Cineplex Inc. Reports Record Third Quarter Results
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TORONTO, ONTARIO -- (Marketwired) -- 11/10/15 -- Cineplex Inc. ("Cineplex") (TSX: CGX) today released its financial results for the three and nine months ended September 30, 2015.
Third Quarter Results
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Period over
Period
2015 2014 Change (i)
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Total revenues $ 328.2 million $ 299.0 million 9.8%
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Attendance 19.4 million 18.0 million 7.6%
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Net income $ 21.4 million $ 15.9 million 34.7%
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Box office revenues per
patron ("BPP") (ii) $ 8.89 $ 9.01 -1.3%
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Concession revenues per
patron ("CPP") (ii) $ 5.43 $ 5.11 6.3%
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Adjusted EBITDA (ii) $ 59.1 million $ 48.0 million 23.0%
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Adjusted EBITDA margin
(ii) 18.0% 16.1% 1.9%
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Adjusted free cash flow
(ii) $ 35.9 million $ 35.9 million -0.1%
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Adjusted free cash flow
per common share of
Cineplex ("Share") (ii) $ 0.568 $ 0.570 -0.4%
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Earnings per Share ("EPS")
attributable to owners of
Cineplex - basic $ 0.34 $ 0.25 36.0%
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EPS attributable to owners
of Cineplex - diluted $ 0.34 $ 0.25 36.0%
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Year to Date Results
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Period over
Period
2015 2014 Change (i)
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Total revenues $ 963.6 million $ 902.5 million 6.8%
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Attendance 56.6 million 54.6 million 3.7%
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Net income $ 57.4 million $ 44.2 million 30.0%
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Box office revenues per
patron ("BPP") (ii) $ 9.09 $ 9.16 -0.8%
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Concession revenues per
patron ("CPP") (ii) $ 5.38 $ 5.08 5.9%
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Adjusted EBITDA (ii) $ 164.6 million $ 138.4 million 19.0%
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Adjusted EBITDA margin
(ii) 17.1 % 15.3 % 1.8%
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Adjusted free cash flow
(ii) $ 104.3 million $ 103.0 million 1.3%
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Adjusted free cash flow
per common share of
Cineplex ("Share") (ii) $ 1.655 $ 1.635 1.2%
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Earnings per Share ("EPS")
attributable to owners of
Cineplex - basic $ 0.91 $ 0.70 30.0%
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EPS attributable to owners
of Cineplex - diluted $ 0.90 $ 0.70 28.6%
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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.
"Cineplex had another strong quarter setting third quarter records for total revenue, up 9.8% to $328.2 million and adjusted EBITDA up 23.0% to $59.1 million. We established new third quarter records for all revenue sources including Box Office revenue which increased 6.1% to $172.6 million, Food Service revenue which grew 14.5% to $105.5 million, and CPP of $5.43, which was up 6.3% versus the same period in 2014. Media revenue increased 7.2% to $34.3 million, and Other revenue was up 29.1% to $15.9 million. In addition, attendance increased 7.6% to 19.4 million guests," said Ellis Jacob, President and CEO, Cineplex Entertainment.
"Key accomplishments during the period included the acquisition of an 80% interest in the operating assets of WG Limited, a leading online gaming platform that facilitates tournaments for the competitive gaming community; the announcement of our plans to build The Rec Room in Calgary, Alberta, our second location; and the expansion of our SCENE loyalty program benefits enabling members to earn and redeem points at CARA Operations Limited restaurant brands which include over 800 restaurants across Canada. Subsequent to quarter end, we completed the acquisition of the remaining 50% of issued and outstanding equity of Cineplex Starburst Inc. making Cineplex the 100% owner of its amusement gaming business in North America."
"Looking ahead, I believe the film slate for the final quarter of 2015 looks strong and I am excited about the strategic opportunities ahead that will help us achieve meaningful growth."
KEY DEVELOPMENTS IN THE THIRD QUARTER OF 2015
The following describes certain key business initiatives undertaken and results achieved during the third quarter in each of Cineplex's core business areas:
THEATRE EXHIBITION
-- Reported third quarter box office revenues of $172.6 million, an
increase of $10.0 million (6.1%) from the $162.6 million reported in the
prior year period due to stronger performing film product in the current
period compared to the prior year.
-- Both box office revenues and attendance results are third quarter
records for Cineplex.
FOOD SERVICE
-- Reported record third quarter food service revenues of $105.5 million,
an increase of $13.4 million (14.5%) over the $92.1 million reported in
the prior year period.
-- CPP was $5.43 for the period, a third quarter record for Cineplex, and
$0.32 (6.3%) higher than the $5.11 reported in the prior year period.
-- Opened six YoYo's Yogurt Cafe ("YoYo's") locations in the third quarter,
bringing the total number of YoYo's locations operated by Cineplex to
69.
AMUSEMENT GAMING AND THE REC ROOM
-- Acquired an 80% interest in the operating assets of WG Limited through
Cineplex's subsidiary, WorldGaming Network LP ("WGN"). This acquisition
resulted in the creation of a new company focused on eSports by creating
a community that connects live online gaming with unique in-theatre
tournament experiences to be held in Cineplex theatres across the
country.
