Cineplex Inc. Reports Record First Quarter Adjusted EBITDA and Announces Dividend Increase
(firmenpresse) - TORONTO, ONTARIO -- (Marketwire) -- 05/10/12 -- Cineplex Inc. ("Cineplex") (TSX: CGX) today released its financial results for the first quarter of 2012.
First Quarter Results
"We are pleased to report our strongest first quarter adjusted EBITDA results ever," said Ellis Jacob, President and CEO, Cineplex Entertainment. "A strong film slate including titles such as The Hunger Games and Dr. Seuss' The Lorax contributed to a 12.1% increase in both attendance and total revenue. Cost controls mitigated a decline in media revenues to deliver a 31.7% increase in adjusted EBITDA and a significant increase in net income. We are also pleased to announce a dividend increase to $1.35 per share on an annual basis from the current $1.29 per share. This increase will be effective with the May 2012 dividend which will be paid in June 2012. This increase represents our second dividend increase since converting to a corporation on January 1, 2011."
"During the first quarter, we also continued to enhance the quality of our circuit through expanded premium offerings and digital projection deployment. We added two UltraAVX auditoriums, 16 RealD 3D screens and converted 219 projection systems to digital resulting in an 82% digital penetration as of March 31, 2012. We also continued to expand the SCENE loyalty program, with total membership as of March 31, 2012 of 3.5 million, and advance our interactive and e-commerce initiatives."
EBITDA and adjusted free cash flow are not measures recognized by generally accepted accounting principles ("GAAP") and do not have standardized meanings in accordance with such principles. Therefore, EBITDA and adjusted free cash flow may not be comparable to similar measures presented by other issuers. EBITDA is calculated by adding back to net income, income tax expense, amortization and interest expense net of interest income. Adjusted EBITDA is calculated by adjusting EBITDA for gains and losses on disposal of assets and the share of income or loss of the Canadian Digital Cinema Partnership ("CDCP"). Adjusted free cash flow is a non-GAAP measure generally used by Canadian corporations, as an indicator of financial performance and it should not be seen as a measure of liquidity or a substitute for comparable metrics prepared in accordance with GAAP. Management uses adjusted EBITDA and adjusted free cash flow to evaluate performance primarily because of the significant effect certain unusual or non-recurring charges and other items have on EBITDA from period to period. For a detailed reconciliation of net income to EBITDA and adjusted EBITDA and from cash provided by operating activities to adjusted free cash flow, please refer to Cineplex's management's discussion and analysis filed on .
KEY DEVELOPMENTS IN THE FIRST QUARTER OF 2012
The following describes certain key business initiatives undertaken during the first quarter of 2012 in each of Cineplex's core business areas:
THEATRE EXHIBITION
MERCHANDISING
MEDIA
ALTERNATIVE PROGRAMMING
INTERACTIVE
LOYALTY
OPERATING RESULTS FOR THE FIRST QUARTER OF 2012
Total revenues
Total revenues for the three months ended March 31, 2012 increased $26.8 million (12.1%) to $248.2 million as compared to the prior year period. A discussion of the factors affecting the changes in box office, concession and other revenues for the periods is provided on the following pages.
Box office revenues
The following table highlights the movement in box office revenues, attendance and BPP for the quarter (in thousands of Canadian dollars, except attendance reported in thousands of patrons, and per patron amounts, unless otherwise noted):
Box office revenues increased $19.5 million, or 15.0%, to $149.4 million during the first quarter of 2012, compared to $130.0 million recorded in the same period in 2011. This increase was primarily due to a 12.1% increase in attendance, as well as a 2.5% increase in BPP. Film product during the current year period was stronger than the prior year period, with The Hunger Games recording the highest-ever box office revenues for a first quarter release and the third-largest opening weekend of all-time. Attendance in the first quarter of 2012 also benefited from the first week of January being a school holiday whereas the first week of 2011 was not.
BPP increased $0.21, from $8.51 in the first quarter of 2011 to $8.72 in the same period in 2012 mainly due to premium-priced product (3D, UltraAVX and IMAX) accounting for 27.1% of box office revenues in the current quarter, up from 23.0% in the prior year period. The increase in the percentage of box office revenues from premium-priced product was due to the impact of UltraAVX, VIP and IMAX installations, the screen counts of which have increased since the first quarter of 2011.
Cineplex's investment in premium-priced formats, including 3D, UltraAVX, IMAX and VIP, over the last four years has positioned it to take advantage of the price premiums offered on these formats, which has contributed to Cineplex's BPP growth in the current period compared to the prior year period.
Concession revenues
The following table highlights the movement in concession revenues, attendance and CPP for the quarter (in thousands of Canadian dollars, except attendance and same store attendance reported in thousands of patrons, and per patron amounts):
Concession revenues increased 18.2% as compared to the prior year quarter, due to the 12.1% increase in attendance during the period and the 5.4% increase in CPP. CPP increased from $4.27 in the first quarter of 2011 to $4.50 in the same period in 2012, and represents a first quarter record for Cineplex. Cineplex believes a focus on revised concession offerings through its RBO rationalization program and better communication with customers through the expansion of a digital menu board program have both contributed to the higher CPP in the current period compared to the prior year period.
