Cineplex Inc. Reports Record Second Quarter Results
Tweet
Share
E-mailGet Alerts CGX Hot Sheet
Join SI Premium – FREE
TORONTO, ONTARIO -- (Marketwired) -- 08/13/15 -- Cineplex Inc. ("Cineplex") (TSX: CGX) today released its financial results for the three and six months ended June 30, 2015.
Second Quarter Results
----------------------------------------------------------------------------
Period
over
Period
Change
2015 2014 (i)
----------------------------------------------------------------------------
Total revenues(i) $ 345.5 million $ 323.5 million 6.8%
----------------------------------------------------------------------------
Attendance(i) 19.7 million 19.3 million 2.0%
----------------------------------------------------------------------------
Net income $ 25.5 million $ 23.2 million 9.8%
----------------------------------------------------------------------------
Box office revenues per patron
("BPP") (ii)(i) $ 9.45 $ 9.40 0.5%
----------------------------------------------------------------------------
Concession revenues per patron
("CPP") (ii)(i) $ 5.50 $ 5.08 8.3%
----------------------------------------------------------------------------
Adjusted EBITDA (ii)(i) $ 65.3 million $ 59.4 million 9.9%
----------------------------------------------------------------------------
Adjusted EBITDA margin (ii) 18.9 % 18.4 % 0.5%
----------------------------------------------------------------------------
Adjusted free cash flow (ii) $ 41.0 million $ 48.7 million -15.8%
----------------------------------------------------------------------------
Adjusted free cash flow per common
share of Cineplex ("Share") (ii) $ 0.650 $ 0.773 -15.9%
----------------------------------------------------------------------------
Earnings per Share ("EPS") - basic $ 0.40 $ 0.37 8.1%
----------------------------------------------------------------------------
EPS - diluted $ 0.40 $ 0.37 8.1%
----------------------------------------------------------------------------
Year to Date Results
----------------------------------------------------------------------------
Period
over
Period
Change
2015 2014 (i)
----------------------------------------------------------------------------
Total revenues $ 635.3 million $ 603.5 million 5.3%
----------------------------------------------------------------------------
Attendance 37.2 million 36.6 million 1.8%
----------------------------------------------------------------------------
Net income $ 36.0 million $ 28.3 million 27.3%
----------------------------------------------------------------------------
Box office revenues per patron
("BPP") (ii) $ 9.19 $ 9.23 -0.4%
----------------------------------------------------------------------------
Concession revenues per patron
("CPP") (ii) $ 5.35 $ 5.06 5.7%
----------------------------------------------------------------------------
Adjusted EBITDA (ii) $ 105.6 million $ 90.3 million 16.9%
----------------------------------------------------------------------------
Adjusted EBITDA margin (ii) 16.6 % 15.0 % 1.6%
----------------------------------------------------------------------------
Adjusted free cash flow (ii) $ 68.5 million $ 67.1 million 2.1%
----------------------------------------------------------------------------
Adjusted free cash flow per common
share of Cineplex ("Share") (ii) $ 1.086 $ 1.066 1.9%
----------------------------------------------------------------------------
Earnings per Share ("EPS") - basic $ 0.57 $ 0.45 26.7%
----------------------------------------------------------------------------
EPS - diluted $ 0.57 $ 0.45 26.7%
----------------------------------------------------------------------------
i. Period over period change calculated based on thousands of dollars
except percentage and per share values. Changes in percentage amounts
are calculated as 2015 value less 2014 value.
ii. Adjusted EBITDA, adjusted EBITDA 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.
(i) Represents an all-time quarterly record for Cineplex.
"We had a record breaking second quarter with new all-time records set for total revenue, up 6.8% to $345.5 million, and adjusted EBITDA up 9.9% to $65.3 million," said Ellis Jacob, President and CEO, Cineplex Entertainment.
"All revenue sources increased in the second quarter. Media revenue increased 13.0% to $35.0 million, primarily due to robust show time advertising sales. Food service revenue continued to be strong, increasing 10.6% to $108.4 million. New all-time quarterly records were also established for BPP of $9.45 and CPP of $5.50. We also increased our monthly dividend by 4% to $0.13 per share or $1.56 on an annual basis," said Jacob.
"Overall, it was a successful quarter. Our top three films -- The Avengers: Age of Ultron, Jurassic World and Furious 7 -- represented 43.5% of box office compared to the same period last year where the top three films represented 29.2%. These three films rank in the top 10 grossing films of all-time. Looking ahead, I believe the film slate for the second half of 2015 looks strong and I am excited about the strategic opportunities ahead which will continue to diversify our business and help us achieve meaningful growth."
KEY DEVELOPMENTS IN THE SECOND QUARTER OF 2015
During the second quarter of 2015, the board of directors of Cineplex (the "Board") announced a monthly dividend increase of 4.0% to $0.130 per Share ($1.56 on an annual basis) up from $0.125 per Share ($1.50 on an annual basis) effective with the May 2015 dividend.
The following describes certain key business initiatives undertaken and results achieved during the second quarter in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported second quarter box office revenues of $186.2 million, an
increase of $4.8 million from the $181.4 million reported in the prior
year period due primarily to the success of the top three films in the
period, The Avengers: Age of Ultron, Jurassic World and Furious 7.
-- BPP was $9.45 for the period, a $0.05 (0.5%) increase from the prior
year period and an all-time quarterly record for Cineplex.
-- Opened Cineplex Cinemas Markham and VIP in Markham, Ontario, a 13 screen
theatre featuring an IMAX auditorium and three VIP auditoriums.
-- During the period, acquired a single screen IMAX theatre in Quebec City,
Quebec, which is one of the largest IMAX screens in the world.
FOOD SERVICE
-- Reported second quarter food service revenues of $108.4 million, an
increase of $10.4 million over the $98.0 million reported in the prior
year period.
-- CPP was $5.50 for the period, an all-time quarterly record for Cineplex,
and $0.42 (8.3%) higher than the $5.08 reported in the prior year
period.