-- Announced plans to build Cineplex's second The Rec Room location in
Calgary, Alberta, a 50,000 square foot dining and entertainment complex
scheduled to open in December 2016 in Deerfoot City.
-- Opened two new XSCAPE Entertainment Centres in the period, bringing the
total number of XSCAPE locations across the circuit to 22.
-- Subsequent to the period end, on October 1, 2015, announced that
Cineplex had completed the acquisition of the remaining 50% of issued
and outstanding equity of Cineplex Starburst Inc. ("CSI") that it did
not already own, for approximately $21.0 million cash.
MEDIA
-- Total media revenues increased $2.3 million, or 7.2%, in the third
quarter compared to the prior year period, with Cineplex Media
increasing $2.6 million (11.4%), offset by a decrease in Cineplex
Digital Media revenues of $0.3 million (2.7%) due to lower project
revenues in the period, partially offset by higher advertising revenues
including the TimsTV and Oxford shopping mall networks.
-- Cineplex Media revenues increased due to robust showtime advertising
sales, with strong results seen in the automotive sector advertising.
ALTERNATIVE PROGRAMMING
-- Alternative programming in the third 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.
DIGITAL COMMERCE
-- Cineplex.com registered a 23% increase in unique visitors and a 28% increase in visits during the third quarter of 2015 compared to the prior year period. -- As at September 30, 2015, the Cineplex app had been downloaded 12.8 million times and recorded over 708 million app sessions.
LOYALTY
-- Membership in the SCENE loyalty program increased by 0.3 million members
in the period, with membership reaching approximately 7.1 million at
September 30, 2015.
-- During the period, the ability to earn and redeem points was launched at
CARA Operations Limited ("CARA") restaurant brands which includes over
800 restaurants across Canada. CARA brands include Swiss Chalet
Rotisserie & Grill, Harvey's, Milestones Grill & Bar, Montana's BBQ &
Bar, Kelsey's, East Side Mario's, Prime Pubs and Bier Markt.
-- SCENE announced changes to the earn and redemption rates for premium
movie experiences effective November 4, 2015, with members earning and
redeeming SCENE points based on the type of movie experience they
choose. Premium movies will earn 50% more points and require 50% more
points for redemption, and VIP movies will earn 100% more points and
require 100% more points for redemption.
OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015
Total revenues
Total revenues for the three months ended September 30, 2015 increased $29.3 million (9.8%) to $328.2 million as compared to the prior year period. Total revenues for the nine months ended September 30, 2015 increased $61.1 million (6.8%) to $963.6 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 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):
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Box office
revenues Third Quarter Year to Date
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2015 2014 Change 2015 2014 Change
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Box office
revenues $ 172,571 $ 162,574 6.1% $ 514,814 $ 500,218 2.9%
Attendance (i) 19,407 18,038 7.6% 56,640 54,611 3.7%
Box office revenue
per patron (i) $ 8.89 $ 9.01 -1.3% $ 9.09 $ 9.16 -0.8%
BPP excluding
premium priced
product (i) $ 8.10 $ 8.03 0.9% $ 8.25 $ 8.23 0.2%
Canadian industry
revenues (ii) 4.3% 1.8%
Same store box
office revenues
(i) $ 168,866 $ 161,518 4.5% $ 501,677 $ 495,401 1.3%
Same store
attendance (i) 19,015 17,912 6.2% 55,265 54,080 2.2%
% Total box from
premium priced
product (i) 34.5% 41.7% -7.2% 36.0% 40.7% -4.7%
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(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 4.5%
for the period from July 3, 2015 to October 1, 2015 as compared to the
period from July 4, 2014 to October 2, 2014. On a basis consistent with
Cineplex's calendar reporting period (July 1 to September 30), the Canadian
industry box office revenue change is estimated to be an increase of 4.3%.
MTAC reported that the Canadian exhibition industry reported a box office
revenue increase of 2.3% for the period from January 3, 2015 to October 1,
2015 as compared to the period from January 4, 2014 to October 2, 2014. On
a basis consistent with Cineplex's calendar reporting period (January 1 to
September 30), the Canadian industry box office revenues are estimated to
be an increase of 1.8%.
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Box office
continuity Third Quarter Year to Date
Box Office Attendance Box Office Attendance
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2014 as reported $ 162,574 18,038 $ 500,218 54,611
Same store
attendance
change 9,947 1,103 10,854 1,185
Impact of same
store BPP
change (2,599) - (4,579) -
New and acquired
theatres (i) 3,565 378 10,050 1,045
Disposed and
closed theatres
(i) (916) (112) (1,729) (201)
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2015 as reported $ 172,571 19,407 $ 514,814 56,640
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(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.
