Q4 2023 Cineplex Inc Earnings Call

February 8, 2024

Some portion of the call with an opportunity for question and answer the end if you'd like to ask a question. Please press star followed by one on your telephone keypad.

I would now like to turn this conference call over to all host.

Misha virtually vice president of corporate development and Investor Relations. Please go ahead.

[music].

Good morning, everyone I would like to welcome you to Cineplex's fourth quarter 2023 earnings release Conference call hosted by Ellis, Jacob President and Chief Executive Officer, and Gordon <unk>, Chief Financial Officer before we begin let me remind you that certain statements being made are forward looking and subject to various risks.

And uncertainties such forward looking statements are based on management's beliefs and assumptions regarding the information currently available.

Actual results may differ materially from those expressed in forward looking statements information regarding factors that could cause results to vary 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 Martha and good morning, and welcome to our Q4 2023 conference calls today, Gordon and I look forward to recapping. The notable year, we had in 2023.

As I reflect on the year Cineplex truly demonstrated why we are north American leader in entertainment and media, we delivered a strong Q2 and a record breaking Q3, the best in our company's history.

During 2023, Cineplex delivered strong year over year revenue growth of 26% and nearly tripled its adjusted EBITDA to $157 4 million from continued operations.

Good morning, everyone and welcome to the Cineplex Inc.

Quarter 2020, Great earnings Conference call all lines have been placed on mute during the presentation portion of the call with an opportunity for a question and answer.

Adjusted EBITDA margin significantly improved to 11, 3% in 2023 compared to four 9% in 2022, and even approaching the 2019 margins of 14, 1%.

If you'd like to ask a question. Please press star followed by one on your telephone keypad.

I would now like to turn this conference call eyeball too.

Hi.

Russia, Richard Lee Vice President of corporate development and Investor Relations. Please go ahead.

These results prove we have the ability to succeed amidst an evolving entertainment industry. Despite the anticipated content supply challenges, which the entire exhibition industry faced we outperformed the North American box office relative to 2022 by 785 basis points.

Good morning, everyone I would like to welcome you to Cineplex's fourth quarter 2023 earnings release Conference call hosted by Ellis, Jacob President and Chief Executive Officer, and Gordon, Our Chief Financial Officer before we begin let me remind you that certain statements being made are forward looking and subject to various risk.

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One of the reasons, we are outperforming our peers in box office performance is by giving our guests more reasons to keep coming back our alternative content strategy played an integral parts navigating last year's content supply ships 2023 marked our biggest year for international programs.

<unk> and uncertainties such forward looking statements are based on management's beliefs and assumptions regarding the information currently available actual results may differ materially from those expressed in forward looking statements information regarding factors that could cause results to vary can be found in the company's most recently filed annual information form and management's discussion.

<unk> delivering 10% of Cineplex is annual box office revenues with firms like Baton animal and carry on charter three this compared to our North American peers, who generated only 4% of their box office revenues from international content.

An 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 Q4 2023 conference call today, Gordon and I look forward to recapping. The notable year, we had in 2023.

In addition, the partnerships we have with the met opera National Theatre suite product stage productions sporting events and concerts allowed us to bring more immersive cinematic events and coming to our theaters. If it was undeniably the year of Taylor Swift with the Taylor Swift Arris to a concert film.

As I reflect on the year Cineplex truly demonstrated why we are north American leader in entertainment and media, we delivered a strong Q2 and a record breaking Q3, the best in our company's history. During 2023 Cineplex delivered strong year over year revenue growth of 26.

Generating over $180 million in domestic box office revenue and taking top spot of Cineplex is number one title in Q4 2023.

<unk> percent and nearly tripled its adjusted EBITDA to $157 4 million from continued operations.

The remarkable response this concert film allowed guests to re imagine their local theaters as a place to enjoy the ultimate concert experience with friends dancing and singing along with their favorite artists.

Adjusted EBITDA margin significantly improved to 11, 3% in 2023 compared to four 9% in 2022, and even approaching the 2019 margins of 14, 1%.

In addition, the expansion of our distribution business Cineplex Pictures allows us to source content from all over the world and distribute to Canadian audiences like Oscar nominated Japanese fund the boy into herein.

Last year, we announced a Canadian theatrical distribution agreement with Lionsgate towards 2023 film slate, bringing 11 titles to the big screen.

They have extended the agreement for another year and Cineplex pictures looks forward to upcoming boom House horror film imaginary and next summer's Borderlands based on one of the best selling video game franchise of all time, starring Cate Blanchett, Kevin Hart and Jack Black.

Yeah.

One of the reasons, we are outperforming our peers in box office performance is by giving our guests more reasons to keep coming back.

Alternative content strategy played an integral parts navigating last year's content supply ships 2023 marked our biggest year for international programing, delivering 10% of Cineplex's annual box office revenues with firms like Baton animal and Katie on chart three.

What's also setting us apart from our peers as no. Other exhibitor has a loyalty program like <unk> plus has it's both a great engagement tool enriching consumer data seen pluses Canada's most robust lifestyle loyalty program with over 14 million members and growing.

This compared to our North American peers, who generated only 4% of their box office revenues from international content.

Now with Empire grocery and home hardware, new retail partners, we have gained significant opportunities to attract new guests.

In addition, the partnerships we have with the met offer our National Theater Street product stage productions sporting events and concerts allowed us to bring more immersive cinematic events and coming to our theaters.

Meaning we are converting non moviegoers into movie goers in fact, 25% of <unk> plus members, who visited Cineplex in 2023 made their first visit as the <unk> plus member further expanding our loyalty guest space.

Was undeniably the Europe Taylor Swift with the Taylor Swift Arris to a concert film generating over $180 million in domestic box office revenue and taking top spot of Cineplex is number one title in Q4 2023.

Not only utilizing the power of data to drive repeat visits and acquire new guests. We're also investing in technology to provide our guests with expanded information in a seamless cineplex experience.

The remodel.

We enhanced our web experience launched a new app and are rolling out a program for mobile concession Audrey bye.

By creating a more personalized guest experience with relevant content and targeted offerings, we have an increase.

Increase in both frequency of visits and spend per person.

It's also important to ensure guests have a variety of ways to immerse themselves within their favorite film through premium experiences. We are continuing to invest in premium offerings like the panoramic screen ex experience, which we expanded in Montreal on Brampton last year, bringing the total number of screen <unk>.

Locations to 17 theaters across the country and.

In 2023, we expanded our partnership with IMAX committing to an additional five screens, including one IMAX screen that opened last year at Cineplex cinemas co Portland.

Our latest IMAX location will be added to our young and Eglinton theater in Toronto, just in time for the release of Doom bar to next month.

By driving guests to premium experiences are BBB in 2023 reached a record of $12 53.

And we generated 41, 1% of our 2023 box office revenues from premium margin accretive experiences like VIP IMAX and ultra AVX. We also.

So achieved a record CPP of $8 96.

These results clearly indicate the multiplying effect of the sustained enthusiasm for a premium theatrical experience and our enhanced food and beverage offerings paired with our unique ability to offer guests diverse content personalized experiences and a variety of entertainment options across our van.

News.

