |
Non-cash rent (iii) (vi) |
— |
(2,978) |
NM |
||
Rent previously recognized as a finance lease (iv) |
— |
(989) |
NM |
||
Cash rent related to lease obligations (v) |
(39,711) |
— |
NM |
||
Theatre occupancy as reported |
$ |
18,407 |
$ |
51,898 |
-64.5% |
(i) Represents the cash payments for theatre rent during the quarter. See IFRS 16 transition section of the MD&A for a reconciliation from previously reported |
|||||
(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 |
|||||
(iii) Non-cash rent included in the 2018 balances in the previous reporting period. See IFRS 16 transition section of the MD&A for a reconciliation from |
|||||
(iv) Rent payments that were charged to the finance lease obligations in the previous reporting period. See IFRS 16 transition section of the MD&A for a reconciliation from previously reported figures. |
|||||
(v) Cash rent that has been reallocated to offset the lease obligations. |
|||||
(vi) See Non-GAAP measures section of this news release. |
|||||
(vii) The 2019 balance includes $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 |
|||
2018 as reported |
$ |
51,898 |
|
Impact of new and acquired theatres |
750 |
||
Impact of disposed theatres |
(535) |
||
Same theatre rent change (i) |
1,178 |
||
One-time items |
1,093 |
||
Other |
(233) |
||
Impact of IFRS 16 adoption: |
|||
Impact of non-cash rent in prior period |
2,978 |
||
Cash rent previously recognized as a finance lease |
989 |
||
Cash rent related to lease obligations |
(39,711) |
||
2019 as reported |
$ |
18,407 |
|
(i) See Non-GAAP measures section of this news release. |
|||
Theatre occupancy expenses as reported decreased $33.5 million (64.5%) during the first quarter of 2019 compared to the prior year period. This decrease was primarily due to the impact of the adoption of IFRS 16 partially offset by the impact of non-cash rent in the prior period.
Total theatre occupancy including cash lease payments increased $2.2 million (4.0%) during the first quarter of 2019 compared to the prior year period. This increase was primarily due to a $1.2 million increase in same theatre rent and a $1.1 million decrease in one-time credits. The increase in same-theatre rent was due to the inclusion of the up front payments of annual rent at one theatre location in the first quarter of 2019 in cash rent-theatre. In comparison, the prior year period includes one quarter of rent expense for the location.
Other operating expenses
The following table highlights the movement in other operating expenses during the quarter (in thousands of dollars) with the prior period presentation revised to provide comparability to the impact of the transition to IFRS 16:
Other operating expenses |
First Quarter |
|||||||
2019 |
Revised |
Change |
||||||
Theatre payroll |
$ |
36,710 |
$ |
38,293 |
-4.1% |
|||
Theatre operating expenses |
28,562 |
29,419 |
-2.9% |
|||||
Media (i) |
16,742 |
16,421 |
2.0% |
|||||
P1AG (i) |
40,965 |
35,719 |
14.7% |
|||||
The Rec Room (i) (ii) |
11,148 |
10,540 |
5.8% |
|||||
Location-based entertainment pre-opening (i) (iii) |
691 |
290 |
138.3% |
|||||
SCENE |
5,038 |
4,217 |
19.5% |
|||||
Marketing |
2,851 |
4,408 |
-35.3% |
|||||
Other (iv) |
9,809 |
8,205 |
19.5% |
|||||
Other operating expenses including cash lease payments |
$ |
152,516 |
$ |
147,512 |
3.4% |
|||
Non-cash rent (v) (vi) |
— |
(105) |
NM |
|||||
Cash rent related to lease obligations (vii) |
(4,333) |
— |
NM |
|||||
Other operating expenses as reported |
$ |
148,183 |
147,407 |
0.5% |
||||
(i) Prior period balances were revised to exclude non-cash rent. See IFRS 16 transition section of the MD&A for a reconciliation from previously reported |
||||||||
(ii) Includes operating costs of The Rec Room locations. Overhead relating to management of The Rec Room portfolio are included in the 'Other' line. |
