Q2 2023 Cineplex Inc Earnings Call
Okay.
Hello, everyone and welcome to the Cineplex, Inc. Q2, 'twenty two 'twenty three earnings conference call, we will begin shortly.
So I just show question ready for Q&A. Please press star followed by one on your telephone keypad. Thank you for your patience.
[music].
Hello, everyone and welcome to the Cineplex, Inc. Q2, 2023 earnings Conference call. My name is Charlie and I will be coordinating the call today.
You will have the opportunity to ask a question at the end of the presentation give you lots you Register your question. Please press star followed by one on your telephone keypad I'll now hand over to our host massive or jelly, Vice President corporate development and Investor Relations to begin Masa. Please go ahead.
Good morning, everyone I would like to welcome music.
The second quarter of 2023 earnings release Conference call hosted by Alan Jacobs, President and Chief Executive Officer, and Gordon Johnson, Chief Financial Officer.
I always begin let me remind you that certain statements being made.
He is subject to various risks and uncertainties.
Such forward looking statements are based on management's beliefs and assumptions regarding information currently available.
<unk> results may differ materially from those expressed in forward looking statements information regarding factors that could cause enough to bear.
<unk> can be found in the company's most recently filed annual information form and management's discussion and analysis.
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 Marisa good morning, and welcome to our Q2 2023 conference call. It is a pleasure to be with you today on the heels of a strong second quarter, our business made tremendous strides during the quarter and that momentum continues we have much to report on and a lot to be excited.
About.
The wave of blockbusters that hit the big screen during the second quarter did not disappoint as gaslog to our theaters do enjoyed the shared immersive experience of moviegoing.
This led to cineplex, the strongest post pandemic quarter, where for the first time since the pandemic, our revenues exceeded $420 million and the EBITDA surpassed $60 million.
Strategic initiatives and sound execution helped us achieve strong per patron results with quarterly BBB, reaching $12 84 in the CPP of $9 21.
Both records for the second quarter.
We are pleased to announce that our strong quarterly performance enable us to delever and repaid $26 million in bank debt. This will surely remain a focus for us as business continues to ramp up the third quarter is off to a sensational I'll start with the month of July becoming our highest grossing.
<unk> ever and the second highest grossing month in Cineplex's history.
Even more promising is that July is EBITDA surpassed every month in 2019 and this momentum has continued into August in fact, the first eight days of August brought in 70% more box office revenues than the same period in 2019.
We are back in business and our results show just that clearly consumer demand for the shared immersive and premium theatrical experience that cineplex delivers is as strong as ever there's simply no better way to amplify excitement and cultural relevance for films than with an exclusive theatrical release.
The perfect illustration of this was seen with Barbara and Hymer cultural phenomenon.
With scores of moviegoers dressed up like characters from the Barbian Oppenheimer movies, which opened on the same day.
Buzz around these firms created an unprecedented box office of cultural event that transcended any streaming service experienced by leaps and bounds.
Guests arrived early in their special outfits, the pictures and shared stories, while waiting with great anticipation to watch these films some even watch them back to back and enjoyed many of our concession offerings for food and drinks during that extended stay.
In addition, many guests shows to watch Christopher Netherlands, Oppenheimer, and our various premium formats as 58% of its box office came from our premium offerings.
This remarkable momentum led to Barbara and hymer, surpassing market expectations with Barbie, passing the $1 billion Mark at the global box office and Oppenheimer exceeding the half a billion dollar mark globally.
These phenomenal results coupled with the impact of Tom Cruises mission impossible led to Cineplex's highest July box office in history.
A similar cultural phenomenon, we're seeing with the Super Mario Brothers movie in April with fans dressed up like Mario Luigi and Princess speech to enjoy a special outing at our venues many guests watched a movie more than one students choosing to enjoys in the shared immersive environment each time all.
And all of this was a great film that broad families to the theaters and drove and it came as no surprise when it exceeded $1 3 billion at the global box office, making it the second highest animated film of all time.