As we look to create more opportunities for families and groups to visit our venues in 2023, we added another cineplex junction location. We introduced this new entertainment concept in 2022 with our first location opening in Winnipeg, Manitoba, It re imagines the exhibition.

You, bringing movies amusement gaming casual dining and live performances, all under one roof significantly expanding the entertainment experience beyond movies last May we opened our second location Cineplex Junction Erin Mills in Mississauga, Ontario, and it's off to a strong.

Start currently on track to exceed our original performance expectations.

As the exhibition business continues to ramp up we're also seeing accelerated growth in our diversified businesses.

We've launched <unk> unique <unk> brands over the past eight years, each targeting a different consumer segment.

These venues off with something for everyone with live entertainment casual dining a range of amusement games and special attractions like archery bowling and access right.

We have three <unk> locations on the Horizon for 2024. In addition to new locations of direct room slated to open in the fourth quarter in Vancouver, and Montreal, We recently announced a new <unk> location opening in Toronto Cadillac Fairview is Fairview mall situated next to Cineplex cinemas.

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The addition of these locations will increase our total number of Lv venues to 16 across Canada.

Over time, we are improving our margins found operational efficiencies and we are confident in our ability to scale. This business further as we adjust over half way towards our goal of 30 locations across Canada.

Our media business is also expanding as we recently signed a digital signage and media representation deal with Cadillac Fairview that will strengthen our leadership position in reaching consumers at premium shopping destinations across the country.

Cineplex digital media will operate a network of 200 digital displays in 18, Cadillac Fairview shopping centers bolster.

Bolstering cdm's out of home shopping network to 89 premium shopping destinations in Canada, including nine of the top 10 busiest malls in Canada. We addition, with the addition of these media sales networks. This now positions Cineplex media as the go to supplier for in mall advertising in the <unk>.

Country.

As we look at the state of the current film slate. During 2023, we saw excellent progress on film release volumes during the second and third quarter.

Consistent supply of product is what we missed due to pandemic impacts on the production schedule.

Despite anticipated short term supply challenges due to the now resolved writers and actors strikes we expect the box office to strengthened in the back half of 2024 and into 2025 US film film.

Film volume ramps up.

When it comes to film supplier two things continue to hold true studios and streamers are committed to theatrical releases and movies may shift the release date, but they are still hitting theaters.

Monkey man directed by and starring Dev Patel famous for Slumdog Millionaire has now been slated for our key accurate released this spring as opposed to initial plans for direct streaming.

We are even seeing films move up their release date, which will further enhance the 2024 supply just yesterday Disney announced Moana to being released theatrically. This November in time for U S. Thanksgiving.

For the first quarter, we have the much anticipated June part two directed by Canada's owned and even new it's a movie made for the big screen experience with loyal fans eager to see this film in IMAX.

Movie Lovers are also looking forward to Marvel's Madam web family favorite Kung Fu Panda, four Ghostbusters frozen Empire, and Godzilla X Kong New Empire.

Bolstering cdm's out of home shopping network to 89 premium shopping destinations in Canada, including nine of the top 10 busiest malls in Canada with <unk>.

In addition to movie Buzz, we've noticed an abundance of demand for our premium concession items like cups, and popcorn stops were due in part to Envos buses frozen Empire, bringing some fund merchandise for fans in the first quarter.

With the addition of these media sales networks. This now positions Cineplex media as the go to supplier for in mall advertising in the country.

As we look at the state of the current film slate. During 2023, we saw excellent progress on film release volumes during the second and third quarter.

After the first quarter as we continue through 2024, we have a number of strong titles, including kingdom of the planet of the apes inside out too if despicable me for that pool, three beautiful juice to Gladiator two wicked parked one lord of the rings The war.

Consistent supply of product is what we missed due to pandemic impacts on the production schedule.

Despite anticipated short term supply challenges due to the now resolved writers and actors strikes we expect the box office to strengthened in the back half of 2024 and into 2025 as Phil.

Or of Broha cream will foster the lion King and Sonic the Hedgehog III.

Finally on the international front I know our team's gone stop talking about Bollywood film fighter, which landed in theaters late January and is inspired by top gun Maverick International firms are becoming a bigger contributor to total box office numbers as I shared earlier, we will continue to focus on bringing a diverse.

Film volume ramps up.

When it comes to film supplier two things continue to hold true studios and streamers are committed to theatrical releases and movies may shift their release date, but they are still hitting theaters.

Monkey man directed by and starring Dev Patel famous for Slumdog Millionaire has now been slated for our key accurate released this spring as opposed to initial plans for direct streaming.

Slate of content to Canadians and with our rich consumer insights strong supplier relationships and distribution capabilities I am confident we are well positioned to navigate any short term supply challenges.

We are even seeing films move up their release date, which will further enhance the 2024 supply just yesterday Disney announced one or two being released theatrically. This November in time for U S. Thanksgiving.

While exhibition is growing and we are building upon our diversified businesses. We have also made great strides towards strengthening our balance sheet.

Last week, we announced the closing of the <unk> transaction for $155 million in gross cash proceeds which represents an approximate seven five times multiple on a free cash flow basis, doubling our original investment we have been in the amusement solution business since 2011.

Movie Lovers are also looking forward to Marvel's Madam web family favorite Kung Fu Panda, four Ghostbusters frozen Empire, and Godzilla X Kong the new Empire.

And through organic growth and acquisitions, we have grown it to become a north American leader.

In addition to movie Buzz, we've noticed an abundance of demand for our premium concession items like cups, and popcorn tops were due in part to Envos buses frozen Empire, bringing some fund merchandise for fans in the first quarter.

The sale of <unk> represents an important step towards accelerating the company's focus on deleveraging and acting as a catalyst for the company's refinancing plans that were announced earlier today.

We are focused on extending debt maturities, removing restrictions and reducing potential equity dilution.

As we work towards our target leverage ratio of two five times to three times, we will consider the reintroduction of the dividend board, we'll be sharing more on this shortly.

I also want to provide a brief update on the competition Bureau's allegations regarding our online booking fee. We strongly believe that we have complied with both the letter and spirit of the law and that the competition Bureau's allegations are unfounded, we look forward to presenting our case before the competition.

Sure.

Our hiring will foster the lion King and Sonic the Hedgehog III.

Finally on the international front I know our team Scone stopped talking about Bollywood film fighter, which landed in theaters late January and is inspired by top gun Maverick International firms are becoming a bigger contributor to total box office numbers as I shared earlier, we will continue to focus on bringing a diverse slate of.

<unk> later this month, we are also aware that class action lawsuits have been commenced in Quebec in British Columbia, and we intend to vigorously defend ourselves against these.

Content to Canadians and with our rich consumer insights strong supplier relationships and distribution capabilities.

<unk> allegations.

As we look to the year ahead, we are starting on solid footing strong performance in 2023 saw adjusted EBITDA and cash flow starting to approach pre pandemic levels and we are and we have delivered strong year over year growth.

Im confident we are well positioned to navigate any short term supply challenges.

While exhibition is growing and we are building upon our diversified businesses. We have also made great strides towards strengthening our balance sheet.

As we kick off 2024, there's a lot. We're excited about we are seeing the return of moviegoing as the content supply is starting to return to a more consistent pace and volume, especially in the back half of 2024, we.