While the 10% SCENE discount and SCENE points issued on concession combo purchases have a negative impact on CPP, Cineplex believes that this program drives incremental visits and concession purchases, resulting in higher overall concession revenues.
Other revenues
The following table highlights the movement in media, games and other revenues for the quarter (in thousands of Canadian dollars):
Other revenues decreased 17.3% from $26.3 million in the first quarter of 2011 to $21.7 million in the same period in 2012. This decrease was due to lower media revenues, which during the first quarter of 2012 were $12.7 million, down $5.3 million, or 29.3%, when compared to the prior year period. The prior year period is a strong comparator for media, as it was a first quarter record for media revenues. The decrease was due to lower full motion and digital pre-show revenues ($5.2 million) compared to the record-setting first quarter of 2011, as a result of decreased spending by the government and telecommunications sectors and the impact of the continued economic uncertainty during the period.
The games revenue increase is due to the acquisition of NWS in May 2011 and therefore is not included in the prior year comparative. The first quarter of 2012 includes one month of revenues for NWS prior to the creation of CSI ($0.4 million). The February and March results for CSI are included in the 'Share of loss of joint ventures' line in the Statements of Operations. The addition of three new XSCAPE entertainment centres since the first quarter of 2011 also contributed to the increase in games revenues.
Film cost
The following table highlights the movement in film cost and Film Cost Percentage for the quarter (in thousands of Canadian dollars, except film cost percentage):
First Quarter
Film cost varies primarily with box office revenue, and can vary from quarter to quarter based on the relative strength of the titles exhibited during the period. The increase in the first quarter of 2012 compared to the prior year period was due to the increase in box office revenue and the 0.9% increase in film cost percentage. The increase in film cost percentage is primarily due to the settlement rate on certain strong performing titles during the first quarter of 2012 being higher than the average film settlement rate.
Cost of concessions
The following table highlights the movement in concession cost and concession cost as a percentage of concession revenues ("concession cost percentage") for the quarter (in thousands of Canadian dollars, except concession cost percentage and concession margin per patron):
First Quarter
Cost of concessions varies primarily with theatre attendance as well as the quantity and mix of concession offerings sold. The increase in concession cost as compared to the prior year period was due to the 18.2% increase in concession revenues. The concession cost percentage of 20.5% was in line with the prior year period. The concession margin per patron increased from $3.37 in the first quarter of 2011 to $3.58 in the same period in 2012, reflecting the impact of the higher CPP during the period.
Depreciation and amortization
The following table highlights the movement in depreciation and amortization expenses during the quarter (in thousands of Canadian dollars):
The first quarter decrease in amortization of property, equipment and leaseholds of $0.6 million primarily relates to the transfer of digital projection equipment to CDCP in June 2011 resulting in lower asset values to depreciate. Lower depreciation relating to the declining 35 millimeter projector base due to the circuit's conversion to digital also contributed to the decrease in amortization of property, equipment and leaseholds.
(Gain) loss on disposal of assets
The following table shows the movement in the (gain) loss on disposal of assets during the quarter (in thousands of Canadian dollars):
First Quarter
The gain or loss on disposal of assets represents the gain or loss recorded on certain assets that were sold or otherwise disposed. For the first quarter of 2012, Cineplex recorded a gain of $0.1 million on the disposal of assets, compared to a loss of $0.5 million in the prior year period.
Other costs
Other costs include three main sub-categories of expenses, including theatre occupancy expenses, which capture the rent and associated occupancy costs for Cineplex's various operations; other operating expenses, which include the costs related to running Cineplex's theatres and ancillary businesses; and general and administrative expenses, which includes costs related to managing Cineplex's operations, including the head office expenses. Please see the discussions below for more details on these categories. The following table highlights the movement in other costs for the quarter (in thousands of Canadian dollars):
Theatre occupancy expenses
The following table highlights the movement in theatre occupancy expenses for the quarter (in thousands of Canadian dollars):
First Quarter
Theatre occupancy expenses increased $0.2 million during the first quarter of 2012 compared to the prior year period. This increase was primarily due to higher same-store rent costs, including common-area maintenance and real estate taxes.
Other operating expenses
The following table highlights the movement in other operating expenses during the quarter (in thousands of Canadian dollars):
First Quarter
Other operating expenses increased $1.6 million during the first quarter of 2012 compared to the prior year period primarily due to higher business volumes in the 2012 period. The higher business volumes resulted in higher payroll costs ($1.8 million), with total theatre payroll accounting for 46.3% of total operating expenses during the first quarter of 2012 as compared to 44.5% for the same period one year earlier. Marketing expenses increased $0.8 million compared to the prior year period due to enhanced marketing programs supporting new and existing initiatives. One month of operations for NWS are included in other operating expenses in 2012 but not in 2011, resulting in a $0.3 million increase. These increases were partially offset by lower Media expenses ($1.1 million) due to the reduced Media activities during the quarter.
