Q3 2021 Cineplex Inc Earnings Call
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[music].
Good day and welcome to the Cineplex, Inc. Third quarter 2021 Analyst Conference call Today's conference is being recorded.
At this time I would like to turn the conference over to your Master <unk> Executive director of corporate development and Investor Relations. Please go ahead ma'am.
Yes.
Good morning, and welcome with me today is Ellis, Jacob our President and Chief Executive Officer, and Gordon, Our Chief Financial Officer before I turn the call over to Alice Let me remind you that certain statements being made are 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.
Store results could differ materially from those expressed in the forward looking statements factors that could cause results to vary include among other things the negative impact of the COVID-19 pandemic adverse factors generally encountered in the film exhibition industry risks associated with other national and world events disc.
Very of undisclosed mature liabilities and general economic conditions.
Following today's remarks, we will close the call with our customary question and answer period I will now turn the call over to Ellis Jacob.
Thank you Melissa and good morning, everyone. We hope you and your families remain healthy and well.
We appreciate you joining us today and important day of Remembrance day.
I would like to take a moment to honor the brief Canadians love soaps and continue to so our country enzymes.
We acknowledge those individuals and their families who have given us so much in the name of our country.
And let us not forget.
Okay.
That's all I address the quarterly results I am pleased to say that that business has turned the corner.
Global box office is back in domestic openings like Tsang Chi and the legend of the tailoring Brendan let Debbie Carnage no time to die in June and the internals are exceeding expectations and in some cases, even over indexing in Canada as was the case with J&J no time to die.
Our business in the industry a recovery thanks to the millions of Canadians, who is clearly missed a sense of the scale early this yes, so experience can approval.
For the first time since the pandemic began we are reporting positive adjusted EBITDA of $10 8 million quarter.
Well as positive quarterly adjusted EBITDA across all our business segments.
This is a huge milestone for our team and our business. One that comes from 18 months of hard work and unwavering determination to get us through one of the toughest times in our history since the pandemic began in March 2020.
We look forward speaking to our financial results. Shortly I wanted to focus my remarks on three things.
The openings and continued momentum towards profitability.
Efforts to encourage the virtual movie going and get that cash back to us and.
And finally, I want to reaffirm our solid position for a strong recovery.
Yeah.
Our entire circuit of theaters and entertainment venues nationwide finally reopened early in the quarter and we are seeing encouraging results in attendance as well as growth from all our other businesses, including do you on AG Cineplex digital media and Cineplex media.
As we have done throughout the pandemic, we maintained a prudent approach to cost management and reduced on average monthly net cash burn to $2 9 million during the quarter down from $24 million in Q2 2021.
This is a significant achievement that I would like to thank our incredible employees across the U S and Canada for their perseverance sacrifices hard work and best in class execution and carrying the company through this recovery.
We truly could not have reached the stage and be confidently welcoming our guests back without such a committed team.
Why don't we when we look at the results coming out of the quarter. Its clear movies are back and so with cineplex since reopening our entire circuit on July 17th we have welcomed over 12 million guests to our theaters.
We are starting to see box office numbers progressively increase in approach pre pandemic levels.
For example, when compared to pre pandemic months in 2019 to 2021 July box office reached 38% with only a partial month of openings August was 62% September was 67% and the growth continued into October with box office revenue range.
80% of the same month in 2019.
Then this past week weekend was a highest box office since the pandemic started even exceeding the same weekend in 2019.
During the third quarter, we also saw PPP and CPP reached all time highs at $11 38, and $8 58, respectively.
The combination of pent up consumer demand and guests indulgent and our concession offerings premium formats.
Key drivers of these exceptional results.
Looking at our other businesses <unk> delivered record quarterly adjusted EBITDA driven by continued strength in the reopening of U S roof locations strong growth in Canada from reopening and a focus on cost management.
We are also seeing an encouraging ramp up within cineplex media as client confidence returns and companies build out their advertising budgets for the fourth quarter and into 2022.