||||||||
(iii) Includes pre-opening costs of The Rec Room and Playdium locations |
||||||||
(iv) Other category includes overhead costs related to The Rec Room, operating costs of WGN and other Cineplex internal departments. |
||||||||
(v) Non-cash rent included in the 2018 balances in the previous reporting period. See IFRS 16 transition section of the MD&A for a reconciliation from |
||||||||
(vi) See Non-GAAP measures section of this news release. |
||||||||
(vii) Cash rent that has been reallocated to offset the lease obligations. |
||||||||
Other operating continuity |
First Quarter |
|
Other Operating |
||
2018 as reported |
$ |
147,407 |
Impact of new and acquired theatres |
2,069 |
|
Impact of disposed theatres |
(429) |
|
Same theatre payroll change (i) |
(2,679) |
|
Same theatre operating expenses change (i) |
(1,369) |
|
Media operating expenses change |
321 |
|
P1AG operating expenses change |
5,246 |
|
The Rec Room operating expenses change |
608 |
|
Location-based entertainment pre-opening change |
401 |
|
SCENE change |
821 |
|
Marketing change |
(1,556) |
|
Other |
1,571 |
|
Impact of IFRS 16 adoption: |
||
Non-cash rent in prior period |
105 |
|
Cash rent related to lease obligations |
(4,333) |
|
2019 as reported |
$ |
148,183 |
(i) See Non-GAAP measures section of this news release. |
||
Other operating expenses during the first quarter of 2019 increased $0.8 million or 0.5% compared to the prior year period. The increase was primarily due to higher amusement and leisure costs related to P1AG due to higher distribution sales as well as the impact of new and acquired theatres. These were partially offset by the $2.7 million decrease in same theatre payroll and the $1.4 million decrease in same theatre operating expenses as a result of the lower business volumes for theatre exhibition, a $1.6 million decrease in marketing due to the timing of campaigns and $4.3 million of cash rent related to the lease obligations arising upon the adoption of IFRS 16.
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) with the prior period presentation revised to provide comparability to the impact of the transition to IFRS 16:
G&A expenses |
First Quarter |
||||
2019 |
Revised |
Change |
|||
G&A excluding LTIP and option plan expense (i) |
$ |
17,828 |
$ |
17,773 |
0.3% |
Restructuring |
— |
996 |
NM |
||
LTIP (i) |
762 |
(1,049) |
NM |
||
Option plan |
389 |
431 |
-9.7% |
||
G&A expenses including cash lease payments |
$ |
18,979 |
$ |
18,151 |
4.6% |
Non-cash rent (iii) (iv) |
— |
(2) |
NM |
||
Cash rent included as part of lease obligations (v) |
(127) |
— |
NM |
||
G&A expenses as reported |
$ |
18,852 |
$ |
18,149 |
3.9% |
(i) Prior period balance was revised to exclude non-cash rent. See IFRS 16 transition section of the MD&A for a reconciliation of previously reported figures. |
|||||
(ii) LTIP includes the expense for the LTIP program as well as the expense for the executive and Board deferred share unit plans. |
|||||
(iii) Non-cash rent included in the 2018 balances in the previous reporting period. See IFRS 16 transition section of the MD&A for a reconciliation of previously |
|||||
(iv) See Non-GAAP measures section of this news release. |
|||||
(v) Cash rent that has been reallocated to offset the lease obligations. |
|||||
G&A expenses increased $0.7 million (4.6%) during the first quarter of 2019 compared to the prior year period primarily due to a $1.8 million increase in LTIP expense. LTIP in the first quarter reflected ongoing regular vesting and a relatively flat share price during the period, compared to a significant price decrease in the prior year period resulting in an expense recovery. Professional fees increased by $0.8 million due in part to an increase in consulting work including the software upgrade undertaken for IFRS 16.