Just last week, we announced the closing of the <unk> transaction for $155 million in gross cash proceeds which represent an approximate seven five times multiple on a free cash flow basis, doubling our original investment we have been in the amusement solution business since 2011.

We are well positioned to navigate any temporary supply shifts and are confident we will continue to outperform our north American peers. When it comes to overall box office performance in most specifically in regards to international programming and alternative content.

And through organic growth and acquisitions, we have grown it to become a north American leader.

The sale of <unk> represents an important step towards accelerating the company's focus on deleveraging and acting as a catalyst for the company's refinancing plans that were announced earlier to date.

We remain committed to delighting our guests at a local theater to ensure they enjoyed the full cineplex entertainment experience.

Delicious food options expanded entertainment and amusement gaming offerings to a wide range of premium viewing experiences and content offerings, including films and events.

We are focused on extending debt maturities, removing restrictions and reducing potential equity dilution.

As we work towards our target leverage ratio of two five times to three times, we will consider the reintroduction of a dividend God, we'll be sharing more on this shortly.

<unk> business has reached significant scale and will be accrete growth driver into the future. We've got three new locations that do open across Canada. This year unique.

A unique brand offerings are a key differentiator and operationally we are ready to continue to scale this business in an efficient and profitable way.

Our investments in digital products will continue to enhance the guest journey across all of our entertainment offerings.

Having ownership over our media businesses provide significant bottom line contributions as advertisers look to reach Canadians in a meaningful and engaging way across the country in cinema or out of home networks, we have the ability to provide attribution and measurement to our advertising.

<unk> later this month were also aware of the class action lawsuits have been commenced in Quebec in British Columbia, and we intend to vigorously defend ourselves against these.

Allegations.

As we look to the year ahead, we are starting on solid footing. Our strong performance in 2023 saw adjusted EBITDA and cash flow starting to approach pre pandemic levels, and we had and we have delivered strong year over year growth.

Clients through our rich data.

And finally strengthening our balance sheet will continue to be a focus for us this year and we are making tremendous progress as discussed earlier.

Overall cineplex has a history of driving industry, leading results and is well positioned to achieve great success.

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.

We are well positioned to navigate any temporary supply shifts and are confident we will continue to outperform our north American peers. When it comes to overall box office performance and more specifically in regards to international programming and alternative content.

<unk>.

Thanks, Alex.

We remain committed to delighting our guests at a local theater to ensure they enjoyed the full cineplex entertainment experience from delicious food options expanded entertainment and amusement gaming offerings to a wide range of premium viewing experiences and content offerings, including films and events.

Pleased to present, a condensed summary of the fourth quarter of 2023 annual 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 Centerpoint Dot com.

Our MD&A in the earnings press release include a complete narrative on the operational results. So I will focus on highlighting select items and then providing commentary on our convertible debenture Amendment proposal, our comprehensive refinancing plan.

<unk> business has reached significant scale and will be accrete growth driver into the future. We've got three new locations set to open across Canada. This year unique.

Unique brand offerings are a key differentiator and operationally we are ready to continue to scale this business in an efficient and profitable way.

<unk>.

Prior to commenting on the financial results I want to remind you that with the completed sale of <unk> last week. The results of <unk> AG a retroactive we presented as discontinued operations.

Our investments in digital products will continue to enhance the guest journey across all of our entertainment offerings.

There is significant disclosure in our financial statements and MD&A related to the retroactive presentation and.

And all amount following will be from continuing operations unless otherwise stated.

As Alex mentioned, our annual results were very strong total revenue increased 25, 9% to $1 4 billion.

And our adjusted EBITDA was $157 $4 million.

Clients through our rich data.

And finally strengthening our balance sheet will continue to be a focus for us this year and we are making tremendous progress as discussed earlier.

Including <unk> adjusted EBITDA was $193 1 million, which represents 84% of 2019 level on 85% of 2019 and box office revenue and 70.

Overall cineplex has a history of driving industry, leading results and is well positioned to achieve great success.

And it's.

So, let's put some perspective to what we've accomplished since the beginning of the pandemic.

2021.

Annual EBITDA increased $78 $2 million from the prior year.

In 2022 and increased a further $147 $2 million from the prior year.

And in 2023 and increased a further $103 $2 million as compared to the prior year.

<unk>.

Thanks Alice.

Pleased to present, a condensed summary of the fourth quarter of 2023 annual results for Cineplex, Inc.

What an incredible recovery story.

For further reference our financial statements and MD&A have been filed on SEDAR and are also available on our Investor Relations website at Centerpoint Dot com.

We continue to focus on revenue opportunities and cost management and are extremely pleased in 2023 to reach a double digit adjusted EBITDA margin of 11, 3%.

Our MD&A in the earnings press release include a complete narrative on the operational results. So I will focus on highlighting and select items and then providing commentary on our convertible debenture Amendment proposal, our comprehensive refinancing plan.

<unk> the full year 2019 total of 13, 8%.

Now, let's take a closer look at our segments and see this optimization focus.

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In the film exhibition and content segment attendance for 2023 increased 25, 8% over 2022.

Prior to commenting on the financial results I want to remind you that with the completed sale of <unk> last week. The results of <unk> retroactively presented as discontinued operations.

Total revenue increased 29, 3%.

And segment adjusted EBITDA increased an incredible 486%.

There is significant disclosure in our financial statements and MD&A related to the retroactive presentation and.

Demonstrating the powerful operating leverage in this business.

And all amounts following will be from continuing operations unless otherwise stated.

Our segment adjusted EBITDA margin increased to 11, 5% in 2023 as compared to three 1% in 2022.

As Alex mentioned, our annual results were very strong total revenue increased 25, 9% to $1 $4 billion.

In the media segment as we have mentioned previously the cinema media business model post pandemic has shifted to a CPM based model.

And our adjusted EBITDA was 157 $4 million.

Compared to 2022 media segment revenue increased 6% segment adjusted EBITDA increased eight 5%.

Including <unk> adjusted EBITDA was $193 1 million, which represents 84% of 2019 level on 85% in 2019 and box office revenue.

And segment adjusted EBITDA margin increased to 55, 9% from 54, 5% in 2022.

<unk> 70.

And it's.

So, let's put some perspective to what we've accomplished since the beginning of the pandemic.

Forward, we are encouraged by a stronger advertising market and the addition of Cadillac Fairview to our shopping mall network beginning in 2020.

2021, our annual EBITDA increased $78 $2 million from the prior year.

This will provide significant incremental contributions to both the cinema media business and the digital media business.

In 2022 and increase the further $147 $2 million from the prior year.

And lastly, our <unk> segment continues to exceed our expectations.

And in 2023 and increased a further $103 $2 million as compared to the prior year.

Segment revenues increased 19, 6% over 2022 and store level adjusted EBITDA increased 10, 4%.

What an incredible recovery story.

We continue to focus on revenue opportunities and cost management and are extremely pleased in 2023 to reach a double digit adjusted EBITDA margin of 11, 3% approaching the full year 2019 total of 13, 8%.

Store level adjusted EBITDA margins for 2023 of 28, 5% exceeded our targets of 25%.

And looking at 'twenty, two 2022's results. It is important to remember that the LTE business benefited from the receipt of certain wage and other subsidies.

Now, let's take a closer look at our segments and see this optimization focus.