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Third Quarter
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Third Quarter 2015 Top Third Quarter 2014 Top
Cineplex Films 3D % Box Cineplex Films 3D % Box
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1 Minions a 13.7% 1 Guardians of the Galaxy a 15.6%
2 Mission: Impossible Rogue 9.3% 2 Dawn of the Planet of the a 8.8%
Nation Apes
3 Ant-Man a 6.9% 3 Teenage Mutant Ninja a 6.7%
Turtles
4 Jurassic World a 6.0% 4 Lucy 5.6%
5 Inside Out a 5.4% 5 Transformers: Age of a 5.6%
Extinction
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Box office revenues increased $10.0 million, or 6.1%, to $172.6 million during the third quarter of 2015, compared to $162.6 million recorded in the same period in 2014. The increase was due to a 7.6% increase in attendance as a result of a stronger performing slate of films in the current period as compared to the prior year period.
BPP for the three months ended September 30, 2015 was $8.89, a $0.12 decrease from the prior year period. This decrease was due in part to the film mix in the period, with two of the top five films in the current period, which accounted for 19.1% of box office revenues, catering to family audiences, resulting in a higher percentage of child admissions which have a lower ticket price than adult admissions. Box office revenues from premium product accounted for 34.5% of box office revenues in the current period, down from 41.7% in the prior year period due in part to a lower percentage of 3D admissions in the current period compared to the prior year period more than offsetting higher revenues from UltraAVX, IMAX and VIP offerings. The decrease in 3D admissions is due in part to the higher proportion of family product in the current period compared to the prior year, which tends to have less 3D admissions, contributing to the lower BPP.
Year to Date
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Year to Date 2015 Top Year to Date 2014 Top
Cineplex Films 3D % Box Cineplex Films 3D % Box
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1 Jurassic World a 7.7% 1 Guardians of the Galaxy a 5.1%
2 The Avengers: Age Of a 5.8% 2 The Lego Movie a 4.2%
Ultron
3 Minions a 4.6% 3 Captain America: The a 3.8%
Winter Soldier
4 Furious 7 4.3% 4 X-Men: Days of Future Past a 3.4%
5 Inside Out a 3.7% 5 22 Jump Street 3.0%
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Box office revenues for the nine months ended September 30, 2015 were $514.8 million, an increase of $14.6 million or 2.9% over the prior year due to the 3.7% 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 and third quarters of 2015. 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 $0.07, or 0.8%, from $9.16 in the prior year period to $9.09 in the current period. This decrease was primarily due to the decrease in revenues from 3D product in the current period compared to the prior year period, as well as a higher percentage of child admissions in the current period compared to the prior year period. Premium priced offerings accounted for 36.0% of Cineplex's box office revenues in the nine months ended September 30, 2015, compared to 40.7% 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):
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Food service
revenues Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
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Food service
revenues $ 105,464 $ 92,094 14.5% $ 304,646 $ 277,261 9.9%
Attendance (i) 19,407 18,038 7.6% 56,640 54,611 3.7%
CPP (i) $ 5.43 $ 5.11 6.3% $ 5.38 $ 5.08 5.9%
Same store food
service revenues
(i) $ 102,839 $ 91,502 12.4% $ 295,430 $ 274,600 7.6%
Same store
attendance (i) 19,015 17,912 6.2% 55,265 54,080 2.2%
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(i) See non-GAAP measures section of this news release.
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Food service revenue
continuity Third Quarter Year to Date
Food Food
Service Attendance Service Attendance
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2014 as reported $ 92,094 18,038 $ 277,261 54,611
Same store attendance change 5,635 1,103 6,016 1,185
Impact of same store CPP
change 5,701 - 14,814 -
New and acquired theatres (i) 2,434 378 7,285 1,045
Disposed and closed theatres
(i) (400) (112) (730) (201)
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2015 as reported $ 105,464 19,407 $ 304,646 56,640
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(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.
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Third 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 $13.4 million, or 14.5% as compared to the prior year period primarily due to the 6.3% CPP increase and the 7.6% increase in attendance. CPP of $5.43 is a third quarter 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 higher CPP in the period.
Year to Date
Food service revenues increased $27.4 million, or 9.9% as compared to the prior year, due to the 5.9% increase in CPP and the 3.7% increase in attendance. The CPP of $5.38 in the current period is the highest CPP Cineplex has reported through the first nine 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):
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Media revenues Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
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Cineplex Media $ 25,029 $ 22,463 11.4% $ 70,363 $ 60,864 15.6%
Cineplex Digital
Media 9,267 9,529 -2.7% 28,025 26,473 5.9%
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Total media
revenues $ 34,296 $ 31,992 7.2% $ 98,388 $ 87,337 12.7%
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(i) Certain prior period comparatives have been reclassified to conform to
the current period's presentation.
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Third Quarter
Total media revenues increased 7.2% to $34.3 million in the third quarter of 2015 compared to the prior year period, and represents a third quarter media revenues record for Cineplex. This increase was largely due to higher Cineplex Media revenues, up $2.6 million as compared to the prior year period due primarily to higher showtime revenues resulting from increases in the automotive sector advertising.