Experiences like these remind us of the significant role center play in creating memorable experiences and how as exhibitors. We are uniquely capable of bringing people together to share cultural moments that stay with us forever.
The momentum we experienced in the second quarter and third quarter to date was largely driven by the industry's recovery from a film supply perspective, the second quarter was the first time since the pandemic, where we benefited from a regular cadence of weekly films across multiple genres sooner.
<unk> top performing films during the quarter included a Super Mario Brothers movie Guardians of the Galaxy volume three Spider man across despite a reverse which all surpassed $100 million of the domestic box office and their opening weekend.
Dan was then there was the little Mermaid Fast Act and the impressive carryover of John Wick Chapter before which was distributed in Canada by a distribution business Cineplex pictures.
This consistent supply of product is what we dearly Miss since the pandemic began while some titles had mixed results with the regular supply of products strong performance offset films that fell short of expectations.
Now that we are seeing a regular weekly cadence of films. We are encouraged to see box office results that exceed our approach to the pre pandemic period.
This speaks to the strength and resilience of the theatrical exhibition industry, despite inflation and recessionary dynamics.
While the second quarter and third quarter to date, so accelerated movie going as we look forward. We are cognizant of the potential impact of the writers and actors strikes and future release dates. We are monitoring. These strikes closely the degree of any downstream delays will ultimately depend on the duration of the strike.
Mix by the screen actors Guild, and the writers Guild of America.
While they may be temporary shifts in the future future film slate is important to recognize the adjust temporary and these loans will have their day in theater any potential delays will not affect consumer interest for movie going our studio plants scaling theatrical volume.
Next level.
Our studio partners have seen time and again, the irreplaceable value proposition of an exclusive theatrical release.
As I've said before we are still the engine that drives the train.
Even non traditional studios, such as Amazon and Apple are committing to theatrical releases to maximize returns on their best film.
Apple is releasing two long awaited films Martin Scorsese's killer of the flower Moon, starring Leonardo Dicaprio.
Ridley Scott's Napoleon both slated for later this year and Amazon has already had tremendous success with the release of grade three and air earlier. This year, notably these non traditional studios are expressing intentions to scale theatrical film production over the next few years to levels comparable to.
<unk> Studios.
As we look forward the flow of content coming from both traditional and non traditional studios gives us great confidence about the long term recovery of content volumes to pre pandemic levels and beyond.
In the meantime, cineplex remains well equipped to navigate any potential short term delays in film shifts as we have done effectively in the past.
You have heard me previously talk about our content diversification strategy and our ability to outperform the north American industry. When there has been a lack of films.
We continue to build as part of the business, which isn't tied directly to Hollywood.
Through our relationships with international content suppliers, and our ability to understand consumer preferences, we have attractive audiences such that the contribution of international product to a box office has increased from four 3% in 2019 to 19, 4% in the first half of 2000.
'twenty three the.
The rest of the industry in North America, only generated three 4% of its box office from international product, we will continue to grow and capitalize on this part of our business with the use of data analytics, which continues to get stronger.
Additionally, we are pursuing the expansion of our distribution business Cineplex Pictures, where we look to source content from all over the world and distributed to Canadian audiences on a year to date basis. We have successfully distributed eight titles and as always we are focused on delivering alternative for.
Grammy, including opera concerts educational programming sporting events and much more.
Our diversified businesses also continued to perform well and contribute to the company's performance.
This helps offset any potential impact of a shift in Hollywood slate.
<unk> business continues to shatter records quarter after quarter for topline Bottomline and margins. This growth is driven by the high margin family Entertainment segment further recovery in the theater segment and the expansion of attractive new verticals, including the lodging and leisure split space within the rule.
<unk> business.
During the second quarter of <unk> generated record adjusted EBITDA of $13 1 million and an impressive margin of 23, 7% up 570 basis points from the same quarter last year.
