Cineplex Inc. ("Cineplex") (TSX:CGX) today released its financial results for
the first quarter of 2012.
First Quarter Results
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Period over
2012 2011 Period Change (i)
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Total Revenues $ 248.2 million $ 221.4 million 12.1%
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Attendance 17.1 million 15.3 million 12.1%
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Other Revenues $ 21.7 million $ 26.3 million (17.3)%
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Net Income
(Loss) $ 15.1 million $ (0.8) million NM
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Adjusted EBITDA $ 41.1 million $ 31.2 million 31.7%
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Adjusted EBITDA
Margin 16.6% 14.1% 2.5%
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Adjusted Free
Cash Flow per
Share $ 0.480 $ 0.392 22.4%
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(i) Period over Period change calculated based on thousands of dollars
except percentage and per share values.
"We are pleased to report our strongest first quarter adjusted EBITDA results
ever," said Ellis Jacob, President and CEO, Cineplex Entertainment. "A strong
film slate including titles such as The Hunger Games and Dr. Seuss' The Lorax
contributed to a 12.1% increase in both attendance and total revenue. Cost
controls mitigated a decline in media revenues to deliver a 31.7% increase in
adjusted EBITDA and a significant increase in net income. We are also pleased to
announce a dividend increase to $1.35 per share on an annual basis from the
current $1.29 per share. This increase will be effective with the May 2012
dividend which will be paid in June 2012. This increase represents our second
dividend increase since converting to a corporation on January 1, 2011."
"During the first quarter, we also continued to enhance the quality of our
circuit through expanded premium offerings and digital projection deployment. We
added two UltraAVX auditoriums, 16 RealD 3D screens and converted 219 projection
systems to digital resulting in an 82% digital penetration as of March 31, 2012.
We also continued to expand the SCENE loyalty program, with total membership as
of March 31, 2012 of 3.5 million, and advance our interactive and e-commerce
initiatives."
EBITDA and adjusted free cash flow are not measures recognized by generally
accepted accounting principles ("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, income tax expense, amortization and
interest expense net of interest income. Adjusted EBITDA is calculated by
adjusting EBITDA for gains and losses on disposal of assets and the share of
income or loss of the Canadian Digital Cinema Partnership ("CDCP"). 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. Management uses adjusted EBITDA and adjusted free cash flow to evaluate
performance primarily because of the significant effect certain unusual or
non-recurring charges and other items have on EBITDA from period to period. For
a detailed reconciliation of net income to EBITDA and adjusted EBITDA 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.
KEY DEVELOPMENTS IN THE FIRST QUARTER OF 2012
The following describes certain key business initiatives undertaken during the
first quarter of 2012 in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported a 15.0% increase in box office revenues during the quarter, due
to a 12.1% increase in attendance, primarily due to The Hunger Games
which had the highest-grossing first-quarter weekend of all-time and the
third-largest opening weekend of all-time.
-- BPP increased 2.5% from $8.51 in the first quarter of 2011 to $8.72 in
the current year period.
-- Installed 219 digital projectors and 16 RealD 3D systems during the
first quarter of 2012, bringing the circuit totals to 1,110 digital
projectors and 412 RealD 3D systems in 122 theatres.
-- Installed seven digital IMAX projectors into existing IMAX locations
during the period.
-- Installed D-BOX MFX seats in three Cineplex theatres during the quarter.
At March 31, 2012, 14 of Cineplex's theatres offer D-BOX MFX seats.
MERCHANDISING
-- Reported record first quarter CPP of $4.50 during first quarter of 2012,
up $0.23 or 5.4% over the first quarter of 2011.
-- Entered into a joint venture agreement with Starburst Coin Machines Inc.
("SCM") which saw New Way Sales ("NWS") acquire SCM's games business in
exchange for cash and a 50% interest in NWS. The joint venture was named
Cineplex Starburst Inc. ("CSI"). CSI supplies and services all of the
games in Cineplex's circuit, while also supplying equipment to third
party arcades, amusement centres, bowling alleys, amusement parks and
theatre circuits, in addition to owning and operating Playdium, a family
entertainment centre located in Mississauga, Ontario.
MEDIA
-- Media revenues decreased 29.3% compared to the strong comparator in the
prior year, which was a record first quarter for media revenues.
-- Contributing to this decrease was reduced spending from the government
and telecommunications sectors. Government spending accounted for 25% of
total spending in the first quarter of 2011 compared to 10% in the
current year period.
-- In the 2012 Spring study by the Print Measurement Bureau, Cineplex
Magazine and Le magazine Cineplex earned outstanding readership numbers,
with Cineplex Magazine ranking as the 7th most-read magazine in Canada,
with a circulation of over 700,000 copies per issue, and Le magazine
Cineplex reaching circulation of over 200,000 copies per issue.