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, 2019 as compared to the prior year periods (expressed in thousands of dollars, except adjusted EBITDAaL margin):
EBITDA |
First Quarter |
||||
2019 |
2018 |
Change |
|||
EBITDA |
$ |
76,690 |
$ |
54,890 |
39.7% |
Adjusted EBITDA |
$ |
77,442 |
$ |
53,532 |
44.7% |
Adjusted EBITDAaL (i) |
$ |
34,331 |
$ |
49,458 |
-30.6% |
Adjusted EBITDAaL margin (i) |
9.4% |
12.7% |
-3.3% |
||
(i) Prior period figures have been revised to conform to current period presentation. See IFRS 16 transition section of the MD&A. |
|||||
Adjusted EBITDAaL for the first quarter of 2019 decreased $15.1 million, or 30.6%, as compared to the prior year period. The decrease compared to the prior year period was primarily due to a decline in box office and theatre food service revenues as a result of reduced attendance. Adjusted EBITDAaL margin, calculated as Adjusted EBITDAaL divided by total revenues, was 9.4%, a decrease of 3.3% from 12.7% in the prior year period due to lower theatre exhibition revenues and higher contributions from lower margin businesses including amusement and leisure.
ADJUSTED FREE CASH FLOW (see Non-GAAP measures section of this news release)
For the first quarter of 2019, adjusted free cash flow per common share of Cineplex was $0.46 as compared to $0.61 in the prior year period. The declared dividends per common share of Cineplex were $0.44 in the first quarter of 2019 and $0.42 in the prior year period. During the 12 months ended March 31, 2019, Cineplex generated adjusted free cash flow per Share of 2.66, compared to $2.31 in the prior 12 month period. Cineplex declared dividends per Share of $1.74 and $1.68, respectively, in each 12 month period. The payout ratios for these periods were 65.2% and 72.6%, 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. As a result of the adoption of IFRS 16, Leases on January 1, 2019, new non-GAAP measures including adjusted EBITDAaL and associated adjusted EBITDAaL margin have been introduced to ensure comparability of periods.
EBITDA is calculated by adding back to net income or net loss, income tax expense, depreciation and amortization expense, and interest income. Adjusted EBITDA excludes the change in fair value of financial instrument, loss on disposal of assets, foreign exchange gain, the equity 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 related to lease obligations. Prior year adjusted EBITDAaL deducts rent previously recognized as a reduction in finance lease obligations, and non-cash rent previously presented as amortization of tenant inducements, rent averaging liabilities, density right and fair-value lease contract liabilities.
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 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 and IMAX product; divided by total paid theatre attendance for the period, less paid theatre attendance for 3D, 4DX, UltraAVX, VIP 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 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, 2019 the impact of the four locations that have been opened or acquired and two locations that have been closed or otherwise disposed of have been excluded, resulting in 161 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.
The Rec Room food cost percentage: Calculated as total The Rec Room food costs divided by total The Rec Room food service revenues for the period.
Non-cash rent
Calculated as the total amortization of tenant inducements, rent averaging liabilities, density rights and fair-value lease contract liabilities. This accounting treatment was applicable under IAS 17 in 2018 but not applicable under IFRS 16 in 2019 and onwards.
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.
By their very nature, forward-looking statements involve inherent risks and uncertainties, including those described in Cineplex's Annual Information Form ("AIF"), Cineplex's management's discussion and analysis ("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, risks generally encountered in the relevant industry, competition, customer, legal, taxation and accounting matters.
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, we undertake 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 MD&A, can be found on SEDAR at www.sedar.com.
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. A leading entertainment and media company, Cineplex welcomes over 70 million guests annually through its circuit of theatres and location based entertainment 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), amusement solutions (Player One Amusement Group) and an online esports platform for competitive and passionate gamers (WorldGaming.com). Additionally, Cineplex operates a location based entertainment business through Canada's newest destination for 'Eats & Entertainment' (The Rec Room), and will also be opening new complexes specially designed for teens and families (Playdium) as well as exciting new sports and entertainment venues across Canada (Topgolf). 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 13,000 people in its offices across Canada and the United States. To learn more visit Cineplex.com or download the Cineplex App.
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:
Thursday May 9, 2019
10:00 am Eastern Time
In order to participate in the conference call please dial 647-484-0475, or from outside Toronto and from the U.S., dial 1-888-394-8218 at least five to ten minutes prior to 10:00 am ET. Please quote the conference confirmation code 6219020 to access the call.