Cineplex Digital Media revenues decreased $0.3 million due to lower project revenues as compared to the prior year period due to the timing of project installations in 2015 as compared to 2014. This decrease was partially offset by higher advertising and service revenues on various networks including the TimsTV and Oxford shopping mall networks. 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 $11.1 million in the nine months ended September 30, 2015 compared to the prior year period. The increase was due to the $9.5 million increase in Cineplex Media revenues due primarily to higher showtime revenues and the $1.6 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):
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Other revenues Third Quarter Year to Date
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2015 2014 Change 2015 2014 Change
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Games $ 2,523 $ 1,813 39.2% $ 7,016 $ 5,450 28.7%
Other 13,392 10,517 27.3% 38,707 32,239 20.1%
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Total other
revenues $ 15,915 $ 12,330 29.1% $ 45,723 $ 37,689 21.3%
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Third 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". Subsequent to the period end, Cineplex acquired the 50% of CSI that it did not already own on October 1, 2015. Effective that date, Cineplex will cease to recognize its share of income of CSI and instead will consolidate the results of CSI.
Other revenues increased 29.1% to $15.9 million in the third 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 in part to the increased attendance in the period as well as the conversion of select gaming rooms to XSCAPE Entertainment Centres. Included in Other are increases in various in-theatre revenues including auditorium rentals and film festival revenues.
Year to Date
For the year to date period, other revenues have increased 21.3% 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 increased attendance, the conversion of select gaming rooms to XSCAPE Entertainment Centres as well as the addition of new XSCAPE locations since the prior year period. A $0.4 million one-time adjustment in the second quarter of 2015 also impacted the games revenues increase period over 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):
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Film cost Third Quarter Year to Date
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2015 2014 Change 2015 2014 Change
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Film cost $ 91,567 $ 85,499 7.1% $ 273,893 $ 260,907 5.0%
Film cost
percentage (i) 53.1% 52.6% 0.5% 53.2% 52.2% 1.0%
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(i) See non-GAAP measures section of this news release.
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Third 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 was due to the higher attendance and the higher film cost percentage in the period compared to the prior year period. The increase in film cost percentage in the current period is primarily due to the settlement rate on the top films during the third quarter of 2015 being higher than the average film settlement rate in the 2014 period.
Year to Date
The year to date increase in film cost expense was due to the 1.0% increase in the film cost percentage and the 3.7% increase in attendance in the period. The increase in film cost percentage in the current year is as a result of the concentration of box office revenues from a few titles, with the top four films in the current period, which rank in the top ten grossing films of all-time, accounting for 22.4% of box office revenues (2014 - top four represented 16.5%).
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):
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Cost of food
service Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
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Cost of food
service $ 22,325 $ 19,848 12.5% $ 65,694 $ 59,876 9.7%
Concession cost
percentage (i) 21.2% 21.6% -0.4% 21.6% 21.6% -%
Concession margin
per patron (i) $ 4.28 $ 4.01 6.7% $ 4.22 $ 3.98 6.0%
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(i) See non-GAAP measures section of this news release.
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Third 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 higher food service revenues, partially offset by the 0.4% decrease in the concession cost percentage during the period. The concession margin per patron increased from $4.01 in the third quarter of 2014 to $4.28 in the same period in 2015, reflecting the impact of higher CPP and lower concession cost percentage 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. The concession margin per patron increased from $3.98 in the prior year period to $4.22 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):
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Depreciation and
amortization
expenses Third Quarter Year to Date
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2015 2014 Change 2015 2014 Change
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Depreciation of
property,
equipment and
leaseholds $ 20,225 $ 17,762 13.9% $ 59,098 $ 51,925 13.8%
Amortization of
intangible assets
and other 1,886 1,903 -0.9% 5,715 5,603 2.0%
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Depreciation and
amortization
expenses as
reported $ 22,111 $ 19,665 12.4% $ 64,813 $ 57,528 12.7%
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The quarterly increase in depreciation of property, equipment and leaseholds of $2.5 million and year to date increase of $7.2 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.
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):
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Loss on disposal
of assets Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Loss on disposal
of assets $ 987 $ 834 18.3% $ 2,337 $ 2,767 -15.5%
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During the third quarter of 2015, Cineplex recorded a loss of $1.0 million on the disposal of assets that were sold or otherwise disposed (2014 - $0.8 million). For the nine months ended September 30, 2015, disposal of assets resulted in a loss of $2.3 million on the disposal of assets that were sold or otherwise disposed of (2014 - $2.8 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):
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Other costs Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
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Theatre occupancy
expenses $ 51,239 $ 50,781 0.9% $ 152,821 $ 152,034 0.5%
Other operating
expenses 89,801 83,717 7.3% 259,952 251,465 3.4%
General and
administrative
expenses 15,703 12,476 25.9% 50,238 42,898 17.1%
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Total other costs $ 156,743 $ 146,974 6.6% $ 463,011 $ 446,397 3.7%
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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):
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Theatre occupancy
expenses Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Rent $ 34,055 $ 33,474 1.7% $ 101,512 $ 100,758 0.7%
Other occupancy 17,806 17,597 1.2% 53,928 53,234 1.3%
One-time items (i) (622) (290) 114.5% (2,619) (1,958) 33.8%
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Total $ 51,239 $ 50,781 0.9% $ 152,821 $ 152,034 0.5%
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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
Third Quarter Year to Date
Occupancy Occupancy
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2014 as reported $ 50,781 $ 152,034
Impact of new and acquired theatres 643 2,199
Impact of disposed theatres (287) (1,414)
Same store rent change (i) 447 431
One-time items (333) (661)
Other (12) 232
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2015 as reported $ 51,239 $ 152,821
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(i) See non-GAAP measures section of this news release.
