Cineplex Q2 2022 Reports Positive Net Income and Strongest Results Since Pandemic Began
Press Release
TORONTO, Canada, August 11, 2022 (TSX: CGX) – Cineplex Inc. (“Cineplex” or the “Company”) today released its financial results for the three and six months ended June 30, 2022. Unless otherwise specified, all amounts are in Canadian dollars.
“Cineplex delivered its strongest quarter in over two years, thanks to a great film slate and record-breaking results from across our diversified businesses,” said Ellis Jacob, President & CEO, Cineplex. “The cumulative success of Top Gun: Maverick, Doctor Strange in the Multiverse of Madness, and Jurassic World Dominion during the quarter – which saw each film opening with a domestic box office over $100 million – is a testament to the fact that when strong film product is available, Canadians return to our theatres in droves. We generated positive net income for the first time since the start of the pandemic. We also achieved a second quarter record BPP of $12.29 and an all-time quarterly record CPP of $8.84. We also saw very encouraging results in our other businesses, including an all-time quarterly record adjusted EBITDAaL in Player One Amusement Group and record second quarter adjusted EBITDAaL in the Location-Based Entertainment business.”
Jacob continued, “in addition to reporting our strongest results since the pandemic began, this quarter we are celebrating a few other important milestones from across the business, including the expansion of the Scene+ loyalty program and Empire Company Limited joining Scotiabank and Cineplex as partners. Today, we are also celebrating the one-year anniversary of CineClub.”
“With respect to the Cineworld litigation, we remain focused on preparations for the Ontario Court of Appeal hearings which are scheduled for October 12 and 13 of this year. As part of the ongoing efforts to maximize and monetize the value of the judgement, we have engaged Moelis & Company as financial advisor and Goodmans LLP as lead counsel,” said Jacob.
“As we look forward, we remain confident in the recovery of our businesses, our strong capital management and liquidity, and our efforts to manage financial uncertainties as we have done during previous economic downturns. The strong quarterly results aided our compliance with the financial covenant testing for the second quarter of 2022. In anticipation of ongoing film release shifts caused by COVID-19 related production delays, we have received the support and confidence of our lending group for the suspension of financial covenant testing in the third quarter of 2022. With the backdrop of recessionary concerns, Cineplex is well positioned to further capitalize on pent-up consumer demand for affordable out-of-home entertainment,” Jacob concluded.
Second Quarter Financial Results
| 2022 | 2021 | Period over Period Change | |||||
| (i) | |||||||
| Total revenues | $ | 349.9 | million | $ | 64.9 | million | 438.9% |
| Theatre attendance | 11.1 | million | 1.1 | million | 866.2% | ||
| Net income (loss) (ii) | $ | 1.3 | million | $ | (103.7) million | NM | |
| Net income (loss) as a percentage of sales (ii) | 0.4 | % | (159.7) | % | 160.1% | ||
| Cash provided by (used in) operating activities | $ | 47.2 | million | $ | 17.1 | million | 175.2% |
| Box office revenues per patron (“BPP”) (iii) | $ | 12.29 | $ | 10.89 | 12.9% | ||
| Concession revenues per patron (“CPP”) (iii) | $ | 8.84 | $ | 7.86 | 12.5% | ||
| Adjusted EBITDA (iii) | $ | 77.9 | million | $ | (16.9) million | NM | |
| Adjusted EBITDAaL (ii) (iii) | $ | 35.8 | million | $ | (53.2) million | NM | |
| Adjusted EBITDAaL margin (ii) (iii) | 10.2 | % | (81.9) | % | 92.1% | ||
| Adjusted free cash flow (iii) | $ | 21.8 | million | $ | (65.9) million | NM | |
| Adjusted free cash flow per Share (iii) | $ | 0.345 | $ | (1.041) | NM | ||
| Earnings per Share (“EPS”) – basic and diluted (ii) | $ | 0.02 | $ | (1.64) | NM | ||
Year to Date Financial Results
| 2022 | 2021 | Period over Period Change | |||||
| (i) | |||||||
| Total revenues | $ | 578.6 | million | $ | 106.3 | million | 444.1% |
| Theatre attendance | 17.8 | million | 1.6 | million | NM | ||
| Net loss (ii) | $ | (40.9) million | $ | (193.4) million | -78.8% | ||
| Net loss as a percentage of sales (ii) | (7.1) | % | (181.9) | % | 174.8% | ||
| Cash provided by (used in) operating activities | $ | 41.7 | million | $ | (18.5) million | NM | |
| Box office revenues per patron (“BPP”) (iii) | $ | 12.19 | $ | 10.44 | 16.8% | ||
| Concession revenues per patron (“CPP”) (iii) | $ | 8.83 | $ | 7.40 | 19.3% | ||
| Adjusted EBITDA (iii) | $ | 114.4 | million | $ | (47.0) million | NM | |
| Adjusted EBITDAaL (ii) (iii) | $ | 30.0 | million | $ | (115.3) million | NM | |
| Adjusted EBITDAaL margin (ii) (iii) | 5.2 | % | (108.4) | % | 113.6% | ||
| Adjusted free cash flow (iii) | $ | 0.1 | million | $ | (144.7) million | NM | |
| Adjusted free cash flow per Share (iii) | $ | 0.002 | $ | (2.285) | NM | ||
| Earnings per Share (“EPS”) – basic and diluted (ii) | $ | (0.65) | $ | (3.05) | -78.7% | ||
- Period over period change calculated based on thousands of dollars except percentage and per share values. Changes in percentage amounts are calculated as 2022 value less 2021 value.