If you cannot participate in a live mode, a replay will be available. Please dial 647-436-0148, or from outside Toronto and from the U.S., dial 1-888-203-1112. The replay passcode is 6219020.
The replay will begin at 1:00 pm ET on Thursday May 9, 2019 and end at 1:00 pm ET on Thursday May 16, 2019.
Note that media will be participating in listen-only mode.
Cineplex Inc.
Interim Condensed Consolidated Balance Sheets
(Unaudited)
(expressed in thousands of Canadian dollars)
March 31, |
December 31, |
||||||
2019 |
2018 |
||||||
Assets |
|||||||
Current assets |
|||||||
Cash and cash equivalents |
$ |
23,877 |
$ |
25,242 |
|||
Trade and other receivables |
90,135 |
165,586 |
|||||
Income taxes receivable |
11,042 |
4,944 |
|||||
Inventories |
29,738 |
30,592 |
|||||
Prepaid expenses and other current assets |
16,132 |
13,862 |
|||||
Fair value of interest rate swap agreements |
1,094 |
1,457 |
|||||
172,018 |
241,683 |
||||||
Non-current assets |
|||||||
Property, equipment and leaseholds |
623,937 |
634,354 |
|||||
Right-of-use assets |
1,307,829 |
— |
|||||
Deferred income taxes |
13,885 |
13,444 |
|||||
Fair value of interest rate swap agreements |
887 |
2,063 |
|||||
Interests in joint ventures and associates |
35,123 |
38,912 |
|||||
Intangible assets |
96,609 |
108,758 |
|||||
Goodwill |
817,045 |
817,235 |
|||||
$ |
3,067,333 |
$ |
1,856,449 |
||||
Cineplex Inc.
Interim Condensed Consolidated Balance Sheets … continued
(Unaudited)
(expressed in thousands of Canadian dollars)
March 31, |
December 31, |
||||||
2019 |
2018 |
||||||
Liabilities |
|||||||
Current liabilities |
|||||||
Accounts payable and accrued liabilities |
$ |
168,540 |
$ |
186,407 |
|||
Share-based compensation |
2,261 |
4,862 |
|||||
Dividends payable |
9,183 |
9,183 |
|||||
Income taxes payable |
1,007 |
12,167 |
|||||
Deferred revenue |
179,324 |
214,016 |
|||||
Lease obligations |
107,705 |
3,058 |
|||||
Fair value of interest rate swap agreements |
1,630 |
1,184 |
|||||
469,650 |
430,877 |
||||||
Non-current liabilities |
|||||||
Share-based compensation |
9,317 |
8,210 |
|||||
Long-term debt |
606,000 |
580,000 |
|||||
Fair value of interest rate swap agreements |
12,989 |
7,674 |
|||||
Lease obligations |
1,304,634 |
10,789 |
|||||
Post-employment benefit obligations |
9,120 |
9,250 |
|||||
Other liabilities |
11,699 |
119,110 |
|||||
Deferred income taxes |
6,616 |
11,528 |
|||||
1,960,375 |
746,561 |
||||||
Total liabilities |
2,430,025 |
1,177,438 |
|||||
Equity |
|||||||
Share capital |
852,379 |
852,379 |
|||||
Deficit |
(214,621) |
(179,721) |
|||||
Hedging reserves and other |
(9,379) |
(3,678) |
|||||
Contributed surplus |
8,204 |
7,815 |
|||||
Cumulative translation adjustment |
787 |
2,301 |
|||||
Total equity attributable to owners of Cineplex |
637,370 |
679,096 |
|||||
Non-controlling interests |
(62) |
(85) |
|||||
Total equity |
637,308 |
679,011 |
|||||
$ |
3,067,333 |
$ |
1,856,449 |
||||
Cineplex Inc.