Pipeline is strong and we are seeing an increasing momentum as clients return to cinema media is a key component of their campaigns.
Our team at Cineplex Digital media has also been busy rolling out flex smart.
Data driven machine learning software platform that Optimizes digital signage to deliver the right content to the right audience at the right time as.
As we look forward, we believe we can generate high margin opportunities with this new platform.
Yeah.
This was an important quarter for us our entire circuit of theaters and entertainment venues are open and we are seeing promising growth from our other businesses too as we continue momentum towards profitability.
Combined with insights from our consumer surveys and recent trends, we know that Canadians have missed those shared social experiences and are excited to be back.
Which is why now more than ever we are providing every single guest that comes into our venues with a great entertainment experience we have.
Taking proactive steps to increase visitation and attendance in our theaters and entertainment venues through innovative offerings marketing campaigns and new programs.
In support of this strategy during the quarter, we introduced sign entertainment subscription program cynical.
Just $9 99 per month members receive one regular admission ticket every month with no expiration date, the opportunity to purchase additional tickets at a discounted.
Right.
20% of concession items in a variety of other benefits, including discounts on purchases at the Cineplex store and on the amusement and gaming at our entertainment venues nationwide.
We design cynical out to appeal to a wide array of guests and entice them to enjoy the theatrical experience more frequently with their friends and family.
The additional discounts included for concessions the cineplex store, the Rec room and Palladium also provide our guests with even greater value to enhance the entertainment experience across the cineplex ecosystem.
So far the program has received an overwhelming positive response from our guests and has exceeded our expectations and internal benchmarks as membership continues to grow.
In September we launched our new brand platform and tagline where escape <unk>.
Added score the campaign strategy centered around reminding Canadians about the magic of cinema.
Scape a movie theater provides and to celebrate the unrivaled experience of the Cineplex big screen.
<unk> welcomes Canadians back to the theater experience and remind them about what they've been missing for so long the immersive cinematic escape and of course, our famous popcorn too.
Also during the quarter, we opened our first location of the Rec room in British Columbia, and first Standalone VIP cinemas in Western Canada, both located at the Amazing Brentwood Center in Burnaby, British Columbia later in the quarter. We also opened a location of the Rec room in Barrie, Ontario Park place.
Which was our 10th correct room location to open across Canada.
All locations opened extremely well, especially the rec room, Brentwood, which had one of our strongest location based entertainment openings ever and remains at the top performing OBE site to date.
Overall, our L. B venues continue to perform well this quarter, even with capacity restrictions in some provinces. This was especially evident in Alberta, where capacity restrictions were lifted for the quarter and our L. B locations performed at almost 90% of the 2019 levels.
Our location based entertainment venues now open coast to coast, we offer our guests even more options when it comes to spending their leisure time with us.
Later this month and subsequent to quarter end, we will celebrate another important milestone for our company. We are opening up 25th VIP cinema location in Canada with Cineplex VIP cinemas University district in Calgary.
Not only is this the province's first standalone VIP cinema. It's also the next evolution of our VIP concepts offering new amenities. These include newly designed heated recliners with adjustable power address and VIP lounges that turned the front runner auditoriums into the Betsy.
Hum.
These are just some of the ways, we enticing guests back to our theaters and ensuring they enjoyed an exceptional experience one cannot replicate hurtful.
Of course, we will continue to closely monitor the fourth wave of the pandemic around the world and in Canada.
However, the recent removal of capacity restrictions across the majority of provinces has been a welcome news to the cineplex team and movie lovers across the country. We are now open at full capacity at close to 90% of our circuit.
Whilst capacity restrictions have changed our commitment to the health and safety of our employees and guests remains the same it's our top priority. We have and will continue to follow all guidelines set forth by all levels of government, including proof of vaccination requirements.
Our field teams are doing a superb job with limited issues or concerns I'd like to thank them for their flexibility and hard work as we implement these new protocols, sometimes with only a few hours notice.
One thing is for sure our team and our guests are happy to be back.
