Cineplex Reports Second Quarter 2024 Results and Announces Intention To Launch Normal Course Issuer Bid

TORONTO, Aug. 9, 2024 /CNW/ - (TSX: CGX) - Today, Cineplex Inc. ("Cineplex" or the "Company") released its financial results for the three and six months ended June 30, 2024. Unless otherwise specified, all amounts contained in this news release are in Canadian dollars.

Q2 2024 Highlights:

• Entertained 8.7 million moviegoers and generated total revenues of $277.3 million
• Delivered BPP of $13.11 and CPP of $9.56, both all-time quarterly records
• Cinema media revenue increased 4.0% over the prior year despite lower attendance
• Increased Digital Place-Based Media revenue by 28.1% primarily due to the addition of Cadillac Fairview to the digital-out-of-home (DOOH) network
• Location-based Entertainment (LBE) revenue increased to a second quarter record of $29.4 million

"The end of the second quarter was a turning point for our industry," said Ellis Jacob, President and CEO, Cineplex.

"As anticipated, the exhibition industry faced challenges in the first half of the year due to the prolonged impact of the Hollywood strikes, but with the two consecutive box office months of June and July over 90% of pre-pandemic levels, it is clear  these challenges are firmly behind us. We have increased confidence in the exhibition business with the ongoing ramp-up of film supply and our ability to generate strong free cash flow. Reaffirming our commitment to creating long-term shareholder value, I am pleased to announce that our board of directors has approved a normal course issuer bid to acquire up to 6,318,346 common shares of Cineplex over the next twelve months.

"We plan to accelerate our growth in the back half of 2024 and beyond, with proven strategies that continue to set us apart from our peers. We are excited about the opening of two Rec Room locations in Montreal and Vancouver, as well as a Playdium in Toronto. Also, we are opening a new theatre at the Royalmount shopping complex in Montreal. These venues are expected to open in the fourth quarter of 2024."

"We remain optimistic about the future. Our market leadership, diversified businesses, innovative strategies, and robust consumer data uniquely position us to capitalize on the tremendous film slate ahead and drive industry-leading results."

Second Quarter Financial Results 

Financial highlights	Second Quarter			Year to Date
(in thousands of dollars, except theatre attendance in thousands of patrons and per share and per patron amounts)	2024	2023	Change (ii)	2024	2023	Change (ii)
		(i)			(i)
Total revenues	$  277,336	$ 367,921	-24.6 %	$  572,095	$  659,276	-13.2 %
Theatre attendance	8,731	12,806	-31.8 %	18,550	22,573	-17.8 %
Net (loss) income from continuing operations	$   (21,312)	$ 158,863	NM	$   (84,282)	$  125,686	NM
Net (loss) income from discontinued operations, including gain on disposition	$        (127)	$   17,682	NM	$    68,003	$    20,686	228.7 %
Net (loss) income (iii)	$   (21,439)	$ 176,545	NM	$   (16,279)	$  146,372	NM
Net (loss) income as a percentage of sales from continuing operations (iii)	-7.7 %	43.2 %	NM	-14.7 %	19.1 %	NM
Cash provided by (used in) continuing operating activities	$         997	$   82,722	-98.8 %	$    36,951	$    75,657	-51.2 %
Box office revenues per patron ("BPP") (iv)	$      13.11	$     12.84	2.1 %	$      12.91	$      12.75	1.3 %
Concession revenues per patron ("CPP") (iv)	$        9.56	$       9.21	3.8 %	$        9.24	$        9.06	2.0 %
Adjusted EBITDA (iv)	$    42,472	$   87,893	-51.7 %	$    89,207	$  140,612	-36.6 %
Adjusted EBITDAaL (iv)	$         925	$   47,194	-98.0 %	$      5,510	$    58,571	-90.6 %
Adjusted EBITDAaL from discontinued operations (iv)	$           —	$   13,064	-100.0 %	$         508	$    21,930	-97.7 %
Adjusted EBITDAaL including discontinued operations (iv)	$         925	$   60,258	-98.5 %	$      6,018	$    80,501	-92.5 %
Adjusted EBITDAaL margin from continuing operations (iv)	0.3 %	12.8 %	-12.5 %	1.0 %	8.9 %	-7.9 %
Adjusted free cash flow (iv)	$   (13,049)	$   30,183	NM	$   (19,054)	$    24,971	NM
Adjusted free cash flow per share (iv)	$     (0.205)	$     0.476	NM	$     (0.299)	$      0.394	NM
(Loss) earnings per share from continuing operations - basic (iii)	$       (0.33)	$       2.51	NM	$       (1.32)	$        1.98	NM
Earnings per share from discontinued operations - basic	$           —	$       0.28	NM	$        1.07	$        0.33	224.2 %
(Loss) earnings per share - basic  (iii)	$       (0.33)	$       2.79	NM	$       (0.25)	$        2.31	NM
(Loss) earnings per share from continuing operations - diluted (iii)	$       (0.33)	$       1.80	NM	$       (1.32)	$        1.51	NM
Earnings per share from discontinued operations - diluted	$           —	$       0.19	-100.0 %	$        1.07	$        0.23	365.2 %
(Loss) earnings per share - diluted (iii)	$       (0.33)	$       1.99	NM	$       (0.25)	$        1.74	NM