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Third Quarter
Theatre occupancy expenses increased $0.5 million during the third quarter of 2015 compared to the prior year period. This increase was primarily due to higher same store rent expense ($0.4 million) and the impact of new and acquired theatres net of disposed theatres ($0.4 million), partially offset by the impact of one-time credits ($0.3 million).
Year to Date
The increase in theatre occupancy expenses of $0.8 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 same store rent expenses, 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 Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Theatre payroll $ 35,530 $ 31,458 12.9% $ 103,554 $ 96,938 6.8%
Media 12,819 13,793 -7.1% 39,464 39,670 -0.5%
Other 41,452 38,466 7.8% 116,934 114,857 1.8%
----------------------------------------------------------------------------
Other operating
expenses $ 89,801 $ 83,717 7.3% $ 259,952 $ 251,465 3.4%
----------------------------------------------------------------------------
------------------------------------------------------------------------
Other operating continuity
Third Quarter Year to Date
Other Operating Other Operating
------------------------------------------------------------------------
2014 as reported $ 83,717 $ 251,465
Impact of new and acquired theatres 2,087 5,191
Impact of disposed theatres (334) (538)
Same store payroll change (i) 2,920 3,367
Marketing change 1,504 1,513
Media change (974) (206)
New business initiatives change 162 (1,454)
Other 719 614
------------------------------------------------------------------------
2015 as reported $ 89,801 $ 259,952
------------------------------------------------------------------------
(i) See non-GAAP measures section of this news release.
------------------------------------------------------------------------
Third Quarter
Other operating expenses during the third quarter of 2015 increased $6.1 million or 7.3% 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 ($1.8 million), higher marketing expenses ($1.5 million) due to expenses incurred supporting film product for which Cineplex has distribution rights as well as 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 ($2.9 million) and a $0.7 million increase in the Other category. These increases were partially offset by a $1.0 million decrease in media expenses due in part to the prior year period including more equipment sales for digital media, which have higher costs associated with fulfillment than advertising sales and digital media services.
Year to Date
For the nine months ended September 30, 2015, other operating expenses increased $8.5 million or 3.4% 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 ($4.7 million), higher same store payroll costs of $3.4 million due to higher business volumes and minimum wage increases in certain provinces, and the higher marketing expenses ($1.5 million) discussed above. 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 ($1.5 million).
The $0.6 million increase in the Other category was primarily due to a $1.6 million increase in SCENE costs due to the growing membership base and support for the SportChek and CARA partnerships and a $0.7 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 ($1.3 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 Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
G&A excluding LTIP
and option plan
expense $ 13,342 $ 11,962 11.5% $ 40,948 $ 39,214 4.4%
LTIP (i) 1,931 69 NM 8,023 2,393 235.3%
Option plan 430 445 -3.4% 1,267 1,291 -1.9%
----------------------------------------------------------------------------
G&A expenses as
reported $ 15,703 $ 12,476 25.9% $ 50,238 $ 42,898 17.1%
----------------------------------------------------------------------------
(i) LTIP includes the expense for the LTIP program as well as the expense
for the executive and Board deferred share unit plans.
----------------------------------------------------------------------------
Third Quarter
G&A expenses increased $3.2 million during the third quarter of 2015 compared to the prior year period due to higher LTIP expenses. This increase was due to the prior year period including an adjustment relating to the variance in performance results for the 2014 period. The $1.4 million increase in G&A excluding LTIP and option plan expense is due primarily to higher head office payroll and higher professional fees.
Year to Date
G&A expenses for the year to date period increased $7.3 million compared to the prior year period, due to a $5.6 million increase in LTIP expense as a result of the larger increase in the average closing Share price for the 90 days prior to September 30, 2015 as compared to the prior year period as well as the prior year period including an adjustment relating to the variance in performance results for the 2014 period. The $1.9 million increase in G&A excluding LTIP and option expense is due to higher head office payroll and higher professional fees.
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 nine months ended September 30, 2015 as compared to the prior year periods (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
----------------------------------------------------------------------------
EBITDA Third Quarter Year to Date
----------------------------------------------------------
2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
EBITDA $ 57,884 $ 46,898 23.4% $ 161,222 $ 134,654 19.7%
Adjusted EBITDA $ 59,081 $ 48,042 23.0% $ 164,639 $ 138,353 19.0%
Adjusted EBITDA
margin 18.0% 16.1% 1.9% 17.1% 15.3% 1.8%
----------------------------------------------------------------------------
Adjusted EBITDA for the third quarter of 2015 increased $11.0 million, or 23.0%, as compared to the prior year period. The increase as compared to the prior year period was primarily due to the higher attendance resulting in higher exhibition revenues, and the higher contribution from Cineplex Media. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 18.0% in the current period, up from 16.1% in the prior year period.