With a new appreciation for friends and family in social settings that have been restricted for so long we are focusing on providing our guests. The one thing they can't get it.
And immersive shared entertainment.
Yes.
Looking ahead, we are encouraged by the continued easing of restrictions and the availability of new fall product, including blockbuster titles were also seeing tremendous success with our international title three.
Three of the top 10 highest grossing for adjusting firms and Cineplex history were released in 2021, which indicates significant post pandemic growth.
For the third quarter, our top five grossing Tsang Chi and the legend of the tailoring was black widow jungle cruise, which reside in F&I.
Thanks, you over index in Canada, and set an all time record for the biggest labor day weekend box office in North America.
October box office numbers or even more encouraging with films like venom, let there be carnage no time to die Halloween until June and the internals.
All drawing guests back to the season in fact, the opening weekend of June generated box office revenue. That's a past 2019 numbers. So the same weekend.
It is clear that global film industry is poised for a big return as restrictions ease.
<unk> content supply is strong for the remainder of the fourth quarter. There are a variety of films for all audiences coming from multiple studios.
Just to name a few we have Ghostbusters afterlife house of Gucci West side story, Spiderman nowhere matrix Resurrection and six two.
Then we have what is it expected to be one of the strongest film slates awaiting movie lovers 2022 with some select nokia's the Batman Sonic the Hedgehog to Doctor Strange in the multi verse of madness top gun Maverick Jurassic World Dominion minions, the rise of rules.
Mission impossible seven Spider man into the Spider verse to Black Panther Avatar two <unk> in the last Kingdom. All of this is extremely encouraging and with a healthy moviegoing behavior. We have witnessed since reopening we know we are moving in the right direction as an industry on.
The road to recovery.
Before I turn things over to board I would like to provide a brief update on the Cineworld litigation as you may have heard the trial has now concluded with the closing arguments having finished last week.
We feel confident in the integrity of the process that unfolded before the Ontario Superior court and anticipate their judgment to several months.
Looking ahead as always we are preparing for the unknown, especially as we enter the winter months. We are closely monitoring COVID-19 infection rates and are ready to adapt as we continue navigating the pandemic, while positioning our company for ongoing success.
The bottom line is that Canadians want to reconnect and recharge with family and friends and that's exactly what our theaters and entertainment venues off road business is in a recovery mode.
As we look forward towards the future we are confident in our efforts to control costs and solidify our financial position. We are confident in our plans to increase visitation and welcome guests back and we are confident in the insurance industry's ability to come back.
With that I will talk to turn things over to <unk>. Thank you.
Thanks else I am pleased to present, a condensed summary of the third quarter results of <unk>, Inc. For further reference our financial statements and MD&A have been filed on SEDAR and are also available on our Investor Relations website at Cineplex Dot com.
Our MD&A and earnings press release includes a fulsome narrative on the operational results. So I will focus on highlighting and quantifying some of the key items, including commentary on cost control liquidity initiatives and outlook.
As Alex mentioned, our business turned the corner as we were finally fully reopened, albeit with selective capacity restrictions by the end of the third quarter. Despite.
Despite all locations not being open for the entire quarter, we reported box office revenues of $94 1 million.
Which was approximately 53% of the box office revenue for Q3 2019.
In addition, we were extremely pleased to report our first positive EBITDA quarter since the beginning of the pandemic with EBITDA of $10 $8 million.
In addition, we reported positive EBITDA in all reportable business segments.
With the positive EBITDA, we were able to materially reduce the average monthly net cash burn to $2 9 million from $24 million when comparing Q3 2021 to Q2 2021.
We continue to be focused on cost control as we reopen the circuits and I wanted to provide some comments on our largest fixed and semi fixed costs and the impacts of subsidies and abatements during the quarter.
For the third quarter, we reported government subsidies of approximately $18 $5 million as compared to $28 5 million in the second quarter of 2021.
The $18 $5 million reported in Q3 2021 includes approximately $16 $2 million in wage subsidies under the <unk> program and approximately $2 $3 million under the current program and provincial property tax and utility subsidies.
