Q1 2024 Cineplex Inc Earnings Call

Okay.

Okay.

[music].

Okay.

Okay.

Okay.

Okay.

Okay.

[music].

Okay.

[music].

Thank you.

[music].

Good morning. Thank you for attending today's Cineplex, Inc. First quarter 'twenty 'twenty four earnings call. My name is Jennifer and I'll be your moderator today, all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you'd like to ask a question press star one on your.

Jennifer: Good morning. Thank you for attending today's Cineplex Inc. first quarter 2024 earnings call. My name is Jennifer, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Mahsa Rejali, VP of Corporate Development and Investor Relations. Mahsa, please proceed.

Mahsa Rejali: Telephone keypad I would now like to pass the conference over to our host massive or Charlie VP of corporate development and Investor Relations Masa. Please proceed.

Mahsa Rejali: Good morning, everyone I would like to welcome you to Cineplex's fourth first quarter of 2024 earnings release Conference call hosted by Ellis, Jacob President and Chief Executive Officer, and Gordon Wilson, Chief Financial Officer before we begin let me remind you that certain statements being made are forward looking and subject to various.

Mahsa Rejali: Good morning, everyone. I would like to welcome you to Cineplex's first quarter 2024 earnings release conference call, hosted by Ellis Jacob, President and Chief Executive Officer, and Gord Nelson, 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 information currently available. Actual results may differ materially from those expressed in this forward-looking statement.

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

Mahsa Rejali: And then our atlas's 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.

Mahsa Rejali: 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.

Ellis Jacob: Good morning, Thank you, Matt and welcome to our Q1 2024 conference calls today, Gordon and I look forward to highlighting some of our key accomplishments this quarter.

Ellis Jacob: Good morning. Thank you, Martha, and welcome to our Q1 2024 conference call. Today, Gord and I look forward to highlighting some of our key accomplishments this quarter. While the first quarter North American box office saw a decline of 5.2% versus 2023, Cineplex's box office increased 1.4% to $125 million over the same period. Once again, we exceeded the domestic box office relative to Q1 2023 by a sizable 6.4% and outperformed our peers.

Ellis Jacob: Well the first quarter North American box office saw a decline of five 2% versus 2023, Cineplex's box office increased one 4% to $125 million over the same period.

Ellis Jacob: Once again, we exceeded the domestic box office relative to Q1 2023 by a sizeable six 4% and outperformed our peers.

Ellis Jacob: We achieved record Q1 BPP of $12.74 and concessions per patron of $8.95, surpassing records we set in Q1 2023. While an anticipated shortage of films impacted the start of the year, given the prolonged disruption from the Hollywood strike last year, 2024 began on a more positive note than expected.

Ellis Jacob: We achieved record Q1, <unk> of $12.74 and concessions per patron of $8.95 of pricing Records. We set in Q1 2023.

Ellis Jacob: Well I would anticipate a shortage of films impacted the start of the year given the prolonged disruption from the Hollywood strike last year 'twenty 'twenty four began on a more positive note than expected this quarter, we not only exceeded our box office projections, but also surpassed the market expectation.

Ellis Jacob: This quarter, we not only exceeded our box office projections but also surpassed market expectations. Cineplex's top three films during the quarter were Dune Part 2, which generated over $280 million in domestic box office revenue to date, Kung Fu Panda 4, and Migration. Cineplex delivered strong performance across all three titles, over-indexing the domestic box offices each week. Furthermore, Cineplex continued to benefit from the strategic management of international content, with three titles ranking in the top 20 films.

Ellis Jacob: <unk> is top three films during the quarter were due in part to which generated over $280 million in domestic box office revenue to date.

Ellis Jacob: For the full and migration.

Ellis Jacob: Cineplex delivered strong performance across all three titles over indexing the domestic box office in each system.

Ellis Jacob: Yeah.

Ellis Jacob: Furthermore, cineplex continued to benefit from the strategic management of international content with three titles ranking in the top 20 films.

Ellis Jacob: Spider, Warning2, and Shetan contributed meaningfully to our box office, with Cineplex capturing significant market share ranging from 30% to 80%. In addition to achieving industry-leading results, our focus remains on executing important corporate actions designed to reduce leverage, improve financial flexibility, and position Cineplex for accelerated long-term growth. In February, we successfully closed the strategic sale of P1AG for $155 million in gross cash proceeds and recognized a gain of $67 million, a testament to the success of our diversification strategy.