L E business generated revenue of $29 1 million, which is a second quarter record and an EBITDA of $6 3 million. This part of the business continues to scale and add meaningful bottom line contributions.
On the media side, both Cineplex media and Cineplex digital media performed well despite the challenging macroeconomic environment.
While there are some economic headwinds and the advertising sector. It is important to remember that cinema continues to be the most attractive and captivating form of advertising.
Cinema attention consistently score is 4% to seven times greater than other video channels, including TV, social and digital ads across a variety of brands and categories.
Both our media teams are focused on data initiatives and we anticipate this will provide a competitive advantage as advertisers increasingly return to spend in the cinema and mall space.
I'd now like to provide an update on our strategic priorities during the quarter. We opened our second junction location in Mississauga, Ontario. This new concept features multiple entertainment options, including movies amusement gaming live events and expanded food and beverage offerings.
All under one roof.
While it is still early days, we are extremely pleased with the performance of these two new locations in the concept as a whole as it allows us to maximize revenue per square foot in our venues, while driving incremental attendance and spend from expanded offerings.
In addition, we continue to advance our data analytics capabilities to create personalized campaigns that aimed to upsell cross sell and increase conversion and visitation across the cineplex ecosystem.
This is combined with utilizing sophisticated marketing techniques that leverage our highly valued and engaging loyalty programs, including the <unk> plus program with over 13 million members and our industry, leading subscription program Center club, which has nearly 135000 members.
And while we pursue multiple data support revenue generating opportunities. We are also leveraging data tools to improve productivity and optimize Showtime planning decisions.
Overall, we remain disciplined and focused on maximizing the use of our square footage and resources drive attendance and effectively manage costs.
Yeah.
Before I turn the call over to Scott I want to provide an update on the competition Bureau's allegations regarding our online booking fee Cineplex filed its response to the competition Bureau's allegations on June 30, and the Bureau filed for fire on July 14th and administrative case management conference to date.
<unk> schedule and procedural matters was held on July 27, we strongly believe that we have complied with both the letter and spirit of the law. We believe the competition Bureau's allegations are unfounded and we continue to seek an early determination of this matter.
Moving onto Cineworld. They emerged from bankruptcy on July 31, and as previously disclosed our claim Republic will be minimal.
We are just as disappointed with the outcome as our shareholders, but I want you to know that we worked tirelessly to explore all options to optimize the value of the litigation judgment, we will not put this chapter behind us.
Looking ahead, we remain highly confident in the strength of our exhibition in other businesses. We are excited about our strong year to date results, which reflect positive momentum from the industry's rebound and our strategic actions to maximize attendance box office and drive growth from our diversified businesses.
As previously discussed our diversification strategy is just one of several compelling factors that differentiate cineplex from our North American peers.
We hold a leading market position for entertainment destinations in Canada.
We are the most innovative exhibitor when it comes to guest experiences from premium formats to enhance gaming venues to new entertainment destinations like junction Cineplex's first mover innovator in the exhibition industry.
We hold a leading market position in international cinema and alternative content.
Our full ownership and control of the cinema media business drives industry, leading revenues will feature to resolve.
The consumer data, we collect is utilized across the cineplex ecosystem to drive additional revenue and make our operations more efficient.
Overall, cineplex is well positioned to achieve great success, and a history of driving industry, leading results are innovative and successful growth initiatives, along with our disciplined capital and cost management will serve us well for years to come.
I am extremely proud of the cineplex team and want to thank them for their agility resourcefulness and determination as we work together to grow our business with that I will turn things over to board.
Thanks, Alex I am pleased to present, the condensed summary second quarter results were certified for further reference our financial statements and MD&A haven't been filed on SEDAR plus and are also available on our Investor Relations website at Cineplex Dot com.
Our MD&A and earnings press release include a complete narrative on the operational results. So I will focus on highlighting and select items and providing commentary on our liquidity.
