Q4 2021 Cineplex Inc Earnings Call

Speaker 1: Your patience everyone, the Cineplex's fourth quarter and year-end 2021 earnings call will begin in one minute.

Thank you for your patience that'd be bonded cineplex's fourth quarter and year end 2021, and he was cool will begin in one minute time, if you would like to ask a question at the end of the presentation. Please press star followed by one no telephone keypad.

Speaker 1: If you would like to ask a question at the end of the presentation, please press star followed by one on your telephone.

Speaker 2: .

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Yeah.

Speaker 1: Good day and thank you for standing by. Welcome to Cineplex's fourth quarter and year-end 2021 earnings call. If you would like to ask a question at the end of the presentation please press star followed by one on your telephone key.

Good day, and thank you for standing by welcome to Cineplex's fourth quarter and yearend 2021 earnings call. If you would like to ask a question at the end of the presentation. Please press Star finished my one on your telephone keypad I would now like to hand, the conference I bet, you'll speak to today most of them as Ali Executive Director corporate development and Investor Relations.

Speaker 1: I would now like to hand the conference over to our speaker today, Massa Rajali, Executive Director, Corporate Development and Investor Relations. Thank you.

Thank you. Please go ahead.

Speaker 3: Good morning and welcome. With me today is Ellis Jacob, our President and Chief Executive Officer, and Gord Nelson, our Chief Financial Officer. Before I turn over the call to Ellis, let me remind you that certain statements being made are forward-looking and subject to various risks and uncertainties.

Good morning, and welcome with me today is Ellis, Jacob our President and Chief Executive Officer, and Gordon out then our Chief Financial Officer before I turn over the call to Alan Let me remind you that certain statements being made are forward looking and subject to various risks and uncertainties.

Speaker 3: Such forward-looking statements are based on management's beliefs and assumptions regarding the information currently available.

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.

Speaker 3: Actual 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, discovery of undisclosed material liabilities, and general economic conditions.

Factors that could cause results to vary include among other things the negative impact of the COVID-19 pandemic I've heard sponsors generally encountered in the film exhibition industry risks associated with other national and world events discovery 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.

Speaker 4: Thank you, Massa. Good morning and welcome to our Q4 and year-end 2021 conference call. We are glad you could join us today. As I address the quarterly results, I am pleased to say that Cineplex and the exhibition industry continues to make significant progress in recovering from the effects of the pandemic.

Thank you Matt.

Good morning, and welcome to our Q4 and year end 2021 conference call. We're glad you could join us today I'm.

Oh, sorry address the quarterly results I am pleased to say that cineplex in the exhibition industry continues to make significant progress in recovering from the effects of the pandemic.

Since reopening in the summer of 2021 releases like Tsang Chi and the legend of the 10 rings, no time to die and doing exceeded industry expectations.

Speaker 4: The highly anticipated release of Spider-Man No Way Home was a huge success. The film generated over $1 billion of global box office within two weeks of its release and has grossed $750 million domestically to date.

The anticipated release of Spider Man No way home was a huge success.

Film generated over $1 billion of global box office within two weeks of its release and has grown $750 million domestically two days.

Speaker 4: While government-mandated restrictions and closures in December prevented us from fully capitalizing on this demand, there is no question that Cineplex's voice for a strong recovery and our box office performance will mirror other jurisdictions once our theaters resume operations at full capacity.

While the government mandated restrictions and closures in December prevented us from fully capitalizing on this demand. There's no question that cineplex is poised for a strong recovery in our box office performance will mirror other jurisdictions, one south theaters resume operations at full capacity.

Speaker 4: While 2022 started off with some challenges, the fact remains that the year ahead is bright. The recent mandated closures were temporary, and we are delighted to see that all of our theatres and entertainment venues are now open nationwide, although capacity and other restrictions remain in certain provinces.

While 2022 started off with some challenges. The fact remains that the euro Ed as Brian . The recent mandated closures were temporary and we are delighted to see that all of our theaters and entertainment venues are now opened nationwide, although capacity and other restrictions remain in certain provinces.

Speaker 4: Despite mandated restrictions, in Q4 2021, we delivered our strongest quarter in two years and made significant strides towards profitability and cash flow generation.

<unk> mandated restrictions in Q4, 2021 we delivered our strongest quarter in two years and made significant strides towards profitability and cash flow generation.

Speaker 4: What's really impressive is that these results were achieved even though operating restrictions were imposed on us during our busiest box office period.

What's really impressive is that these results were achieved even though operating restrictions were imposed on us during our busiest box office periods.

Speaker 4: This momentum is highly encouraging and with the recent closures now behind us and restrictions continuing to ease, we are thrilled about the year ahead and our path towards recovery.

This momentum is highly encouraging and with the recent closure is now behind us and restrictions continuing to ease we are thrilled about the year ahead and our path towards recovery.

Speaker 4: With Gord speaking to our financial results shortly, I want to focus my remarks on three main areas. First, the positive momentum seen when our venues are open. Secondly, our proactive efforts to reinstate financial stability and advance growth initiatives. And lastly, to reaffirm our solid position for a promising recovery across all of our businesses.

With God speaking to our financial results shortly I want to focus my remarks on three main areas first the positive momentum seen when our venues are open secondly, our proactive efforts to reinstate financial stability and advanced growth initiatives and lastly to reaffirm our solid position for a promised.

Recovery across all of our businesses.

Speaker 4: To speak to my first point, although most of our venues were closed for the first half of 2021, once we were able to reopen from mid-July to early December of last year, we saw momentum in all of our lines of business.

To speak to my first point, although most of our venues were closed for the first half of 2021. Once we were able to reopen from mid July to early December of last year, we saw momentum in all of our lines of business Tsang Chi and the legend of the 10 rigs established an all time record.

Speaker 4: Changchi and the Legend of the Ten Rings establish an all-time record for a Labor Day release in September .

For Labor day release in September .

Speaker 4: No Time to Die brought out an audience that mirrored the demographics make-up of our 2019 base by bringing back in our adults.

No time to die brought out an audience that mirrored the demographic makeup of our 2019 base by bringing back in our adults since reopening in July a box office numbers were progressively approaching three brand emmick levels with October reaching 80% of the same month in 2009.

Speaker 4: Since reopening in July , our box office numbers were progressively approaching pre-pandemic levels with October reaching 80% of the same month in 2019.

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Speaker 4: These results had us excited about December , which included the highly anticipated releases of Spider-Man No Way Home, The Matrix Resurrections, and Sing To.

These results had us excited about December which included the highly anticipated releases of Spider Man, Norway home, the matrix Resurrection and sing too.

Speaker 4: However, as we all know, during December , provincially mandated capacity restrictions and closures were reinstated in certain provinces. And for the first time ever, the operating restrictions also included a ban on concession sales in some provinces, including our largest market, Ontario.

However, as we all know during December provincially mandated capacity restrictions and closures were reinstated in certain provinces and for the first time ever. The operating restrictions also included a ban on concession sales in some provinces, including our largest market, Ontario.

Speaker 4: These constraints were intensified as omicron numbers increased and ultimately culminated in closures of theatres and LBE locations in certain markets from mid-December to early February 2022.

These constraints were intensified as omnicom numbers increase and ultimately culminated in the closures of our theaters in Lv locations in certain markets from mid December to early February 2022.

The timing of the operating restrictions was extremely unfortunate to provide some background. The last two weeks of December account for a material portion of our business.

Speaker 4: The timing of the operating restrictions was extremely unfortunate. To provide some background, the last two weeks of December account for a material portion of our business, typically delivering around 30% of our Q4 box office.

Currently delivering around 30% of our Q4 box office. These restrictions prevented us from realizing the full benefits of Spider Man No way home, which had the second biggest domestic opening weekend of all time and the biggest December opening ever.

Speaker 4: These restrictions prevented us from realizing the full benefits of Spider-Man No Way Home, which had the second biggest domestic opening weekend of all time and the biggest December opening ever.

Speaker 4: We know from our own box office results prior to the recent closures, as well as box office results from our peers in the United States, that guests want to be back in our theatres.

We know from our own box office results prior to the recent closures as well as box office results from our peers in the United States that guests want to be back in our theaters.

Speaker 4: In spite of these restrictions, we still delivered strong revenue growth, welcoming 10.2 million guests to our theaters during the fourth quarter.

In spite of these restrictions we still delivered strong revenue growth welcoming $10 2 million guests to our theaters during the fourth quarter.

Speaker 4: We also achieved an all-time quarterly record BPP of $12.29. And while the CPP for Q4 2021 was significantly impacted by restrictions on concession sales, we still set an all-time annual record CPP of $7.93.

We also achieved an all time quarterly record <unk> of $12 29.

And while the CPP walk for Q4 2021 was significantly impacted by restrictions on concession sales, we still set an all time annual record CPP of $7 93.