In the film exhibition and content segment attendance for 2023 increased 25, 8% over 2022.

We are pleased with year over year results and with only 13 locations at year end, we are not yet halfway through our 30 location potential rollout.

Total revenue increased 29, 3%.

Hey, Bob are concrete examples of this focus on revenue opportunities and cost management.

And segment adjusted EBITDA increased an incredible 486%.

And finally net income has increased significantly to $167 $2 million from $1 million in 2022.

Demonstrating the powerful operating leverage in this business.

Our segment adjusted EBITDA margin increased to 11, 5% in 2023 as compared to three 1% in 2022.

Primarily due to the significant increase in adjusted EBITDA and the recognition of the deferred tax asset.

In the media segment as we have mentioned previously the cinema media business model post pandemic has shifted to a CPM based model.

Were significantly greater than that seen gain impairment reversals and noncash interest pick ups in the prior year.

Compared to 2022 media segment revenue increased 6% segment adjusted EBITDA increased eight 5%.

I would now like to move on and speak to our balance sheet.

Particular, our liquidity position.

At year end, we had $298 million drawn and approximately $235 million available under our credit facilities.

And segment adjusted EBITDA margin increased to 55, 9% from 54, 5% in 2022.

Forward, we are encouraged by a stronger advertising market and the addition of Cadillac Fairview to our shopping mall networks beginning in 2020.

At December 31, 2023, we reported a senior leverage ratio of 151 times as.

As compared to a covenant of two five times.

This will provide significant incremental contributions to both the cinema media business and the digital media business.

Total debt ratio of 270 times as compared to a covenant of three to five times well within our two and a half to three times target range and demonstrates our commitment to deleveraging.

And lastly, our <unk> segment continues to exceed our expectations.

Segment revenues increased 19, 6% over 2022 and store level adjusted EBITDA increased 10, 4%.

In addition to deleveraging through operating results. We recently closed the sale of <unk> and this resulted in gross cash proceeds of approximately $155 million, which was used to repay amounts borrowed under the existing credit facility.

Store level adjusted EBITDA margins for 2023 of 28, 5% exceeded our targets of 25%.

As a reminder, any cash taxes on the gain will be sheltered by available Nols.

And working at 22 2020 two's results. It is important to remember that the LTE business benefited from the receipt of <unk>.

Certain wage and other subsidies.

I do want to spend some time talking about our balance sheet in the press release issued this morning regarding our comprehensive refinancing plan.

We are pleased with <unk> results and with only 13 locations at year end, we are not yet halfway through our 30 location potential rollout.

We have been talking for some time about optimizing our capital structure when appropriate.

Hey, Bob are concrete examples of this focus on revenue opportunities and cost management.

We said during the Q3 call in November that you will see us moving forward with initiatives, including extending maturities, removing restrictions and financial covenants and ultimately introducing a dividend.

And finally net income has increased significantly to $167 $2 million from $1 million in 2022.

Primarily due to the significant increase in adjusted EBITDA and the recognition of the deferred tax assets, which were significantly greater than that seen gain impairment reversals and noncash interest pick ups in the prior year.

Well with the significant improvements in our operating results these stronger financing markets and the catalyst of the sale of the <unk> business. The time to take action is now.

We have spent the past year listening to investor concerns include.

I would now like to move on and speak to our balance sheet and in particular, our liquidity position.

Issues with near term maturities dilutive convertible debentures and concerns over a bank credit facility covenants restricting operating flexibility.

At year end, we had $298 million drawn and approximately $235 million available under our credit facilities.

We believe our plan addresses all of these concerns.

First we have launched a process to amend extend and partially redeem our convertible debentures G.

At December 31, 2023, we reported a senior leverage ratio of 151 times.

Key components, including reducing the principal amount by $100 million and extending the term out six years to March 2030.

As compared to a covenant of two five times.

Total debt ratio of 270 times as compared to a covenant of three to five times well within our two and a half to three times target range and demonstrates our commitment to deleveraging.

We require approval of two thirds of the holders and as of today, we have the support of approximately 61, 2% of convert holders.

This amendment is part of a broader refinancing plan, which includes a new Canadian high yield sort of Canadian dollar high yield senior secured offering between $500 million $600 million.

Okay term to maturity of at least five years.

As a reminder, any cash taxes on the gain will be sheltered by available Nols.

The new $100 million Covenant light senior secured revolving credit facility, which will be undrawn at closing and repayment in full of our existing senior credit facility and our existing seven 5% senior secured second lien notes.

I do want to spend some time talking about our balance sheet in the press release issued this morning regarding our comprehensive refinancing plan.

We have been talking for some time about optimizing our capital structure when appropriate.

We are ready.

We will launch these initiatives immediately with a with a goal to close all transactions in early March.

It's been a mid point on the high yield offering of $550 million and no amounts drawn on the revolver, we will be coming out of the gate with senior leverage of approximately three five times based on 2023, adjusted EBITDA from continuing operations of $157 4 million.

Well with the significant improvements in our operating results.

Stronger financing markets and the catalyst of the sale of the <unk> business. The time to take action is now.

So in summary, we shared investor concerns with respect to our balance sheet and we said that we would act when appropriate.

We have spent the past year lifting to investor concerns, including issues with near term maturities dilutive convertible debentures and concerns over a bank credit facility covenants restricting operating flexibility.

We had three key objectives.

Objective, one was to meaningfully extend debt maturities.

This plan will result in new senior secured notes with a maturity of at least five years and an amended convert offering with a term of six years.

We believe our plan addresses all of these concerns.

First we have launched a process to amend extend and partially redeem our convertible debentures.

Objective two was to reduce restrictions imposed by debt covenants. This plan will result in the repayment in full of the existing bank credit facility.

Key components, including reducing the principal amount by $100 million and extending the term of six years to March 2030.

And the replacement with a $100 million revolver with a covenant light structure.

We require approval of two thirds of the holders and as of today, we have the support of approximately 61, 2% of convert holders.

And finally objective three was to reduce the potential equity dilution from the existing convertible debentures.

This amendment is part of a broader refinancing plan, which includes a new Canadian high yield sort of Canadian dollar high yield senior secured offering between $500 million $600 million.

This amendment and principal repayments will result in a reduction in the potential equity dilution of just under 9 million shares or just under 30% of the potential equity dilution of the existing converts.

A term to maturity of at least.

Five years.

This plan is a bold move to strengthen the balance sheet for the future.

And a new $100 million Covenant light senior secured revolving credit facility, which will be undrawn at closing and repayment in full of our existing senior credit facility and our existing seven 5% senior secured second lien notes.

Now I would take I would like to take a few moments to consider the future I want to revisit the world. We've described during our past analyst calls.

So it's a world, where we could potentially achieve pre pandemic adjusted EBITDA levels on.

We are ready.

And we will launch these initiatives immediately with a with a goal to close all transactions in early March.

75% to 8% of pre pandemic.

Levels due.

Due to our business model and use of free cash flow to de lever.

For the full year of 2023, we achieved roughly 84% of 2019 EBITDA of 72% of the attendance.

If we achieve 75% of pre pandemic.

Our adjusted EBITDA would be approximately $20 million higher.

So in summary.