As Alex mentioned, we were extremely pleased with our Q2 operating results. We reported total revenue of $423 1 million attendance of $12 8 million people and adjusted EBITDA of $63 million, our strongest quarterly results since 2019, we.
Reported net income of $176 5 million.
Which included a tax benefit of $158 $4 million, which I will discuss later.
For the second quarter total revenues increased 29% to $423 1 million.
From $349 9 million in the prior year and adjusted EBITDA increased 68, 5% to $60 $3 million from $35 $8 million in the prior year.
Adjusted EBITDA margin for the quarter was 14, 2%, which is in excess of the full year 2019 on that.
We experienced excellent results in our film exhibition and content businesses with segmented revenue, increasing 24, 9% to $312 8 million.
Adjusted EBITDA more than doubling to $45 $6 million.
And adjusted EBITDA margin, increasing to 14, 6% from eight 5% all as compared to the prior year quarter.
Box office revenues increased by 26% to compared to the prior year with BP at an all time second quarter record of $12 84.
Primarily due to consumer demand for premium experiences.
Premium product accounted for 46, 6% of our box office in the second quarter.
Theater food service revenues increased 23% to $118 million.
Our second highest quarterly result ever with CPP of $9 21, establishing a new second quarter record.
And then for the second quarter increased 15, 5% to $12 8 million and represented 75% of Q2 2019.
On a month by month basis April was 86% of April 2019.
May was 60% of May 2019, and June was 82% of 2019.
For the second quarter, two months were above 80% of the 2019 and attendance levels and it was only made which was below and this was primarily due to the Avengers endgame. The second highest grossing film of all time, having a significant impact in June and May 2019.
On the media side of the business, we reported second quarter Media segment revenue was $26 million adjusted EBITDA of $13 $6 million and segmented adjusted EBITDA margin of 52, 3%.
As we continue to see growing traffic in our cinemas in malls, we expect to see further recovery in our media businesses.
Our amusement and leisure businesses had another incredible record breaking quarter with a combined 15, 1% increase in revenue and a 13, 3% increase in adjusted EBITDA compared to the prior year.
This business segment continues to outperform the pre pandemic period.
<unk> business continues to benefit from growing theater attendance and the expanding the FCC market in Canada and the U S.
Reported all time record quarterly revenues of $55 $2 million and record quarterly adjusted EBITDA was 13 point.
Our LTE business reported record Q2 revenues of $29 $1 million.
G&A expenses increased $1 4 million to $16 7 million from $15 $3 million in the prior year, primarily due to a $1 1 million increase in <unk> expense.
G&A is described in more detail in our MD&A.
Total interest expense increased to $30 5 million from $28 6 million in the prior year.
Encourage you to read our MD&A disclosure as we breakout the components of interest expense.
Cash interest expense increased two 8% to $31 4 million with cash rent sorry cash interest excluding the lease interest expense decreased six 4% or $1 million to.
<unk> to $14 $9 million.
Primarily as a result, a lower effective borrowing costs on the bank credit facilities.
Noncash interest expense increased to $3 3 million from a recovery of $2 million in the primary prior year, primarily due to the shift in the mark to market adjustments on our hedges.
We recorded a net income tax recovery of $158 $2 million comprised of a current tax expense of <unk> 3 million and a deferred tax recovery of $158 $4 million.
The deferred tax recovery as a result of the reasonable expectation of the utilization to offset future periods of taxable income given our current outlook.
As a reminder, we have approximately $427 5 million of non capital losses to utilize against future periods.
This item is described in more detail in note three of our financial statements.
Before discussing our liquidity position I wanted to briefly touch on Capex and an update on our center world claim.
For 2023, we reported second quarter net capex of $15 1 million and on a year to date basis to $29 million our guidance for net Capex for 2023 remains at $60 million.
And we will continue to be prudent and opportunistic with our growth initiatives focusing on initiatives that drive incremental revenue and returns.