- 2022 includes expenses related to the Cineworld Transaction and associated litigation and claims recovery in the amount of $1.2 million (2021 – $2.6 million) for the second quarter and $1.5 million (2021 – $5.0 million) for the year-to-date.
- Adjusted EBITDA, adjusted EBITDAaL, adjusted EBITDAaL margin, adjusted free cash flow per common share of Cineplex, BPP and CPP are measures that do not have a standardized meaning under generally accepted accounting principles (“GAAP”). These measures as well as other Non-GAAP other financial measures reported by Cineplex are defined in the ‘Non-GAAP and Other Financial Measures’ section at the end of this news release.
Proactive Credit Facility Amendment
On August 10, 2022, Cineplex entered into a fifth amending agreement to the Credit Agreement, (the “Fifth Credit Agreement Amendment”), which among other things, extended the suspension of financial covenant testing until the fourth quarter of 2022 and liquidity covenant requirement until March 31, 2023. The following is a summary of the key terms of the Fifth Credit Agreement Amendment:
- The suspension of financial covenant testing was extended until the fourth quarter of 2022. On resumption of financial covenant testing in the fourth quarter of 2022:
- for the fourth quarter of 2022, testing will be based on an annualized calculation of Adjusted EBITDA (as further adjusted in accordance with the Credit Agreement definitions) based on the actual results for the fourth quarter multiplied by 4;
- for the quarter ending on March 31, 2023, testing will be based on an annualized calculation of Adjusted EBITDA based on actual results for the fourth quarter of 2022 and the first quarter of 2023 multiplied by 2; and
- for the quarter ending on June 30, 2023, testing will be based on an annualized calculation of Adjusted EBITDA based on the actual results of the fourth quarter of 2022, the first quarter of 2023 and the second quarter of 2023 multiplied by 4/3.
- Thereafter, testing will be based on an annualized calculation of the cumulative Adjusted EBITDA on a trailing four fiscal quarter basis;
- The Total Leverage Ratio of 3.75x will apply when financial covenants are reinstated, and will be reduced quarterly by 0.25x until the third quarter of 2023 at which point it will reach a level of 3.00x;
- The liquidity covenant will continue and be amended requiring available liquidity (as defined) to be maintained at all times until March 31, 2023 at no less than $100.0 million;
- The Senior Leverage Ratio to be based on annualized Adjusted EBITDA and set at 1.0x lower than the Total Leverage Ratio. Senior Leverage Ratio is defined as (i) Total Debt (as defined in the Credit Agreement) less any Notes Payable to
- Adjusted EBITDA; and
- A fixed charge coverage ratio of greater than 1.25x will continue to apply.
This summary of the Fifth Credit Agreement Amendment is qualified in its entirety by reference to the provisions of the Credit Agreement which contains a complete statement of those terms and conditions. The Credit Agreement and each of the First, Second, Third, Fourth and Fifth Credit Agreement Amendment were filed on SEDAR on June 30, 2020, November 13, 2020, February 8, 2021, January 4, 2022, and August 10, 2022, respectively, for each of Credit Agreement Amendments.
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