ALTERNATIVE PROGRAMMING
-- The highly successful Metropolitan Opera series continued its strong
performance in Cineplex's theatres.
-- Scotiabank Theatre Toronto hosted actor and director Kevin Smith for his
Kevin Smith: Live from Behind show, which was also broadcast live to
select theatres across the Cineplex circuit and sub-distributed by
Cineplex to other circuits across Canada and the United States.
-- Other alternative programming during first quarter of 2012 included the
Classic Film Series, the Great Digital Film Festival, the Family
Favourites film series, and live events such as World Wrestling
Entertainment and concert performances.
INTERACTIVE
-- Cineplex.com registered all-time high results in the first quarter of
2012 with page views and visits up 76.9% and 33.3%, respectively, over
the prior year period to 95.5 million page views and 16.7 million visits
during the quarter.
-- Cineplex Mobile is ranked by Comscore as the 8th most popular mobile app
in Canada and the first in entertainment listings with 1.7 million
unique visitors, reaching 8.3% of mobile subscribers in Canada. At March
31, 2012, the app had been downloaded 3.1 million times and recorded
55.1 million app sessions.
-- Site optimization continues to be a focus for both cineplex.com and the
Cineplex Store, utilizing cloud technology to enhance performance.
-- Continued the development of the UltraViolet cloud-based digital locker
that is anticipated to be integrated into the Cineplex Store.
LOYALTY
-- Membership in the SCENE loyalty program increased by approximately 0.2
million members during the first quarter of 2012 to approximately 3.5
million at March 31, 2012.
-- SCENE partnered with Cara Foods, Telus, Sirius Satellite Radio and
Samsung during the first quarter of 2012 for various programs.
OPERATING RESULTS FOR THE FIRST QUARTER OF 2012
Total revenues
Total revenues for the three months ended March 31, 2012 increased $26.8 million
(12.1%) to $248.2 million as compared to the prior year period. A discussion of
the factors affecting the changes in box office, concession and other revenues
for the periods is provided on the following pages.
Box office revenues
The following table highlights the movement in box office revenues, attendance
and BPP for the quarter (in thousands of Canadian dollars, except attendance
reported in thousands of patrons, and per patron amounts, unless otherwise
noted):
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Box office revenues First Quarter
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2012 2011 Change
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Box office revenues $ 149,413 $ 129,956 15.0%
Attendance 17,127 15,272 12.1%
Box office revenue per patron 8.72 8.51 2.5%
Canadian industry revenues (i) 13.8%
Same store box office revenues 148,868 129,178 15.2%
Same store attendance 17,072 15,164 12.6%
% Total box from 3D, UltraAVX, VIP
& IMAX 27.1% 23.0% 4.1%
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(i) The Motion Picture Theatre Associations of Canada reported that the
Canadian exhibition industry reported a box office increase of 12.4% for the
period from December 30, 2011 to March 29, 2012 as compared to the period
from December 31, 2010 to March 31, 2011. On a basis consistent with
Cineplex's calendar reporting period (January 1 to March 31), the Canadian
industry box office is estimated to be an increase of 13.8%.
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Box office continuity First Quarter
Box Office Attendance
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2011 as reported $ 129,956 15,272
Same store attendance change 16,251 1,908
Impact of same store BPP change 3,440 -
New and acquired theatres 544 55
Disposed and closed theatres (778) (108)
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2011 as reported $ 149,413 17,127
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First Quarter
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First Quarter 2012 First Quarter 2011 Top
Top Cineplex Films IMAX 3D % Box Cineplex Films IMAX 3D % Box
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1 The Hunger Games X 8.3% 1 The King's Speech 7.0%
2 Dr. Seuss' The
Lorax X X 7.3% 2 The Green Hornet X 5.1%
3 Mission: Impossible
- Ghost Protocol X 5.1% 3 Just Go With It 4.8%
4 The Vow 4.7% 4 Gnomeo and Juliet X 4.2%
5 Journey 2: The
Mysterious Island X X 4.6% 5 Rango X 4.0%
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Box office revenues increased $19.5 million, or 15.0%, to $149.4 million during
the first quarter of 2012, compared to $130.0 million recorded in the same
period in 2011. This increase was primarily due to a 12.1% increase in
attendance, as well as a 2.5% increase in BPP. Film product during the current
year period was stronger than the prior year period, with The Hunger Games
recording the highest-ever box office revenues for a first quarter release and
the third-largest opening weekend of all-time. Attendance in the first quarter
of 2012 also benefited from the first week of January being a school holiday
whereas the first week of 2011 was not.