-- Launched the 2015 edition of Cineplex's popular 'Peel and Pop' program
where the purchase of qualifying movie snacks can result in instant
prizes or SCENE points for guests.
-- Continued the expansion of Cineplex's Outtakes, Poptopia and YoYo's
Yogurt Cafe ("YoYo's") brands during the period. As at June 30, 2015,
there were 93 Outtakes locations, 21 Poptopia locations and 63 YoYo's
locations across Cineplex's circuit.
AMUSEMENT GAMING
-- Opened a new XSCAPE location as part of the new Cineplex Cinemas Markham
and VIP theatre, bringing the total number of XSCAPE locations across
the circuit to 20.
MEDIA
-- Total media revenues increased $4.0 million, or 13.0%, in the second
quarter compared to the prior year period, with Cineplex Media
increasing $3.3 million (15.2%) and Cineplex Digital Media revenues
increasing $0.7 million (7.6%).
-- Cineplex Media revenues increased due to robust showtime advertising
sales, with strong results seen in the automotive and telecommunications
categories.
-- Cineplex Digital Media revenues increased due to higher advertising
revenues including the TimsTV and Oxford shopping mall networks.
-- Installed Interactive Media Zones in the lobbies of select theatres
across the circuit. As at June 30, 2015, Cineplex has 38 Interactive
Media Zones across its circuit.
-- Cineplex Digital Networks ("CDN") was named Overall Content Creator of
the Year at the 2015 International Design Signage Awards.
ALTERNATIVE PROGRAMMING
-- Alternative programming in the second quarter of 2015 included live and
encore performances from the Metropolitan Opera: Live in HD series,
ethnic film programming, In The Gallery presentations and encore
presentations of The National Theatre Live.
-- Partnered with HBO Canada to show the Season 5 finale of Game of Thrones
live in participating theatres across Canada.
-- Announced Front Row Centre Events' eSports Cinema Events series, which
will feature live broadcasts, a variety of gaming events and special
content for cinemas that will give gamers the most exclusive access to
the eSports phenomenon, with the first event scheduled for the third
quarter of 2015.
DIGITAL COMMERCE
-- Cineplex.com registered a 20% increase in unique visitors and a 22% increase in visits during the second quarter of 2015 compared to the prior year period. -- As at June 30, 2015, the Cineplex app had been downloaded 12.2 million times and recorded over 667 million app sessions, ranking it as the 12th most popular mobile brand in Canada with 17% penetration of the Canadian mobile market. -- Continued to enhance the Cineplex Store technology platform, releasing support for Chromecast in both iOS and Android apps, as well as supporting scaled SuperTicket offerings.
LOYALTY
-- Membership in the SCENE loyalty program increased by 0.2 million members
in the period, reaching a membership of 6.8 million at June 30, 2015.
OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015
Total revenues
Total revenues for the three months ended June 30, 2015 increased $22.0 million (6.8%) to $345.5 million as compared to the prior year period. Total revenues for the six months ended June 30, 2015 increased $31.8 million (5.3%) to $635.3 million as compared to the prior year period. A discussion of the factors affecting the changes in box office, food service, media and other revenues for the period is provided below.
Non-GAAP measures discussed throughout this MD&A, including adjusted EBITDA, adjusted free cash flow, attendance, BPP, premium priced product, same store metrics, CPP, film cost percentage, concession cost percentage and concession margin per patron are defined and discussed in the non-GAAP measures section at the end of this news release.
Box office revenues
The following table highlights the movement in box office revenues, attendance and BPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance reported in thousands of patrons, and per patron amounts):
----------------------------------------------------------------------------
Box office revenues Second Quarter Year to Date
--------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Box office revenues $186,202 $181,419 2.6% $342,243 $337,644 1.4%
Attendance (i) 19,695 19,301 2.0% 37,233 36,573 1.8%
Box office revenue
per patron (i) $ 9.45 $ 9.40 0.5% $ 9.19 $ 9.23 -0.4%
BPP excluding
premium priced
product (i) $ 8.35 $ 8.46 -1.3% $ 8.34 $ 8.34 -%
Canadian industry
revenues (ii) 2.6% 0.5%
Same store box
office revenues (i) $180,735 $179,303 0.8% $334,165 $334,009 -%
Same store
attendance (i) 19,156 19,073 0.4% 36,396 36,171 0.6%
% Total box from
premium priced
product (i) 46.3% 41.8% 4.5% 36.7% 40.1% -3.4%
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
(ii) The Movie Theatre Association of Canada ("MTAC") reported that the
Canadian exhibition industry reported a box office revenue increase of 2.8%
for the period from April 3, 2015 to July 2, 2015 as compared to the period
from April 4, 2014 to July 3, 2014. On a basis consistent with Cineplex's
calendar reporting period (April 1 to June 30), the Canadian industry box
office revenue change is estimated to be an increase of 2.6%. MTAC reported
that the Canadian exhibition industry reported a box office revenue
increase of 1.2% for the period from January 2, 2015 to July 2, 2015 as
compared to the period from January 3, 2014 to July 3, 2014. On a basis
consistent with Cineplex's calendar reporting period (January 1 to June
30), the Canadian industry box office revenues are estimated to be an
increase of 0.5%.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Box office continuity Second Quarter Year to Date
Box Office Attendance Box Office Attendance
----------------------------------------------------------------------------
2014 as reported $ 181,419 19,301 $ 337,644 36,573
Same store attendance change 776 82 2,070 224
Impact of same store BPP
change 657 - (1,914) -
New and acquired theatres (i) 4,427 435 6,205 634
Disposed and closed theatres
(i) (1,077) (123) (1,762) (198)
----------------------------------------------------------------------------
2015 as reported $ 186,202 19,695 $ 342,243 37,233
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the prior
year comparative period.
