Q4 2019 Earnings Call

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Good day and was come to the next Q4.

29.

Cool.

This conference is being recorded.

I would like to turn the conference over to me.

Cycle.

Investor Relations and communication. Please go ahead.

Good morning, before beginning the call we look likes to remind you that certain statements being made our forward looking and subject to various risks and uncertainties such forward looking statements are based on management's beliefs and assumptions regarding the information currently available.

Actual results could differ materially from those expressed in the forward looking statements factors that could cause results to dairy include among other things adverse factors generally encountered in the film exhibition industry risks associated with National and World events discovery of undisclosed material liabilities and general economic.

Conditions I will now turn the call over to our President and CEO Ella's Jacob.

Thank you Melissa good morning, and welcome to Cineplex Inc.'s fourth quarter and year end 2019 conference call you all blood you could join us on todays call I will provide a brief overview of our topline annual results and accomplishments as well as a status update on the pending acquisition of Cineplex.

It's an award.

At the conclusion of my remarks, our Chief Financial Officer, Gordon Nelson will provide a brief overview of thought financials, specifically focusing on the transaction related expenses, which has impacted the results. Following that we will hold a question and answer theory.

I'm pleased to reflect the boat that 2019 was another strong year for cineplex.

Diversified businesses continued to build scale and show more meaningful results, resulting in total revenue of 1.7 billion up 3.3% year over year I wouldn't be achieved all time annual records for media Amusements and food service revenue.

Despite the strong results adjusted EBITDA and net income more negatively impacted by transaction costs related to the proposed suitable acquisition as well as the adoption of flat for a 16, which quarter will go over in more detail shortly.

Shifting our focus is some of our key accomplishments throughout the year there was much to celebrate in 2019.

We opened two new theaters, one in Vancouver, and one in Saskatoon as well as a new VIP cinema experience by retrofitting, our Winston Churchill location in old.

Through our existing partnership with Aegis, 40, Bucks and reaffirming our commitment to bringing the latest and cinema technology to Canadians. This year, we added five new 40, ex auditoriums and five new screenings auditoriums do I was circuit.

We also introduced junction on New theater of the future concept that combines cinema with location based entertainment to create the Brooklyn Entertainment destination for any occasion.

During the year, we expanded our alcohol beverage service to an additional 52 theaters now available at 88 theaters, which is over 50% of our search.

Adding nine locations this year I won't breach delivery services available 104 theaters and we also launched a partnership with skip the dishes, providing home delivery from 130 theaters across the country.

Well dollar cinema media digital beliefs based media businesses reported record annual results Cineplex media, so growth in Showtime and pre show advertising and in partnership with Tangerine Bank announced answering tuesday's, a continuation of our popular choose the ticket program.

Yes enjoy discounted movie admissions and free popcorn upgrades for Tangerine customers.

Cineplex digital media saw continued growth with existing clients and completed the deployment of AMC theaters digital network at approximately 630 locations across the United States.

Turning our attention to location based entertainment in 2019, we opened new locations with direct room, and Mississauga, Ontario, answering John's Newfoundland as well as the first two locations apart reinvented palladium concept and ramped and with the Ontario.

In 2020, we plan to open three new locations as the recruitment do new palladium locations. The first will be later this month when we open the doors to Manitoba is very first location of the rec room in the when a bad.

See the also celebrated a big milestone last year as we reach the 10 million member Mark in September.

With over 10.3 million members seen as Canada stop warranty program for movie lovers.

I'm proud to report that for the third time Cineplex was named one of Canada's most admired corporate culture is by Waterstone human capital selected from hundreds of companies. The award recognized as best in class Canadian organizations that demonstrate a strong worked culture.

Also during the year, we were recognized as one of the top 40, most valuable Canadian Bank brands for 2019.

Study by brands. He was based on end up consumer research instead of blood. So as highlighted numerous times throughout the report for our customer experience emotional connection excellent reputation clipper those and good citizenship.

And of course this past December we announced that we had entered into an agreement to we are to be acquired by center will group.

As the entertainment industry continues to transform the pending transaction and shows that Cineplex's BARDA Nextera Global Entertainment.

It means that our business, particularly on network of 165 movie theaters across Canada has access to global opportunities and then evolving entertainment landscape.

Overall shareholder sentiment has been very positive in Soc last night, we announced that cineplex shareholders voted 99.92% in favor of the deal following the special shareholder meeting separately Cineworld announced yesterday that its shareholders also voted to approve the trends.