BPP increased $0.21, from $8.51 in the first quarter of 2011 to $8.72 in the
same period in 2012 mainly due to premium-priced product (3D, UltraAVX and IMAX)
accounting for 27.1% of box office revenues in the current quarter, up from
23.0% in the prior year period. The increase in the percentage of box office
revenues from premium-priced product was due to the impact of UltraAVX, VIP and
IMAX installations, the screen counts of which have increased since the first
quarter of 2011.
Cineplex's investment in premium-priced formats, including 3D, UltraAVX, IMAX
and VIP, over the last four years has positioned it to take advantage of the
price premiums offered on these formats, which has contributed to Cineplex's BPP
growth in the current period compared to the prior year period.
Concession revenues
The following table highlights the movement in concession revenues, attendance
and CPP for the quarter (in thousands of Canadian dollars, except attendance and
same store attendance reported in thousands of patrons, and per patron amounts):
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Concession revenues First Quarter
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2012 2011 Change
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Concession revenues $ 77,037 $ 65,154 18.2%
Attendance 17,127 15,272 12.1%
Concession revenue per patron 4.50 4.27 5.4%
Same store concession revenues 76,750 64,868 18.3%
Same store attendance 17,072 15,164 12.6%
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Concession revenue continuity First Quarter
Concession Attendance
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2011 as reported $ 65,154 15,272
Same store attendance change 8,161 1,908
Impact of same store CPP change 3,721 -
New and acquired theatres 287 55
Disposed and closed theatres (286) (108)
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2012 as reported $ 77,037 17,127
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First Quarter
Concession revenues increased 18.2% as compared to the prior year quarter, due
to the 12.1% increase in attendance during the period and the 5.4% increase in
CPP. CPP increased from $4.27 in the first quarter of 2011 to $4.50 in the same
period in 2012, and represents a first quarter record for Cineplex. Cineplex
believes a focus on revised concession offerings through its RBO rationalization
program and better communication with customers through the expansion of a
digital menu board program have both contributed to the higher CPP in the
current period compared to the prior year period.
While the 10% SCENE discount and SCENE points issued on concession combo
purchases have a negative impact on CPP, Cineplex believes that this program
drives incremental visits and concession purchases, resulting in higher overall
concession revenues.
Other revenues
The following table highlights the movement in media, games and other revenues
for the quarter (in thousands of Canadian dollars):
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Other revenues First Quarter
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2012 2011 Change
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Media $ 12,686 $ 17,939 -29.3%
Games 1,922 1,235 55.6%
Other 7,129 7,108 0.3%
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Total $ 21,737 $ 26,282 -17.3%
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Other revenues decreased 17.3% from $26.3 million in the first quarter of 2011
to $21.7 million in the same period in 2012. This decrease was due to lower
media revenues, which during the first quarter of 2012 were $12.7 million, down
$5.3 million, or 29.3%, when compared to the prior year period. The prior year
period is a strong comparator for media, as it was a first quarter record for
media revenues. The decrease was due to lower full motion and digital pre-show
revenues ($5.2 million) compared to the record-setting first quarter of 2011, as
a result of decreased spending by the government and telecommunications sectors
and the impact of the continued economic uncertainty during the period.
The games revenue increase is due to the acquisition of NWS in May 2011 and
therefore is not included in the prior year comparative. The first quarter of
2012 includes one month of revenues for NWS prior to the creation of CSI ($0.4
million). The February and March results for CSI are included in the 'Share of
loss of joint ventures' line in the Statements of Operations. The addition of
three new XSCAPE entertainment centres since the first quarter of 2011 also
contributed to the increase in games revenues.
Film cost
The following table highlights the movement in film cost and Film Cost
Percentage for the quarter (in thousands of Canadian dollars, except film cost
percentage):
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Film cost First Quarter
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2012 2011 Change
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Film cost $ 76,707 $ 65,544 17.0%
Film cost percentage 51.3% 50.4% 0.9%
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First Quarter
Film cost varies primarily with box office revenue, and can vary from quarter to
quarter based on the relative strength of the titles exhibited during the
period. The increase in the first quarter of 2012 compared to the prior year
period was due to the increase in box office revenue and the 0.9% increase in
film cost percentage. The increase in film cost percentage is primarily due to
the settlement rate on certain strong performing titles during the first quarter
of 2012 being higher than the average film settlement rate.