Our wage subsidies under the accused program increased $541000 to $16 $2 million in Q3 as compared to Q2.
As our gross wages increase with the reopening.
It's more than offset the declining participation rates given the tail off of the accused program and our revenue increases.
Our occupancy related subsidies decreased to approximately $2 $3 million as compared to $12 $9 million in the second quarter, primarily as provincial support ceased after the mandated closures are lifted.
In addition to the government subsidies, we continue to receive abatements from our landlords, albeit at declining amounts as time has passed and our locations reopen.
For the third quarter, we received the benefit of abatements totaling $4 $9 million as compared to abatements and the sale of lease rates totaling $13 $1 million in the second quarter of 2021.
Yeah.
I also wanted to highlight some additional costs incurred during the quarter enhanced cleaning protocols and additional staffing costs related to the verification of vaccine passports amounted to approximately $1 4 million.
During the quarter.
Also as the Cineworld litigation move to the trial stage on September 13th our legal costs related to this litigation increased to $4 1 million.
During Q3.
For the third quarter of 2021, we reported net capex of $3 $5 million and approximately $35 $1 million during the past 18 months of the COVID-19 impacted period.
As we look forward for the remainder of 2021, we will only be completed contractually committed projects and required maintenance capex projects and as such we expect that net capex for 2021 will be approximately $30 million.
Beyond 2021, we will continue to be prudent with our growth initiatives and we will seek out opportunities within the disrupted retail landscape.
I would now like to focus on our liquidity position.
For Q3 2021, we were pleased to have net repayments under our credit facilities of approximately $26 million.
Throughout 2021, we have managed our debt fell off by minimizing our cash burn and looking for liquidity opportunities.
Key liquidity opportunities on a year to date basis include the receipt of the income tax receivable in the head office sale leaseback proceeds.
As a reminder, on the latest credit facility Amendment, we extended the suspension of financial Covenant testing until the fourth quarter of 2021, but provided for a monthly liquidity test until the financial covenants are reintroduced.
At September 32021, we had approximately $272 million in availability under our credit facilities, we significantly decreased our average net monthly cash burn to $2 $9 million during the latest quarter and we believe we have positioned the company well to handle any further uncertainties.
Through the next 12 months.
As we continue to ramp up we will continue to focus on cost controls and liquidity, while driving revenues for the month of October we are pleased to advise that our box office revenues were approximately 80% of our box office revenues in October 2019, and we had positive EBITDA.
The signs continue to be encouraging as we look forward.
We see restrictions being relaxed, we see pent up consumer demand and we see a backlog of film titles to supply the market.
We continue.
To focus on the safe operations of our businesses and cost management, while exploring opportunities for value creation.
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 if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
You're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Once again that is star one quick question.
And we will take our first question from Derek Lessard with TD Securities.
Yeah, Good morning, everybody and hope everybody is safe and.
Congrats on navigating a tough the tough operating environment.
Okay. Good.
Just just taking a look at your film costs.
Which are trending maybe a few percentage points below 50% just curious.
The dynamic going on there and whether this might be the studios, where you maybe helping theatres in the industry to get back into the black.
Okay.
It's Derek it's mainly because of the mix of film product and the studios that are coming out with the movies and also the international films that we have as part of the overall movies that were released during the quarter.
Okay. That's helpful and maybe just one.
One one last one for me maybe it.
It's a little premature it sure here, but just wondering if you've started to think about you know life post pandemic and what that means for paying down debt further and maybe resuming a dividend payment.
Okay.
Yeah. So Derek look at one thing as we've always said is.
In the short term with significantly reduced our cash outflows from what we had done historically so the dividend is not there right now.
And also the Capex has been materially reduced from where it was kind of pre pandemic you know our focus right now is let's get reopened let's get our balance sheet back more into that target zone that we feel comfortable with and as we've always said.
Comfort zone as a leverage of somewhere between two and a half and three times. So so let's get there first and then.
Well, we'll take a look at that question.
Okay. Thanks, Thanks, everybody.