Interim Condensed Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of Canadian dollars, except per share amounts)
Three months ended March 31, |
|||||||
2019 |
2018 |
||||||
Revenues |
|||||||
Box office |
$ |
156,496 |
$ |
181,380 |
|||
Food service |
103,058 |
116,948 |
|||||
Media |
35,013 |
32,513 |
|||||
Amusement |
58,500 |
49,905 |
|||||
Other |
11,871 |
10,126 |
|||||
364,938 |
390,872 |
||||||
Expenses |
|||||||
Film cost |
78,721 |
95,204 |
|||||
Cost of food service |
23,436 |
24,776 |
|||||
Depreciation - right-of-use assets |
36,462 |
— |
|||||
Depreciation and amortization - other assets |
32,855 |
31,194 |
|||||
Loss on disposal of assets |
477 |
210 |
|||||
Other costs |
185,442 |
217,454 |
|||||
Share of income of joint ventures and associates |
(369) |
(897) |
|||||
Interest expense - lease obligations |
12,220 |
157 |
|||||
Interest expense - other |
5,417 |
6,327 |
|||||
Interest income |
(74) |
(87) |
|||||
Foreign exchange |
541 |
(765) |
|||||
375,128 |
373,573 |
||||||
(Loss) income before income taxes |
(10,190) |
17,299 |
|||||
Provision for income taxes |
|||||||
Current |
408 |
2,035 |
|||||
Deferred |
(3,238) |
38 |
|||||
(2,830) |
2,073 |
||||||
Net (loss) income |
$ |
(7,360) |
$ |
15,226 |
|||
Attributable to: |
|||||||
Owners of Cineplex |
$ |
(7,350) |
$ |
15,226 |
|||
Non-controlling interests |
(10) |
— |
|||||
Net (loss) income |
$ |
(7,360) |
$ |
15,226 |
|||
Basic net (loss) income per share attributable to owners of Cineplex |
$ |
(0.12) |
$ |
0.24 |
|||
Diluted net (loss) income per share attributable to owners of Cineplex |
$ |
(0.12) |
$ |
0.24 |
|||
Cineplex Inc.
Interim Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended March 31, |
|||||||
2019 |
2018 |
||||||
Net (loss) income |
$ |
(7,360) |
$ |
15,226 |
|||
Other comprehensive (loss) income |
|||||||
Items that will be reclassified subsequently to net income: |
|||||||
(Loss) income on hedging instruments |
(7,794) |
776 |
|||||
Associated deferred income taxes recovery (expense) |
2,093 |
(211) |
|||||
Foreign currency translation adjustment |
(1,514) |
1,507 |
|||||
Other comprehensive (loss) income |
(7,215) |
2,072 |
|||||
Comprehensive (loss) income |
$ |
(14,575) |
$ |
17,298 |
|||
Attributable to: |
|||||||
Owners of Cineplex |
$ |
(14,565) |
$ |
17,298 |
|||
Non-controlling interests |
(10) |
— |
|||||
Comprehensive (loss) income |
$ |
(14,575) |
$ |
17,298 |
|||
Cineplex Inc.