Cost of concessions
The following table highlights the movement in concession cost and concession
cost as a percentage of concession revenues ("concession cost percentage") for
the quarter (in thousands of Canadian dollars, except concession cost percentage
and concession margin per patron):
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Cost of concessions First Quarter
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2012 2011 Change
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Concession cost $ 15,770 $ 13,648 15.5%
Concession cost percentage 20.5% 20.9% -0.4%
Concession margin per
patron $ 3.58 $ 3.37 6.2%
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First Quarter
Cost of concessions varies primarily with theatre attendance as well as the
quantity and mix of concession offerings sold. The increase in concession cost
as compared to the prior year period was due to the 18.2% increase in concession
revenues. The concession cost percentage of 20.5% was in line with the prior
year period. The concession margin per patron increased from $3.37 in the first
quarter of 2011 to $3.58 in the same period in 2012, reflecting the impact of
the higher CPP during the period.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization
expenses during the quarter (in thousands of Canadian dollars):
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Amortization expenses First Quarter
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2012 2011 Change
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Amortization of property,
equipment and leaseholds $ 14,515 $ 15,124 -4.0%
Amortization of intangible
assets and other 1,939 2,248 -13.7%
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Amortization expenses as
reported $ 16,454 $ 17,372 -5.3%
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The first quarter decrease in amortization of property, equipment and leaseholds
of $0.6 million primarily relates to the transfer of digital projection
equipment to CDCP in June 2011 resulting in lower asset values to depreciate.
Lower depreciation relating to the declining 35 millimeter projector base due to
the circuit's conversion to digital also contributed to the decrease in
amortization of property, equipment and leaseholds.
(Gain) loss on disposal of assets
The following table shows the movement in the (gain) loss on disposal of assets
during the quarter (in thousands of Canadian dollars):
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(Gain) loss on disposal of
assets First Quarter
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2012 2011 Change
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(Gain) loss on disposal of
assets $ (55) $ 537 -110.2%
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First Quarter
The gain or loss on disposal of assets represents the gain or loss recorded on
certain assets that were sold or otherwise disposed. For the first quarter of
2012, Cineplex recorded a gain of $0.1 million on the disposal of assets,
compared to a loss of $0.5 million in the prior year period.
Other costs
Other costs include three main sub-categories of expenses, including theatre
occupancy expenses, which capture the rent and associated occupancy costs for
Cineplex's various operations; other operating expenses, which include the costs
related to running Cineplex's theatres and ancillary businesses; and general and
administrative expenses, which includes costs related to managing Cineplex's
operations, including the 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 Canadian dollars):
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Other costs First Quarter
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2012 2011 Change
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Theatre occupancy expenses $ 41,708 $ 41,541 0.4%
Other operating expenses 57,866 56,232 2.9%
General and administrative
expenses 15,572 15,703 -0.8%
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Total other costs $ 115,146 $ 113,476 1.5%
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Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for
the quarter (in thousands of Canadian dollars):
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Theatre occupancy expenses First Quarter
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2012 2011 Change
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Rent $ 27,758 $ 27,576 0.7%
Other occupancy 14,208 14,399 -1.3%
One-time items (i) (258) (434) -40.6%
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Total $ 41,708 $ 41,541 0.4%
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(i) 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.
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Theatre occupancy continuity First Quarter
Occupancy
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2011 as reported $ 41,541
Impact of new theatres 163
Impact of disposed theatres (181)
Same store rent change 246
Non-recurring items 118
Other (179)
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2012 as reported $ 41,708
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First Quarter
Theatre occupancy expenses increased $0.2 million during the first quarter of
2012 compared to the prior year period. This increase was primarily due to
higher same-store rent costs, including common-area maintenance and real estate
taxes.
Other operating expenses
The following table highlights the movement in other operating expenses during
the quarter (in thousands of Canadian dollars):
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Other operating expenses First Quarter
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2012 2011 Change
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Other operating expenses $ 57,866 $ 56,232 2.9%
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Other operating continuity First Quarter
Other Operating
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2011 as reported $ 56,232
Impact of new theatres 154
Impact of disposed theatres (362)
Same store payroll change 1,847
Marketing change 814
Media (1,127)
New Way Sales 299
Other 9
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2012 as reported $ 57,866
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First Quarter
Other operating expenses increased $1.6 million during the first quarter of 2012
compared to the prior year period primarily due to higher business volumes in
the 2012 period. The higher business volumes resulted in higher payroll costs
($1.8 million), with total theatre payroll accounting for 46.3% of total
operating expenses during the first quarter of 2012 as compared to 44.5% for the
same period one year earlier. Marketing expenses increased $0.8 million compared
to the prior year period due to enhanced marketing programs supporting new and
existing initiatives. One month of operations for NWS are included in other
operating expenses in 2012 but not in 2011, resulting in a $0.3 million
increase. These increases were partially offset by lower Media expenses ($1.1
million) due to the reduced Media activities during the quarter.