----------------------------------------------------------------------------
Second Quarter
----------------------------------------------------------------------------
Second Quarter 2015 Top Second Quarter 2014 Top
Cineplex Films 3D % Box Cineplex Films 3D % Box
----------------------------------------------------------------------------
1 The Avengers: Age of X 15.9% 1 Captain America: The X 11.2%
Ultron Winter Soldier
2 Jurassic World X 15.6% 2 X-Men: Days of Future X 9.4%
Past
3 Furious 7 12.0% 3 The Amazing Spider-Man 2 X 8.6%
4 Mad Max: Fury Road X 7.2% 4 Godzilla X 7.5%
5 Inside Out X 5.3% 5 Maleficent X 6.1%
----------------------------------------------------------------------------
Box office revenues increased $4.8 million, or 2.6%, to $186.2 million during the second quarter of 2015, compared to $181.4 million recorded in the same period in 2014. The increase was due to the success of the top three films released in the period which accounted for 43.5% of Cineplex box office in the period. These three films all outperformed the top film from the prior year period and contributed to the 2.0% increase in attendance in the period.
BPP for the three months ended June 30, 2015 was $9.45, a $0.05 increase from the prior year period and an all-time quarterly record for Cineplex. This increase was mainly due to box office revenues from premium product accounting for 46.3% of box office revenues in the current period, up from 41.8% in the prior year period.
Year to Date
----------------------------------------------------------------------------
Year to Date 2015 Top Year to Date 2014 Top
Cineplex Films 3D % Box Cineplex Films 3D % Box
----------------------------------------------------------------------------
1 The Avengers: Age of X 8.7% 1 The Lego Movie X 6.1%
Ultron
2 Jurassic World X 8.5% 2 Captain America: The X 5.6%
Winter Soldier
3 Furious 7 6.5% 3 X-Men: Days of Future Past X 4.7%
4 Mad Max: Fury Road X 3.9% 4 The Amazing Spider-Man 2 X 4.3%
5 American Sniper 3.8% 5 Godzilla X 3.7%
----------------------------------------------------------------------------
Box office revenues for the six months ended June 30, 2015 were $342.2 million, an increase of $4.6 million or 1.4% over the prior year due to the 1.8% increase in attendance more than offsetting the impact of the lower BPP in the current year period compared to the 2014 period. The attendance and box office revenues increases in the period were due to the strong performance of the film product in the second quarter of 2015, with the top three films in the first half of 2015 all outperforming the top film from the prior year period. These increases were partially offset by the impact of extreme weather conditions in Atlantic Canada in the first quarter negatively impacting theatre attendance in the Atlantic Provinces in 2015.
Cineplex's BPP for the period decreased $0.04, or 0.4%, from $9.23 in the prior year period to $9.19 in the current period. This decrease was primarily due to the decrease in revenues from 3D product as only three of the top five films in the 2015 period were screened in 3D compared to all of the top five in 3D in the prior year period. Premium priced offerings accounted for 36.7% of Cineplex's box office revenues in the six months ended June 30, 2015, compared to 40.1% in the prior year period.
Food service revenues
The following table highlights the movement in food service revenues, attendance and CPP for the quarter and the year to date (in thousands of Canadian dollars, except attendance and same store attendance reported in thousands of patrons, and per patron amounts):
----------------------------------------------------------------------------
Food service revenues Second Quarter Year to Date
------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Food service revenues $108,397 $ 98,024 10.6% $199,182 $185,167 7.6%
Attendance (i) 19,695 19,301 2.0% 37,233 36,573 1.8%
CPP (i) $ 5.50 $ 5.08 8.3% $ 5.35 $ 5.06 5.7%
Same store food
service revenues (i) $104,613 $ 96,898 8.0% $193,595 $183,328 5.6%
Same store attendance
(i) 19,156 19,073 0.4% 36,396 36,171 0.6%
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Food service revenue
continuity Second Quarter Year to Date
------------------------------------------------
Food Food
Service Attendance Service Attendance
----------------------------------------------------------------------------
2014 as reported $ 98,024 19,301 $ 185,167 36,573
Same store attendance change 419 82 1,137 224
Impact of same store CPP
change 7,296 - 9,130 -
New and acquired theatres
(i) 3,108 435 4,588 634
Disposed and closed theatres
(i) (450) (123) (840) (198)
----------------------------------------------------------------------------
2015 as reported $ 108,397 19,695 $ 199,182 37,233
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release. Represents theatres
opened, acquired, disposed or closed subsequent to the start of the prior
year comparative period.
----------------------------------------------------------------------------
Second Quarter
Food service revenues are comprised primarily of concession revenues, which includes food sales at theatre locations as well as non-theatre locations. Food service revenues increased $10.4 million, or 10.6% as compared to the prior year period primarily due to the 8.3% CPP increase and the 2.0% increase in attendance. CPP of $5.50 is an all-time quarterly record for Cineplex. Expanded offerings outside of core food service products, including offerings at Cineplex's VIP Cinemas, have resulted in higher average transaction values, resulting in the record CPP in the period.
Year to Date
Food service revenues increased $14.0 million, or 7.6% as compared to the prior year, due to the 5.7% increase in CPP and the 1.8% increase in attendance. The CPP of $5.35 in the current period is the highest CPP Cineplex has reported through the first six months of a year.
While the 10% SCENE discount and SCENE points issued on food service combo purchases reduce individual transaction values which impacts CPP, Cineplex believes that this program drives incremental visits and food service purchases, resulting in higher overall food service revenues.
Media revenues
The following table highlights the movement in media revenues for the quarter and the year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Media revenues Second Quarter Year to Date
------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Cineplex Media $25,323 $21,981 15.2% $45,334 $38,401 18.1%
Cineplex Digital Media 9,697 9,009 7.6% 18,758 16,944 10.7%
----------------------------------------------------------------------------
Total media revenues $35,020 $30,990 13.0% $64,092 $55,345 15.8%
----------------------------------------------------------------------------
(i) Certain prior period comparatives have been reclassified to conform to
the current period's presentation.