Adjusted EBITDA for the nine months ended September 30, 2015 increased $26.3 million, or 19.0%, as compared to the prior year period, due to the higher revenues in all major categories compared to the prior year period. Adjusted EBITDA margin for the period was 17.1%, an increase of 1.8% from 15.3% in the prior year period.
ADJUSTED FREE CASH FLOW
For the third quarter of 2015, adjusted free cash flow per common share of Cineplex was $0.57 as compared to $0.57 in the prior year period. The declared dividends per common share of Cineplex were $0.39 in the third quarter of 2015 and $0.38 in the prior year period. During the twelve months ended September 30, 2015, Cineplex generated adjusted free cash flow per Share of $2.33, compared to $2.21 per Share in the year ended September 30, 2014. Cineplex declared dividends per Share of $1.53 and $1.47, respectively, in each year. The payout ratios for these periods were approximately 65.5% and 66.2%, respectively. Adjusted free cash flow per common share and the payout ratios for the 2014 periods were 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. None of those 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 months ended September 30, 2015, the impact of the four locations that have been opened or acquired and the two locations that have been closed have been excluded, resulting in 158 theatres being included in the same store metrics. For the nine months ended September 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:
Tuesday, November 10, 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 Tuesday, November 10,
2015 and end at 1:00 p.m. Eastern Time on Tuesday, November 17, 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)
September 30, December 31,
2015 2014
Assets
Current assets
Cash and cash equivalents $ 24,795 $ 34,367
Trade and other receivables 56,576 101,462
Inventories 8,086 7,978
Prepaid expenses and other current assets 12,697 8,102
----------------------------------
102,154 151,909
Non-current assets
Property, equipment and leaseholds 507,348 495,532
Deferred income taxes 6,531 6,971
Interests in joint ventures 47,307 46,457
Intangible assets 123,247 109,746
Goodwill 801,335 798,801
----------------------------------
$ 1,587,922 $ 1,609,416
----------------------------------
----------------------------------
Liabilities
Current liabilities
Accounts payable and accrued expenses $ 105,631 $ 159,152
Share-based compensation 7,225 6,160
Dividends payable 8,201 7,877
Income taxes payable 16,835 9,735
Deferred revenue 107,103 149,644
Finance lease obligations 2,888 2,670
Fair value of interest rate swap
agreements 1,372 692
----------------------------------
249,255 335,930
----------------------------------
Non-current liabilities
Share-based compensation 17,728 15,504
Long-term debt 308,194 229,754
Fair value of interest rate swap
agreements 4,482 2,117
Finance lease obligations 12,811 15,008
Post-employment benefit obligations 7,154 6,977
Other liabilities 171,703 173,550
Convertible debentures 100,211 98,727
----------------------------------
622,283 541,637
----------------------------------
Total liabilities 871,538 877,567
----------------------------------
Equity
Share capital 854,595 854,073
Deficit (138,775) (123,771)
Hedging reserves and other (5,376) (3,405)
Contributed surplus 758 4,952
Cumulative translation adjustment 324 -
----------------------------------
Total equity attributable to owners of
Cineplex 711,526 731,849
Non-controlling interests 4,858 -
Total equity 716,384 731,849
----------------------------------
----------------------------------
$ 1,587,922 $ 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 Nine months ended
September 30, September 30,
----------------------------------------------------
2015 2014 2015 2014
Revenues
Box office $ 172,571 $ 162,574 $ 514,814 $ 500,218
Food service 105,464 92,094 304,646 277,261
Media 34,296 31,992 98,388 87,337
Other 15,915 12,330 45,723 37,689
----------------------------------------------------
328,246 298,990 963,571 902,505
----------------------------------------------------
Expenses
Film cost 91,567 85,499 273,893 260,907
Cost of food service 22,325 19,848 65,694 59,876
Depreciation and
amortization 22,111 19,665 64,813 57,528
Loss on disposal of
assets 987 834 2,337 2,767
Other costs 156,743 146,974 463,011 446,397
Share of income of joint
ventures (1,260) (1,063) (2,586) (2,096)
Interest expense 5,919 5,472 17,149 16,272
Interest income (46) (172) (134) (285)
----------------------------------------------------
298,346 277,057 884,177 841,366
----------------------------------------------------
Income before income
taxes 29,900 21,933 79,394 61,139
----------------------------------------------------
Provision for income
taxes
Current 8,761 1,007 21,836 2,387
Deferred (300) 5,012 114 14,562
----------------------------------------------------
8,461 6,019 21,950 16,949
----------------------------------------------------
Net income $ 21,439 $ 15,914 $ 57,444 $ 44,190
----------------------------------------------------
----------------------------------------------------
Attributable to:
Owners of Cineplex $ 21,520 $ 15,914 $ 57,525 $ 44,190
Non-controlling
interests (81) - (81) -
----------------------------------------------------
Net income $ 21,439 $ 15,914 $ 57,444 $ 44,190
----------------------------------------------------
----------------------------------------------------
Basic net income per
share attributable to
owners of Cineplex $ 0.34 $ 0.25 $ 0.91 $ 0.70
Diluted net income per
share attributable to
owners of Cineplex $ 0.34 $ 0.25 $ 0.90 $ 0.70
Cineplex Inc.