Thank you.
And we will take our next question from Jeff Fan with Scotia Bank.
Thanks, Good morning, everyone.
Nice to see positive EBITDA.
Couple of questions.
Hum.
Your theatrical metrics, the PPP and CPP were extremely strong compared to Q3 levels that you've stated.
How sustainable do you think.
It.
It seems like some of it was price increase and some of it is mix.
How do you see the kind.
Kind of playing out.
And then a couple of numbers questions as well one is just the cash burn cord.
You guys gave us.
Some very good month to month.
Capacity or attendance.
Numbers versus 2019.
Wondering if you could just talk about the cash burn from month to month, how much of an improvement that you saw from September sorry from July to September and then maybe in October as well.
And then the final question is just all in inflation at.
And the potential impact on costs are you seeing any of these pressures.
As yet.
Also as you look out to 'twenty, two I guess with the Ontario minimum wage increase can you help us quantify what that is.
If you have that sense yet thanks.
So Geoff I'll take the first part of your question and then I'll turn it over to Gordon on the DPP as we saw it was up.
Over 20%.
Compared to last year and the large amount of that is coming the causes.
And the guests wanting to partake in.
Ultra AVX has the IMAX as the VIP is all of those different format, which comes with a higher BCP and then on the CPP, which was up.
Close to 16%, we basically are seeing a real desire for our guests to indulge in all of the.
Food items, we have to offer and because when we had the <unk>.
Restricted capacities, we have the benefit of processing.
Our guests in a quicker way through the concessions and some of those areas and in addition to that for example in VIP you can preorder. Your food you get cinemas, which has also been very positive so as far as will these trends continue as the.
Guests increase it gets to be a.
A little more challenging but.
We will see and work hard to try and maintain as much as possible in the concessions as we move forward.
So I hope that gives you a good color on where it's Rob.
Thanks, Alan and then.
Thanks, Sorry, Jeff and then I'll take your next two questions. So first of all with respect to cash burn then.
Is.
And we provided some some monthly data to you. So we were pleased.
We're pretty much online with where we expected.
I think last time, we spoke is as we expected Q3 box office to be around 55, I think is what we said, 55% in 2019 levels and so we came in at 53%.
With the reopening as we ramped up.
Quarter month by month in terms of.
In terms of our achievement.
2019 box office.
We had a we.
We had a strong <unk>.
Strong July you know relative to other months September is typically a weak month for us. So when you look at cash burn.
You got it you remember that sort of the interest costs are relatively fixed the capex is a bit lumpy as and we've opened up in a few locations. So.
So but at the end of the day, we were we were encouraged by having.
Positive EBITDA and marginally negative cash burn during the quarter and so as we go forward.
We need to think about those attributes too as we go forward, so, but but things are encouraging we were really pleased that we paid down.
You know $26 million of debt during the third quarter.
Although we had negative cash burn as you know we had some with some working capital improvements that helped us.
Get there with respect to your second question then on inflation is.
We are seeing I guess, a couple two macro effects that.
People are hearing about one is.
Some some instances of sort of supply chain disruption.
Which means some level of product substitution that we're seeing.
At the theatres, particularly from the food from the food and the <unk>.
Some bags.
Nothing that's been disruptive to us we have a great procurement team that's.
But able to source products at no additional cost.
But in the long term, obviously, we do see impacts in terms of.
You mentioned labor.
And as well as the inflation area environment coming ahead. So.
We do believe that we have headroom in our ability to pass on inflationary costs as others are doing.
And so once we see that impacting US is we do believe that we have the ability to pass.
Pass on that in terms of.
<unk> costs and <unk>.
<unk>.
I think respect with respect to your question on <unk>.
Minimum wages is that was something that we were expecting to see.
And.
And so there will be obviously an impact for <unk>, we are working to use.
Certain tools to sort of optimize our our labor scheduling to hopefully offset some of the impact of that but but that is definitely an impact that we're going to see going forward.
Thanks Scott.
Right.