----------------------------------------------------------------------------
Second Quarter
Total media revenues increased 13.0% to $35.0 million in the second quarter of 2015 compared to the prior year period, and represents a second quarter media revenues record for Cineplex. This increase was largely due to higher Cineplex Media revenues, up $3.3 million as compared to the prior year period due primarily to higher showtime revenues resulting from increases in automotive and telecommunications sector advertising.
Cineplex Digital Media revenues increased $0.7 million due to higher advertising revenues including the TimsTV and Oxford shopping mall networks. The increases due to higher advertising revenues were partially offset by lower project revenues as compared to the prior year period due to the timing of project installations in 2015 as compared to 2014. Project revenues tend to fluctuate with the timing of clients' installation requirements, whereas other digital media revenue streams are more consistent period to period.
Year to Date
Total media revenues increased $8.7 million in the six months ended June 30, 2015 compared to the prior year period. The increase was due to the $6.9 million increase in Cineplex Media revenues due primarily to higher showtime revenues and the $1.8 million increase in Cineplex Digital Media revenues, primarily due to higher digital advertising revenues including advertising on the TimsTV and Oxford shopping mall networks.
Other revenues
The following table highlights the movement in games and other revenues for the quarter and the year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Other revenues Second Quarter Year to Date
------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Games $ 2,473 $ 1,759 40.6% $ 4,493 $ 3,637 23.5%
Other 13,448 11,304 19.0% 25,315 21,722 16.5%
----------------------------------------------------------------------------
Total other revenues $ 15,921 $ 13,063 21.9% $ 29,808 $ 25,359 17.5%
----------------------------------------------------------------------------
Second Quarter
Other revenues include gaming revenues as well as revenues from the Cineplex Store, promotional activities, screenings, private parties, corporate events, breakage on gift card and voucher sales, revenues from in-theatre guest service initiatives and management fees. Games revenues do not include Cineplex's 50% share of results of CSI, which are included in "Share of income of joint ventures".
Other revenues increased 21.9% to $15.9 million in the second quarter of 2015 compared to the prior year period. This increase was primarily due to additional revenues arising from enhanced guest service initiatives and increased SCENE partner revenues. Games revenues increased due to the conversion of select gaming rooms to XSCAPE Entertainment Centres, the addition of new XSCAPE locations since the prior year period, and the impact of a one-time adjustment ($0.4 million).
Year to Date
For the year to date period, other revenues have increased 17.5% compared to the prior year period primarily due to additional revenues arising from enhanced guest service initiatives and increased SCENE partner revenues. The games revenues increase is due to the conversion of select gaming rooms to XSCAPE Entertainment Centres as well as the addition of new XSCAPE locations since the prior year period.
Film cost
The following table highlights the movement in film cost and the film cost percentage for the quarter and the year to date (in thousands of Canadian dollars, except film cost percentage):
----------------------------------------------------------------------------
Film cost Second Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Film cost $102,155 $ 94,950 7.6% $182,326 $175,408 3.9%
Film cost
percentage (i) 54.9% 52.3% 2.6% 53.3% 52.0% 1.3%
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
----------------------------------------------------------------------------
Second Quarter
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. The increase in film cost percentage in the current period is as a result of the concentration of box office revenues from a few titles, with the top three films in the current period, which rank in the top ten grossing films of all-time, accounting for 43.5% of box office revenues (2014 - top three represented 29.2%). The period over period film cost percentage increase is impacted by the prior year being the lowest second quarter film cost percentage reported by Cineplex.
Year to Date
The year to date increase in film cost expense was due to the 1.3% increase in the film cost percentage and the 1.8% increase in attendance in the period.
Cost of food service
The following table highlights the movement in cost of food service and cost of food service as a percentage of food service revenues ("concession cost percentage") for the quarter and the year to date (in thousands of Canadian dollars, except percentages and margins per patron):
----------------------------------------------------------------------------
Cost of food service Second Quarter Year to Date
----------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Cost of food service $23,921 $21,147 13.1% $43,369 $40,028 8.3%
Concession cost
percentage (i) 22.1% 21.6% 0.5% 21.8% 21.6% 0.2%
Concession margin per
patron (i) $ 4.29 $ 3.98 7.8% $ 4.18 $ 3.97 5.3%
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
----------------------------------------------------------------------------
Second Quarter
Cost of food service varies primarily with theatre attendance as well as the quantity and mix of offerings sold. The increase in the cost of food service as compared to the prior year period was due to the higher food service revenues and the 0.5% increase in the concession cost percentage during the period, with the higher percentage due in part to expanded offerings including those at VIP theatres. The concession margin per patron increased from $3.98 in the second quarter of 2014 to $4.29 in the same period in 2015, reflecting the impact of the higher CPP during the period.
Year to Date
The increase in the cost of food service as compared to the prior year period was due to the higher food service revenues and the 0.2% increase in the concession cost percentage during the period. The concession margin per patron increased from $3.97 in the prior year period to $4.18 in the current period, reflecting the impact of the higher CPP in the current period.
Despite the 10% discount offered to SCENE members and SCENE points offered on select offerings, which contributes to a higher concession cost percentage, Cineplex believes the SCENE program drives incremental attendance and purchase incidence which increases food service revenues and CPP.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization expenses during the quarter and year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Depreciation and
amortization expenses Second Quarter Year to Date
------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Depreciation of property,
equipment and leaseholds $19,879 $17,333 14.7% $38,873 $34,163 13.8%
Amortization of intangible
assets and other 1,923 1,862 3.3% 3,829 3,700 3.5%
----------------------------------------------------------------------------
Depreciation and
amortization expenses as
reported $21,802 $19,195 13.6% $42,702 $37,863 12.8%
----------------------------------------------------------------------------
The quarterly increase in depreciation of property, equipment and leaseholds of $2.5 million and year to date increase of $4.7 million is primarily due to the impact of equipment and leasehold improvements relating to assets acquired through acquisitions, new theatre construction and other growth projects. The increase in amortization of intangible assets in the quarter and year to date periods is due to the amortization of the intangible assets acquired in the prior year periods and subsequent to those periods.