Speaker 4: In addition to the exhibition business, our other businesses also contributed positively to our overall results. We significantly improved our net loss during the quarter to $21.8 million from $230 million in Q4 2020.

In addition to the exhibition business. Our other businesses also contributed positively to our overall results we significantly improved our net loss during the quarter to 20, $21 8 million from $230 million in Q4 2020.

Speaker 4: and improved our adjusted EBITDA to $20.2 million from an adjusted EBITDA loss of $65.9 million in Q4 2020.

And improved our adjusted EBITDA to $20 2 million from an adjusted EBITDA loss of $65 9 million in Q4 2020.

Speaker 4: Through a combination of attendance growth and working capital management, we generated positive net cash from operating activities of $27.5 million in the fourth quarter compared to negative $61 million in Q4 2020.

Through a combination of attendance growth and working capital management, we generated positive net cash from operating activities of 27 5 million in the fourth quarter compared to negative $61 million in Q4 2020.

Speaker 4: We were also pleased to see a positive average monthly net cash contribution from the first quarter since the pandemic began.

We were also pleased to see a positive average monthly net cash contribution from the first quarter since the pandemic began.

Speaker 4: I would now like to talk about our proactive efforts to reinstate financial stability and advance growth initiatives in the past year. While we hoped to avoid further operating restrictions, we were prepared for and anticipated possible challenges arising from a new variant. We had contingency plans in place well before the first case of the new variant was recorded in Canada.

I would now like to talk about our proactive efforts to reinstate financial stability and advanced growth initiatives in the past year, while we hope to avoid further operating restrictions we were prepared for an anticipated possible challenges arising from a new variant.

Had contingency plans in place well before the first case of the new variance was recorded in Canada.

Speaker 4: With the onset of Omicron, we took proactive steps to reinstate financial stability.

With the onset of omni Kron, we took proactive steps to reinstate financial stability.

Speaker 4: The Board will provide a more fulsome financial update in a moment, but some of the actions taken include a continued focus on minimizing cash burn, cost management across all business lines, and adding liquidity which included government subsidies where possible.

Ed will provide a more fulsome financial update in a moment, but some of the actions taken include a continued focus on minimizing cash burn cost management across all business lines, and adding liquidity, which included government subsidies where possible.

Speaker 4: Moreover, we worked with our supportive lenders and obtained the continued suspension of financial covenant testing until the second quarter of 2022.

Moreover, we worked with a supportive lenders and obtain the continued suspension of financial covenant testing until the second quarter of 2022.

Speaker 4: This continued support speaks volumes about our lenders' confidence in our business plan and our expected recovery. We have taken significant measures to manage the financial uncertainties created by COVID-19 and believe in the strength of our industry as the pandemic gets under control and we see a return to normal.

This continued support speaks volumes about our lenders confidence in our business plan and our expected recovery, we have taken significant measures to manage the financial uncertainties created by COVID-19, and believe in the strength of our industry as the pandemic gets under control and we see a return to normalcy.

Looking back on the quarter, we achieved encouraging results, which would not have been possible without the dedication of our amazing employees across the cineplex ecosystem.

Speaker 4: Looking back on the quarter, we achieved encouraging results which would not have been possible without the dedication of our amazing employees across the Cineplex ecosystem.

Speaker 4: With all our theatres and entertainment venues now open nationwide and restrictions easing in many provinces, we are turning yet another corner on the road to recovery and anticipate further upward trajectory in the months to come.

With all our theaters and entertainment venues now open nationwide and restrictions easing in many provinces. We are turning yet another corner on the road to recovery and anticipate further upward trajectory in the months to come.

Speaker 4: Over the course of the pandemic, we continue to advance our growth initiatives and during the fourth quarter we announced the launch of SCENE+. This enhanced rewards program brings together two of Canada's favorite loyalty programs, SCENE and Scotia Rewards.

Over the course of the pandemic, we continue to advance our growth initiatives and during the fourth quarter, we announced the launch of <unk> plus this enhanced rewards program brings together two of Canada favorite loyalty program scene and Scotia rewards.

Speaker 4: ScenePlus members will still enjoy the much-loved features and rewards from movies, entertainment and dining, while also adding the option of earning and redeeming points for travel, shopping and banking.

<unk> plus members will still enjoy the much loved features and rewards for movies entertainment and dining while also adding the option of earning and redeeming points for travel shopping and banking.

Speaker 4: This strategic alignment creates huge opportunities for the future of the ScenePlus program and enables our team to reach and entertain even more guests and movie lovers than ever before.

This strategic alignment creates huge opportunities for the future of the <unk> plus program and enables our team to reach and entertain even more guests and movie lovers than ever before.

Speaker 4: In addition, during the summer of 2021, we launched our entertainment subscription program, CineClub, which provides members with benefits in our theaters, location-based entertainment venues, and the Cineplex store. So far, CineClub has received a positive response from our guests, despite restrictions and closures.

In addition, during the summer of 2021, we launched our entertainment subscription program cynical, which provides members with benefits in our theaters location based entertainment venues and the Cineplex store. So far Center club has received a positive response from our guests.

Despite restrictions and closures, we have always strived to provide our guests an exceptional entertainment experience at great value, while driving attendance and increasing moviegoing frequency and cynical does just that.

Speaker 4: We have always strived to provide our guests an exceptional entertainment experience at great value while driving attendance and increasing movie-going frequency, and CineClub does just that.

Speaker 4: We have also worked hard to engage with our guests and provide offerings through our digital movie platform, the Cineplex Store, and food delivery through Skip the Dishes and UberEats.

We have also worked hard to engage with our guests and provide offerings through our digital movie platform, the cineplex store and food delivery through skip the dishes in Uber eats the cineplex store, which differentiates us from our peers benefited from a number of people releases during the year offering guests the.

Speaker 4: The Cineplex store, which differentiates us from our peers, benefited from a number of Peabody releases during the year, offering guests the chance to view content directly in their home.

<unk> to view content directly in their homes. This was especially important during the closure periods as it enabled us to engage with our guests at a time when their out of home entertainment options were limited.

Speaker 4: This was especially important during the closure periods as it enabled us to engage with our guests at a time when their out-of-home entertainment options were limited.

Speaker 4: We are also exploring alternative content offerings, including the expansion of our distribution business for select feature films in Canada. Branded Cineplex Pictures, we see significant growth opportunities where we can leverage Cineplex assets and database to promote and find new audiences.

We're also exploring alternative content offerings, including the expansion of our distribution business for select feature films in Canada.

Branded Cineplex pictures, we see significant growth opportunities, where we can leverage cineplex assets and database to promote and find new audiences.

Speaker 4: This is in addition to our ongoing efforts to increase and diversify content through international titles, where we are experiencing tremendous success. In fact, three of the top 10 highest-grossing Punjabi films in Cineplex history were released in 2021, which indicates significant post-pandemic growth and opportunity for Cineplex going forward.

This is in addition to our ongoing efforts to increase and diversify content through international titles, where were experiencing tremendous success. In fact three of the top 10 highest grossing Punjabi films incentive blocks history were released in 2021, which indicates significant post spend.

<unk> growth and opportunity for cineplex going forward.

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Speaker 4: Last year, we opened three new VIP locations, including our 25th VIP cinema in Calgary, which opened its doors in November .

Last year, we opened three new VIP locations, including our 25th VIP cinema in Calgary, which opened its doors in November .

Speaker 4: We also opened one Palladium location in Nova Scotia and two new locations of the Rec Room in British Columbia and Ontario in 2021.

Also opened one palladium location in Nova Scotia, and two new locations of direct room in British Columbia, and Ontario in 2021.

Speaker 4: With these additions, we now have location-based entertainment venues open coast-to-coast and can offer our guests even more options when it comes to spending their leisure time with us.

With these additions we now have location based entertainment venues open coast to coast and can offer our guests even more options when it comes to spending their leisure time with us.

Lastly, I want to discuss and reaffirm our solid position for a promising recovery across all of our businesses, including the encouraging results from a non exhibition business units.

Speaker 4: Lastly, I want to discuss and reaffirm our solid position for a promising recovery across all of our businesses, including the encouraging results from our non-exhibition business unit.

Speaker 4: During the fourth quarter, P1AG's adjusted EBITDA increased by 27% to $4 million compared to pre-pandemic Q4 2019, mainly driven by customer shifts and cost management.

During the fourth quarter <unk>, adjusted EBITDA increased by 27% to $4 million compared to pre pandemic Q4, 2019, mainly driven by customer shifts in cost management.

Speaker 4: Our location-based entertainment business continues to perform well with an adjusted store level EBITDA of $4.6 million in Q4 2021 compared to a loss of $2.8 million in the prior year. Going forward, we expect to reap benefits from the new locations that were built over the last two years.

Our location based entertainment business continues to perform well with an adjusted store level EBITDA of $4 6 million in Q4, 2021 compared to a loss of $2 8 million in the prior year.

Going forward, we expect to reap benefits from the new locations that were built over the last two years.