General and administrative expenses
The following table highlights the movement in general and administrative
("G&A") expenses during the quarter, including share and unit based compensation
costs, and G&A net of these costs (in thousands of Canadian dollars):
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G&A expenses First Quarter
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2012 2011 Change
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G&A excluding LTIP and
Option Plan expense $ 12,342 $ 10,536 17.1%
LTIP 2,585 2,578 0.3%
Option plan 645 2,589 -75.1%
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G&A expenses as reported $ 15,572 $ 15,703 -0.8%
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First Quarter
G&A expenses decreased $0.1 million during the first quarter of 2012 compared to
the prior year period, primarily due to a $1.9 million decrease in the expense
for the option plan. This decrease was partially offset by higher professional
fees ($0.6 million) relating to the creation of CSI and an internal corporate
reorganization effected during the first quarter of 2012, and salary and general
cost increases ($0.7 million).
Effective January 1, 2012, the Board of Directors of Cineplex invoked Cineplex's
right to substitute a cashless exercise for any requested exercise of options
for cash, in accordance with the terms of the option plan. As a result of the
change in administrative policy, the options may only be equity-settled, and are
considered equity, not liabilities. The expense amount for options is determined
at the time of their issuance, recognized over the vesting period of the
options. Existing options at the time of the change in administrative policy
have their remaining expense determined at the time of the change in
administrative policy, recognized over the remaining vesting periods.
Share of income of joint ventures
Cineplex's joint ventures in 2012 include its share of one theatre in Quebec,
one IMAX screen in Ontario, its 50% interest in SCENE LP, its 78.2% interest in
CDCP (formed in June 2011) and its 50% interest in CSI (formed January 31,
2012). For the 2011 period, Cineplex's joint ventures included one theatre in
Quebec, one IMAX screen in Ontario and its interest in SCENE LP. The following
table highlights the movement in the share of income of joint ventures during
the quarter (in thousands of Canadian dollars):
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Share of (income) loss of
joint ventures First Quarter
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2012 2011 Change
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Share of CDCP $ (75) $ - NM
Share of CSI (226) - NM
Share of SCENE 50 (2,531) NM
Share of other joint
ventures (26) 58 NM
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Total income of joint
ventures $ (277) $ (2,473) -88.8%
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First Quarter
The decrease in income of joint ventures during the period was primarily due to
the SCENE loyalty program. SCENE's results in the first quarter of 2011 include
income relating to a change in accounting estimate for breakage resulting in a
program-to-date adjustment to its outstanding points liability. Two of the joint
ventures created subsequent to the first quarter of 2011 also contributed to the
movement (CSI - income of $0.2 million and CDCP - income of $0.1 million).
EBITDA and adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for the three months
ended March 31, 2012 as compared to the three months ended March 31, 2011
(expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
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EBITDA First Quarter
--------------------------------------------------
2012 2011 Change
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EBITDA $ 41,269 $ 30,701 34.4%
Adjusted EBITDA $ 41,139 $ 31,238 31.7%
Adjusted EBITDA margin 16.6% 14.1% 2.5%
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Adjusted EBITDA for the first quarter of 2012 increased $9.9 million, or 31.7%,
as compared to the prior year period. This represents Cineplex's highest-ever
first quarter adjusted EBITDA, exceeding the $34.7 million recorded in the first
quarter of 2010 which featured Avatar, the highest grossing film of all-time.
The increase over the prior year period was primarily due to the higher
exhibition and concession revenues recorded in the period. Adjusted EBITDA
margin, calculated as adjusted EBITDA divided by total revenues, was 16.6%, up
2.5% from 14.1% in the prior year period.
Adjusted Free Cash Flow
For the first quarter of 2012, adjusted free cash flow per common share of
Cineplex was $0.480 as compared to $0.392 in the prior year period. The declared
dividends per common share of Cineplex were $0.323 in the first quarter of 2012
and $0.315 in the prior year period. The payout ratios for these periods were
67% and 80%, respectively.
