Cineplex (CGX) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues reached $395.6 million, surpassing Q3 2019 levels but down 4.6% year-over-year, with box office at 98% of 2019 and a net loss of $24.7 million due to a $39.2 million Competition Tribunal penalty provision.

• Attendance declined 15.5% year-over-year to 13.3 million, but all-time records were set for box office per patron (BPP) at $13.19 and concession per patron (CPP) at $9.85, driven by premium formats and pricing.

• Premium experiences accounted for 42.2% of box office, and loyalty program membership exceeded 15 million.

• Media and digital place-based media revenues grew strongly, with digital up 40.3% year-over-year due to network expansion.

• Share repurchases resumed under a Normal Course Issuer Bid (NCIB), with 185,700 shares repurchased in Q3.

Financial highlights

• Adjusted EBITDAaL from continuing operations was $47.5 million (12.0% margin), down 36.4% year-over-year, mainly due to lower attendance and higher film costs.

• Q3 2024 total revenue was $395.6 million, with net loss from continuing operations of $24.7 million, compared to net income of $24.5 million in Q3 2023.

• Box office revenues fell 7.1% to $174.9 million, and food service revenues decreased 2.0% to $143.3 million.

• Media revenues increased 8.5% to $31.4 million, with digital place-based media up 40.3% year-over-year.

• Adjusted free cash flow was negative $8.4 million, compared to positive $59.8 million in Q3 2023.

Outlook and guidance

• Management expects to capitalize on a strong upcoming film slate in Q4 2024 and 2025, leveraging diversified businesses and robust consumer data to generate significant free cash flows.

• Premium formats and alternative programming remain a focus to drive higher per-patron revenues.

• LBE business expansion continues, with new venues opening and a target of 30 locations nationwide.

• Target leverage ratio of 2.5x to 3.0x; once achieved, capital return options including dividends will be considered.

• Free cash flow expected to exceed $100 million annually at 75-80% of pre-pandemic attendance.