Interim Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the three months ended March 31, 2019 and 2018
Share |
Contributed surplus |
Hedging reserves and other |
Cumulative translation adjustment |
Deficit |
Non- |
Total |
|||||||||||||||||||||
January 1, 2019 |
$ |
852,379 |
$ |
7,815 |
$ |
(3,678) |
$ |
2,301 |
$ |
(179,721) |
$ |
(85) |
$ |
679,011 |
|||||||||||||
Net loss |
— |
— |
— |
— |
(7,350) |
(10) |
(7,360) |
||||||||||||||||||||
Other comprehensive loss |
— |
— |
(5,701) |
(1,514) |
— |
— |
(7,215) |
||||||||||||||||||||
Total comprehensive loss |
— |
— |
(5,701) |
(1,514) |
(7,350) |
(10) |
(14,575) |
||||||||||||||||||||
Dividends declared |
— |
— |
— |
— |
(27,550) |
— |
(27,550) |
||||||||||||||||||||
Share option expense |
— |
389 |
— |
— |
— |
— |
389 |
||||||||||||||||||||
TGLP non-controlling interests capital contribution |
— |
— |
— |
— |
— |
33 |
33 |
||||||||||||||||||||
March 31, 2019 |
$ |
852,379 |
$ |
8,204 |
$ |
(9,379) |
$ |
787 |
$ |
(214,621) |
$ |
(62) |
$ |
637,308 |
|||||||||||||
January 1, 2018 |
$ |
856,761 |
$ |
1,647 |
$ |
1,332 |
$ |
(2,817) |
$ |
(148,060) |
$ |
— |
$ |
708,863 |
|||||||||||||
Net income |
— |
— |
— |
— |
15,226 |
— |
15,226 |
||||||||||||||||||||
Other comprehensive income |
— |
— |
565 |
1,507 |
— |
— |
2,072 |
||||||||||||||||||||
Total comprehensive income |
— |
— |
565 |
1,507 |
15,226 |
— |
17,298 |
||||||||||||||||||||
Dividends declared |
— |
— |
— |
— |
(26,599) |
— |
(26,599) |
||||||||||||||||||||
Share option expense |
— |
431 |
— |
— |
— |
— |
431 |
||||||||||||||||||||
March 31, 2018 |
$ |
856,761 |
$ |
2,078 |
$ |
1,897 |
$ |
(1,310) |
$ |
(159,433) |
$ |
— |
$ |
699,993 |
|||||||||||||
Cineplex Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended March 31, |
||||||
2019 |
2018 |
|||||
Cash provided by (used in) |
||||||
Operating activities |
||||||
Net (loss) income |
$ |
(7,360) |
$ |
15,226 |
||
Adjustments to reconcile net (loss) income to net cash provided by operating activities |
||||||
Depreciation and amortization of property, equipment and leaseholds, and intangible assets |
32,855 |
31,194 |
||||
Depreciation of right-of-use assets |
36,462 |
— |
||||
Amortization of tenant inducements, rent averaging liabilities and fair value lease contract liabilities |
— |
(3,085) |
||||
Unrealized foreign exchange |
429 |
— |
||||
Interest rate swap agreements - non-cash interest |
(558) |
120 |
||||
Accretion of convertible debentures |
— |
601 |
||||
Other non-cash interest |
559 |
101 |
||||
Loss on disposal of assets |
477 |
210 |
||||
Deferred income taxes |
(3,238) |
38 |
||||
Non-cash share-based compensation |
389 |
431 |
||||
Net change in interests in joint ventures and associates |
(1,686) |
(1,205) |
||||
Changes in operating assets and liabilities |
2,251 |
919 |
||||
Net cash provided by operating activities |
60,580 |
44,550 |
||||
Investing activities |
||||||
Proceeds from disposal of assets |
— |
182 |
||||
Purchases of property, equipment and leaseholds |
(32,362) |
(25,511) |
||||
Intangible assets additions |
(1,612) |
(1,355) |
||||
Tenant inducements |
615 |
1,876 |
||||
Net cash received from CDCP |
5,474 |
684 |
||||
Net cash used in investing activities |
(27,885) |
(24,124) |
||||
Financing activities |
||||||
Dividends paid |
(27,550) |
(26,599) |
||||
Borrowings under credit facilities, net |
26,000 |
6,000 |
||||
Repayments of lease obligations - principal |
(32,484) |
(832) |
||||
Financing fees |
(243) |
— |
||||
Net cash used in financing activities |
(34,277) |
(21,431) |
||||
Effect of exchange rate differences on cash |
217 |
(54) |
||||
Decrease in cash and cash equivalents |
(1,365) |
(1,059) |
||||
Cash and cash equivalents - Beginning of period |
25,242 |
40,597 |
||||
Cash and cash equivalents - End of period |
$ |
23,877 |
$ |
39,538 |
||
Supplemental information |
||||||
Cash paid for interest - lease obligation |
$ |
11,687 |
$ |