This news release contains "forward-looking statements" within the meaning of
applicable securities laws, such as statements concerning anticipated future
events, results, circumstances, performance or expectations that are not
historical facts. These statements are not guarantees of future performance and
are subject to numerous risks and uncertainties, including those described in
our Annual Information Form and in this news release. Those risks and
uncertainties include adverse factors generally encountered in the film
exhibition industry such as poor film product and unauthorized copying; the
risks associated with national and world events, including war, terrorism,
international conflicts, natural disasters, extreme weather conditions,
infectious diseases, changes in income tax legislation; and general economic
conditions. Many of these risks and uncertainties can affect our actual results
and could cause our actual results to differ materially from those expressed or
implied in any forward-looking statement made by us or on our behalf. All
forward-looking statements in this news release are qualified by these
cautionary statements. These statements are made as of the date of this news
release and, except as required by applicable law, we undertake no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise. Additionally, we undertake no
obligation to comment on analyses, expectations or statements made by third
parties in respect of Cineplex Inc. or Cineplex Entertainment Limited
Partnership, their financial or operating results or their securities.
About Cineplex Inc.
Cineplex is the largest motion picture exhibitor in Canada and owns, leases or
has a joint-venture interest in 130 theatres with 1,359 screens serving
approximately 66 million guests annually. Headquartered in Toronto, Canada,
Cineplex operates theatres from British Columbia to Quebec and is the exclusive
provider of UltraAVX and the largest exhibitor of digital 3D and IMAX projection
technologies in the country. Proudly Canadian and with a workforce of
approximately 10,000 employees, the company operates the following top tier
brands: Cineplex Odeon, Galaxy, Famous Players, Colossus, Coliseum, SilverCity,
Cinema City and Scotiabank Theatres. Cineplex shares trade on the Toronto Stock
Exchange (TSX) under the symbol "CGX". For more information, visit
www.cineplex.com.
Further information can be found in the disclosure documents filed by Cineplex
with the securities regulatory authorities, available at www.sedar.com.
You are cordially invited to participate in a teleconference call with the
management of Cineplex (TSX:CGX) to review our quarterly results. Ellis Jacob,
President and Chief Executive Officer and Gord Nelson, Chief Financial Officer,
will host the call. The teleconference call is scheduled for:
Thursday, May 10, 2012
10:00 a.m. Eastern Time
In order to participate in the conference call, please dial 416-644-3417 or
outside of Toronto dial 1-877-974-0446 at least five to ten minutes prior to
10:00 a.m. Eastern Time. Please quote the conference ID 4534140 to access the
call.
-- If you cannot participate in the live mode, a replay will be available.
Please dial 416-640-1917 or 1-877-289- 8525 and enter code 4534140#. The
replay will begin at 12:00 p.m. Eastern Time on Thursday, May 10, 2012
and end at 11:59 p.m. Eastern Time on Thursday, May 17, 2012.
-- Note that media will be participating in the call in listen-only mode.
-- Thank you in advance for your interest and participation.
Cineplex Inc.
Interim Consolidated Balance Sheets
(Unaudited)
(expressed in thousands of Canadian dollars)
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March 31, December 31,
2012 2011
Assets
Current assets
Cash and cash equivalents $ 9,259 $ 48,992
Trade and other receivables 30,037 67,185
Inventories 4,092 4,118
Prepaid expenses and other current
assets 7,224 3,727
--------------------- ------------------
50,612 124,022
Non-current assets
Property, equipment and leaseholds 388,798 389,532
Deferred income taxes 10,906 12,052
Fair value of interest rate
contracts 1,010 -
Interests in joint ventures 39,278 26,163
Intangible assets 82,440 84,379
Goodwill 608,929 608,929
--------------------- ------------------
$ 1,181,973 $ 1,245,077
--------------------- ------------------
--------------------- ------------------
Liabilities
Current liabilities
Accounts payable and accrued
expenses $ 80,939 $ 112,285
Share-based compensation - 1,331
Dividends payable 6,558 6,285
Income taxes payable 5,050 17,485
Deferred revenue 62,373 83,907
Finance lease obligations 2,104 2,411
Fair value of interest rate swap
agreements 638 565
Convertible debentures 33,698 76,864
--------------------- ------------------
191,360 301,133
--------------------- ------------------
Non-current liabilities
Share-based compensation 6,623 9,466
Long-term debt 167,676 167,531
Fair value of interest rate swap
agreements - 1,199
Finance lease obligations 22,229 26,474
Post-employment benefit
obligations 5,686 5,688
Other liabilities 113,001 103,727
Deficiency interest in joint
venture 4,962 8,250
--------------------- ------------------
320,177 322,335
--------------------- ------------------
Total liabilities 511,537 623,468
--------------------- ------------------
Equity
Share capital 813,569 764,801
Deficit (145,351) (140,469)
Accumulated other comprehensive
loss (309) (2,723)
Contributed surplus 2,527 -
--------------------- ------------------
670,436 621,609
--------------------- ------------------
$ 1,181,973 $ 1,245,077
--------------------- ------------------
--------------------- ------------------
Cineplex Inc.
