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    CGX   CA1724541000

CINEPLEX INC.

(CGX)
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Cineplex : faces another quarterly loss as movie theatres slowly reopened across Canada

08/12/2021 | 04:58pm EST

TORONTO — Projectors began lighting up the big screens at many Cineplex Inc. movie theatres over the spring, but Canada's biggest cinema chain still faced another quarter of deep losses.

The impact of theatre closures from the COVID-19 pandemic and moviegoers still cautious to return to multiplexes continued to wreak havoc on the company's financial results in the second quarter as it lost $103.7 million.

Cineplex also introduced a ticket price increase across the country, which chief executive Ellis Jacob told The Canadian Press was "about three per cent, on average."

That would amount to nearly 50 cents extra for a regular ticket at one of the Toronto locations, though Jacob pointed out the price could be less substantial in other parts of the country. It could also be more for premium tickets, such as Imax or VIP theatre screenings.

The decision was made to "kind of offset operating costs — all of the costs have gone up," Jacob said of running the business amid a pandemic.

"It was basically early spring that we started to look at it because we were looking at costs and we were looking at where things stood and we haven't taken a price increase for a while."

The price hike couldn't stem Cineplex's losses, which amounted to $1.64 per diluted share for the quarter ended June 30, compared with a loss of $98.9 million or $1.56 per diluted share a year ago.

Total revenue was $64.9 million, up from $22 million in the same quarter last year.

Box-office sales accounted for $12.5 million of revenue compared with a nominal amount a year ago when the company had just six theatres open in Alberta in June 2020.

Food service revenues, which incorporate results from concession and food delivery orders, rose to nearly $13.3 million from almost $3.3 million a year ago when nearly all of the sales came from people ordering popcorn and treats at home. However, the company noted that fewer customers were snacking in theatres during the latest quarter because of "strict operating restrictions and mandatory closures."

Ticket sales were dominated by "F9: The Fast Saga," even though it opened less than a week before the quarter ended, while "A Quiet Place Part II" also proved popular. About 1.1 million patrons showed up in the period, though the number was front-loaded to the first week of reopening.

Cineplex's media revenue rose to $9.4 million compared with $8.1 million in the same quarter last year, while amusement revenue increased to $22.2 million, up from $3.7 million. Other revenue increased to $7.6 million from $7.1 million a year ago.

Running a business in the pandemic has been a challenge for every sector, but movie theatres have taken it on the chin with mandatory closures nationwide and major Hollywood titles jumping ship to debut on streaming platforms or digital rental services.

Cineplex started the second quarter with just 38 theatres open across Canada and wrapped the three-month period with 86 in operation as health officials pulled back on closures and eased capacity restrictions in some regions.

Ontario and Manitoba did not register any ticket sales in the quarter as they remained closed until mid-July. All of the company's 160 theatres are now open, Jacob said.

How this fall's slate of Hollywood films will fare continues to plague the movie industry which has already witnessed a slip in the box office stateside as new strains of the virus that causes COVID-19 keep more people at home.

Jacob said he's confident movie studios won't shuffle of their calendar dramatically again in the coming months, but he acknowledged those decisions are out of his control.

"I think if there are movements, they will be very limited because these movies have been on the shelf for a while," he said.

Shortly after the interview with Jacob, Sony Pictures announced it was pushing superhero sequel "Venom: Let There Be Carnage" by three weeks, from Sept. 24 to Oct. 15.

Cineplex is looking on the bright side of a very dark period, putting promotional efforts behind CineClub, a new monthly subscription program for avid moviegoers it hopes will remove some uncertainty from the business equation while enticing customers to return.

For $9.99 per month, members get numerous perks, among them a complimentary movie ticket that can roll over to future months for active members, a 20 per cent discount on concession items, and a limited number of cheaper "member-priced" tickets.

CineClub operates entirely separate from the physical box-office, meaning all ticket purchases are done online, a plan the company says eliminates a "touch point" with the automated box-office machines or employees.

This report by The Canadian Press was first published Aug. 12, 2021.

Companies in this story: (TSX:CGX)

© 2021 The Canadian Press. All rights reserved., source Canadian Press DataFile

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Financials
Sales 2021 709 M 559 M 559 M
Net income 2021 -193 M -152 M -152 M
Net Debt 2021 575 M 454 M 454 M
P/E ratio 2021 -2,55x
Yield 2021 -
Capitalization 734 M 574 M 578 M
EV / Sales 2021 1,85x
EV / Sales 2022 0,81x
Nbr of Employees 10 000
Free-Float 98,7%
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Number of Analysts 7
Last Close Price 11,58 CAD
Average target price 16,79 CAD
Spread / Average Target 45,0%
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Managers and Directors
Ellis Jacob President, Chief Executive Officer & Director
Gord Nelson Chief Financial Officer
Phyllis N. Yaffe Chairman
Daniel Francis McGrath Chief Operating Officer
Robert W. Bruce Independent Director
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