Speaker 4: Cineplex Media is also showing encouraging signs of ramping up as client confidence returns and companies build out their advertising budgets for 2020.

Cineplex media is also showing encouraging signs of ramping up as client confidence returns and companies build out their advertising budgets for 2022.

Speaker 4: Our team at Cineplex Digital Media continues to be busy with the rollout of new products and services which optimize digital signage, expand offerings for our clients, and unlock value from data and experience design services.

Our team at Cineplex digital media continues to be busy with the rollout of new products and services, which optimize digital signage to expand offerings for our clients and unlock value from data and experience design services.

Speaker 4: As we look forward, we believe we can generate high margin opportunities from these initiatives.

As we look forward, we believe we can generate high margin opportunities from these initiatives.

Speaker 4: Looking ahead, it is clear the global film industry is poised for a big return as restrictions are lifted and content supply remains strong. Our studio partners are gravitating towards an exclusive theatrical window for blockbuster titles and there is a general acknowledgement in the industry about the importance of the big screen in a film's success.

Looking ahead. It is clear the global film industry is poised for a big return as restrictions are lifted and content supply remains strong.

Studio partners are gravitating towards an exclusive theatrical window for blockbuster titles and there is a general acknowledgment in the industry about the importance of the big screen in a film success theatrical.

Speaker 4: Theatrical exhibition has and always will play a significant role in elevating content to realize its maximum potential, from box office revenues to associated downstream revenues including merchandising sales and the promotion of studio streaming platforms.

<unk> exhibition has and always will play a significant role in elevating content to realize its maximum potential from box office revenues to associated downstream revenues, including merchandising sales and the promotion of studios streaming platforms.

Speaker 4: With that said, we are particularly encouraged by this year's film slate, which is very promising and includes the following anticipated titles, just to name a few.

With that said, we are particularly encouraged by this year's film slate, which is very promising and includes the following anticipated titles just to name a few.

Speaker 4: For the remainder of Q1 2022, we have Dead of the Nile and Marry Me releasing today ahead of Valentine's Day, Uncharted later this month, and the highly anticipated release of the Batman in early March.

For the remainder of Q1 2022, we have debt of denial and marry me releasing today ahead of Valentine's Day Unchartered later this month and the highly anticipated release of the Batman in early March.

Speaker 4: And for the remainder of the year, we have Mobius, Sonic the Hedgehog 2, Fantastic Beasts, Doctor Strange and the Multiverse of Madness, Top Gun Maverick, Jurassic World Dominion, Minions The Rise of Groot, Spider-Man Into the Spider-Verse 2, Black Panther, Wakanda Forever, Avatar 2, and Aquaman and the Lost Kingdom.

For the remainder of the year, we have morpheus Sonic the Hedgehog, two fantastic Beast DOCSIS Doctor Strange in the multi verse of madness top gun Maverick Jurassic World Dominion minions. The rise of grew Spider man into the Spider verse to Black Panther with Canada Forever.

Avatar, two and acumen and the loss Kingdom, we believe that after experimentation with various release strategies over the past year and a half. This extensive list of titles reaffirms our commitment of studios to an exclusive theatrical release window.

Speaker 4: We believe that after experimentation with various release strategies over the past year and a half, this extensive list of titles reaffirms the commitment of studios to an exclusive theatrical release window.

Speaker 4: Finally, before I pass things to court, I want to provide a brief update on the ongoing litigation with Cineworld. As many of you heard, the Ontario Supreme Court of Justice issued a judgment for $1.24 billion in favour of Cineplex.

Finally, before I pass things to court I want to provide a brief update on the ongoing litigation with Cineworld as many of you heard the Ontario Supreme Court of Justice issued a judgment for 124 billion in favor of Cineplex.

Speaker 4: While Cineworld has filed their Notice of Intent to Appeal, we remain confident in the Court's decision. We will continue pursuing compensation for what we believe to have been a wrongful repudiation of the agreement between Cineplex and Cineworld.

While Cineworld has filed a notice of intent to appeal, we remain confident in the court's decision. We will continue pursuing compensation for what we believe to have been a wrongful repudiation of the agreement between cineplex since in the world.

Speaker 4: The bottom line is that Cineplex has an exciting year and future ahead. We have applied financial discipline, liquidity initiatives, and cost control measures throughout the pandemic and are confident in our financial position to withstand any further pressures in the near term. We have implemented operating efficiencies and laid the groundwork for recovery. And we have done all of this while staying committed to the health and safety of our employees and guests.

The bottom line is that cineplex has an exciting year and future ahead, we have applied financial discipline liquidity initiatives and cost control measures throughout the pandemic and are confident in our financial position to withstand any further pressures in the near term we have implemented operating efficiencies.

And laying the groundwork for recovery and we have done all of this while staying committed to the health and safety of our employees and guests.

Speaker 4: Our team has proven that we can safely operate during the pandemic, and we are thrilled to welcome guests back to our venues once again. Moviegoing is here to stay, and Cineplex Future is strong. With that, I will turn things over to Gaur.

Our team has proven that we can safely operate during the pandemic and we are thrilled to welcome guests back to our venues. Once again moviegoing is here to stay and cineplex future is strong with that I will turn things over to God.

Speaker 5: Thanks, Ellis. I am pleased to present a condensed summary of the results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on CDAR and are also available on our investor relations website at cineplex.com.

Thanks, Alex I am pleased to present presented condensed summary of fourth quarter results for Cineplex, 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.

Speaker 5: Our MD&A and earnings press release include a fulsome narrative on the operational results, so I will focus on highlighting and quantifying some of the key operating results, and provide commentary on cost control, liquidity, and the future.

Our MD&A and earnings press release include a fulsome narrative on the operational results. So I will focus on highlighting and quantifying some of the key operating results and provide commentary on cost control liquidity and outlook.

Speaker 5: As Ellis mentioned, our Q4 operating results were materially impacted by provincially mandated closures, capacity restrictions, and for the first time, restrictions on concession sales in certain provinces.

As Alex mentioned, our Q4 operating results were materially impacted by provincially mandated closures capacity restrictions and for the first time restrictions on concession sales in certain provinces.

Speaker 5: These restrictions became effective during the last half of December when we typically generated about 30% of Q4's box office volume.

These restrictions became effective during the last half of December when we typically generate about 30% of Q4 as box office volume.

Speaker 5: Despite these operating restrictions, we did report our strongest results since the beginning of the pandemic.

Despite these operating restrictions we did report our strongest results since the beginning of the pandemic.

Speaker 5: Total revenues increased to $300 million from $52.5 million in the prior year. Net loss improved to $21.8 million from $230.4 million in the prior year. And adjusted EBITDA increased to $20.2 million from negative $65.9 million in 2020.

Total revenues increased to $300 million from $52 $5 million in the prior year net loss improved to $21 $8 million from $234 million in the prior year and adjusted EBITDA increased to $22 million from negative.

<unk> $65 $9 million in 2020.

Speaker 5: In addition, we reported our first quarter since the beginning of the pandemic without a net cash burn.

In addition, we reported our first quarter since the beginning of the pandemic without a net cash burn.

Speaker 5: In our film exhibition and content segment, attendance increased to 10.2 million in the current quarter as compared to 0.8 million in the prior year. We reported a record quarterly BPP of $12.29 and our CPP of $7.49, although strong, was negatively impacted by the restrictions on theatre food sales in certain provinces.

In our film exhibition and content segment attendance increased to $10 2 million in the current quarter as compared to <unk> 8 million in the prior year, we reported a record quarterly BP of $12 29.

And our CPP of $7 49.

Although strong was negatively impacted by the restrictions on theater food sales in certain provinces.

Speaker 5: Well, we had to pivot from ramping business volumes to operating restrictions yet again. We did what we always do. We focused on the guest experience, safety, and cost controls as we navigated through the uncertainty.

Well, we had to pivot from ramping business volumes to operating restrictions yet again, we did what we always do we focused on the guest experience safety and cost controls as we navigated through the uncertainty.

Speaker 5: For film entertainment and content, we reported our highest segment IBADEL of the pandemic during Q4 2021.

Fulfillment entertainment and content, we reported our highest segment EBITDA with the pandemic during Q4 2021.

Speaker 5: Our media business was also materially impacted by operating restrictions and closures, not only by the specific restrictions implemented in Q4, but also by the uncertainty that restrictions throughout the year created in our client's strategies as they look to commit to cinema and our digital place-based network.

Our media business was also materially impacted by operating restrictions and closures not only by the specific restrictions implemented in Q4, but also by the uncertainty that restrictions throughout the year created in our clients' strategies as they look to commit to cinema and our digital place based networks.

Speaker 5: We did see clients coming back and reported fourth quarter media revenue of $32.8 million as compared to $12.5 million in the prior year.

We did see clients coming back had reported fourth quarter media revenue of $32 8 million as compared to $12 5 million in the prior year.