Interim Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months Three months
ended March ended March
31, 2012 31, 2011
Revenues
Box office $ 149,413 $ 129,956
Concessions 77,037 65,154
Other 21,736 26,282
---------------------- ----------------------
248,186 221,392
---------------------- ----------------------
Expenses
Film cost 76,707 65,544
Cost of concessions 15,770 13,648
Depreciation and amortization 16,454 17,372
(Gain) loss on disposal of
assets (55) 537
Other costs 115,146 113,476
Share of income of joint
ventures (277) (2,473)
Interest expense 4,384 5,699
Interest income (80) (232)
---------------------- ----------------------
228,049 213,571
---------------------- ----------------------
Income before income taxes 20,137 7,821
---------------------- ----------------------
Provision for (recovery of)
income taxes
Current 5,642 -
Deferred (613) 8,669
---------------------- ----------------------
5,029 8,669
---------------------- ----------------------
Net income (loss) $ 15,108 $ (848)
---------------------- ----------------------
---------------------- ----------------------
Cineplex Inc.
Interim Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Three Three
months months
ended ended
March 31, March 31,
2012 2011
Net income (loss) $ 15,108 $ (848)
Other comprehensive income (loss)
Income on hedging instruments 3,324 919
Associated deferred income taxes
expense (910) (2,073)
---------------------- ----------------
Other comprehensive income (loss) 2,414 (1,154)
---------------------- ----------------
Comprehensive income (loss) $ 17,522 $ (2,002)
---------------------- --------------------
---------------------- --------------------
Cineplex Inc.
Interim Consolidated Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the three months ended March 31, 2012 and 2011
----------------------------------------------------------------------------
Unit Share Contributed
capital capital surplus
Balance - January 1, 2012 $ - $ 764,801 $ -
Share option liabilities
reclassified - - 6,850
Net income - - -
Other comprehensive income - - -
Dividends declared - - -
Long-term incentive plan
obligation - (5,575) -
Long-term incentive plan
shares - 6,471 -
Share option expense - - 646
Issuance of shares upon
exercise of options - 4,969 (4,969)
Issuance of shares on
conversion of debentures - 43,338 -
Issuance of shares for cash - 501 -
Shares repurchased and
cancelled - (936) -
------------------------------------------------
Balance - March 31, 2012 $ - $ 813,569 $ 2,527
------------------------------------------------
------------------------------------------------
Balance - January 1, 2011 $ 710,121 $ - $ 1,407
Effect of corporate
conversion (710,121) 744,760 (1,407)
Net loss - - -
Other comprehensive loss - - -
Long-term incentive plan
obligation - (4,306) -
Dividends declared - - -
Long-term incentive plan
shares - 1,888 -
Issuance of shares on
conversion of debentures - 1,823 -
---------------------------------------------
Balance - March 31, 2011 $ - $ 744,165 $ -
------------------------------------------------
------------------------------------------------
Accumulated
other
comprehensive
loss Deficit Total
Balance - January 1, 2012 $ (2,723) $ (140,469) $ 621,609
Share option liabilities
reclassified - - 6,850
Net income - 15,108 15,108
Other comprehensive income 2,414 - 2,414
Dividends declared - (19,140) (19,140)
Long-term incentive plan
obligation - - (5,575)
Long-term incentive plan
shares - - 6,471
Share option expense - - 646
Issuance of shares upon
exercise of options - - -
Issuance of shares on
conversion of debentures - - 43,338
Issuance of shares for cash - - 501
Shares repurchased and
cancelled - (850) (1,786)
------------------------------------------------
Balance - March 31, 2012 $ (309) $ (145,351) $ 670,436
------------------------------------------------
------------------------------------------------
Balance - January 1, 2011 $ (3,534) $ (113,120) $ 594,874
Effect of corporate
conversion - - 33,232
Net loss - (848) (848)
Other comprehensive loss (1,154) - (1,154)
Long-term incentive plan
obligation - - (4,306)
Dividends declared - (18,111) (18,111)
Long-term incentive plan
shares - - 1,888
Issuance of shares on
conversion of debentures - - 1,823
------------------------------------------------
Balance - March 31, 2011 $ (4,688) $ (132,079) $ 607,398
------------------------------------------------
------------------------------------------------
Cineplex Inc.