Once again, if you would like to ask a question. Please press star one we will take our next question from Adam Shine with National Bank financial.
Thanks, a lot good morning.
I guess, Jeff asked the question on sort of the <unk> I'll move on to a few other revenue lines. If you don't mind on the media front, you talked about how youre seeing some degree of recovery and otherwise obviously media has been a bit of a lag in regards to keeping pace with what's clearly been.
Recovering box office, maybe God.
Alex can you talk to sort of how things are truly playing out so far in the Q4 are we expected to see.
A meaningful recovery in media, both both segments of media in Q4.
Adam as you said theres always a bit of a lag and.
It's a couple of months before you see the return on the media side and with.
Attendance continuing to.
Although we anticipate.
A stronger Q4 from a media overall perspective, and a much more into 2022 as things normalize and we feel confident that that will continue into the future.
Okay and on <unk>, Jamie Q&A G. In Q3 was about 82% of the level of Q3, I mean, that's obviously see the greatest pace of recovery you touched on that a little bit maybe you can elaborate are there.
Any particular drivers to note are there any potential.
New contracts that may have been announced or pending.
Yeah. So Adam it scored here so look at the one thing.
To remember about <unk> is you know roughly between 60% and two thirds of its business.
Driven out of the U S.
And so you know the obviously the U S has been opened.
Much more widely open in Canada.
So and we're seeing a resurgence of people wanting to get out and.
In the U S.
And go to L. B E type concepts in.
Play the types of games that we supply the other thing that I wanted to kind of just mentioned out there to us.
So from a top line perspective, we were really pleased with the results out of <unk> and from a bottom line perspective, we were probably exceedingly pleased they had record it was a record quarterly EBITDA for the business and all time record quarterly EBITDA was impacted by.
Some wage subsidies that were included in those results.
Over the pandemic and its kind of cold its customer base.
So some of our little low margin or negligible.
Contributing customers, we have exit edited exited out of those relationships, but I think what you're seeing though is you are seeing in the numbers is that's not really impacting the overall top line and it's definitely helping the margin so.
And I guess, the last thing to comment on the <unk> businesses.
With.
What you are hearing about supply chain disruptions and in terms of.
In the Tech space is the equipment sales side of the business.
Hasn't been as significant as it has been in prior years.
And thats, probably not unexpected and that would be the lower margin element of the business. So so summary, very pleased with the business.
A great quarter for that business I.
I think we've really optimized it and and very encouraging results.
Thanks for that color Gordon and I guess, that's a lead into the final question just on the revenue segments. When we look to the L B E, which which did impress in the period.
The skew of revenue was dramatically towards the gaming side sort of 70% of revs this period compared to let's say, 55% or lower.
In a similar period back in Q3 dollars 19. So is that is that just the gaming side of the equation is simply resonating. We're now back in Canada, we're not talking about the U S. Opening dynamic here. So theres traction there or are you guys doing anything to maybe drive promotions offers or otherwise.
On the gaming side of the equation across the <unk> circuit.
Yes.
I think it's actually a little bit of the adverse look at the gaming is doing really well, but I think I would suggest that's more of the <unk> versus at the food and beverage side, we've had some operating hours restrictions.
In certain provinces.
Other thing is not surprising as you think about it.
Oh location like our recruits rec, sorry, I roundhouse.
Corporate lunches obviously.
Not happening these days so so I think really what you're seeing is us.
The reduction in operating hours.
From the food and beverage side.
Fewer.
Corporate occasions.
And part of the part of the issue in terms of restricting some of the operating hours of the kitchen is the labor shortages that everyone's kind of familiar with in terms of getting kitchen staff and that's one area. If you look across our entire business. That's probably the one area, where we're labor challenges are more prominent than others.
So so it's really that the food and beverage has suffered a little bit.
During the quarter and so gaming is doing well.
And hence you also see the.
Margin the EBITDA margin from that business the percentage being higher than it's been historically because it's more.
The revenues is more weighted on the amusement side.
And also we were benefiting from some waiver subsidies during the quarter.