Interim Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended Nine months ended
September 30, September 30,
----------------------------------------------------
2015 2014 2015 2014
Net income $ 21,439 $ 15,914 $ 57,444 $ 44,190
----------------------------------------------------
Other comprehensive
income (loss)
Items that will be
reclassified
subsequently to net
income:
(Loss) income on hedging
instruments (189) 73 (2,689) (1,483)
Associated deferred
income taxes recovery
(expense) 50 (19) 718 392
Foreign currency
translation adjustment 324 - 324 -
----------------------------------------------------
Other comprehensive
income (loss) 185 54 (1,647) (1,091)
----------------------------------------------------
Comprehensive income $ 21,624 $ 15,968 $ 55,797 $ 43,099
----------------------------------------------------
Attributable to:
Owners of Cineplex $ 21,705 $ 15,968 $ 55,878 $ 43,099
Non-controlling
interests (81) - (81) -
----------------------------------------------------
Comprehensive income $ 21,624 $ 15,968 $ 55,797 $ 43,099
----------------------------------------------------
----------------------------------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Changes in Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the nine months ended September 30, 2015 and 2014
Hedging Cumulative
Share Contributed and other translation
capital surplus reserves adjustment
Balance -
January 1, 2015 $ 854,073 $ 4,952 $ (3,405) $ -
Net income - - - -
Other
comprehensive
(loss) - - (1,971) 324
------------------------------------------------------------
Total
comprehensive
income - - (1,971) 324
Dividends
declared - - - -
Share option
expense - 1,267 - -
Issuance of
shares on
exercise of
options 522 (522) - -
WGN purchase
obligation - (4,939) - -
WGN non-
controlling
interests
recognized on
acquisition - - - -
------------------------------------------------------------
Balance -
September 30,
2015 $ 854,595 $ 758 $ (5,376) $ 324
------------------------------------------------------------
------------------------------------------------------------
Balance -
January 1, 2014 $ 853,411 $ 3,899 $ (1,715) $ -
Net income - - - -
Other
comprehensive
(loss) - - (1,091) -
------------------------------------------------------------
Total
comprehensive
income (1,091) -
Dividends
declared - - - -
Share option
expense - 1,291 - -
Issuance of
shares on
exercise of
options 485 (485) - -
------------------------------------------------------------
Balance -
September 30,
2014 $ 853,896 $ 4,705 $ (2,806) $ -
------------------------------------------------------------
------------------------------------------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Changes in
Equity
(Unaudited)
(expressed in thousands of Canadian dollars)
For the nine months ended September 30, 2015 and 2014
Non-
controlling
Deficit interests Total
Balance -
January 1, 2015 $ (123,771) $ - $ 731,849
Net income 57,444 (81) 57,444
Other
comprehensive
(loss) - - (1,647)
---------------------------------------------
Total
comprehensive
income 57,525 (81) 55,797
Dividends
declared (72,529) - (72,529)
Share option
expense - - 1,267
Issuance of
shares on
exercise of
options - - -
WGN purchase
obligation - - (4,939)
WGN non-
controlling
interests
recognized on
acquisition - 4,939 4,939
---------------------------------------------
Balance -
September 30,
2015 $ (138,775) $ 4,858 $ 716,384
---------------------------------------------
---------------------------------------------
Balance -
January 1, 2014 $ (107,323) $ - $ 748,272
Net income 44,190 - 44,190
Other
comprehensive
(loss) - - (1,091)
---------------------------------------------
Total
comprehensive
income 44,190 - 43,099
Dividends
declared (69,582) - (69,582)
Share option
expense - - 1,291
Issuance of
shares on
exercise of
options - - -
---------------------------------------------
Balance -
September 30,
2014 $ (132,715) $ - $ 723,080
---------------------------------------------
---------------------------------------------
Cineplex Inc.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of Canadian dollars)
Three months ended Nine months ended
September 30, September 30,
------------------------------------------------
2015 2014 2015 2014
Cash provided by (used in)
Operating activities
Net income $ 21,439 $ 15,914 $ 57,444 $ 44,190
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and
amortization of property,
equipment and leaseholds,
and intangible assets 22,111 19,665 64,813 57,528
Amortization of tenant
inducements, rent
averaging liabilities and
fair value lease contract
liabilities (1,947) (1,769) (5,950) (4,648)
Accretion of debt issuance
costs and other non-cash
interest 1,403 1,230 3,995 3,581
Loss on disposal of assets 987 834 2,337 2,767
Deferred income taxes (300) 5,012 114 14,562