Speaker 5: The increase was primarily due to cinema media revenue, which increased $20.6 million as a result of the circuit reopening throughout the majority of Q4 2021 and the resulting stronger box office performance.

The increase was primarily due to cinema media revenue, which increased $26 million as a result of the circuit reopening throughout the majority of Q4 2021, and the resulting stronger box office performance.

Speaker 5: Given the high margin contribution of cinema media, our overall media segment EBITDA increased to $19.3 million, also a segment record during the pandemic.

Given the high margin contribution of cinema media, our overall media segment EBITDA increased to $19 3 million also a segment record during the pandemic.

Speaker 5: Our P1AG business typically generates approximately two-thirds of its revenue from the U.S., and as such is less impacted than our other businesses by operating restrictions in Canada.

Our <unk> business typically generates approximately two thirds of its revenue from the U S and as such is less impacted than our other businesses by operating restrictions in Canada. It.

Speaker 5: It had another strong quarter, with revenues increasing to $31.8 million from $11.8 million in the prior year, and EBITDAL increasing to $4 million from a loss of $3.7 million in the prior year.

It had another strong quarter with revenues increasing to $31 8 million from $11 8 million in the prior year and EBITDA, increasing to $4 million from a loss of $3 7 million.

Prior year.

Our LTE business continues to be impacted by the pandemic and operating restrictions, we would typically generate significant revenues during the fourth quarter from corporate events and holiday parties, but as you. All know these types of events were significantly impacted in 2021.

Speaker 5: Our LBE business continues to be impacted by the pandemic and operating restrictions. We would typically generate significant revenues during the fourth quarter from corporate events and holiday parties. But as you all know, these types of events were significantly impacted in 2020.

Speaker 5: We were still pleased to report Q4 adjusted store level EBITDA of $4.7 million, up from a loss of $2.8 million in the prior year.

We were still pleased to report Q4 adjusted store level EBITDA of $4 7 million up from a loss of $2 $8 million in the prior year.

Speaker 5: Despite the lower business volumes, we were able to manage costs and reported an adjusted store level EBITDA margin of 24.4%.

Despite the lower business volumes, we were able to manage costs and reported an adjusted store level EBITDA margin of 24, 4%.

Speaker 5: G&A expenses were up 34.2% to $15.8 million from $11.8 million in the prior year, primarily due to additional litigation costs, a decrease in wage subsidies, a decrease in restructuring expenses, and timing related to certain expenditures. These items are described.

G&A expenses were up 34 to 34, 2% to $15 8 million from $11 8 million in the prior year, primarily due to additional litigation costs a decrease in wage subsidies a decrease in restructuring expenses and timing related to.

Certain expenditures.

These items are described in more detail in our MD&A.

Speaker 5: With the continuing uncertainty of COVID and the potential of further operating restrictions, we continue to be focused on cost control and I wanted to provide some comments on our largest fixed and semi-fixed costs and the impacts of subsidies and abatements during the

With the continuing uncertainty of Covid and the potential of further operating restrictions we continue to be focused on cost control and I wanted to provide some comments on our largest fixed and semi fixed cost and the impacts of subsidies and abatements during the quarter.

Speaker 5: For the fourth quarter, we reported government subsidies of approximately $11.3 million as compared to $18.4 million in the third quarter of 2021 and $22.2 million in the fourth quarter of 2021.

For the fourth quarter, we reported government subsidies of approximately $11 3 million as compared to 18 $4 million in the third quarter of 2021, and $22 2 million in the fourth quarter of 2020.

Speaker 5: The $11.3 million reported in Q4 2021 includes approximately $9.4 million in wage subsidies and approximately $1.9 million under the Federal Rent Subsidy Program and Provincial Property Tax and Utility.

The $11 3 million reported in Q4 2021 includes approximately $9 $4 million in wage subsidy and the approximately $1 9 million under the federal rent subsidy program and provincial property tax and utility subsidies.

Speaker 5: Our subsidy program receipts did reduce in the fourth quarter as it was expected that we would be in a reopening.

Our subsidy program receipts did reduce in the fourth quarter as it was expected that we would be in a reopening phases.

Speaker 5: Provincial and federal governments have announced subsidy programs, which will continue to apply throughout the beginning of 2022, and we will continue to benefit from these programs.

Provincial and federal governments have announced subsidy programs, which will continue to apply throughout the beginning of 2022, and we will continue to benefit from these programs.

Speaker 5: 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.

In addition to the government subsidies, we continue to receive abatements from our landlords, albeit at a declining amounts as time has passed and our locations reopen.

Speaker 5: For the fourth quarter, we received the benefit of abatements totaling $7.1 million, as compared to abatements of $14.9 million in the fourth quarter.

For the fourth quarter, we received the benefit of abatements totaling $7 1 million as.

As compared to abatements of $14 9 million in the fourth quarter 2020.

Yeah.

For the fourth quarter of 2021, we reported net capex of $4 million and approximately $15 $6 million for the full year.

Speaker 5: For the fourth quarter of 2021, we reported net capex of $4 million and approximately $15.6 million for the full year.

Speaker 5: Our Net Cap Axis is materially below prior years and our guidance.

Our net capex was materially below prior years, and our guidance as we focused on only contractually committed expenditures and necessary expenditures.

Speaker 5: as we focused on only contractually committed expenditures and necessary.

Speaker 5: 2022 and beyond. We will continue to be prudent with our growth initiatives and we'll seek out opportunities within the disrupted retail landscape.

For 2022, and beyond we will continue to be prudent with our growth initiatives and we will seek out opportunities within the disrupted retail landscape.

Speaker 5: Given the ongoing impacts of the pandemic and related restrictions during the first quarter, our guidance for Net Cap Ex for 2022 is reduced to $70 to $75 million.

Given the ongoing impacts of the pandemic and related restrictions during the first quarter our guidance for net Capex for 2022 is reduced to $70 million to $75 million.

As a result of the foregoing we were pleased to report our first quarter since the beginning of the pandemic without a cash burn.

Speaker 5: As a result of the foregoing, we were pleased to report our first quarter since the beginning of the pandemic without a cash flow.

Speaker 5: We had an average monthly net cash contribution of $439,000 as compared to an average monthly net cash burn of $24.9 million in the prior year.

We had an average monthly net cash contribution of 439000 as compared to an average monthly net cash burn of $24 9 million in the prior year.

Speaker 5: Please note that we were providing two alternative calculations of average monthly net cash burn, one which is similar to our previous disclosures, and a second which is based on a more directly identifiable GAAP measure, including net cash provided by or used in operating activities as a starting point.

Please note that we were providing to alternative calculations of average monthly net cash burn.

One which is similar to our previous disclosures and a second which is based on the more directly identifiable GAAP measure.

Including net cash provided by or used in operating activities as a starting point.

Speaker 5: As a result, there have been some immaterial changes to the previously presented.

As a result urban some immaterial changes to the previously presented amounts.

Speaker 5: Before discussing our liquidity position, I wanted to discuss two additional items.

Before discussing our liquidity position I wanted to discuss two additional items.

Speaker 5: As I know you are aware, with respect to the Senate World Litigation, we were awarded damages of $1.24 billion and $5.5 million for transaction costs exclusive of prejudgment interest.

As I know Youre aware with respect to the Cineworld litigation, we were awarded damages of 124 billion and $5 $5 million for transaction costs.

Exclusive of prejudgment interest.

So in a world has filed a notice of appeal and.

Speaker 5: And due to uncertainties in timing, outcome of appeal, and the ability to recover the full amount, no amount has been accrued as a receivable on our finance.

And due to uncertainties in timing and outcome of our appeal and the ability to recover the full amount no amount has been accrued as a receivable on our financial statements.

Speaker 5: Secondly, I want to remind you of the benefit of the tax asset that was derecognized during 2020 as a result of the uncertainties related to the pandemic.

Secondly, I want to remind you of the benefit of the tax asset that was de recognized during 2020 as a result of the uncertainties related to the pandemic.

Speaker 5: As described in Note 8 of our financial statements, we currently have non-capital losses totaling $314.6 million to utilize against future periods.

As described in note eight of our financial statements. We currently have non capital losses totaling $314 $6 million to utilize against future periods.

Speaker 5: We can continue to evaluate the recoverability of these deferred tax assets and will recognize such assets when and if appropriate.

We continue to evaluate the recoverability of these deferred tax assets and will recognize such asset when and if appropriate.

Speaker 5: I would now like to focus on our liquidity position. For Q4 2021, we were pleased to have net borrowings of $1 million under our credit facilities after net repayments of approximately $26 million in Q3 2021.

I would now like to focus on our liquidity position for Q4 2021, we were pleased to have net borrowings of $1 million under our credit facilities. After net repayments of approximately $26 million in Q3 2021.

Speaker 5: Throughout 2021, we have managed our debt balance by minimizing our cash burn and looking for liquidity opportunities.