Loss on disposal of assets
The following table shows the movement in the loss on disposal of assets during the quarter and year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Loss on disposal of assets Second Quarter Year to Date
------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Loss on disposal of assets $ 1,033 $ 1,989 -48.1% $ 1,350 $ 1,933 -30.2%
----------------------------------------------------------------------------
During the second quarter of 2015, Cineplex recorded a loss of $1.0 million on the disposal of assets that were sold or otherwise disposed (2014 - $2.0 million). For the six months ended June 30, 2015, disposal of assets resulted in a loss of $1.4 million on the disposal of assets that were sold or otherwise disposed of (2014 - $1.9 million, including a $0.6 million gain on the sale of land that was previously a drive-in theatre which is offset by losses on certain assets that were sold or otherwise disposed of).
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 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 and year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Other costs Second Quarter Year to Date
------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Theatre occupancy
expenses $ 50,473 $ 50,229 0.5% $101,582 $101,253 0.3%
Other operating
expenses 89,237 83,537 6.8% 170,151 167,748 1.4%
General and
administrative
expenses 15,624 15,211 2.7% 34,535 30,422 13.5%
----------------------------------------------------------------------------
Total other costs $155,334 $148,977 4.3% $306,268 $299,423 2.3%
----------------------------------------------------------------------------
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for the quarter and year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Theatre occupancy
expenses Second Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Rent $ 33,629 $ 33,775 -0.4% $ 67,457 $ 67,284 0.3%
Other occupancy 18,048 17,845 1.1% 36,122 35,637 1.4%
One-time items (i) (1,204) (1,391) -13.4% (1,997) (1,668) 19.7%
----------------------------------------------------------------------------
Total $ 50,473 $ 50,229 0.5% $101,582 $101,253 0.3%
----------------------------------------------------------------------------
(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.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Theatre occupancy continuity Second Quarter Year to Date
Occupancy Occupancy
----------------------------------------------------------------------------
2014 as reported $ 50,229 $ 101,253
Impact of new and acquired
theatres 725 1,534
Impact of disposed theatres (238) (1,125)
Same store rent change (i) (364) (15)
One-time items 188 (328)
Other (67) 263
----------------------------------------------------------------------------
2015 as reported $ 50,473 $ 101,582
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
----------------------------------------------------------------------------
Second Quarter
Theatre occupancy expenses increased $0.2 million during the second quarter of 2015 compared to the prior year period. This increase was primarily due to the impact of new and acquired theatres net of disposed theatres ($0.5 million) and the impact of one-time credits ($0.2 million) partially offset by lower same store rent expenses ($0.4 million) due to the impact of non-cash occupancy amounts.
Year to Date
The increase in theatre occupancy expenses of $0.3 million for the 2015 period compared to the prior year was due to the impact of new and acquired theatres net of disposed theatres and higher real estate taxes included in Other, partially offset by the impact of one-time credits.
Other operating expenses
The following table highlights the movement in other operating expenses during the quarter and the year to date (in thousands of Canadian dollars):
----------------------------------------------------------------------------
Other operating
expenses Second Quarter Year to Date
------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Theatre payroll $ 35,470 $ 33,127 7.1% $ 68,024 $ 65,480 3.9%
Media 13,635 13,467 1.2% 26,645 25,877 3.0%
Other 40,132 36,943 8.6% 75,482 76,391 -1.2%
----------------------------------------------------------------------------
Other operating
expenses $ 89,237 $ 83,537 6.8% $170,151 $167,748 1.4%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other operating continuity Second Quarter Year to Date
Other Operating Other Operating
----------------------------------------------------------------------------
2014 as reported $ 83,537 $ 167,748
Impact of new and acquired
theatres 2,253 3,134
Impact of disposed theatres (330) (822)
Same store payroll change (i) 966 756
Marketing change 1,266 9
Media change 168 768
New business initiatives change (255) (1,616)
Other 1,632 174
----------------------------------------------------------------------------
2015 as reported $ 89,237 $ 170,151
----------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
----------------------------------------------------------------------------
Second Quarter
Other operating expenses during the second quarter of 2015 increased $5.7 million or 6.8% compared to the prior year period. The major components of the increase were the net impact of new and acquired theatres net of disposed theatres ($1.9 million), higher marketing expenses ($1.3 million) due to the timing of campaigns in the 2015 period compared to 2014, higher same store payroll due to higher business volumes and minimum wage increases in certain provinces ($1.0 million) and a $1.6 million increase in the Other category, discussed below.
The major movements in the Other category include the following:
-- Higher SCENE costs in the current period due to the growing membership
base and support for the SportChek partnership launched in the fourth
quarter of 2014 ($0.9 million).
-- Higher same store utility costs due in part to higher electricity rates
and consumption, partially offset by lower fuel costs ($0.5 million).
-- Higher other costs ($0.2 million) including ongoing theatre maintenance.
Year to Date
For the six months ended June 30, 2015, other operating expenses increased $2.4 million or 1.4% compared to the prior year period. The major components of this increase were the net impact of new and acquired theatres net of disposed theatres ($2.3 million) and higher media costs of $0.8 million and higher same store payroll costs of $0.8 million both due to higher business volumes. These increases were partially offset by lower spending on new business initiatives due in part to one-time digital platform development costs incurred in the prior year period ($1.6 million).
The $0.2 million increase in the Other category was primarily due to a $1.4 million increase in SCENE costs due to the growing membership base and support for the SportChek partnership and a $0.2 million increase in same store utility costs. These increases were partially offset by lower 3D royalty expenses due to lower 3D attendance in the 2015 period compared to the prior year ($1.0 million) and lower ongoing theatre maintenance costs due to the timing of repairs in the 2015 and 2014 periods.