Interest rate swap
agreements - non-cash
interest 62 (27) 149 (73)
Non-cash share-based
compensation 429 445 1,266 1,291
Accretion of convertible
debentures 493 460 1,484 1,398
Net change in interests in
joint ventures 875 1,337 (2,224) 97
Tenant inducements - 555 757 3,397
Changes in operating assets
and liabilities (9,280) (20,746) (49,937) (79,257)
------------------------------------------------
Net cash provided by
operating activities 36,272 22,910 74,248 44,833
------------------------------------------------
Investing activities
Proceeds from sale of assets - 1 108 405
Purchases of property,
equipment and leaseholds (25,560) (33,466) (72,885) (84,161)
Acquisition of businesses,
net of cash acquired (12,472) - (15,630) (2,466)
Intangible assets addition (355) - (469) (2,750)
Net cash received from CDCP 407 140 1,163 909
------------------------------------------------
Net cash used in investing
activities (37,980) (33,325) (87,713) (88,063)
------------------------------------------------
Financing activities
Dividends paid (24,603) (23,620) (72,204) (69,260)
Borrowings under credit
facility, net 28,000 29,000 78,000 79,000
Payments under finance
leases (671) (592) (1,980) (1,778)
------------------------------------------------
Net cash provided by
financing activities 2,726 4,788 3,816 7,962
------------------------------------------------
Effect of exchange rate
differences on cash 77 - 77 -
Increase (decrease) in cash
and cash equivalents 1,095 (5,627) (9,572) (35,268)
Cash and cash equivalents -
Beginning of period 23,700 14,499 34,367 44,140
------------------------------------------------
Cash and cash equivalents -
End of period $ 24,795 $ 8,872 $ 24,795 $ 8,872
------------------------------------------------
------------------------------------------------
Supplemental information
Cash paid for interest $ 2,354 $ 2,579 $ 9,632 $ 10,000
Cash paid for income taxes $ 1,998 $ 186 $ 13,674 $ 2,172
Cineplex Inc.
Interim Consolidated Supplemental Information
(Unaudited)
(expressed in thousands of Canadian dollars)
Reconciliation to Adjusted EBITDA
----------------------------------------------------------------------------
Three months ended Nine months ended
September 30, September 30,
2015 2014 2015 2014
---------------------- ----------------------
Net income $ 21,439 $ 15,914 $ 57,444 $ 44,190
Depreciation and amortization 22,111 19,665 64,813 57,528
Interest expense 5,919 5,472 17,149 16,272
Interest income (46) (172) (134) (285)
Current income tax expense 8,761 1,007 21,836 2,387
Deferred income tax recovery
(expense) (300) 5,012 114 14,562
---------------------- ----------------------
EBITDA $ 57,884 $ 46,898 $ 161,222 $ 134,654
Loss on disposal of assets 987 834 2,337 2,767
CDCP equity income (i) (428) (388) (720) (1,008)
Non-controlling interest EBITDA
of WGN 34 - 34 -
Depreciation and amortization -
joint ventures (ii) 522 520 1,539 1,604
Joint venture taxes and
interest (ii) 82 178 227 336
---------------------- ----------------------
Adjusted EBITDA $ 59,081 $ 48,042 $ 164,639 $ 138,353
----------------------------------------------------------------------------
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 Nine months ended
September 30, September 30,
2015 2014 2015 2014
----------------------------------------------------
Cash provided by
operating activities $ 36,272 $ 22,910 $ 74,248 $ 44,833
Less: Total capital
expenditures net of
proceeds on sale of
assets (25,560) (33,465) (72,777) (83,756)
----------------------------------------------------
Standardized free cash
flow 10,712 (10,555) 1,471 (38,923)
Add/(Less):
Changes in operating
assets and liabilities
(i) 9,280 20,746 49,937 79,257
Changes in operating
assets and liabilities
of joint ventures (i) (2,135) (2,400) (362) (2,193)
Tenant inducements (ii) - (555) (757) (3,397)
Principal component of
finance lease
obligations (671) (592) (1,980) (1,778)
Growth capital
expenditures and other
(iii) 16,797 27,668 51,211 65,996
Share of income of joint
ventures, net of non-
cash depreciation (iv) 1,436 1,431 3,632 3,095
Non-controlling interest
EBITDA of WGN 34 - 34 -
Net cash received from
CDCP (iv) 407 140 1,163 909
----------------------------------------------------
Adjusted free cash flow $ 35,860 $ 35,883 $ 104,349 $ 102,966
----------------------------------------------------
----------------------------------------------------
Average number of Shares
outstanding 63,086,232 62,987,992 63,064,784 62,965,606
Adjusted free cash flow
per Share $ 0.568 $ 0.570 $ 1.655 $ 1.635
Dividends declared $ 0.390 $ 0.375 $ 1.150 $ 1.105
----------------------------------------------------------------------------
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.
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