General and administrative expenses
The following table highlights the movement in general and administrative ("G&A") expenses during the quarter, including share and unit based compensation costs, and G&A net of these costs (in thousands of Canadian dollars):
First Quarter
G&A expenses decreased $0.1 million during the first quarter of 2012 compared to the prior year period, primarily due to a $1.9 million decrease in the expense for the option plan. This decrease was partially offset by higher professional fees ($0.6 million) relating to the creation of CSI and an internal corporate reorganization effected during the first quarter of 2012, and salary and general cost increases ($0.7 million).
Effective January 1, 2012, the Board of Directors of Cineplex invoked Cineplex's right to substitute a cashless exercise for any requested exercise of options for cash, in accordance with the terms of the option plan. As a result of the change in administrative policy, the options may only be equity-settled, and are considered equity, not liabilities. The expense amount for options is determined at the time of their issuance, recognized over the vesting period of the options. Existing options at the time of the change in administrative policy have their remaining expense determined at the time of the change in administrative policy, recognized over the remaining vesting periods.
Share of income of joint ventures
Cineplex's joint ventures in 2012 include its share of one theatre in Quebec, one IMAX screen in Ontario, its 50% interest in SCENE LP, its 78.2% interest in CDCP (formed in June 2011) and its 50% interest in CSI (formed January 31, 2012). For the 2011 period, Cineplex's joint ventures included one theatre in Quebec, one IMAX screen in Ontario and its interest in SCENE LP. The following table highlights the movement in the share of income of joint ventures during the quarter (in thousands of Canadian dollars):
First Quarter
The decrease in income of joint ventures during the period was primarily due to the SCENE loyalty program. SCENE's results in the first quarter of 2011 include income relating to a change in accounting estimate for breakage resulting in a program-to-date adjustment to its outstanding points liability. Two of the joint ventures created subsequent to the first quarter of 2011 also contributed to the movement (CSI - income of $0.2 million and CDCP - income of $0.1 million).
EBITDA and adjusted EBITDA
The following table represents EBITDA and adjusted EBITDA for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011 (expressed in thousands of Canadian dollars, except adjusted EBITDA margin):
Adjusted EBITDA for the first quarter of 2012 increased $9.9 million, or 31.7%, as compared to the prior year period. This represents Cineplex's highest-ever first quarter adjusted EBITDA, exceeding the $34.7 million recorded in the first quarter of 2010 which featured Avatar, the highest grossing film of all-time. The increase over the prior year period was primarily due to the higher exhibition and concession revenues recorded in the period. Adjusted EBITDA margin, calculated as adjusted EBITDA divided by total revenues, was 16.6%, up 2.5% from 14.1% in the prior year period.
Adjusted Free Cash Flow
For the first quarter of 2012, adjusted free cash flow per common share of Cineplex was $0.480 as compared to $0.392 in the prior year period. The declared dividends per common share of Cineplex were $0.323 in the first quarter of 2012 and $0.315 in the prior year period. The payout ratios for these periods were 67% and 80%, respectively.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in our Annual Information Form and in this news release. Those risks and uncertainties include adverse factors generally encountered in the film exhibition industry such as poor film product and unauthorized copying; the risks associated with national and world events, including war, terrorism, international conflicts, natural disasters, extreme weather conditions, infectious diseases, changes in income tax legislation; and general economic conditions. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, we undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of Cineplex Inc. or Cineplex Entertainment Limited Partnership, their financial or operating results or their securities.
About Cineplex Inc.
Cineplex is the largest motion picture exhibitor in Canada and owns, leases or has a joint-venture interest in 130 theatres with 1,359 screens serving approximately 66 million guests annually. Headquartered in Toronto, Canada, Cineplex operates theatres from British Columbia to Quebec and is the exclusive provider of UltraAVX and the largest exhibitor of digital 3D and IMAX projection technologies in the country. Proudly Canadian and with a workforce of approximately 10,000 employees, the company operates the following top tier brands: Cineplex Odeon, Galaxy, Famous Players, Colossus, Coliseum, SilverCity, Cinema City and Scotiabank Theatres. Cineplex shares trade on the Toronto Stock Exchange (TSX) under the symbol "CGX". For more information, visit .
Further information can be found in the disclosure documents filed by Cineplex with the securities regulatory authorities, available at .
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:
In order to participate in the conference call, please dial 416-644-3417 or outside of Toronto dial 1-877-974-0446 at least five to ten minutes prior to 10:00 a.m. Eastern Time. Please quote the conference ID 4534140 to access the call.
Contacts:
Cineplex Inc.
Gord Nelson
Chief Financial Officer
(416) 323-6602
Cineplex Inc.
Pat Marshall
Vice President Communications and Investor Relations
(416) 323-6648
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Datum: 10.05.2012 - 04:15 Uhr
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