Throughout 2021, we have managed our debt balance by minimizing our cash burn and looking for liquidity opportunities.

Speaker 5: As a result of Omicron and the provincially mandated operating restrictions and closures, we immediately and proactively approached our bank group to amend our credit facilities to extend the suspension of covenant testing until the second quarter of 2022.

As a result of <unk> and the provincially mandated operating restrictions and closures, we immediately and proactive we approached our bank group to amend our credit facilities to extend the suspension of covenant testing until the second quarter of 2022.

Speaker 5: We were pleased to receive their support and announce this amendment on December 30th, 2021.

We were pleased to receive their support and announced this amendment on December 32021.

Speaker 5: As a reminder, while the Covenant testing is suspended, we are required to maintain a minimum liquidity of $100 million.

As a reminder, while the covenant testing is suspended we are required to maintain a minimum liquidity of $100 million.

Speaker 5: And as of December 31st, 2021, we had approximately $271 million in availability or liquidity under our credit facility.

And as at December 31, 2021, we had approximately $271 million in availability or liquidity under our credit facilities.

Speaker 5: As we continue to reopen and ramp up, we will continue to focus on cost controls and liquidity while driving revenue.

As we continue to reopen and ramp up we will continue to focus on cost controls and liquidity, while driving revenues.

Speaker 5: We see restrictions being relaxed, we see pent-up consumer demand, and we see a backlog of film titles to supply the market unreal.

We see restrictions being relaxed, we see pent up consumer demand and we see a backlog of film titles to supply the market on reopening.

Speaker 5: We continue to focus on the safe operations of our businesses and cost management while exploring opportunities for value creation.

We continue to focus on the safe operations of our businesses and cost management, while exploring opportunities for value creation.

Speaker 5: That concludes our remarks for this morning and we'd like to now turn the call over to the conference operator for questions.

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

Okay.

Speaker 1: you. If you would like to ask a question please press star followed by one on your telephone keypads. If you choose to withdraw your question please press star followed by two. When preparing to ask your question please ensure your phone is unmuted.

Thank you if you would like to ask a question. Please press star followed by one.

He packs.

To withdraw your question. Please press star finish my team when the pairing to ask a question. Please ensure you'll sign is on mute.

Speaker 1: And our first question today comes from Derek Lazard of PD Securities. Derek, please go ahead, your line is open.

And our first question today comes from Jennifer <unk> of TD Securities. Please go ahead. Your line is open.

Speaker 6: Good morning, everybody. Glad to talk to you again. Just a few questions for me. I'm curious about the price increase that you put through. Maybe if you could add some context around, I guess, their average magnitude, and are they simply you guys raising ticket prices, and maybe just how sticky do you expect them to be?

Yes, good morning, everybody glad to talk to you again.

Just a few questions for me.

Curious about the price increase that you put through and just maybe if you could add some context around I guess, the average magnitude and are they simply.

You guys raising ticket prices prices and maybe just how sticky do you expect them to be.

Speaker 4: Yeah, Derek, we have made some very small price adjustments as we are moving forward. Most of the increase you see in the BPP is based on the guests coming to our premium offerings and that's helped us, you know, get to the higher numbers that you see.

Yes Derrick.

We have made some very small price adjustments as we moving forward most of the increase you see in the BP is based on the.

Guests coming to our premium offerings and that's helped us.

Get to the higher numbers that you see but we will continue to evaluate our pricing and how we move forward with that into 2022.

Speaker 4: But we'll continue to evaluate our pricing and how we move forward with that into 2020.

Speaker 6: The $3.8M and $3.1M increase in team costs and marketing expenses, I'm just wondering how we should be thinking about the level of these expenses and whether or not these are more one-time.

Okay, No that's helpful and maybe Gordon.

The $3 8 million and $3 1 million increase in <unk> costs and marketing expenses I'm, just wondering how we should be thinking about the level of these expenses and whether or not these are more one time.

Speaker 5: Yeah, so with respect to the marketing expenses, I mean there are two strong initiatives that we implemented in the third and into the fourth quarter. So one is with respect to a kind of a rebranding campaign to reintroduce our guests and get them back into thinking of the theater experience, and then the second one is a Cine Club introduction. So you're gonna see a little bit of an elevated spend in Q4 related to those initiatives, and that's why you're seeing the increase relative to the prior year. With respect to scene, and you've seen the scene increase, you know, from 2020 to 2021, is we've discussed the launch of Scene Plus and, you know, the opportunities that we see with respect to that. So the elevated costs that you're going to see in both 2021 and that will continue on through 2022 as we go and implement the benefits of Scene Plus. So for 2021 and 2022, you'll see those costs at a little bit of an elevated level than you would have

Yes, so with respect to the marketing expenses I mean, there are two two strong initiatives that we implemented in the third and into the fourth quarter. So one is respect with respect to kind of a rebranding campaign.

To reintroduce our guests and get them back into thinking of the theater experience and then the second one is in a club introductions. So.

You're going to see a little bit of an elevated spend in Q4 related to those initiatives and that's why you're seeing the increase relative to the prior year.

With respect to seen and.

And you've seen the seen increase.

From 2022 2021.

As we've discussed the launch of <unk> plus.

The opportunities that we see with respect to that so the elevated cost that youre going to see in both 2021 and that will continue on through 2022, as we go and implement the benefits of <unk> plus so so for 2021 and 2022, you will see those costs at a little bit of an elevated.

Level than you would have historically see.

Speaker 6: Okay, that's helpful. And then maybe one last one for me before we cue Alice. I know you guys want to be open, but I was just curious on which movie for you would you regard as the next 10 pull that you'd say that you need to absolutely be fully open in order to leverage?

Okay. That's helpful. And then maybe one last one for me before I re queue Alex.

I know you guys Wanna be opened but I was just curious on which movies per year with us.

Would you regard as the next.

Ill turn call back.

I would say that you would need to absolutely be fully opened in order to leverage.

Sure.

Well the good news is we started tickets on sale.

Speaker 4: Well, the good news is we started tickets on sale at midday yesterday for the movie The Batman, and we've got some special events that are taking place the day before the movie opens at a special event.

Midday yesterday for the movie Batman and.

We've got some special events that are taking place the day before the movie opens at.

A special.

Speaker 4: deal we made with Warner Brothers and it's happening across North America and on that Wednesday we've already pretty well sold out all of the bigger markets like Toronto and Montreal and things are going very well and at this point I think we've already pretty sold close to half a million dollars worth of tickets.

The deal we made with Warner brothers, and it's happening across North America and on that Wednesday, we've already pretty well sold out all of this the bigger markets like Toronto, and Montreal, and things are going very well and as at this point I think we've already pre sold close to half a million dollars worth of tickets. So I think thats going to be the next step.

Speaker 4: So I think that's going to be the next biggie, even though we've got opening tonight, Death of a Denial, Marry Me, and Black Light. So we've got product that's coming through that will continue to get our guests back to our theaters. And let's not also forget the Oscar-nominated films that are back on the screen. So there's going to be a lot of product that our guests can enjoy. Okay. That's it for me.

Even though we've got opening Tonight that of denial marry me and Black lights. So we've got product that's coming through that we will continue to get our guests back to our theaters and let's not also forget the Oscar nominated films that are back on the screen, so theres going to be.

You know a lot of product that our guests can enjoy.

Okay. That's it for me thanks, everybody.

Thank you Sir.

Yes.

Speaker 1: Thank you and our next question comes from Jeff Van of Scotiacapital. Jeff, please go ahead your line.

Thank you and our next question comes from Jeff Fan of Scotia Capital. Please go ahead. Your line is open.

Speaker 7: Thank you, good morning, and thanks for all the colour. I just want to dig into the performance in the FOX office a little bit. Ellis, I think you said in October you did about 80% of 2019. Wondering if you can give us the number for November just before the closures.

Thank you and good morning, and thanks for all the color.

I just wanted to dig into the.

Performance in the box office, a little bit.

Alex I think you said in October .

About 80% of 2019.

I'm wondering if you can give us a number for November just before.

The closures.

Speaker 7: And then the second part related to box offices, because the closures were not applied across the country uniformly, some theaters were open.

Then the second part related to box office is because the closures were not applied across the country uniformly some theaters where open.

Speaker 7: some provinces. Do you have any data on how those theaters performed through the quarter, the ones that were opened, the ones that were able to show Spider-Man in the last two weeks of December ? I know it might be small, but it just gives us a sense as to what the pent up demand and patrons willingness to come back is. If you have that, that would be great.

Some provinces.

Do you have any data on how those theatres performed through the quarter the ones that were opened.

The ones that we're able to show.

Spiderman in the last two weeks of December I know it might be small but.

This gives us a sense as to what the pent up demand.

Patrons willingness.

Willingness to come back is if you have that that would be great.

Speaker 8: So October , as you said, we did 80%. In November , we were close to 70%. And December , taking all of the items into account, we ended up at 62%. But that was also because, as you said, we were hurt by the back half of December , where we were closed or restricted in a number of locations.