157 |
||
Cash paid for interest - other |
$ |
5,895 |
$ |
6,773 |
||
Cash paid for income taxes, net |
$ |
17,861 |
$ |
7,072 |
||
Cineplex Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDAaL
Three months ended March 31, |
||||||
2019 |
2018 |
|||||
Net (loss) income |
$ |
(7,360) |
$ |
15,226 |
||
Depreciation and amortization - other |
32,855 |
31,194 |
||||
Depreciation - right-of-use assets |
36,462 |
— |
||||
Interest expense - lease obligations |
12,220 |
157 |
||||
Interest expense - other |
5,417 |
6,327 |
||||
Interest income |
(74) |
(87) |
||||
Current income tax expense |
408 |
2,035 |
||||
Deferred income tax (recovery) expense |
(3,238) |
38 |
||||
EBITDA |
$ |
76,690 |
$ |
54,890 |
||
Loss on disposal of assets |
477 |
210 |
||||
CDCP equity income (i) |
(317) |
(818) |
||||
Foreign exchange loss (gain) |
541 |
(765) |
||||
Non-controlling interest |
11 |
— |
||||
Depreciation and amortization - joint ventures and associates (ii) |
29 |
2 |
||||
Taxes and interest of joint ventures and associates (ii) |
11 |
13 |
||||
Adjusted EBITDA |
$ |
77,442 |
$ |
53,532 |
||
Cash rent related to lease obligation (iii) |
(44,171) |
— |
||||
Cash rent paid not pertaining to current period |
1,060 |
— |
||||
Cash rent previously recognized as a finance lease (iv) |
— |
(989) |
||||
Non-cash rent (v) (vi) |
— |
(3,085) |
||||
Adjusted EBITDAaL (vi) (vii) |
34,331 |
49,458 |
||||
(i) |
CDCP equity income 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 and associates with the exception of CDCP (see (i) above). |
(iii) |
Balance of cash rents that have been reallocated to offset the lease obligations. |
(iv) |
Rent payments that were charged to the finance lease obligations in the previous reporting period. See IFRS 16 transition section of the MD&A. |
(v) |
Non-cash rent included in the 2018 balances in the previous reporting period. See IFRS 16 transition section of the MD&A. |
(vi) |
See Non-GAAP measures section of this news release. |
(vii) |
Prior period figures have been revised to conform to current period presentation. See IFRS 16 transition section of the MD&A. |
Cineplex Inc.
Interim 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, |
||||||
2019 |
2018 |
|||||
Cash provided by operating activities (i) |
$ |
60,580 |
$ |
44,550 |
||
Less: Total capital expenditures net of proceeds on sale of assets |
(32,362) |
(25,329) |
||||
Standardized free cash flow |
28,218 |
19,221 |
||||
Add/(Less): |
||||||
Changes in operating assets and liabilities (ii) |
(2,251) |
(919) |
||||
Changes in operating assets and liabilities of joint ventures and associates (ii) |
1,317 |
308 |
||||
Principal component of lease obligations |
(32,484) |
(832) |
||||
Principal portion of cash rent paid not pertaining to current period |
1,037 |
— |
||||
Growth capital expenditures and other (iii) |
27,692 |
20,042 |
||||
Share of income of joint ventures and associates, net of non-cash depreciation |
92 |
94 |
||||
Non-controlling interest |
11 |
— |
||||
Net cash received from CDCP (iv) |
5,474 |
684 |
||||
Adjusted free cash flow |
$ |
29,106 |
$ |
38,598 |
||
Average number of Shares outstanding |
63,333,238 |
63,330,446 |
||||
Adjusted free cash flow per Share |
$ |
0.460 |
$ |
0.609 |
||
Dividends declared |
$ |
0.435 |
$ |
0.420 |
||
(i) |
Prior period figures have been revised to conform to current period presentation. See IFRS 16 transition section of the MD&A for further details. |
(ii) |
Changes in operating assets and liabilities are not considered a source or use of adjusted free cash flow. |
(iii) |
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 fund Board approved projects. |
(iv) |
Excludes the share of income of CDCP, as CDCP is a limited-life financing vehicle funded by virtual print fees collected from distributors. |
SOURCE Cineplex
Gord Nelson, Chief Financial Officer, (416) 323-6602
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