And then lastly, cineworld emerged from bankruptcy protection on July 31, 2020.
Their plan contemplates all holders of general unsecured claims, which includes cineplex's claim of $1 two $4 billion.
Receiving a share or a total pool of U S dollars $10 million or $10 million in cash plus interest and a litigation trust, which are not expected to be material.
The distribution to general unsecured creditors will not happen immediately and we may not receive our distribution until 2024.
We do not anticipate cineplex is allocated portion to be material and no amount has been accrued in cineplex's financial statements.
I would now like to move on and speak to our balance sheet and in particular, our liquidity position.
For Q2 2003 for Q2 2020, we reported net repayments of $26 million under our credit facilities, which left us with $330 million drawn and approximately $203 million available under our credit facilities at <unk>.
<unk> 2023.
As at June 32023, we reported a senior leverage ratio of two or three times as compared to a covenant of 275 times.
Now I'd like to take a few moments to look forward I wanted to revisit the world I described during our last analyst call.
This was a world, where we could potentially achieve pre pandemic adjusted EBITDA levels on 75% to 80% pre pandemic attendance levels.
Due to our diversified business model and then use this free cash flow to Delever.
For the second quarter, we achieved 75% in Q2 2019 attendance level.
87% of box office, and 100% of theater food service revenues.
Our EBITDA was approximately $60 million or cash interest in long term debt was $14 9 million and our net capex was $15 1 million.
For simple net free cash flow of approximately $30 million and we repaid $26 million under our credit facility.
We know what it is not as simple as multiplying by four but our Q2 results give us confidence that this world is within our grasp.
Now, let's talk about the balance sheet at.
At the end of Q1, 2023, we had approximately $896 million face value of debt, including $316 3 million in convertible debentures, which have a conversion price of $10 94.
All of our equity research analysts have a one year target price in excess of the conversion price.
In the 75% to 80% World, we believe that the convertible debentures would convert to equity and with the adjusted current debt balance of $580 million, excluding the converts.
We would be at the low end of our target leverage ratio range of two five to $3 3.0 times.
And on the path to consider the reintroduction of a dividend.
Now, let's talk about initiatives to optimize and optimize our capital structure as I said last quarter I'm going to make it clear that we're primarily talking about the composition and maturity of our debt stack, including items, such as raising strategies mix of bank versus private versus public debt.
<unk> versus Canadian issuance.
<unk> died or measure measures such as issuing common equity to reduce debt.
With the strong return of our business in Q2, you should see us moving forward with some of these initiatives in the near future.
And finally speaking of common equity our businesses typically traded at a premium given our market share and diversify a bit.
However, with the positive results of our business and momentum in the industry. We have not seen the same valuation return that appears in the U S of experience.
We are trading at an approximately 25% discount to our target price.
We understand that our Canadian listing means we are subject to more of a show me view, but we would expect that our Q2 results should give you some confidence that we are showing you.
With a continued strong movie slate for the balance of 2023 and the incredible results from our diversified businesses. There is a lot to be excited about.
And with that I would like to turn the call.
Over to the conference operator for questions.
Of course, thank you.
To ask a question. Please press star one on your telephone keypad, we'd like to draw. Your question. Please press star followed by two.
Parents, who ask a question. Please ensure you're on mute locally as a reminder, that star one on your telephone keypad now.
Our first question comes from Derek Lessard TD Securities. Sir Your line is open. Please go ahead.
Yes, good morning, everybody good to hear your voices.
Glad to see the improvement across your businesses.
Yeah.
And on that it looks like you guys are doing well in most of the areas that you do have control over and but I did want to touch on an area where you don't.
The wagon strikes Alex you've touched on this a little bit in your opening remarks, but I just wanted to hit on how you think about the evolution of the strike.
And Gordon maybe how should we be thinking about debt.
In terms of how you compare.
Particularly the balance sheet, particularly as you come up with covenant testing in Q4 again.