And if we achieved 80% of pre pandemic levels, we would be approximately equal to 2019 adjusted EBITDA levels.

We shared investor concerns with respect to our balance sheet and we said that we would act when appropriate we had three key objectives.

We may have a few bumps ahead because of early stage changes due to the various strikes, but the long term view is solid and we believe this world that we have described as real and coming soon.

Objective, one was to meaningfully extend debt maturities.

This plan will result in new senior secured notes with a maturity of at least five years and an amended convert offering with a term of six years.

We see a continued path to hitting our leverage target of two five to three times and reintroducing a dividend.

Objective two whats a reduced restrictions imposed by debt covenants.

With our strong operating results and our balance sheet initiatives discussed today. There is a lot to be excited about and with that I would like to turn things over to the conference operator for questions.

Plan will result in the repayment in full of the existing bank credit facility.

And the replacement with a $100 million revolver with a covenant light structure.

And finally objective three was to reduce the potential equity dilution from the existing convertible debentures.

Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad if for any reason you'd like to withdraw. Your question. Please press star followed by case as a reminder, if you are using a speaker phone please about that.

Hamzah to allow the signal to rig count.

So that staff on a Taiwan Bosco question.

So our last question comes from the line of Derek Lessard of tea.

This plan is a bold move to strengthen the balance sheet for the future.

Cowen Your line is now open. Please go ahead.

Now I'd like to take a few moments to consider the future I want to revisit the world. We've described during our past analyst calls.

Yes, good morning, everybody and congratulations I think obviously the big news is the announced refinancing plan.

It was a world, where we could potentially achieve pre pandemic adjusted EBITDA levels on.

You did talk about it being covenant light God I was wondering if you could maybe add some details around that and then in may.

75% to 8% of pre pandemic.

As a follow up as it relates to your asset base should it put to bed I guess any more asset sales in other words everything that you have now it should should we be considering that as core.

Levels.

Due to our business model and use of free cash flow to de lever.

For the full year of 2023, we achieved roughly 84% of 2019 EBITDA of 72% of the attendance.

So thanks, Derek and thanks for your question so with respect to the first one.

If we achieve 75% of pre pandemic.

Our adjusted EBITDA would be approximately $20 million higher.

When we describe it is covenant lite, we would describe that as a kind of a typical kind of cover wide structure that exists out there today, depending on borrowing levels could introduce this kind of a springing test at some point so.

And if we achieved 80% of pre pandemic levels.

We would be approximately equal to 2019 adjusted EBITDA levels.

We may have a few bumps ahead because of early stage changes due to the various strikes, but the long term view is solid and we believe this world that we have described as real and coming soon.

But it would remove substantially the majority of the restrictions that we've had to date, assuming that we don't exceed kind of springing.

<unk> levels.

On your second question then.

See a continued path to hitting our leverage target of two five to three times.

As you know.

I think as Ive described today, we're very confident of the world, where we are and where we see it going.

And reintroducing a dividend.

<unk> always said, though if.

Felt that there was kind of an accretive.

Opportunity on the transaction.

Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad if for any reason you'd like to withdraw your question. Please press star followed by Kate.

Yes.

We should do is we should explore those opportunities so nothing planned today.

But this is an opportunity there and we would obviously explore.

Okay.

As a reminder, if you are using a speaker phone. Please about your handset to allow the signal to rig count.

Didn't you have mentioned in the past the desire to get a credit rating.

Just curious where that where you guys are in that process. Our lineup. Thank you.

Stahl Qantas Bhagwan Bosco question.

So our last question comes from the line of Derek Lessard of TD.

Yes, so look we've.

TD Cowen Your line is now open. Please go ahead.

We're in a position where we want to ensure the success of.

Yes, good morning, everybody and congratulations I think obviously the big news is the announced refinancing plan.

The offering that we're looking to do and as well as position the company well and give us flexibility for the future. So one should expect that with.

You did talk about it being covenant light Gordon I was wondering if you could maybe add some details around that and then.

With the marketing of this deal is that a credit rating will be part of that.

Maybe as a follow up as it relates to your asset base should that put to bed I guess any more asset sales in other words everything that you have now it should should we be considering that as core.

Okay, and maybe just one one more on the operational side I was wondering if you could give us.

Data on the rollout of the mobile food ordering throughout the network.

Yes, so we started that and it's been quite successful Derrick and we will continue to roll it out for the balance of 2024 across the country as we go through the different regions.

So thanks, Derek and thanks for your question so with respect to the first one.

When we describe it is covenant lite, we would describe that as a kind of a typical kind of couple of white structure that exists out there today, depending on borrowing levels.

Okay. Thanks, everybody for taking my questions.

Could introduce this kind of a springing test at some point so.

Thank you.

But it would remove substantially the majority of the restrictions that we have.

Our next question comes from the line of the Colo.

To date, assuming that we don't exceed kind of springing borrowing levels.

Canaccord Genuity. Your line is now open. Please go ahead.

On your second question then is.

Good morning, Thanks for taking my questions.

A couple from me.

Think as Ive described today, we're very confident of the world, where we are and where we see it going.

With respect to a court I mean, you talked about.

You kind of gave some high level projections, one various attendance levels, which is obviously very helpful.

But we've always said, though if.

Yes.

Felt that there was kind of in an accretive.

Opportunity on a transaction.

With respect to the prospect of someday bring him back a dividend.

We would.

Yes.

I wanted to ask you about how you see free cash flow conversion and how we should think about that obviously 2023.

We should do is we should explore those opportunities so nothing planned today.

But this is an opportunity there and we would obviously explore.

It's a bit of an anomaly.

Okay.

From that perspective, but partly because of the late Q4.

You have mentioned in the past the desire to get a credit rating.

How should we think about those components.

I'm, just curious where that where you guys are in that process. Our lineup. Thank you.

The main components as we kind of look to walk down from EBITDA to free cash flow.

Yes, so look we've.

And secondly, kind of a broader question on the slate.

We're in a position where we want to ensure the success of.

Maybe for Atlas.

Clearly, we know that the.

The offering that we're looking to do and as well as position the company well and give us flexibility for the future. So one should expect that with.

The Hollywood.

Strikes impacted the slate and but when you look at this late in the second half of the year.

With the marketing of the steels that a credit rating will be part of that.

Just from sort of first cloud it looks like it's strengthening and then 2025 arguably has a lot of the bigger brands bigger sort of Tentpole brands coming back is it sort of your general view as well.

Okay, and maybe just one more on the operational side I was wondering if you could give us or.

An update on the rollout of the <unk>.

Late starts to look a lot stronger towards the second half and into 2025.

Mobile food ordering throughout the network.

Yes, so we started that and it's been quite successful Derrick and we will continue to roll it out for the balance of 2024 across the country as we go through the different regions.

Good morning, everyone and thanks for the questions with respect to your first question on.

Sort of free cash flow conversion and the reintroduction of a dividend.

I described but a number of scenarios.

Okay. Thanks, everybody for taking my questions.

With respect to attendance levels.

Thank you.

The one was somewhere between 75 and 80% as we would really be at pre pandemic levels.

Thank you.

Our next question comes from the line of the Gallo.

<unk> of Canaccord Genuity. Your line is now open. Please go ahead.

Including <unk> were roughly $230 million in 2019.