Ellis Jacob: Wider wanting to and shutdown contributed meaningfully to our box office with cineplex, capturing significant market share ranging from 30% to 80%.

Ellis Jacob: In addition to achieving industry, leading results our focus remains on executing important corporate actions designed to reduce leverage improve financial flexibility and positions in simplex for accelerated long term growth.

Ellis Jacob: In February we successfully closed the strategic sale of <unk> for $155 million in gross cash proceeds and recognized the gain of $67 million a testament to the success of our diversification strategy.

Ellis Jacob: The net proceeds were used to repay bank debt, serving as a pivotal catalyst to commence a comprehensive refinancing plan, which we also successfully completed in the first quarter. This refinancing plan was meticulously crafted to deliver three key benefits for our company and shareholders. Thank you.

Ellis Jacob: The net proceeds were used to repay bank debt, serving as a pivotal catalyst to commence a comprehensive refinancing plan, which you can also successfully completed in the first quarter.

Ellis Jacob: This refinancing slab was meticulously crafted to deliver three key benefits for our company and shareholders extending debt maturities easing restrictions and minimizing potential dilution from existing convertible debentures.

Ellis Jacob: Our new three-year note offering of $575 million had robust demand, surpassing $2 billion across North America, a clear testament to the remarkable confidence the market has in our business plan and team. Now, with our Strengthened Balance Sheet, we are focused on executing our growth initiatives and shifting our capital allocation priorities to support enhanced shareholder returns. I'd like to highlight some of these key initiatives that continue to differentiate us from our peers.

Ellis Jacob: New three year note offering of 575 million had robust demand, surpassing $2 billion across North America, a clear Testament to the remarkable confidence the market has in our business plan and team.

Ellis Jacob: Now with our strengthened balance sheet, we are focused on executing our growth initiatives and shifting our capital allocation priorities to support enhance shareholder return.

Ellis Jacob: I'd like to highlight some of these key initiatives that continue to differentiate us from our peers.

Ellis Jacob: The first is our ongoing investment in LBE, which is a profitable and successful business with attractive store-level margins in excess of our 25% target. The Rec Room and Palladium brands feature a variety of food and entertainment offerings appealing to an attractive demographic. We entered the business in 2016 as we saw an opportunity in Canada with no other national competitor in the market operating at scale. This first mover advantage served us well and positioned us as a leading Canadian player.

Ellis Jacob: The first is our ongoing investment in LTE, which is a profitable and successful business with attractive store level margin, except in excess of our 25% target.

Ellis Jacob: The rec room, and Palladium brands feature a variety of food and entertainment offerings appealing to an attractive demographic.

Ellis Jacob: We exited the business in 2016 that was we saw an opportunity in Canada with no other national competitor in the market operating at scale.

Ellis Jacob: This first mover advantage has served us well and positioned us as a leading Canadians layer.

Ellis Jacob: Our expertise in multi-unit retail locations and our customer database through Scene helped us extract significant synergies within our business and create an overall entertainment destination for Canadians. Currently, we operate 13 LBE venues strategically positioned in key markets, with an additional three locations opening in the fourth quarter of this year. Among these, a new Palladium venue will be added to the Greater Toronto area adjacent to the Cineplex Cinemas Fairview Mall.

Ellis Jacob: Our expertise in multi unit retail locations and a cause fits customer database leucine helped us extract significant synergies within our business and create an overall entertainment destination for Canadians.

Ellis Jacob: Currently we operate 13 lb venues strategically positions in key markets with an additional three locations opening in the fourth quarter of this year.

Ellis Jacob: Among these are new palladium venue will be added to the greater Toronto area adjacent to the Cineplex cinemas Fairview Mall, we will also open to new venues of the Rec room of marquee location in downtown Vancouver, another in the exciting Royal month development in Montreal.

Ellis Jacob: We will also open two new venues of the Rec Room, a marquee location in downtown Vancouver and another in the exciting Royal Mount development in Montreal. Given the success of our LBE business, we believe there's an opportunity to grow to 30 locations across Canada. This expansion has the potential to double the store-level EBITDA contribution from the LBE business to approximately $75 million.