Action at its general meeting of shareholders.

So in the World will continue to work towards obtaining the remaining regulatory approvals required to close the transaction under the investment in Canada.

As you know transactions like this take time, but the process continues and we expect the transaction to close between March 20, Threerd and June Thirtyth.

Before I turn the call over the Gord I want to say, thank you to our shareholders for your continued support as well as Cineplex's Senior management team and our 13000 employees across Canada, and it and the U.S. for their hard work and commitment throughout the year.

Since going public in 2003, we have work hard to deliver value to our shareholders and we are confident that the pending transaction would send the world just does just that.

With that I will pass the call over to board.

Thanks, Alex I'm pleased to present to convince somebody with a fourth quarter and annual financial results for simplex Inc.

We are further reference our financial statements and Mdna had been filed on SEDAR. This morning, and are also available on our Investor Relations website at Cineplex Dot com.

Our Mdna and earnings press release includes a fulsome narrative on the operational results. So I will just focused on highlighting and quantifying some of the more unusual items related to the pending transaction and the impact of the adoption of efforts to succeed.

For the first fourth quarter total revenue increased 3.6% to an all time quarterly record of $443.2 million as a result in growth in results from food service revenue and media revenues on an annual basis total revenues total revenues of $1.7 billion increase.

3% or $52.7 million as compared to the prior year on all time annual records reported for food service.

Yeah and amusement revenues.

The bottom line was impacted significantly as a result of the pending transaction and the adoption of that for 16.

Items impacting the results in the compare ability to the prior year include the following.

DNA expenses included center World transaction related costs of $11.7 million, which included professional fees and the acceleration of certain stock based compensation items.

Interest expense was impacted by the inclusion of $12.1 million noncash interest expense related to the loss of hedge accounting on their proposed change of control endemic and expected repayment of debt on closing.

The adoption event for 16 negatively impacted net income by approximately for $14.3 million for the full year in 2019.

$25.5 million as compared to the pricing.

In total these items after adjusting for taxes negatively impacted net income by $43.1 million.

Or 68 cents per share as compared to 2018.

As Alex mentioned, we have worked hard to deliver value to our shareholders and we're confident that the pending transaction was in a world does just stuff.

That concludes our remarks for this morning, and we'd now like to turn the call over to the conference operator for questions.

Thank you.

I would like to ask a question Pete.

He's an extended the mute function.

Yes.

Right.

Once again.

Good question.

First question is coming from.

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Keith.

Hi, good morning, outscored Melissa I guess pets out there just.

Before I started just want to let you all know that it was a pleasure working what you guys over the years.

Constant price and looking out for the best interest to the shareholders would have loved to see.

How all these initiatives played out for you guys. So.

One question for me you ran a pretty extensive go shop process and just wondering if you could add some color to that process and perhaps some of the feedback you've got coming out of it.

Yeah Derrick. Thank you for your comments much appreciated we did rather robust process as you had mentioned that onto the go shop and we had parties that we're interested in the go shop, but a at the end of the day the $34 price.

Was very fair and the premium that we were offered that that position of 42% was something that a you know the other parties want to able to.

Go beyond.

Okay. Thanks, guys.

As a reminder.

Okay.

Good question.

Next question is coming from China from National Bank financial.

Hi, Thanks, a lot good morning Ellis of course, so congratulations on the transaction.

Quick question I mean, you highlighted March 23rd.

Or ended June that's really be the bad trust since back in December just curious have received any movement in regards to.

Heritage, Canada, and ER and the World you know I said, making any progress on the file odds of a potential closing to close out Q1 versus you know slippage into Q2 <unk> just your thoughts.

We have a process that's underway at him and we continue to work together with Ah you know send the world and the authorities to make sure that we continue to move this forward and we continue to communicate with all the parties and again. This is it's in a world.

You know proposals to a investment in Canada.

Okay. Thank you.

Thank you.

Yep.

Question at this time, Mr. Jacob I would like.

Do you.

Okay.

Again, thank you for joining us. This morning, we look forward to providing additional updates as we move towards closing the transaction would send the world and thank you very much again for all your support as shareholders as analysts and a great group to work with and hold so.

Our team at Cineplex and all of our employees. Thanks, very much again have a great day.

Yes.

That's right.

Thank you very much for your participation you may now disconnect.

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