So October as you said, we did 80% in November we were close to <unk>.

70% and December taking all of the items into account we ended up at 62%, but that was also because as you said we were hurt by the back half of December where we will have closed or restricted in a number of locations. The first half of December is not a.

Speaker 4: The first half of December is not a good indicator because the first two weeks in December are usually the slow week and the back two weeks are usually the strongest week of the quarter and in the last two weeks it's also the strongest weeks of the year, which is really something that hurt us because of the closure.

A good indicator because the first two weeks in December are usually the slower weekend. The back two weeks are usually the strongest week of the quarter and in the last two weeks. It is also the strongest weeks of the year, which is really something that hurt us because of the closures. So on an overall basis from like October .

Speaker 4: So on an overall basis, from October to December , we were close to 70% for the quarter.

We're to December we were close to 70% for the quarter.

Speaker 4: And if you looked at October to December 15th, we were around the same number.

And if you looked at October to December 15th we were around the same number.

Okay.

Speaker 7: helpful. What about the theatres that were open? What about the theatres that were open if we can dig it down to the ones that actually went through the quarter and stayed open?

Hopeful because that would be helpful.

The orders that were open but what about the theatres that will open if we can dig it down to the ones that actually went through the quarter and stayed opened.

Speaker 4: Yeah, if you look at the ones that stayed open, that helped us get to the 70% and basically, you know, we were close to close to 80% for the ones that were open.

Yes, if you look at the ones that stayed open that helped us get to the 70% and basically.

You know we were close to close to 80% for the ones that were opened.

Okay.

Speaker 4: Great, that's helpful. So they were strong, but again, remember we were hurt because Quebec was closed and we also had restrictions in all of, mostly all of the other provinces.

Great. That's helpful. So there was strong but again remember remember we were hurt because Quebec was closed and we also had restrictions in all of most of the all of the other provinces.

Right understood.

<unk>.

Speaker 9: And the other question is for Gord, just related to some of the measures, relief measures that you alluded to since the new closures. How much should we be expecting for 2022, I guess, particularly in Q1? And can you talk a little bit about what you're thinking on cash burn for Q1-22 before the covenants kick back in?

The other question is for cord just.

Just related to some of the measures relief measures that you alluded to.

Since the new closures, how much should we be expecting.

For 2022, I guess, particularly in Q1 and can you talk a little bit about what you're thinking on cash burn for Q1, 'twenty two before the covenants.

Back to you.

Speaker 5: Sure, so on your first question on subsidies, so on government subsidies, so this would be the wage program, the rent program, and the utilities program, we generated about $11.3 million of support during the fourth quarter.

Sure so.

On your first question on subsidies.

So on government subsidies this would be the wage program.

Rent program in <unk> and utilities program, we generated about 11 three.

$3 million of support during the fourth quarter.

Speaker 5: And, you know, as we mentioned, it was primarily related to the restrictions put in place in the BACA.

And as we mentioned.

It was primarily related to the restrictions put in place in the back half of December .

Speaker 5: The programs that have now been announced for that mid-December through any other periods of restrictions in 2022 are actually a little bit richer than some of the predecessor programs. So there's a hardest-hit business recovery program.

The programs that have now been announced.

For that mid December .

Through.

Any other periods of restrictions in the 2022 are actually a little bit richer.

And some of the predecessor program so.

There is a hardest hit business recovery program.

Speaker 5: you know, a tourism and hospitality recovery program that are really designed to help those organizations that have been particularly hard hit during the pandemic.

A tourism and hospitality recovery program.

That are really designed to help those organizations that have been particularly hard hit during the pandemic.

Speaker 5: So the subsidy levels are a little bit richer. So I would expect.

So for the subsidy levels are a little bit richer.

So I would expect that our support magazine them. So I gave you the amount for Q4 about 11 three.

Speaker 5: that our support magazine, so I gave you the amount for Q4, about 11.3.

Speaker 10: is that our support mechanisms for the first quarter could be almost three times that magnitude.

Is that our support mechanisms for the first quarter could be almost three times that magnitude.

Speaker 5: So we would expect them to be over $30 million.

So they will be we would expect them to be over $30 million.

On your second yes.

Speaker 5: Yes, so on your second question, which relates to cash burn, what I would suggest is that I gave you the number for last quarter of Q4 2020, which was in essence a full quarter closure. We were kind of ramping up to about a $25 million cash burn in a full closure scenario.

Yes, so on your second question.

Which relates to cash burn.

<unk>.

What I would suggest is that I gave you the number for last quarter, which.

Sorry of Q4, 2020, which was in essence, a full quarter full quarter closure.

We were kind of ramping up to about a $25 million cash burn and a full closure scenario.

Speaker 5: You know, if you wanted to suggest that perhaps for Q1, we're in a scenario where maybe it's a third of that number, you know, given the impacts that have kind of really fallen in January , that's probably around the neighborhood of where we're going to be.

If you wanted to suggest that perhaps for Q1.

We're in a scenario, where maybe it's a third of that number.

Given the impacts that are kind of really fallen in January that's probably around the neighborhood of where we're going to be.

Yeah.

Great. Thanks, that's helpful.

Yeah.

Speaker 11: Thank you. Our next question comes from Aravinda Galapithike from Canada called Genuity. Aravinda, please go ahead. Your line is open.

Thank you. Our next question comes from Adam <unk> from Canaccord Genuity. Please go ahead. Your line is open.

Speaker 12: Two for me, the first one for Gord, or even Alice, with respect to occupancy costs. I mean, as we look beyond Q1, how should we sort of think about that element, the cash component? Are there more rationalization that you can achieve on a go-forward basis or add to the box of these returns back to pre-pandemic levels?

Two from me the.

The first one.

Cord or.

Even analysts with respect to occupancy costs as.

As we look beyond Q1.

How should we sort of think about that element the cash component either more rationalization that you can achieve.

On a go forward basis or adds to the box office returns back to pre pandemic levels should we be thinking of.

Speaker 5: we'd be thinking of sort of the historic benchmark as we sort of look to forecast that.

Historic.

So the historic benchmark as we sort of look to forecast that and then secondly on the media side.

Speaker 5: And then secondly, on the media side, under the circumstances, I thought the cinema media number was actually quite good getting to, surpassing 50% of the pre-pandemic levels. Can you give us a flavor of

Under the circumstances I thought the cinema media number was actually quite good getting to surpassing 50% of the pre pandemic levels.

Can you give us a flavor.

Speaker 13: the sort of the dialogue that you're having with advertisers, their appetite to sort of come back alongside sort of the reopening. So would there be a sort of a lag as in terms of the return?

The sort of the dialogue that you're having with advertisers their appetite to sort of come back.

Alongside the reopening so can't be instead of a lag.

In terms of the return of those AD dollars. Thank you.

Speaker 14: Hi Aravinda, it's Gord. I'll take the first question on occupancy and then turn it back to Ellis for media. With respect to the occupancy costs, you know, we've done, you know, our real estate team has done an amazing job, incredible job in terms of getting abatements. And I want to stress again that these are abatements, these are not deferrals of rent, so this is permanent forgiveness. We're not in a situation where we have to pay catch-up rent.

Yeah.

Hi, Evan It's board I'll take the first question on occupancy and then turn it back to <unk> for media.

With respect to the occupancy cost.

We've done.

Our real estate team has done an amazing job incredible job in terms of getting abatements and I want to stress again that these are abatements. These are not deferrals of rent. So this is permanent forgiveness, we're not in a situation, where we have to pay catch up rent in 2020.

Speaker 14: So, you know, obviously we continue to explore other opportunities during the most recent closure period and so we expect to be successful, but again, on a diminished level than we've been historically.

So.

Obviously, we are continuing to explore other opportunities during the most recent closure period.

And so we expect to be successful, but again on a diminished levels.

Ben historically.

So your question is do I go back up to sort of the 2019 level and I think thats. That's appropriate you would not go above that level because as I said.

Speaker 15: Your question is, do I go back up to sort of the 2019 level, and I think that's appropriate. You would not go above that level because, as I said, we have not been in a situation where we've been deferring rent and having the pay catch-up for it in 2022.

We have not been in situations, where we've been deferring rent and having to pay catch up 4% in 2022.

And then I'll, let Ellen.

Let's talk about kind of the media relationships, yes on the media side, we did have a strong Q4, and we are seeing a real desire for our clients to get back.

Speaker 16: Yes, on the media side, we did have a strong Q4 and we are seeing a real desire for our clients to get back on screen and we will see a continuing ramp-up as we move forward. Sadly, we got hit with the closures in our bigger markets, but we're looking forward to a nice ramp-up as we move forward.

On screen and we will see a continuing ramp up as we move forward Sadly, we got hit with the closures in our bigger markets, but we're looking forward to a nice ramp up as we move forward.

Okay.