(i) The results of discontinued operations (P1AG) have been excluded from prior period figures as applicable per IFRS 5 to conform to the current period
presentation. All amounts are from continuing operations unless otherwise noted.

(ii) Period over period change calculated based on thousands of dollars except percentage and per share values. Changes in percentage amounts are calculated as 2024 value less 2023 value.

(iii) 2024 includes the loss on the 2024 Refinancing of $2.0 million during the second quarter and $56.0 million for year to date, and expenses related to other transactions or litigation outside the normal course of business in the amount of $0.5 million during the second quarter (2023 - $0.2 million) and $2.4 million (2023 - $1.1 million) for year to date.

(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 other financial measures reported by Cineplex are defined in the 'Non-GAAP and Other Financial Measures' section at the end of this news release.

Second Quarter and July Box Office Results

The following table compares 2024 monthly box office revenues to 2019 and 2023 monthly box office revenues:

Month	2019 Box office (i)	2023 Box office (i)	2024 Box office (i)	2024 as a percentage of 2019	2024 as a percentage of 2023
April	$63,759	$61,278	$29,183	46 %	48 %
May	$68,697	$47,514	$33,936	49 %	71 %
June	$56,918	$55,701	$51,359	90 %	92 %
Q2 Total	$189,374	$164,493	$114,478	60 %	70 %
July	$76,935	$86,388	$72,468	94 %	84 %
(i) Amounts are in thousands of dollars.

Normal Course Issuer Bid

Cineplex announces that, subject to the approval of the Toronto Stock Exchange (the "TSX"), its board of directors has approved a normal course issuer bid ("NCIB") for its common shares (the "Common Shares"), as opportunities arise from time to time.

Under the NCIB, Cineplex proposes to purchase for cancellation up to a maximum of 6,318,346 Common Shares, or approximately 10% of its public float of 63,183,455 Common Shares as of August 8, 2024, over the 12 month period following TSX approval of the NCIB. As at August 8, 2024, there were 63,684,281 Common Shares issued and outstanding. Purchases under the NCIB will be made through the facilities of the TSX or through alternative Canadian trading systems and in accordance with applicable regulatory requirements at a price per Common Share equal to the market price at the time of acquisition.

Cineplex intends to enter into an automatic share purchase plan with a designated broker that contains specified parameters regarding how its Common Shares can be purchased under the NCIB during times when the Company would ordinarily not be permitted to purchase Common Shares due to regulatory restrictions or self-imposed blackout periods.