Yeah.

Good morning, Thanks for taking my questions.

We suggested that.

A couple from me.

At an 80% level based on last year's results, we would be in essence at 2019 levels.

With respect to a court I mean, you talked about.

You kind of gave some high level projections, one various attendance levels, which is obviously very helpful.

I mean, the proviso is that.

Excluding <unk> that is roughly around $200 million. So lets just use a round number of around $200 million.

With respect to the prospect of someday bring him back a dividend.

I wanted to ask you about how you see free cash flow conversion and how we should think about that obviously 2023.

Out of that really comes to components, because which would be interest and capex.

Is it.

We have significant Nols that.

A bit of an anomaly.

That will shelter near term cash taxes for the next number of years.

From that perspective, but partly because of the lighter Q4.

Should we think about those components.

When we look at interest bearing cost of interest today is roughly $60 million.

The main components as we kind of look to walk down from EBITDA to free cash flow.

Cash.

As a result of the refinancing and the Paydown.

And secondly, kind of a broader question on the slate.

From <unk>.

For Atlas.

We expect that to be slightly less than that it will all be somewhat contingent on the marketing of the high yield deal.

Clearly, we know that the.

The Hollywood.

Strikes impacted the slate and but when you look at this late in the second half of the year.

But we expect that.

The interest rate environment today is a little bit.

Just from sort of first glance it looks like it's strengthening and then 2025 arguably has a lot of the bigger brands bigger sort of Tentpole brands coming back is it sort of your general view as well.

More challenging than it was when we introduce some of these other instruments. So.

But we should be less than $60 million.

And then with respect to Capex is.

When you look at last year's numbers as an example.

Late starts to look a lot stronger towards the second half and into 2025.

It was just over $40 million, so well below sort of the 60 that I would've.

Provided guidance on.

Good morning, everyone and thanks for the questions with respect to your first question on sort.

And.

And so as we look forward.

Free cash flow conversion and the reintroduction of a dividend.

Next year, but in particular.

As Allison mentioned, we have four locations.

I described but a number of scenarios.

Coming onboard.

With respect to.

In the LTE space, so to rec rooms, when in Vancouver, and one in Montreal, we have one palladium in Toronto.

Attendance levels.

The one was still somewhere between 75 and 80% as we would really be at pre pandemic levels.

And one.

Theater in Montreal, So four locations.

Hi.

Including <unk> were roughly $230 million in 2019.

Using sort of the average amount of $10 million each at 40.

25% to 30 for maintenance Capex, and 10 to 15 for premium than others.

We suggested that.

At an 80% level based on last year's results, we would be in essence at 2019 levels, but I mean, the proviso is that.

You're roughly going to be at around $80 million number for next year.

With.

With those number of locations. So so if you do get the kind of high level math 2060, less 80 gives us an ability to ability to delever at $80 million plus with the improved operating results, we should be in that target leverage ratio range of two five to three times.

Excluding <unk> that is roughly around $200 million. So lets just use a round number of around $200 million. So I don't know if that really comes to components, because which would be interest and capex.

We have significant Nols.

And so those are the kind of the parameters around where you see the reintroduction of the dividend, which could that be towards the end of this year into early next year.

And that will shelter near term cash taxes for the next number of years.

When we look at interest bearing cost of interest today is roughly $60 million.

At the time horizon.

Cash interest.

As a result of the refinancing and the Paydown.

And our window on your question regarding the movie slate.

From <unk>.

All honesty I'm actually quite excited for the month of March We've got June part II coming out.

We expect that to be slightly less than that.

I'll be somewhat contingent on the marketing of the high yield deal.

By Denis will new and Thats going to be a big Canadian event, and I think it will do very well for US We've got Kung Fu Panda four and then we've got Ghostbusters frozen Empire, followed by Godzilla.

But we expect that.

The interest rate environment today is a little bit.

More challenging than it was when we introduce some of these other instruments. So.

But we should be less than $60 million.

The new Empire, So you've got a big movie and with the holiday period, we will have a strong month of March and we are seeing a number of films being moved up on the calendar and as I mentioned earlier <unk>, which.

And then with respect to Capex is when you look at last year's numbers as an example.

It was just over $40 million, so well below sort of the 60 that I would've.

Provided guidance on.

And.

So as we look forward to.

We weren't aware of it being released yesterday Disney put it into November of 2024, and when I look at the Christmas of 2024, I think we are going to have a really really strong fourth quarter compared to what it was in 2023, even though we won't have a taylor.

Next year, but in particular, we have.

As Alex mentioned, we have four locations.

Coming onboard three.

Three in the LTE space, so to rec rooms.

One in Vancouver, and one in Montreal, we have.

When palladium in Toronto and one.

Theater in Montreal, So four locations.

Swift unless she's doing something new for us.

Using sort of the average amount of $10 million each at 40.

But <unk> got a lot of big product between venom Gladiator Wicked.

25% to 30 for maintenance Capex, and 10 to 15 for premium than others.

One two Lord of the rings Karate Kid, the Lion King and Sonic the Hedgehog, there's like a big picture pretty well all through the.

You're roughly going to be at around $80 million number for next year.

With with.

With those number of locations. So so if you do get the kind of high level map 20, $60 80, it gives us an ability to ability to delever at $80 million plus with the improved operating results, we should be in that target leverage ratio range of two five to three times.

Fourth quarter of 2024, and there are big movies.

Spurts like in September where normally you don't have.

Large movies, you've got betelgeuse, too and Transformers, one which are both coming out so.

Very positive and optimistic that there's going to be more movies moving up and also the strength of the product will be good.

And so those are the kind of the parameters around where you see the reintroduction of the dividend, which could that be towards the end of this year into early next year.

Hope that helps you in answer to your question.

Likely the time horizon.

Yes. It does thanks so much.

And our window on your question regarding the movie slate.

Right.

All honesty I'm actually quite excited for the month of March you know, we've got June part II coming out.

Thank you.

Our next question comes from the line of Jackie.

By then you will know and Thats going to be a big Canadian event, and I think it'll do very well for us We've got Kung Fu Panda four and then we've got Ghostbusters frozen Empire, followed by Godzilla.

<unk> Bank. Your line is now open. Please go ahead.

Great. Thank you for taking my question I wanted to.

Just ask you a few questions I get a lot from.

Investors and maybe it's helpful to put them out there.

First question is on movie costs are we are we seeing or expecting changes in terms of movie costs, but.

I would now.

The negotiation have ended.

In Hollywood.

Are you expecting any changes there.

Second question is on the real estate optimization.

Should we expect any reduction in rent in 2024.

Essentially as you.

Look at optimizing some of your.

Venues and third question.

Swift unless she is doing something new for us.

I'm sorry, you throw in.

But <unk> got a lot of big product between venom Gladiator Wicked.

All of them at once.

First question is when we look at 2024.

One two Lord of the rings Karate Kid, the Lion King and Sonic the Hedgehog, there's like a big picture pretty well all through the.

What are we expecting in terms of.

Margin accretion from the operating leverage of the.

The business.

Fourth quarter of 2024, and there are big movies.

Oh God you discussed.

Some metrics when it comes to.

Spurts like in September where normally you don't have.

Attendance, but are there you know.