Maybe I'll just throw one other random and you've got the covenant retest going it shouldn't be much of an issue I think you've talked previously that you.
You need at least 65% box office versus 2019, let's call. It 36 billion of EBITDA, given the pacing that Alex referred to back in terms of October at 80% level, obviously, a record recent weekend and some good products still coming.
Are you prepared to venture.
An assumption regarding the Q4 level of 65% at least is is obviously, what you're what you're striving for but could easily come in obviously materially better than that correct.
Yeah, I look at that Adam and I think you know the Q4 is always typically based October is the.
Slowest months of the.
<unk> of the quarter.
Q4 is always made from U S Thanksgiving too.
To the last day of the year.
So we need to see how the product performs during that period, but we're encouraged by it.
Thanks, a lot.
Thank you.
We will take our next question from Tim Casey with BMO.
Alright. Thanks, Good morning, just a couple for me.
Have you.
Big Downs a year.
Sure.
Platform, yet I noticed there was one location in Canada in Toronto, That's close I'm just wondering if that's just a one off.
Specific lease arrangement or are you are you doing kind of a network wide review of that.
And maybe closing some underperforming our older locations and second.
We've talked in the past about how you're trying to bring in.
Automated processes into a into the theater.
People being able to order concessions by their phone in some sort of delivery into the theater to the seats depending on the type of theater I'm. Just wondering if you can update us on.
If you are accelerating that type of program.
And I'm, just hoping to kind of almost automate the process.
For going into next year, and that where you can really preserve margins.
So that would be helpful.
So Tim on the first part of your go question itself on the locations themselves, we continue to evaluate locations across the country and where we've got older locations.
Our fees are within close proximity.
We look at rationalizing our positions within those marketplaces. So that's something that we look at it on an ongoing basis and given.
These situations, we will face with it was smart to kind of consolidate our positions in certain areas across.
Each of the provinces.
So that's really the overall as it relates to the rationalization of the screen count across the country.
And then on your second question and specifically.
Alright.
Is there any metrics you're willing to provide a boat.
How much do you think you'll rationalize or what type of location or screen Youll get to me.
No. It's really looking at each individual area that we are operating in and seeing what the future is from an overall perspective, and where we are moving forward in the proximity of an existing theater Theres no real big.
The analysis that we've done at this point, but we will continue to review it on an ongoing basis.
Got it.
And then Tim on your second question on Rolling out.
Sort of automation initiatives.
Just prior to the pandemic as we had rolled out the mobile ordering app.
Which is the foodservice, Arkansas foodservice ordering.
In advance to for our VIP locations.
And with.
You know what the pandemic with now reserve seating or science seeding everywhere. It makes the rollout.
Mobile ordering easier than having a non assigned seating environment. So that's on our radar to for the first half of next year is to roll that out.
Sure.
Thank you.
Thank you.
As a reminder, if you would like to ask a question. Please press star one.
Pause for just a moment.
Okay.
Okay.
We have no further questions at this time I would like to turn the conference back to Mr. Alan Jacobs for any additional or closing remarks.
Thank you just wanted to thank you all for joining our call. This morning.
As you heard today, we are in a strong position and have a lot to look forward to as we move ahead.
So good is open nationwide and close to 100% capacity in almost every province, there is a strong slate of films ahead in our reaffirmed commitment from our studio partners.
We have been proactive with our efforts to encourage habitual movie going in to increase attendance and visitation through strategic offerings like the launches in our cloud momentum is building in our other businesses with a strong pipeline ahead.
Our financial position is on solid ground and we are prepared for what's to come as we continue to ramp up across the businesses.
Above all this we are beyond thrilled to be back doing what we do best entertaining Canadians.
I look forward to speaking with you all again for our fourth quarter and year end conference call early next year as well.
Say goodbye on this Remembrance day I hope you can all take a moment to acknowledge those individuals who have served and continue to serve our country today and everybody take care.
And head to the movies.
Thank you.
That concludes today's presentation. Thank you for your participation you may now disconnect.
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