Okay.
So on the initial comments on the strike.
We are looking to a situation where the strike gets resolved relatively yes.
Quickly and most of our all of our studio partners are doing everything they can to minimize the disruption of the product flow to us and we are working with them also from a marketing perspective, and using our data to basically promote the films that are coming out and helping them.
Work together with US now unlike Covid. This is not a shutdown to me. This is just as I said, a temporary postponement of some of the movies. If the strike is for a prolonged period and I think we will be back and running strongly ads b.
Forward.
To some of the areas of the business now the difference for us too as we have a very strong.
Slate of diversified products coming from international locations, and we will continue to pursue that it's not replacing Hollywood, but at least it gives us an ability to continue to have guests come to our venues, including things like <unk> and <unk>.
Sporting events and other items that we can show them at our theaters so to me.
I hope, it's a short term situation, but I can't really guarantee anything because we will have to wait and see what.
Both the <unk>.
Union groups decide to do as we move forward, but the number of individuals getting impacted I think we will see a move forward.
<unk> two.
A resolution of the situation hope that answers your question.
And Derrick I'll answer the second half of your question. So first of all I want to say.
I am not concerned with this at all from a covenant perspective.
You got to recall that coming into Q3 and into Q4.
We were impacted both by what I would call emphasis last year, sorry, we were impacted by what I would call our supply chain disruption was.
This is a significant shift.
A number of titles commencing in late July 2022.
So we're dropping off on an LTM basis, some pretty weak quarters coming out of Q3 last year and Q4 last year and even into Q1 of this year.
And so the strength that we're seeing now going into Q3 and as Alex mentioned in his conference call script to have our highest EBITDA monthly EBITDA in July behind us.
As.
In the.
At the risk of shift I would say is probably over.
Is that something Thats overstated out there right now and so from a covenant perspective.
Got some weak periods coming off.
As this is going to be no worse than.
Some of the disruption that we faced in prior periods.
Yes. Thanks, both comments are super helpful and maybe on a more positive I wanted to drill down a little bit on that strong <unk> performance.
First more on what Youre seeing in terms of consumer behavior against the sort of cloudy macro backdrop in that and how should we view sort of the potential new locations and your pipeline there.
Yeah.
Yeah. So let me talk about performance.
Big data a little bit more of your question because I think.
There may be some others asking about.
The LTE.
So, let's first and foremost say that.
The <unk> business has been and both of our amusement and leisure businesses have been extremely strong and kind of coming out of the post pandemic.
<unk>.
For the business.
There is a bit of a seasonality to this business that we need to be conscious of.
As Canada.
In general moves out of the winter months and into the spring into the summer folks first couple of months, where there is where there is nice weather Ed side is.
The business.
Suffers a little bit about people Canadians wanting to be outside so the may June period.
We see a little bit of a drop in demand, which then picks back up in July and we've reported that one of our strongest months in July that were going to report.
So we see a bit of seasonality there the business is still extremely dry and while I want to address margins.
Because people ask about margins during the second quarter.
And.
A little bit lower than where they had been historically in the past number of quarters.
<unk> talked a little bit about the seasonality in may in particular with the strong weather as we saw a dip in volume.
And so the margin in the <unk> business for the month of May itself was about 13%.
If you took out the month of May.
If you just looked at April and June the margin for the LTE business was about 25.
So we have kind of a one month anomaly, we perhaps didn't react as strongly as we could have to the.
The volume decline in the month of May.
But as we look into July I see the margins coming right back up so so strong business strong indicators, we have a couple in the pipeline for next year.
So we have one in Vancouver, and one in Quebec.
But those are scheduled to reopen to open towards the end of 2024 and as I said.
We use the pandemic to really optimize the authorization operations of our LTE business and we're seeing that.
The success and the benefits as we look forward.
Yeah.
Yeah.
Thanks for that very helpful.