General and administrative expenses
The following table highlights the movement in general and administrative ("G&A") expenses during the quarter and the year to date, including Share based compensation costs, and G&A net of these costs (in thousands of Canadian dollars):
----------------------------------------------------------------------------
G&A expenses Second Quarter Year to Date
------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
G&A excluding LTIP and
option plan expense $ 13,490 $ 13,523 -0.2% $ 27,606 $ 27,252 1.3%
LTIP (i) 1,709 1,245 37.3% 6,092 2,324 162.1%
Option plan 425 443 -4.1% 837 846 -1.1%
----------------------------------------------------------------------------
G&A expenses as
reported $ 15,624 $ 15,211 2.7% $ 34,535 $ 30,422 13.5%
----------------------------------------------------------------------------
(i) LTIP includes the expense for the LTIP program as well as the expense
for the executive and Board deferred share unit plans.
----------------------------------------------------------------------------
Second Quarter
G&A expenses increased $0.4 million during the second quarter of 2015 compared to the prior year period due to higher LTIP expenses. This increase was due to a larger increase in the average closing Share price for the 90 days prior to June 30, 2015 as compared to the prior year period, which is one of the variables used in calculating LTIP expense.
Year to Date
G&A expenses for the year to date period increased $4.1 million compared to the prior year period, due to a $3.8 million increase in LTIP expense as a result of the larger increase in the average closing Share price for the 90 days prior to June 30, 2015 as compared to the prior year period.
EARNINGS BEFORE INTEREST, INCOME TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") (see non-GAAP measures section of this news release)
The following table presents EBITDA and adjusted EBITDA for the three and six months ended June 30, 2015 as compared to the prior year periods (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
----------------------------------------------------------------------------
EBITDA Second Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
EBITDA $ 63,849 $ 57,411 11.2% $103,338 $ 87,756 17.8%
Adjusted EBITDA $ 65,310 $ 59,430 9.9% $105,558 $ 90,311 16.9%
Adjusted EBITDA
margin 18.9% 18.4% 0.5% 16.6% 15.0% 1.6%
----------------------------------------------------------------------------
Adjusted EBITDA for the second quarter of 2015 increased $5.9 million, or 9.9%, as compared to the prior year period. The increase as compared to the prior year period was primarily due to the higher attendance and record BPP and CPP amounts resulting in higher exhibition revenues, and the higher contribution from Cineplex Media and Cineplex Digital Media. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 18.9% in the current period, up from 18.4% in the prior year period.
Adjusted EBITDA for the six months ended June 30, 2015 increased $15.2 million, or 16.9%, as compared to the prior year period, due to the higher contribution from Cineplex Media and Cineplex Digital Media, the impact of the higher CPP as well as lower operating costs compared to the prior year period. Adjusted EBITDA margin for the period was 16.6%, an increase of 1.6% from 15.0% in the prior year period.
ADJUSTED FREE CASH FLOW
For the second quarter of 2015, adjusted free cash flow per common share of Cineplex was $0.65 as compared to $0.77 in the prior year period. The declared dividends per common share of Cineplex were $0.39 in the second quarter of 2015 and $0.37 in the prior year period. During the twelve months ended June 30, 2015, Cineplex generated adjusted free cash flow per Share of $2.33, compared to $2.40 per Share in the year ended June 30, 2014. Cineplex declared dividends per Share of $1.51 and $1.45, respectively, in each year. The payout ratios for these periods were approximately 64.8% and 60.3%, respectively. Adjusted free cash flow per common share and the payout ratios for the 2014 period was positively impacted by Cineplex's use of loss carryforwards acquired through Cineplex's acquisition of AMC Ventures Inc. in 2012, resulting in Cineplex's cash income taxes in 2014 being substantially reduced. Based on estimated 2014 taxable income, none of the acquired losses are available to be used to reduce taxable income in 2015.
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. 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.
EBITDA is calculated by adding back to net income, income tax expense, depreciation and amortization expense, and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for losses on disposal of assets, the share of income of CDCP and depreciation, amortization, interest and taxes of Cineplex's other joint ventures. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA 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 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.
Per Patron Revenue Metrics
Cineplex reviews per patron metrics as they relate to box office revenue and concession 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:
Attendance: 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 attendance for the period.
BPP excluding premium priced product: Calculated as total box office revenues for the period, less box office revenues from 3D, UltraAVX, VIP and IMAX product; divided by total paid attendance for the period, less paid attendance for 3D, UltraAVX, VIP and IMAX product.
CPP: Calculated as total food service revenues divided by total paid attendance for the period.
Premium priced product: Defined as 3D, UltraAVX, IMAX and VIP film product.
Concession margin per patron: Calculated as total food service revenues less total cost of food service, divided by attendance for the period.
Same Store Analysis
Cineplex reviews and reports same store metrics relating to box office revenues, concession revenues, rent expense and payroll expense, as these measures are widely used in the theatre exhibition industry as well as other retail industries. Same store 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 and six months ended June 30, 2015, the impact of the six locations that have been opened or acquired and the three locations that have been closed have been excluded, resulting in 156 theatres being included in the same store metrics.
Cost of sales percentages
Cineplex reviews and reports cost of sales percentages for its two largest revenue sources, box office revenues and concession 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.
Concession cost percentage: Calculated as total food service costs divided by total 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, 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") 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 "Risk Management" section of Cineplex's management's discussion and analysis.
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 or the Partnership, their financial or operating results or their 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, can be found on SEDAR at www.sedar.com.
About Cineplex Inc.
Cineplex is one of Canada's leading entertainment companies and operates one of the most modern and fully digitized motion picture theatre circuits in the world. A top-tier Canadian brand, Cineplex operates numerous businesses including theatrical exhibition, food services, gaming, alternative programming (Front Row Centre Events), Cineplex Media, Cineplex Digital Solutions, Cineplex Digital Networks, and the online sale of home entertainment content through CineplexStore.com and on apps embedded in various electronic devices. Cineplex is also a joint venture partner in SCENE - Canada's largest entertainment loyalty program.