Large movies, you've got betelgeuse, too and Transformers, one which are both coming up so.

Assets that could be seen as non core at potentially also adding.

Very positive and optimistic that there's going to be more movies moving up and also the strength of the product will be good.

Benefit.

Core when it comes to cash contribution thank you.

Okay.

So thank you for your questions and the first.

Hope that helps you in answer to your question.

Capital I will take on the studios.

Yes. It does thanks so much.

We don't expect any real material changes in our film rental as we go through 2024 now again, if we have massive box office hits and Dave.

Right.

Thank you.

Our next question comes from the line of.

Jackie of Scotia Bank. Your line is now open. Please go ahead.

They do extremely well then we are happy to pay more because then we end up with a much larger box office numbers. So I would say on average you can go with what we have been able to do historically as we go forward on the rent side, we continue to work with our.

Great. Thank you for taking my question I wanted to just ask you a few questions I get a lot from it.

Investors and maybe it's helpful to put them out there.

First question is on movie costs are we or are we seeing or expecting changes in terms of movie cause that.

Landlord partners and look at opportunities and we continue to adjust.

I would now.

The negotiation hub.

As we look into the future and Thats something that we continue to do as leases come up for renewal and that will be something we will do through 2024, but we also will get the benefit of adjustments that we have.

In Hollywood are you expecting any changes there.

Second question is on the real estate optimization.

Should we expect any reduction in rent in 2024.

Comes from the Euro.

Made in the past couple of years that will flow through into 2024 and four.

Look at optimizing some of your.

Venues and third question.

And.

So are you throwing that you are all of them at the.

Good news.

Dr.

Third question is when we look at 2024.

<unk>.

CPP upside because we were looking at.

What are we expecting in terms of.

Potential benefits in one of the things that we have to say is.

Margin accretion from the operating leverage of the.

The business.

For the month of October we had our highest CPP ever it was the first time with clock Ross $10.

Oh God you discussed.

Some metrics when it comes to.

Attendance, but are there you know.

You know the.

Taylor Swift concert really helped in that case, we continue to work on ways to increase our concessions for.

That could be seen as noncore adds potentially also adding.

Benefit.

20 core when it comes to cash contribution thank you.

International content, then we will look at different ways to do that as we move forward our box per person was hurt in the fourth quarter, because we didn't have a lot of movies that were three D.

Okay.

So thank you for your questions and the first cut.

<unk> will take on the studios.

We don't expect any real material changes in our film rental as we go through 2024 now again, if we have massive box office hits and they.

Compared to 2020.

But we see that will pick up as we have the bigger movies coming forward into 2024. So those are kind of the areas. I think you were asking about and Gordon.

They do extremely well then we are happy to pay more because then we ended up with a much larger box office numbers. So I would say on average you can go with what we have been able to do historically as we go forward on the rent side, we continue to work with our.

Turn it back.

Correct.

Martin Merrick.

Good I'm really excited for I'd say four key areas that I'll help drive results and margins going forward. The first one is as.

You noted as attendance and as I noted too.

Landlord partners and look at opportunities and we continue to adjust.

And I gave you some numbers in terms of.

Okay improvements to EBITDA based on various attendance levels. So that's probably our strongest contributor. The other thing is when you look at.

As we look into the future and that's something that we continue to do as leases come up for renewal and that will be something we will do through 2024, but we also will get the benefit of adjustments that we have.

The performance of our LTE business.

And that we are hitting and exceeding our target store level margins of 25%.

Made in the past couple of years that will flow through into 2024 and four.

And we've got three Lv.

And.

<unk> coming onboard next year, so that will be.

Good news.

Dr.

<unk>.

Margin accretive.

CPP upside because we were looking at.

The third element is when you look at our media business has been.

Potential benefits in one of the things that we have to say is.

It's been a bit of a challenging advertising market across the board across not just Dolby cineplex vote for everyone.

For the month of October we had our highest CPP ever it was the first time with clock Ross $10.

And as we see the rebound of the media business as well as the addition of Cadillac Fairview to our digital signage network.

You know the.

Taylor Swift concert really helps in that case.

And as you may recall.

The incremental contribution of each additional media dollars very significant to the bottom line I gave you the overall.

Continue to work on ways to increase our concessions for.

International content, and we will look at different ways to do that as we move forward our box per person was hurt in the fourth quarter, because we didn't have a lot of movies that were three D.

Media segment margin of about 55%.

That's it on the increment the incrementals are significantly higher than that and then the last item.

Yes.

We're very excited about the results from deploying mobile concession happen.

Compared to 2020.

But we see that will pick up as we have the bigger movies coming forward into 2024. So those are kind of the areas. I think you were asking about an award.

Purchase.

And our locations. So those four items together you are expect to have kind of meaningful contributions to the EBIT margin and EBITDA.

Turn it back.

Great. Thank you.

Correct.

Martin Merrick.

Last question on that.

Good I'm really excited for I'd say four key areas at all.

Are there anything else.

In the pipeline that could be looked at other than what you already have announced.

Drive results and margins going forward the first one.

As you noted is attendants and as I noted too.

So.

As I mentioned earlier no guar.

You know what I gave you some numbers in terms of.

Or anything else at this point in time, where we are.

The improvements to EBITDA based on.

If something came around that there is an opportunity out there.

Various attendance levels. So that's probably our strongest contributor the other thing is when you look at.

With a hugely accretive we would we would consider but nothing at this time.

Thank you.

The performance of our LTE business.

Thank you.

As a reminder, if you'd like to join the question queue. Please press star followed by one on your telephone keypad. Our next question comes from the line of Troy.

And that we are hitting and exceeding our target store level margins of 25%.

And we've got three Lv.

<unk>.

<unk> coming onboard next year, so that will be.

Capital markets. Your line is open. Please go ahead.

Okay.

Yes, thanks, very much and good morning.

Margin accretive.

The third element is when you look at our media business has been.

First Gordon for you just a point of clarification.

It's been a bit of a challenging advertising market across the board across not just Dolby cineplex up for everyone.

Late getting on the $80 million in Capex that you provided the breakdown for was that.

And as we see the rebound of the media business as well as the addition of Cadillac Fairview to our digital signage network.

For 2024.

Was that a 2025 capex Scott.

2024.

And as you may recall.

Okay perfect.

The incremental contribution of each additional media dollars isn't very significant to the bottom line I gave you the overall.

And on the <unk>.

<unk> strategy. So good to see this kind of kicking up back into gear.

Media segment margin of about 55%.

Are your targeted 30 locations.

That's it on the increment the incrementals are significantly higher than that and then the last item.

Two questions one as you bring on new locations, presumably with all the <unk>.

Yes.

We're very excited about the results from deploying sort of the mobile concession happen and what me that.

<unk> you have had and thought that maybe start up kind of marketing costs.

The purchase.

Expect to get.

In our location. So those four items together you expect to have kind of meaningful contributions to the EBIT margin and EBITDA.

Closer to your kind of run rate margins sooner than maybe some of the initial locations.

And then secondly outside of LTE.

Looking at your diversification portfolio called <unk>.

Great. Thank you.

On AG.

Last question on that.

Is there any other kind of adjacencies that you're on for the moment or really is it all around kind of the digital media side.

So are there anything else.