Interim Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months Three months
ended March ended March
31, 2012 31, 2011
Cash provided by (used in)
Operating activities
Net income (loss) $ 15,108 $ (848)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities
Depreciation and amortization of
property, equipment and
leaseholds, deferred charges and
intangible assets 16,454 17,372
Amortization of tenant
inducements, rent averaging
liabilities and fair value lease
contract liabilities (935) (1,050)
Accretion of debt issuance costs
and other non-cash interest 140 233
(Gain) loss on disposal of assets (55) 537
Deferred income taxes (613) 8,669
Interest rate swap agreements -
non-cash interest 916 (96)
Non-cash share-based compensation 682 218
Accretion of convertible
debentures 172 310
Net change in interests in joint
ventures 2,665 (2,468)
Tenant inducements 3,297 2,855
Changes in operating assets and
liabilities (36,449) (17,879)
------------------------------------
Net cash provided by operating
activities 1,382 7,853
------------------------------------
Investing activities
Proceeds from sale of assets 1,120 7
Purchases of property, equipment and
leaseholds (13,899) (12,421)
Acquisition and formation of businesses,
net of cash acquired (7,399) -
Additional equity funding of CDCP (244) -
------------------------------------
Net cash used in investing activities (20,422) (12,414)
------------------------------------
Financing activities
Dividends paid (18,867) (12,070)
Borrowings under credit facility 30,000 15,000
Repayment of credit facility (30,000) (15,000)
Payments under finance leases (541) (545)
Proceeds from issuance of shares 501 -
Acquisition of long-term incentive plan
shares - (9,793)
Purchase of shares for cancellation (1,786) -
------------------------------------
Net cash used in financing activities (20,693) (22,408)
------------------------------------
Decrease in cash and cash equivalents
during the period (39,733) (26,969)
Cash and cash equivalents - Beginning of
period 48,992 85,343
------------------------------------
Cash and cash equivalents - End of
period $ 9,259 $ 58,374
------------------------------------
------------------------------------
Supplemental information
Cash paid for interest $ 1,944 $ 3,764
Cash paid for income taxes $ 18,120 $ -
Cineplex Inc.
Interim Consolidated Supplemental Information (Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDA
----------------------------------------------------------------------------
Three months ended March 31,
2012 2011
---------------------- ----------------------
Net income (loss) $ 15,108 $ (848)
Depreciation and amortization
(i) 16,828 17,413
Interest expense 4,384 5,699
Interest income (80) (232)
Current income tax expense 5,642 -
Deferred income tax (recovery)
expense (613) 8,669
---------------------- ----------------------
EBITDA $ 41,269 $ 30,701
(Gain) loss on disposal of
assets (55) 537
CDCP equity income (ii) (75) -
---------------------- ----------------------
Adjusted EBITDA $ 41,139 $ 31,238
----------------------------------------------------------------------------
(i) Includes the depreciation and amortization incurred by the joint
ventures with the exception of CDCP (see (ii) below)
(2012 - $374 thousand and 2011 - $41 thousand).
(ii) 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.
Components of Other Costs
----------------------------------------------------------------------------
Other costs Three months ended March 31,
--------------------------------------
2012 2011
----------------------------------------------------------------------------
Theatre occupancy expenses $ 41,708 $ 41,541
Other operating expenses 57,866 56,232
General and administrative expenses 15,572 15,703
--------------------------------------
Total other costs $ 115,146 $ 113,476
----------------------------------------------------------------------------
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,
2012 2011
-------------------- --------------------
Cash provided by operating
activities $ 1,382 $ 7,853
Less: Total capital expenditures (12,779) (12,414)
-------------------- --------------------
Standardized free cash flow (11,397) (4,561)
Add/(Less):
Changes in operating assets and
liabilities (i) 36,449 17,879
Changes in operating assets and
liabilities of joint ventures (i) (2,942) (5)
Tenant inducements (ii) (3,297) (2,855)
Principal component of financing
lease obligations (541) (545)
New build capital expenditures and
other (iii) 9,660 10,090
Share of income of joint ventures,
net of non-cash depreciation (iv) 576 2,514
Cash invested in CDCP (iv) (244) -
-------------------- --------------------
Adjusted free cash flow $ 28,264 $ 22,517
-------------------- --------------------
-------------------- --------------------
Average number of Shares
outstanding 58,847,728 57,468,588
Adjusted free cash flow per Share $ 0.480 $ 0.392
----------------------------------------------------------------------------
(i) Changes in operating assets and liabilities are not considered a
source or use of adjusted free cash flow
(ii) Tenant inducements received are for the purpose of funding new theatre
capital expenditures and are not considered a source of adjusted free
cash flow.
(iii) New build capital expenditures and other represent expenditures on
Board approved projects as well as any expenditures for digital
equipment that was contributed to CDCP, exclude maintenance capital
expenditures, and are net of proceeds on asset sales. The Revolving
Facility is available to Cineplex to fund Board approved projects.
(iv) 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.
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