Thank you Lynn.

Thank you.

Speaker 17: Thank you and our next question comes from Drew McReynolds of RBC Capital Markets. Drew, please go ahead, your line is open.

Thank you and our next question comes from Nick.

Because I know <unk> of RBC capital markets Geri. Please go ahead. Your line is open.

Yes, thanks very much.

Speaker 18: Yeah, thanks very much and good morning to you all. A couple of just follow ups or clarifications, maybe starting with you Gord on.

Good morning to you all a couple of.

Follow ups or clarifications, maybe starting with your board on on.

Speaker 19: On CapEx, I don't know if I got the number right. I think I heard $70 to $75 million for 2022. If that is correct, can you give a little color on

On Capex fall.

No if I got the number right I think I heard $70 million to $75 million for 2022.

That is correct can you give a little color on.

Speaker 18: you know, what that envelope is going to include.

What that envelope.

Going to include.

Speaker 18: Um, and then second on the scene plus accounting.

And then second on the scene club accounting.

Speaker 20: You've walked through just a couple of puts and takes as to what we should expect.

Walk through just a couple of <unk>.

Puts and takes as to what we should expect on a going forward, but in terms of accounting for that program is there really any.

Speaker 21: kind of going forward, but in terms of accounting for that program, is there really any big difference to what you were doing before? And I'll stop there and add just a couple others.

Difference to what you were doing before and I'll stop there and just couple others often.

Speaker 14: Okay, thanks Drew. So I'll take those two questions with respect to CapEx and I'm happy to provide a little bit more color on that. In 2021, as I mentioned, we look to only complete contractually committed projects as well as really only required expenditures during the period. So, you know, we have reported a full year CapEx of roughly $16 million, which is described in our MD&A.

Okay. Thanks, Joe So I'll take those two questions for with respect to Capex and I'm happy to provide a little bit more color on that.

In 2021, as I mentioned, we look to only.

Complete contractually committed projects as.

As well as.

Really only required expenditures during the period so.

We have reported.

Full year Capex of roughly $16 million, which is described in our MD&A was roughly $7 million in maintenance $5 million and builds.

Speaker 22: was roughly $7 million in maintenance, $5 million in builds, $5 million in growth, and about $1 million in timing of disbursement.

$5 million growth.

About $1 million.

And sort of timing of disbursements.

Speaker 14: The amounts that I described for 2022, you heard me correctly, was a range of $70-$75 million.

The amounts that I described for 2022.

You heard me correctly was a range of $70 million to $75 million.

Speaker 14: And so that would be comprised of the following. Roughly $25 million of maintenance capital. So again, we've got a little bit of catch up. Our maintenance is typically $30 million, as we've described before. And with some of the closures in the first quarter, we're a little bit behind where we'd be on that. So I'm suggesting we'll be at around a $25 million of maintenance capex. Some of the builds that we've restarted, and so the net build amount will be about $30 million. Premium initiatives, so this is typically adding premium initiatives in the theaters, will be around $10 million. And then other new growth as it comes along will be sort of a range of $5 to $10 million. And that makes up the $70.

And so that would be comprised of the following roughly $25 million of maintenance capital also again.

We've got a little bit of catch up our maintenance is typically $30 million as we've described before.

And with some of the closures in the first quarter were a little bit behind that would be on that so so I'm, suggesting will be at around a $25 million in maintenance capex.

Some of the builds that we've restarted.

<unk>.

So the net billed amount will be about $30 million premium initiatives. So this is typically adding premium initiatives in the theaters.

Be around $10 million and then other new growth as it comes along we'll be sort of a range of $5 million to $10 million and that makes up 70% to 75.

Speaker 23: With respect to your second question on seeing the nuances and the changes, and it's a good question on the accounting. One that really had a relatively insignificant impact in the fourth quarter, which we will provide more detail on in 2022 as we go forward.

With respect to your second question on.

Fine.

The nuances and the changes and it's a good question.

On the accounting.

One that really had it.

It's relatively insignificant impact in the <unk>.

In the fourth quarter, which you will provide more detail on.

In 2022 as we go forward.

Speaker 24: We, when we were issuing scene points.

As we when we were issuing seen points historically.

Quickly.

Speaker 25: For transactions at the box office or the concession stand because we would deduct

For transactions at the box office or the concession stand.

As we would deduct.

Those seem point the value of those seen points almost as a discount against the original transaction. So if you're buying a ticket purchase.

Speaker 26: seam point, the value of those seam points, almost as a discount against the original transaction. So if you were buying a ticket purchase...

Okay.

Speaker 14: dollars say, and we issued X number of scene points, we would actually record the box office revenue as 14 less X.

$10 say and we issued X number of seen points, we would actually.

Record the box office revenue was 14 less acts.

Speaker 27: Now that we're not necessarily the primary beneficiary of the C++ rewards, is we will end up really moving that.

Now that we're not necessarily the primary beneficiary.

Of of the same plus rewards.

As we will end up.

Moving that discount to a marketing expense.

Speaker 14: So now that, in the example I just gave you.

So now that and the example, I just gave you $14 will come in as box office revenue and that X X the value of those scene.

Speaker 14: $14 will come in as box office revenue and that acts the value of those scenes.

Speaker 14: points issued will become a marketing expense. So again it was insignificant, it was just slightly over a million dollars in the in the fourth quarter and we will provide detail in our MD&A about, you know, going forward on how those amounts are comprised and compared to the prior years but the important thing is it's a net zero impact.

Points issued will become a marketing expense. So it was again it was insignificant.

It was just slightly over $1 million in the in the fourth quarter and we will provide detail in our MD&A.

About.

Going forward on how those amounts are comprised of compared to the prior years, but the important thing is it's a net zero impact. So it just means the box office in the concession revenue will be grossed up and.

Speaker 14: So it just means, you know, the box office and the concession revenue will be grossed up and there will be a correspondence.

And there'll be.

Corresponding marketing expense.

Speaker 18: Yeah, those two answers there, Gord, are fantastic. Thank you for that. A couple other ones just quick. On the digital media side, just in the MD&A, you talk about a few of your contracts expiring and a focus on higher margin projects. I'm assuming that's maybe in the normal course of...

Yes.

Two answers their gourd fantastic. Thank you for that a couple of other ones just quick.

On the digital media side, just in the MD&A you talk about a few different contracts.

Firing and are focused on higher margin projects.

Yes.

I'm, assuming that's maybe in the normal course.

Speaker 18: scaling this business as you look forward, but just any change in your strategy there. And then lastly for me, I probably have asked this often on prior quarters, but just as we come out of COVID-19.

Scaling this business as you look forward, but just any change in your strategy there.

Then lastly for me.

We have asked this.

Often on prior quarters, but just.

As we come out of.

Speaker 28: the mess of the last couple of years. You guys have done a great job on the cost structure, but at the same time, obviously, the world is seeing some inflation. How do you view at the high level the put and take of that one? Thank you.

The master of the last couple of years, you guys have done a great job on the cost structure.

But at the same time, obviously the world is seeing some inflation. So just how do you view at the high level kind of a put and take of that one. Thank you.

Okay.

Sure so.

Speaker 29: I'll start with both. I'll take both the questions and then we can jump in. So on CDM, we're really pleased with sort of the pivot that the business is doing. In our materials, we talk about the development during the pandemic and the initiative to develop our Flex smart engine technology. And so this is where we really see the next generation of the digital signage business. And the smart engine is really a data-driven platform which provides more value for the impressions that appear in front of the signage. In essence, it's using machine learning and AI to kind of provide more targeted messaging. So that's where we see sort of a high margin pivot in terms of our strategy. And what we'll see is we'll transition our customer base away from sort of the low margin, you know, maybe mass location type customers where they're not looking for a solution like that. And so they're low margin contributors to us. And look into kind of more of these high touch points, high value contributors, and high margin contributors in the digital media business. So that's really started and that's the focus of the business going forward. And Gord, I think it's really important to say that as we switch and pivot, we may show a decline. But over the next 12 to 18 months, we will recapture a lot of good business as we continue to use technology to move forward and get new clients into the space.

I'll start with both I'll take both the questions and <unk> can jump in.

On CDM.

We're really pleased with sort of the pivot that the business is doing.

In our in our <unk>.

Materials, we talk about our.

The development during the pandemic and the initiative to develop our flex smart engine technology.

And so this is where we really see the next generation of the digital signage business and the smart engine is really a data driven.

Platform, which provides more value for the impressions.

That appeared in front of the signage it lessens its using machine learning and AI.

AI to kind of provide more targeted messaging, so that's where we see sort of a high margin pivot in terms of our strategy.

And what will what we'll see is we will transition our customer base away from sort of the low margin.

Maybe Matt.

Mass location type customers, where they are not looking for a solution like that.

And so they're low margin contributors to us and look into kind of more of these high touch points high.

High value contributors in high margin contributors in the digital media business. So that's that's really started and thats. The focus of the business going forward and God I think it's really important to say that as we switch in pivot.