Cineplex is headquartered in Toronto, Canada, and operates 162 theatres with 1,652 screens from coast to coast, serving approximately 74 million guests annually through the following theatre brands: Cineplex Odeon, SilverCity, Galaxy Cinemas, Scotiabank Theatres, Cineplex Cinemas and Cineplex VIP Cinemas. Cineplex also owns and operates the UltraAVX, Poptopia, and Outtakes brands. Cineplex trades on the Toronto Stock Exchange under the symbol CGX. More information is available at 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, August 13, 2015
10:00 a.m. Eastern Time
In order to participate in the conference call, please dial 416-849-1847 or outside of Toronto dial 1-866-530-1554 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 2912996 to access the call.
-- If you cannot participate in the live mode, a replay will be available.
Please dial 647-436-0148 or 1-888-203-1112 and enter code 2912996#. The
replay will begin at 1:00 p.m. Eastern Time on Thursday, August 13, 2015
and end at 1:00 p.m. Eastern Time on Thursday, August 20, 2015.
-- 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 Condensed Consolidated Balance Sheets
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31,
2015 2014
Assets
Current assets
Cash and cash equivalents $ 23,700 $ 34,367
Trade and other receivables 62,810 101,462
Inventories 8,361 7,978
Prepaid expenses and other current assets 14,812 8,102
-----------------------------
109,683 151,909
Non-current assets
Property, equipment and leaseholds 504,112 495,532
Deferred income taxes 6,181 6,971
Interests in joint ventures 48,589 46,457
Intangible assets 106,031 109,746
Goodwill 801,335 798,801
-----------------------------
$ 1,575,931 $ 1,609,416
-----------------------------
-----------------------------
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 126,667 $ 159,152
Share-based compensation 7,092 6,160
Dividends payable 8,201 7,877
Income taxes payable 10,052 9,735
Deferred revenue 108,826 149,644
Finance lease obligations 2,812 2,670
Fair value of interest rate swap agreements 1,162 692
-----------------------------
264,812 335,930
-----------------------------
Non-current liabilities
Share-based compensation 15,558 15,504
Long-term debt 280,047 229,754
Fair value of interest rate swap agreements 4,311 2,117
Finance lease obligations 13,557 15,008
Post-employment benefit obligations 7,044 6,977
Other liabilities 171,950 173,550
Convertible debentures 99,718 98,727
-----------------------------
592,185 541,637
-----------------------------
Total liabilities 856,997 877,567
-----------------------------
Equity
Share capital 854,587 854,073
Deficit (135,691) (123,771)
Accumulated other comprehensive loss (5,237) (3,405)
Contributed surplus 5,275 4,952
-----------------------------
718,934 731,849
-----------------------------
$ 1,575,931 $ 1,609,416
-----------------------------
-----------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of Canadian dollars, except net income per share)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June Six months ended June
30, 30,
---------------------------------------------------
2015 2014 2015 2014
Revenues
Box office $ 186,202 $ 181,419 $ 342,243 $ 337,644
Food service 108,397 98,024 199,182 185,167
Media 35,020 30,990 64,092 55,345
Other 15,921 13,063 29,808 25,359
---------------------------------------------------
345,540 323,496 635,325 603,515
---------------------------------------------------
Expenses
Film cost 102,155 94,950 182,326 175,408
Cost of food service 23,921 21,147 43,369 40,028
Depreciation and
amortization 21,802 19,195 42,702 37,863
Loss on disposal of
assets 1,033 1,989 1,350 1,933
Other costs 155,334 148,977 306,268 299,423
Share of income of joint
ventures (752) (978) (1,326) (1,033)
Interest expense 5,520 5,583 11,230 10,800
Interest income (41) (43) (88) (113)
---------------------------------------------------
308,972 290,820 585,831 564,309
---------------------------------------------------
Income before income
taxes 36,568 32,676 49,494 39,206
---------------------------------------------------
Provision for income
taxes
Current 10,654 1,010 13,075 1,380
Deferred 436 8,461 414 9,550
---------------------------------------------------
11,090 9,471 13,489 10,930
---------------------------------------------------
Net income $ 25,478 $ 23,205 $ 36,005 $ 28,276
---------------------------------------------------
---------------------------------------------------
Basic net income per
share $ 0.40 $ 0.37 $ 0.57 $ 0.45
Diluted net income per
share $ 0.40 $ 0.37 $ 0.57 $ 0.45
Cineplex Inc.
Interim Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June Six months ended June
30, 30,
---------------------------------------------------
2015 2014 2015 2014
Net income $ 25,478 $ 23,205 $ 36,005 $ 28,276
---------------------------------------------------
Other comprehensive
income (loss)
Items that will be
reclassified
subsequently to net
income:
Income (loss) on hedging
instruments 422 (981) (2,500) (1,556)
Associated deferred
income taxes expense
(recovery) (100) 260 668 411
---------------------------------------------------
Other comprehensive
income (loss) 322 (721) (1,832) (1,145)
---------------------------------------------------
Comprehensive income $ 25,800 $ 22,484 $ 34,173 $ 27,131
---------------------------------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the six months ended June 30, 2015 and 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
Share Contributed comprehensive
capital surplus loss Deficit Total
Balance - January
1, 2015 $854,073 $ 4,952 $ (3,405) $(123,771) $ 731,849
Net income - - - 36,005 36,005
Other
comprehensive
(loss) - - (1,832) - (1,832)
----------------------------------------------------------
Total
comprehensive
income (1,832) 36,005 34,173
Dividends
declared - - - (47,925) (47,925)
Share option
expense - 837 - - 837
Issuance of
shares on
exercise of
options 514 (514) - - -
----------------------------------------------------------
Balance - June
30, 2015 $854,587 $ 5,275 $ (5,237) $(135,691) $ 718,934
----------------------------------------------------------
----------------------------------------------------------
Balance - January
1, 2014 $853,411 $ 3,899 $ (1,715) $(107,323) $ 748,272
Net income - - - 28,276 28,276
Other
comprehensive
(loss) - - (1,145) - (1,145)