Thank you. Our next question comes from drew Mcreynolds of RBC capital markets True. Your line is open. Please proceed.
Yes, thanks, very much and good morning.
Congrats on that.
On the results two questions for me first on the Cineplex media side.
Little bit of a tough comp that you allude to in the MD&A.
And Alex in your opening remarks.
Elaborated a little bit more on the data ecosystem cineplex fab underneath.
Just wanted to better understand.
This business moving forward.
It is tied to attendance, but also tied to things you can do with your data. So just wondering how that's evolving.
And then second question on the amusement outlook looks like there was some.
Additional equipment sales in the wage subsidy and there maybe for you or just how should we be looking at the sustainability of what is obviously a very strong Q2. Thank you.
Okay.
Yeah.
So with respect to the media business, Andrew I'll take I'll take both the questions but.
I wanted to.
Talk about what we've been describing to you historically with respect to this business is.
There's a lag in this business or the return of both mall traffic and.
Theater attendance.
Before typically our advertising partners.
For the confidence that a film is going to play and make sure that they've got their engagement and strategies in place.
With respect to and I'm going to go into the numbers first and then with respect to the prior year for Q2 2022.
It benefited from some advertisers who had annualized commitments that they had deferred during the pandemic.
And with top gun coming out in Q2 is somewhat piled on and put some of those commitments into Q2 2022, So we benefited a bit.
And from that perspective.
Now I will.
When we look at media revenue as a percentage of the pre pandemic level.
As we've been in a range of.
<unk>.
Sort of anywhere.
This quarter was with about 60% of pre pandemic up to a high of 72% in Q4 last year. So we've been hovering a range, you're kind of that 60% to 70% range.
And as we described and what we were expecting to see that to be a little bit of a lag between between where attendance was coming.
I will say that as we look forward.
And our data strategies are really engaging advertisers to sort of prove and connect with our customers.
Is that we're seeing.
The media revenue come back more in line with our attendance pattern.
And as an example.
For the month of July which will describe now our attendance was about 93%.
2019 levels, our media revenue for the month of July was about 94%.
So we are coming back we're right on line with that attendance level as I look forward to the next number of quarters. Our expectations is that the media revenue compared to 2019 levels will now track in line with the tenants as opposed to being behind it.
So we're very encouraged that.
You know that our advertising customers are understanding of recognizing.
The relevance and.
And the returns that they get on spending in cinema.
And we're happy to kind of see that lag what we think is now behind us.
Andrew the Big thing is basically using our data to provide a return on investment to our advertisers and agencies and to me that's something that's very critical because we are able to prove how beneficial it is to be on the screen at our theaters and that's in <unk>.
Porton differentiator from us to some of the other.
Companies out there.
And drew on your second question on the <unk> business.
Yes.
This business.
I would say is on fire in the whole space is on fire. So.
As we look at the exhibitors.
As we have.
Sure.
Look too.
Open our junk junction concept.
C exhibitors in the U S look into.
Utilize extra space for amusement gaming concepts.
So lots of opportunity there.
See an explosion in FEC concepts across North America.
We see landlords looking as retail tenants exit working for entertainment type concepts to come into a malls.
So there is a massive opportunity for revenue growth in the Q&A.
And we're seeing that happen in the way with scale of the business is there is tremendous economies of scale because.
We can service those customers without having to have a lot of additional.
Kind of overhead to service that customer base.
You mentioned, yes, there was a benefit of.
Employee attention with credit.
In the third sorry in the second quarter, which is really a one time event. So we won't see that going forward.
Okay. That's great very helpful. Thank you.
Thank you as a final reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad now.
Yes.
Our next question comes from Maher Yaghi.
Capital Mohan your lines open. Please go ahead.
Yes. Thank you for taking my question.
Gratulation guys on a nice quarter I wanted to just go back to the strike.
And.
The discussion we have with also with our U S companies that we cover it seems too.
It's in the best interest of everybody behind the solution like you mentioned <unk>. So.