You May show a decline, but over the next 12 to 18 months, we will recapture a lot of.

Good business as we continue to use technology to move forward and get new clients into the space. So we are optimistic that it will continue to grow as we move forward and then we'll pivot a little bit away from the big hardware sale component to hardware sales was about 50% of our revenue.

Speaker 4: So we are optimistic that it'll continue to grow as we move forward. Yeah. And then we'll pivot a little bit away from the big hardware sales component to, you know, hardware sales was about 50% of our revenue in 2019. So you'll see, you know, a little bit of a pivot away from the hardware sales too, which is extremely low market.

<unk> thousand 19.

So youll see a little bit of a pivot away from hardware sales to which is extremely low margin.

Speaker 30: On your second question, which is related to, you know, costs and our cost structure, and, you know, we obviously have been very focused on that during the pandemic. Look, we're aware of all the supply chain disruptions, potential for inflationary cost increases.

On your second question, which was related to.

Costs in our cost structure, and we obviously have been very focused on that during the pandemic.

Look at we're aware of all the supply chain disruptions.

Potential for inflationary cost increases.

Speaker 31: you know, wage challenges and a number of items which we've donated, denoted in our, you know, the risk section of our MD&A. You know, we do believe that there's opportunity to potentially pass on any and if those occur through pricing. We have held back on pricing, but that would be an opportunity. But also we're looking at automation and technology to help mitigate some of those and any of those cost increases.

Wage challenges in a number of items, which were donated to noted in our resection of our MD&A.

We do believe that there's opportunity to potentially pass on any and if those occur.

Through pricing, we have held back on pricing.

But that would be an opportunity, but also we're looking at automation and technology to help mitigate some of those in any of those cost increases.

Got it thanks, thanks very much to you both.

Thank you.

Thanks you.

Okay.

Speaker 1: Thank you. And as a reminder, ladies and gentlemen, if you would like to ask a question today, please press the.

Thank you and as a reminder, ladies and gentlemen, if you would like to ask a question today. Please pass that.

Speaker 32: please press star followed by one on your telephone keypads and our next question comes from Adam Shine of National Bank Financial. Adam please go ahead your line is open.

Please press star followed by one on your telephone Keypads and our next question comes from Adam Shine of National Bank Financial. Please go ahead. Your line is open.

Speaker 18: Thanks a lot. As you can imagine, most of my questions have been asked and answered already, but a couple maybe for you, Ellis. You know, one, when I look at the release schedule this year, it does look pretty strong. I can count at least a dozen plus particularly large blockbuster movies, and then a whole slew of perhaps smaller budget ones, which leads to the question, you know, Bob Iger, you know, has he exited Disney and made a few remarks during the

Thanks, a lot you can imagine most of them most of my questions have been asked and answered already but a couple maybe for you Ellis.

One when I look at the release schedule. This year. It does look pretty strong I can count at least a dozen plus.

Particularly large blockbuster movies, and then a whole slew of perhaps smaller budget ones, which leads to the question Bob Iger.

Has the exited Disney and made a few remarks during a number of interviews talked about the increasing block Buster ization.

Speaker 33: number of interviews talked about, you know, the increasing blockbusterization of the box office. And, you know, we've seen obviously how some of the Marvel movies, Disney movies have sort of outperformed. Can you maybe talk about your thoughts as to how you see things, you know, in terms of, you know, driving more consumers for more movies out to the box office as we exit the COVID?

The box office and we've seen obviously you have some of the Marvel movies Disney movies have sort of outperformed can you maybe talk about your thoughts as to how you see things.

Terms of driving more consumers for more movies helped to the box office as we exit the COVID-19 .

Speaker 34: Yes, it's a great question and I did read what Bob said, but the bottom line is when you go back and look at them as to all the different experiments that the studios did over the last year and a half, they all still realize that the theatrical release is one of the best ways of building the brand.

Yes, it's a great question and I did read what Bob said, but the bottom line is when you go back and look at them as to all the different experiments that the studios did over the last year and a half they all still realize that.

The theatrical release is one of the best ways of building the brand and.

Speaker 35: And, you know, I look at the back half of this, not even the back half from moving forward, there are a significant number of tentpole movies that are being released in 2022, which are the movies that really drive the total box office for the year because they are usually the higher grossing movies.

I look at the back half of this not even the back half from moving forward. There are a significant number of tent pole movies that are being released in 2022, which are the movies that really drive the total box office for the year because they are usually the higher grossing movies.

Speaker 36: And as we go through the year, I think there's going to be, you know, a number of the smaller studios that are going to come out with the specialty product and also the Academy Awards this year. There's a lot of movies like West Side Story, Licorice Pizza.

And as we go through the year I think there is going to be.

A number of the smaller studios that are going to come out with the specialty product and also the Academy Awards. This year Theres a lot of movies like West side story Liquorice Pizza dune.

Speaker 37: Dune, you know, Canadian story, King Richard.

Canadian.

Story King Richard Nightmare Ali These are all movies that.

Speaker 4: Nightmare Alley, these are all movies that, you know, will start to continue to do business as we move forward. And I think even though Bob said, hey, the theaters are only going to be good for the tentpoles, I think it's going to come back to all of the movies performing and being part of the overall box office. But again, the tentpoles drive the bottom line, both from a box office and concession perspective.

We will start to continue to do business as we move forward and I think even though Bob says hey, the theaters are only going to be good for the.

<unk> I think it's going to come back to all of the movies performing and being part of the overall box office, but again the Tentpoles drive the bottom line, both from a box office and concession perspective.

Hope that helps you.

Speaker 38: Absolutely. And maybe one just to tie, Gordon, just, you know, notwithstanding the fact that obviously, you know, there are inflationary pressures out there and as Aravinda asked on occupancy costs, these will naturally, you know, move higher this year. Gordon, just in the context of where margins go, you know, on the back of savings that have indeed been achieved over the last couple of years, can we still assume that there will indeed be margin expansion, you know, this year or exiting COVID, you know, compared to the 2019 level?

Absolutely and maybe one just a tie Gordon.

Notwithstanding the fact that obviously there are inflationary pressures out there and has ever been asked on the occupancy cost diesel naturally.

Move higher this year.

Or just in the context of where margins go on the back of savings that have indeed been achieved over the last couple of years.

We still assume that there will indeed be margin expansion.

This year or exiting COVID-19 .

<unk> to the 2019 level.

Speaker 39: Yeah, I agree with Adam. That's where we want to get back. 2019 included some unusual transaction-related expenses, so I think if you say excluded those, that's where we're trying to get to is the margin up above 2019 excluding those. Fantastic. Thanks.

Yes, I agree with that and Thats, where we want to get back.

2019 included some unusual.

Transaction related expenses, so I think if you excluded those.

That's where we're trying to get to is the margin up above two.

<unk> thousand 19, excluding those.

Fantastic Thanks, a lot.

Thank you Adam.

Speaker 40: Thank you. We currently have no further questions, so I'll hand the call back over to Ellis Jacobs, CEO and President, for closing remarks.

Thank you. We currently have no further questions. So I'll hand, the call back over to Ellis Jacob.

<unk> for closing remarks.

Speaker 41: Thank you again for joining the call this morning. As you heard today, our company is positioned well and we have a lot to look forward to as we move ahead. Our theaters and entertainment venues are now open across the country and we expect the remaining restrictions to be lifted in the coming months as we have seen in Saskatchewan and Alberta.

Thank you again for joining the call. This morning as you heard today, our company is positioned well and we have a lot to look forward to as we move ahead.

<unk> and entertainment venues are now open across the country and we expect the remaining restrictions to be lifted in the coming months as we have seen in Saskatchewan and Alberta.

Speaker 42: The film slate for the remainder of the year is strong and momentum is building in our other business.

The film slate for the remainder of the year strong and momentum is building in our other businesses. Our financial position is on solid ground and we are prepared for what's to come as we continue to ramp up across the country and businesses and above all of this we are beyond thrilled to be back doing what we do best something we've been proudly doing for <unk>.

Speaker 4: Our financial position is on solid ground and we are prepared for what's to come as we continue to ramp up across the country and business.

Speaker 43: And above all of this, we are beyond thrilled to be back doing what we do best – something we've been proudly doing for 100 years – entertaining Canadians.

100 years entertaining Canadians.

Speaker 44: I look forward to speaking with you all again in May for our first quarter results. Until then, please take care, be well, and enjoy a movie at your local Cineplex. Thank you very much and have a great week.

I look forward to speaking with you all again in May for our first quarter results until then please take care and enjoy a movie at your local cineplex. Thank you very much and have a great weekend.

Okay.

Speaker 45: Thank you, ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect your lines.

Thank you ladies and gentlemen. This concludes today's call. Thank you all for joining you may now disconnect your lines.

Yeah.

Speaker 46: The.

Yeah.

Yeah.

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