----------------------------------------------------------
Total
comprehensive
income (1,145) 28,276 27,131
Dividends
declared - - - (45,961) (45,961)
Share option
expense - 846 - - 846
Issuance of
shares on
exercise of
options 459 (459) - - -
----------------------------------------------------------
Balance - June
30, 2014 $853,870 $ 4,286 $ (2,860) $(125,008) $ 730,288
----------------------------------------------------------
----------------------------------------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
---------------------------------------
2015 2014 2015 2014
Cash provided by (used in)
Operating activities
Net income $ 25,478 $ 23,205 $ 36,005 $ 28,276
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization of
property, equipment and
leaseholds, and intangible assets 21,802 19,195 42,702 37,863
Amortization of tenant
inducements, rent averaging
liabilities and fair value lease
contract liabilities (2,302) (1,479) (4,003) (2,879)
Accretion of debt issuance costs
and other non-cash interest 1,319 1,187 2,592 2,351
Loss on disposal of assets 1,033 1,989 1,350 1,933
Deferred income taxes 436 8,461 414 9,550
Interest rate swap agreements -
non-cash interest 16 (62) 87 (46)
Non-cash share-based compensation 425 443 837 846
Accretion of convertible
debentures 498 467 991 938
Net change in interests in joint
ventures (2,191) (860) (3,099) (1,240)
Tenant inducements - - 757 2,842
Changes in operating assets and
liabilities 7,920 (12,106) (40,657) (58,511)
---------------------------------------
Net cash provided by operating
activities 54,434 40,440 37,976 21,923
---------------------------------------
Investing activities
Proceeds from sale of assets - - 108 404
Purchases of property, equipment and
leaseholds (20,406) (19,225) (47,325) (50,695)
Acquisition of businesses, net of
cash acquired (2,674) (1,516) (3,158) (2,466)
Intangible assets addition - (2,750) (114) (2,750)
Net cash received from CDCP 329 769 756 769
---------------------------------------
Net cash used in investing
activities (22,751) (22,722) (49,733) (54,738)
---------------------------------------
Financing activities
Dividends paid (23,966) (22,983) (47,601) (45,640)
Borrowings under credit facility,
net - 10,000 50,000 50,000
Payments under finance leases (659) (595) (1,309) (1,186)
---------------------------------------
Net cash (used in) provided by
financing activities (24,625) (13,578) 1,090 3,174
---------------------------------------
Increase (decrease) in cash and cash
equivalents 7,058 4,140 (10,667) (29,641)
Cash and cash equivalents -
Beginning of period 16,642 10,359 34,367 44,140
---------------------------------------
Cash and cash equivalents - End of
period $ 23,700 $ 14,499 $ 23,700 $ 14,499
---------------------------------------
---------------------------------------
Supplemental information
Cash paid for interest $ 4,801 $ 5,018 $ 7,278 $ 7,421
Cash paid for income taxes $ 2,566 $ 768 $ 11,676 $ 1,986
Cineplex Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reconciliation to Adjusted EBITDA
----------------------------------------------------- ---------------------
Three months ended Six months ended
June 30, June 30,
2015 2014 2015 2014
---------------------- ---------------------
Net income $ 25,478 $ 23,205 $ 36,005 $ 28,276
Depreciation and amortization 21,802 19,195 42,702 37,863
Interest expense 5,520 5,583 11,230 10,800
Interest income (41) (43) (88) (113)
Current income tax expense 10,654 1,010 13,075 1,380
Deferred income tax expense 436 8,461 414 9,550
---------------------- ---------------------
EBITDA $ 63,849 $ 57,411 $ 103,338 $ 87,756
Loss on disposal of assets 1,033 1,989 1,350 1,933
CDCP equity income (163) (675) (292) (620)
Depreciation and amortization -
joint ventures (ii) 519 564 1,017 1,084
Joint venture taxes and
interest (ii) 72 141 145 158
---------------------- ---------------------
Adjusted EBITDA $ 65,310 $ 59,430 $ 105,558 $ 90,311
----------------------------------------------------- ---------------------
(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 with the exception of CDCP (see (i)
above).
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 Six months ended
June 30, June 30,
2015 2014 2015 2014
----------------------------------------------------
Cash provided by
operating activities $ 54,434 $ 40,440 $ 37,976 $ 21,923
Less: Total capital
expenditures net of
proceeds on sale of
assets (20,406) (19,225) (47,217) (50,291)
----------------------------------------------------
Standardized free cash
flow 34,028 21,215 (9,241) (28,368)
Add/(Less):
Changes in operating
assets and liabilities
(i) (7,920) 12,106 40,657 58,511
Changes in operating
assets and liabilities
of joint ventures (i) 1,439 (118) 1,773 207
Tenant inducements (ii) - - (757) (2,842)
Principal component of
finance lease
obligations (659) (595) (1,309) (1,186)
Growth capital
expenditures and other
(iii) 12,615 14,281 34,414 38,328
Share of income of joint
ventures, net of non-
cash depreciation (iv) 1,180 1,041 2,196 1,664
Net cash received from
CDCP (iv) 329 769 756 769
----------------------------------------------------
Adjusted free cash flow $ 41,012 $ 48,699 $ 68,489 $ 67,083
----------------------------------------------------
----------------------------------------------------
Average number of Shares
outstanding 63,073,248 62,966,909 63,053,866 62,954,227
Adjusted free cash flow
per Share $ 0.650 $ 0.773 $ 1.086 $ 1.066
Dividends declared $ 0.385 $ 0.370 $ 0.760 $ 0.730
----------------------------------------------------------------------------
(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) Growth 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. 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. Cash invested into CDCP, as well as cash distributions
received from CDCP, are considered to be uses and sources of adjusted
free cash flow.
Contacts: Cineplex Inc. Gord Nelson Chief Financial Officer (416) 323-6602 Cineplex Inc. Pat Marshall Vice President Communications and Investor Relations (416) 323-6648
Source: Cineplex Inc.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Super Micro Computer (SMCI) Falls 6%
- KeyCorp (KEY) PT Raised to $16 at Argus
- Morgan Stanley (MS) PT Raised to $102 at HSBC
Create E-mail Alert Related Categories
Press ReleasesRelated Entities
Dividend, Earnings, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