Cineplex is commencing the NCIB because the board of directors believes that the market price of the Common Shares does not reflect the intrinsic value of the Company and the repurchase of shares would be in the best interests of the Company and its shareholders and would represent an attractive and appropriate use of available funds. Decisions regarding the amount and timing of future purchases of Common Shares will be based on market conditions, share price and other factors.

The NCIB remains subject to the approval of the TSX and will begin on the date that is two trading days after the receipt of TSX approval. A further news release with additional details of the NCIB will be issued upon approval of the NCIB by the TSX.

With the proposed  NCIB, Cineplex sees tremendous value in opportunistically repurchasing its Common Shares in an accretive manner with excess free cash flow, while balancing its target leverage ratio and high return-on-investment initiatives.

KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2024

The following describes certain key business initiatives undertaken and results achieved during 2024 in each of Cineplex's core business areas:

FILM ENTERTAINMENT AND CONTENT

Theatre Exhibition

• Reported second quarter box office revenues of $114.5 million, a decrease of $50.0 million or 30.4% from $164.5 million, due to a 31.8% decrease in theatre attendance as a result of the disruption of the release schedule from the writers' and actors' strikes in 2023. Box office revenues benefited in June from the success of the highly anticipated film, Inside Out 2, released during the quarter.
• Reported second quarter BPP of $13.11, an all-time quarterly record, $0.27 or 2.1% higher than the $12.84 reported during the prior year.
• Closed two locations in the second quarter at the end of their lease terms as part of Cineplex's portfolio optimization and rationalization strategy.
• Enhanced the theatre circuit with an IMAX screen at Cineplex Odeon South Edmonton Cinemas in Edmonton, Alberta.

Theatre Food Service

• Reported second quarter theatre food service revenues of $83.5 million, a decrease of $34.5 million or 29.2% compared to the prior year, primarily due to a 31.8% decrease in theatre attendance.
• Reported a second quarter CPP of $9.56, an all-time quarterly record, an increase of $0.35 or 3.8% compared to the prior year, primarily due to an increase in average spend.
• Enhanced guest experience through the use of mobile food and beverage pre-ordering which completed national roll out to 146 locations in the first quarter. Early results indicate higher transaction sales size compared to guests ordering at point of sale.

Alternative Programming and Distribution

• As part of the theatrical distribution partnership with Lionsgate, Cineplex Pictures (Cineplex's distribution business) distributed Strangers Chapter 1 during the second quarter.
• Continued a leadership position in alternative programming, with 9.2% of second quarter box office revenues coming from international films, compared to those films having a 3.1% North-American share. Strong performing titles, Jatt & Juliet 3 (Punjabi), Shinda Shinda No Papa (Punjabi) and Shayar (Punjabi), of which Cineplex represented over 75% of total North American box office.
• Event Cinema programming consisted of a variety of successful initiatives including matches from the ICC Men's T20 Cricket World Cup 2024, music/concert programming featuring GHOST, SUGA from BTS, and Pearl Jam, Metropolitan opera show-stoppers such as Madama Butterfly and La Rondine, anime events featuring Mobile Suit Gundam: SEED Freedom, and popular classics including the Lord of the Rings trilogy, all of the Spider-Man films and a full Stanley Kubrick career-retrospective.

Digital Commerce

• Curated Cineplex Store collections for Asian History Month and Pride Month to elevate Asian stories and 2SLGBTQ2IA+ voices.

MEDIA

• Reported second quarter media revenues of $29.1 million, an increase of $3.0 million or 11.6% compared to the prior year.
• Continued leveraging expertise in data and analytics to drive revenues.

Cinema Media

• Reported second quarter cinema media revenues of $18.5 million, a increase of $0.7 million or 4.0% over the prior year, despite lower attendance.
• Reported a second quarter cinema media per patron (CMPP) of $2.12, an increase of $0.73 or 52.5% over the prior year (see Section 'Non-GAAP and other financial measures').