Hopefully it will be short lived but I wanted to.
Ask you in terms of the slate.
<unk> that you're expecting in your theory.
For 2023 are you seeing any shift in terms of timeline for the movies that.
We are slated to come this year being pushed out or it's more.
2020 for 2025.
Movies that are being.
Maybe starting to move away.
In response to tell us the only movie today, that's moved out that.
Would have been one that we would have seen has been.
A reasonable hit as Ghostbusters, which is moving to March 29, 2024 from December 25, 2023 and to me.
First quarter to have a big movie move into that quarter and a good positioning for us because there are a lot of other movies if.
They keep their dates all the way through from the third quarter to the fourth quarter, you've got some strong product.
Coming out with grant reasonable equalizer that non too big Fat Greek wedding dumb money Paw patrol's saw so theres a lot of and Thats just in the third quarter. When you go to the fourth quarter you are looking at movies like pillars of the flower Moon the excesses.
Got dune you've got the marvels.
The hunger games.
Full in wish <unk>.
<unk> long cost so theres a lot of movies that are still there and as long as they don't move I think we will continue to perform extremely well and again when you look at the three movies that are playing in our theaters now we expect them to continue to move forward like Barbie Oppenheimer and mission impossible.
And we have done extremely well on a percentage basis compared to.
Our north American numbers on an overall and then for Barbie, We had two of the top 10 locations in North America for Oppenheimer, The same and Oppenheimer, we're close to 10% of the North American growth in Barbie.
Getting close to eight 5% and we keep going up every week.
I think content wise as long as you know the.
Disruption doesn't continue for a significant period of time I don't think we will see a major impact to us.
Okay. Thanks, and maybe just a follow up in terms of your discussion with the studios in the U S.
What is their view on the return on their investment.
In.
And on their investments in movies and have they changed their view.
Disney was saying they are still committed to making a strong movies, they're focusing on quality rather than quantity.
Can you, maybe just talk a little bit about.
How you see the studios moving forward with their investments and how that could affect your business overall.
The good news in that areas, you've got companies like Amazon and Apple also wanting to participate and I think it is going to increase the number of.
Movies that are being released into the movie theater and like I've always said we.
So the engine that drives the train, but again youre going to have movies that are going to do extremely better than we anticipated and they are ones that are not going to do it as well, but on overall basis as long as we are ahead, both from a studio and an exhibitor perspective, then everybody wins in that process and if you.
Told me and this is.
Good thing if you asked me two years three years ago with Barbie.
A movie I would have said hey that doesn't sound like we'll get there.
And it's done really well and it will continue to do well and Warner Brothers did an incredible job in promoting that film and basically it has filled our theaters on an ongoing basis.
So from an overall perspective, we've had years, where this is always the case some movies do better than we expected and others.
Less than we had expected.
And maybe my last question on screens.
In Q2, you'll have some.
Some weeks, where you had more.
<unk> been screens that you have available.
How is the situation right now going into the summer period.
And in the fall.
In terms of utilization.
There is a lot of product, but we continue to use our data and analytics to basically derive which locations should have what film and that is really helping us.
We as we move forward.
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We had a lot of situations, where we can get as many screens on a particular movie, but what then ends up happening is our guests come in later weeks off the run and we catch up on an overall.
Physician to me as I said to you.
It's a high class problem, when you've got a lot of movies and not enough screens.
Great. Thank you very much.
Thank you Sir.
Thank you at this stage. We currently have no further questions. So I'll hand back over to Ellis Jacob for any closing remarks.
I want to thank you all again for joining the call. This morning, we look forward to speaking with you in November for our third quarter 2022 results.
Make sure you get to see Barbie and Oppenheimer and have a wonderful and a great day.
Thank you.
Ladies and gentlemen. This concludes today's call. Thank you for joining you may now disconnect your lines.
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Thank you for joining you may now disconnect your lines.
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