In the pipeline that could be looked at other than what you already have announced.

On the LTE side at least over the foreseeable future.

So as.

As I mentioned earlier, no plans or anything else at this point in time, where we are.

Yeah.

Okay.

Something came around that there is an opportunity out there.

First of all on your question on LTE and run rate margins.

With a hugely accretive we would we would consider but nothing at this time.

Sure.

We developed a contact we brought it to Canada, we've learned a lot over the last five years or so.

Thank you.

We've kind of really narrowed down what the offering is.

As a reminder, if you'd like to join the question queue. Please press star followed by one on your telephone keypad. Our next question comes from the line of Troy.

And from the first one with Jos.

Very large box in Edmonton.

Mike Weinhold of RBC capital markets. Your line is open. Please go ahead.

To where we are today, so youre going to see US hit those guys. You would expect at those margins kind of out of the box.

Yes, thanks, very much and good morning.

Typically <unk>.

Often a honeymoon period, where they actually outperformed a little bit when they first opened.

Just first Gordon for you just a point of clarification I was kind of late getting on.

But yes, we're very confident of achieving kind of those margins on a go forward basis.

The $80 million in Capex that you provided the breakdown for was that.

Given the experience that we've had in the business.

For 2024.

Or was that a 2025 capex cut.

And then with respect to your other question.

2024.

Outside of sort of where we see the diversified business model.

Okay perfect.

And on the.

Continued to introduce.

<unk> strategy. So good to see this kind of kicking up back into gear.

Additional concepts, where we got the LTE and exciting about the palladium we've got.

The rec rooms.

Are your targeted 30 locations.

Also recently introduced the junction, where we have two of those opportunities.

So two questions one as you bring on new locations, presumably with all the <unk>.

For additional sites.

But right now I would say we're focused on.

Variance you have had and thought that maybe start up kind of marketing costs.

Just continuing on with the plan as it exists today, we will explore opportunities to the extent that there may be other things to do in the future, but right now our focus is pretty much on the diversification.

We expect to get.

Closer to your kind of run rate margins sooner than maybe some of the initial locations.

And then secondly outside of LTE.

Looking at your diversification portfolio.

Strategy and plan as laid out in our most recent though.

<unk>.

Andrew our focuses on the balance sheet, which is what we talked about through the call.

Is there any other kind of adjacencies that you're on for the moment or really is it all around kind of the digital media side.

So we have the additional funds, we can look at opportunities that become available.

And the <unk> side at least over the foreseeable future.

Okay. No. That's that's all helpful. One last one on the Cineplex media.

Okay.

Now that it's a little bit more CPM based I'm wondering if you can just.

First of all on your question on LTE and run rate margins.

Talk to kind of the ability for those cpm's to firm up.

We develop the contact we brought it to Canada, we've learned a lot over the last five years or so.

Overtime.

I guess the way I look at the business is somewhat of an outdoor digital data driven business, which.

We've kind of really narrowed down what the offering is.

And from the first one which is very.

In my mind should be.

A very large box in Edmonton.

Very competitive.

To where we are today, so youre going to see US hit those guys. You would expect at those margins kind of out of the box Theres typically often a honeymoon period, where they actually outperformed a little bit when they first opened.

And media.

Channel with.

With a lot of kind of sustained growth here as attendance comes back but just on the rate side is there any additional color you can give us how you expect that those rates to firm up that we do over the next couple of years.

But yes, we're very confident of achieving kind of those margins on a go forward basis.

Given the experience that we've had in the business.

Yeah. So first of all the media offers a very unique media offering.

Yeah.

Got a captive audience of a very attractive demo.

And then with respect to your other question.

And the ability to connect with that audience at a later date, so and it really is.

Outside.

Where we've seen the diversified business model, we continue to introduce.

A compelling offering for our advertisers.

Additional concepts, where we got the LTE and exciting about the palladium we've got.

With that said, we did obviously during the pandemic as needed to kind of.

The rec rooms.

We also recently introduced the junction where we have two of those opportunities.

Transition to a CPM based model given.

What was going on in within Canada in terms of opening and closing.

For additional sites.

But right now I would say we're focused on.

So we still see we continued to drive and provide additional insights to our advertisers which provide tremendous value.

Not only do we see kind of.

Strategy and plan as laid out in our most recent though.

Growth in our Advertiser base.

And particularly in growth of the advertising market.

Andrew our focus is on the balance sheet, which is what we talked about through the call.

But we also see opportunities as they see the compelling nature of the offering that we provide relative to.

So we have the additional funds, we can look at opportunities that become available.

Otherwise our options.

Okay. That's all helpful. One last one on the Cineplex media.

Hello outdoor.

Andrew we can use our data now to provide our advertisers with great feedback.

Now that it's a little bit more CPM based I'm wondering if you can just.

Which really helps from an overall perspective, and we can now provide agencies with the huge offering which is not only the movie theater is it's the digital side of things. It's the Rec room. So you can really get an overall benefit from a marketing perspective, when you team up with cineplex.

Talk to kind of the ability for those cpm's to firm up.

Overtime.

I guess the way I look at the business is somewhat of an outdoor digital data driven business, which.

In my mind should be.

Very competitive.

And media.

Channel.

Okay. That's great. Thank you very much.

With a lot of kind of sustained growth here as attendance comes back but just on the rate side is there any additional color you can give us.

Thank you thanks Jay.

As there are no additional questions waiting at this time I would like to hand the call back.

Expect that those rates to firm up that would be due over the next couple of years.

Two our highest Jacobs for closing remarks.

Yeah. So first of all the media offers a very unique media offering.

Thank you very very much for all joining the call. This morning, and we look forward to speaking with you.

Got a captive audience of a very attractive demo.

And the ability to reconnect with that audience at a later date. So it really is.

First quarter 2024 results have a great day and get ready for a big movies.

A compelling offering for our advertisers.

Thank you.

But that said we did obviously during the pandemic as needed to kind of.

Ladies and gentlemen, thank you for joining us on today's call have a great rest. Your day you may now disconnect your line.

Transition to a CPM based model given.

What was going on and with it within Canada in terms of opening and closing.

So we still see we continue to drive and provide additional insights to our advertisers which provide tremendous value.

Not only do we see kind of.

Growth in our Advertiser base.

And particularly in growth of the advertising market.

But we also see opportunities as they see the compelling nature of the offering that we provide relative to.

Otherwise I wouldn't options right.

Hello outdoor.

Andrew we can use our data now to provide our advertisers with great feedback, which really helps from an overall perspective, and we can now provide agencies with the huge offering which is not only the movie theaters. It's the digital side of things, it's the rec room. So you.

You can really get the overall benefit from a marketing perspective, when you team up with cineplex.

Yes, that's great. Thank you very much.

Thank you thanks Jay.

As there are no additional questions waiting at this time I would like to hand, the call back to.

Hi, Alex.

Jacob for closing remarks.

Thank you very very much for all joining the call. This morning, and we look forward to speaking with you.

<unk> first quarter 2024 results have a great day and get ready for a big movies.

Thank you.

Ladies and gentlemen, thank you for joining us on today's call have a great rest of your day you may now disconnect your line.

Yeah.

[music].

Q4 2023 Cineplex Inc Earnings Call

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