Digital Place-Based Media

• Reported second quarter revenues of $10.6 million, an increase of $2.3 million or 28.1% over the prior year, primarily due to the agreement with Cadillac Fairview that began in the first quarter.
• Non-project revenues accounted for $7.0 million, an increase of $1.4 million or 25.1% during the second quarter, compared to the prior year of $5.6 million, which primarily consists of media advertising, sales of software and IT support.
• In addition to the previously announced operating and sales agreement to sell digital and static media and sponsorships in 18 shopping centres, signed an agreement with Cadillac Fairview to sell, install and manage directory and media assets at 14 properties across Canada. This refresh of network assets is planned to start in the third quarter of 2024.

LOCATION-BASED ENTERTAINMENT

• Reported second quarter record revenues of $29.4 million, an increase of $0.3 million or 1.0% compared to the prior year.
• Reported second quarter adjusted store level EBITDAaL of $4.8 million, a decrease of $1.6 million or 25.0% compared to the prior year, primarily due to an increase in operating expenses.

LOYALTY

• Membership in the Scene+ loyalty program was over 15 million members as at June 30, 2024.

CORPORATE 

• Celebrated Pride Month by hosting external in-person and virtual Pride-related events designed to uplift and empower the 2SLGBTQIA+ community and its allies. Cineplex employees donated to Rainbow Railroad, a global not-for-profit organization that helps at-risk 2SLGBTQIA+ people reach safety worldwide.
•  During the second quarter, sold underutilized land adjacent to a theatre for cash proceeds of $11.9 million, resulting in a gain of $8.7 million.

NON-GAAP AND OTHER FINANCIAL MEASURES

National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure ("NI 52-112") imposes obligations regarding disclosure of non-GAAP financial measures, non-GAAP ratios, and other financial measures. Cineplex reports on certain non-GAAP measures, non-GAAP ratios, supplementary financial measures and total segment measures that are used by management to evaluate Cineplex's performance. The following measures included in this news release do not have a standardized meaning under GAAP and may not be comparable to similar measures provided by other issuers. Cineplex includes these measures because management believes that they assist investors in assessing financial performance. These non-GAAP and other financial measures are used throughout this news release and are defined below.

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is defined in 52-112 as a financial measure disclosed that (a) depicts the historical or expected future financial performance, financial position or cash flow of an entity, (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity, (c) is not disclosed in the financial statements of the entity, and (d) is not a ratio, fraction, percentage or similar representation.

NON-GAAP RATIOS

A non-GAAP ratio is defined in NI 52-112 as a financial measure disclosed that (a) is in the form of a ratio, fraction, percentage or similar representation, (b) has a non-GAAP financial measure as one or more of its components, and (c) is not disclosed in the financial statements.

Below are non-GAAP financial measures or non-GAAP ratios for continuing operations that are reported by Cineplex.

EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDAaL

Management defines EBITDA as earnings before interest income and expense, income taxes and depreciation and amortization expense. Adjusted EBITDA excludes the change in fair value of financial instrument, loss (gain) on disposal of assets, foreign exchange, the equity income of CDCP, and impairment, 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.

Subsequent to the adoption of IFRS 16, Leases, effective January 1, 2019, the calculation of EBITDA no longer includes a charge for amounts paid or payable with respect to leased property and equipment. Given the majority of Cineplex's businesses are carried on in leased premises, Cineplex introduced the measure of adjusted EBITDAaL which includes a deduction for cash rent paid/payable related to lease obligations. 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.

EBITDA, adjusted EBITDA and adjusted EBITDAaL are non-GAAP measures generally used as an indicator of financial performance and they should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Cineplex's EBITDA, adjusted EBITDA and adjusted EBITDAaL may differ from similar calculations as reported by other entities and accordingly may not be comparable to EBITDA, adjusted EBITDA or adjusted EBITDAaL reported by other entities.

Adjusted Store Level EBITDAaL Metrics

Cineplex reviews and reports adjusted EBITDAaL at the location level for LBE which is calculated as total LBE revenues from all locations less total LBE operating expenses, which excludes pre-opening costs and overhead relating to the management of LBE.

Adjusted Store Level EBITDAaL Margin

Calculated as adjusted store level EBITDAaL divided by total revenues for LBE for the period.

SUPPLEMENTARY FINANCIAL MEASURES

Supplementary financial measures are financial measures that are not (a) presented in the financial statements and (b) is, or is intended to be, disclosed periodically to depict the historical or expected future financial performance, financial position or cash flow, that is not a non-GAAP financial measure or a non-GAAP ratio as defined in the instrument. Below are supplementary financial measures that Cineplex uses to depict its financial performance, financial position or cash flows.

Earnings (loss) per Share Metrics
Cineplex has presented basic and diluted earnings (loss) per share net of this item to provide a more comparable loss per share metric between the current periods and prior year periods. In the non-GAAP and other financial measures, earnings is defined as net income or net loss attributable to Cineplex excluding the change in fair value of financial instruments.

Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office revenue, theatre food service revenue and cinema media revenue such as BPP, CPP, BPP excluding premium priced product, concession margin per patron, and CMPP, as these are key measures used by investors to value and assess Cineplex's performance, and are widely used in the theatre exhibition industry. Cineplex's management 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.

CMPP: Calculated as total cinema media revenues divided by total paid 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 June 30, 2024 the impact of one location that was opened or acquired and two locations that were closed or otherwise disposed of have been excluded, resulting in 156 theatres being included in the same theatre metrics. For the six months ended June 30, 2024 the impact of one location that was opened or acquired and three locations that were closed or otherwise disposed of have been excluded, resulting in 156 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.

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 and goals, and the 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 for the year ended December 31, 2023 ("Annual MD&A") and in this news release, which is incorporated herein by reference and available on SEDAR+ (www.sedarplus.ca). These 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, including: Cineplex's expectations with respect to liquidity and capital expenditures; 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; the approval by the TSX of the NCIB and information concerning future purchases of Common Shares under the NCIB; and 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 Annual 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.sedarplus.ca.

You are cordially invited to participate in a conference call with the management of Cineplex (TSX: CGX) to review our second quarter results. Ellis Jacob, President and Chief Executive Officer and Gord Nelson, Chief Financial Officer, will host the call scheduled for:

Cineplex Inc. Q2 2024 Earnings Webcast:

Date:	Friday, August 9, 2024
Time:	10:00 a.m. Eastern Daylight Time
Audio Webcast:	Audience URL https://events.q4inc.com/attendee/676853945
	Pre-registration available.
	An archive of the webcast will be available at https://corp.cineplex.com/investors after the webcast for a limited time.

Please note, analysts who cover the Company, should use the dial-in option to participate in the live question period:
1-226-828-7575 (Local) or 1-833-950-0062 (Canada Toll-free), access code 218046.

All attendees should join the event 5-10 minutes prior to the scheduled start time. 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. Cineplex offers a unique escape from the everyday to millions of guests through its circuit of 169 movie theatres and location-based entertainment venue. In addition to being Canada's largest and most innovative film exhibitor, the company operates Canada's favourite destination for 'Eats & Entertainment' (The Rec Room), complexes specially designed for teens and families (Playdium), and an entertainment concept that brings movies, amusement gaming, dining, and live performances together under one roof (Cineplex Junxion). It also operates successful businesses in cinema media (Cineplex Media), alternative programming (Cineplex Events), motion picture distribution (Cineplex Pictures), digital commerce (CineplexStore.com), and digital place-based media (Cineplex Digital Media or CDM). Providing even more value for its guests, Cineplex is a partner in Scene+, Canada's largest entertainment and lifestyle loyalty program.

Proudly recognized as having one of the country's Most Admired Corporate Cultures, Cineplex employs over 10,000 people in its offices and venues across Canada. To learn more, visit Cineplex.com.

SOURCE Cineplex

For further information: Investor Relations contact: Mahsa Rejali, Vice President, Corporate Development & Investor Relations, [email protected]; Media Relations contact: Michelle Saba, Vice President, Communications, [email protected]