Ellis Jacob: Given the success of our <unk> business, we believe there's an opportunity to grow to 30 locations across Canada.

Ellis Jacob: This expansion has the potential to double the stroke of store level EBITDA contribution from the <unk> business to approximately $75 million.

Ellis Jacob: By fortifying our leadership position in the market, we have a good runway to further grow in a highly-aggretive, high-margin business and strengthen our position as a leading entertainment destination for Canadians. Our media business is also expanding as Cineplex Digital Media signed two important deals in the quarter, with Cadillac Fairview and Common Arm growing our digital out-of-home shopping network to 94 premium shopping centers, which includes nine of the country's top ten busiest malls.

Ellis Jacob: By fortifying our leadership position in the market. We have good runway to further grow in a highly accretive higher margin business and strengthen our position as a leading entertainment destination for Canadians.

Ellis Jacob: Our media business is also expanding at Cineplex digital media signed two important deals in the quarter with Cadillac Fairview and calm and are growing our digital out of home shopping network to 94 premium shopping centers, which includes nine of the country's top 10 busiest smalls.

Ellis Jacob: We now operate in have media representation agreements for more than 1000 screens in the malls across Canada.

Ellis Jacob: We now operate and have media representation agreements for more than 1,000 screens in malls across Canada. Cineplex Digital Media is also working closely with retailers looking to innovate their in-store experience with digital displays as a way to inspire and engage shoppers throughout their experience. This speaks to the future of retail. Wal-Mart Canada announced the grand reopening of its flagship location at Square One in Mississauga, a first-of-its-kind concept from Walmart globally that will test new technologies and concepts as it modernizes its retail operations.

Ellis Jacob: Cineplex digital media is also working closely with retailers looking to innovate the in store experience with digital displays as a way to inspire and engage shoppers throughout the experience.

Ellis Jacob: This speaks to the future of retail.

Ellis Jacob: Walmart, Canada announced the Grand reopening of its flagship location at square one in Mississauga first of its kind concept from Walmart globally that will test new technologies and concepts as it modernizes its retail operations Cineplex digital media supported Walmart by building Digi.

Ellis Jacob: Cineplex Digital Media supported Walmart by building digital signage solutions and integrating them throughout the new store design. These solutions included new digital wayfinding technologies with the goal of being part of an immersive retail experience to enhance in-store shopping. As Cineplex Digital Media's network grows, this positions Cineplex Media as a one-stop shop for advertisers looking to reach Canadians through digital out-of-home advertising and in shopping malls and cinemas. A key differentiator amongst our peers is that we fully own our cinema media business and retain all the revenue generated from the advertising on our screens.

Ellis Jacob: Little Siloed solutions and integrating them throughout the new store design.

Ellis Jacob: These solutions include a new digital wave finding technologies with the goal of being part of an immersive retail experience to enhance in store shopping.

Ellis Jacob: Pat Cineplex digital media is network grows this position Cineplex media as one stop shop for advertisers looking to reach Canadians to digital out of home advertising and in shopping malls and cinema.

Ellis Jacob: A key differentiator amongst our peers is that we fully own cinema media business and retain all of the revenue generated from the advertising on our screens.

Ellis Jacob: By offering a portfolio of media products, we attract advertising customers of all sizes and drive our revenue per patron to industry-leading levels, almost doubling our peers in the U.S. Not only do our expanded media offerings drive increased results, but our in-house team allows us to retain significantly more of this revenue. Our cinema media business operates at an EBITDA margin of approximately 80%, while our U.S. peers retain only a fraction of the revenue stream through access.

Ellis Jacob: By offering a portfolio of media products, we attract advertising customers of all sizes and drive our revenue per patron to industry, leading levels almost doubling our peers in the U S.

Ellis Jacob: Not only do our expanded media offerings drive increase results, but our in house team allows us to retain significantly more of this revenue.

Ellis Jacob: Cinema media business operates at an EBITDA margin of approximately 80%, while our U S peers retain only a fraction of the revenue stream through an access fee.

Ellis Jacob: As attendance continues to grow, we expect further growth in our cinema media business. What makes cinema advertising so compelling is its attention power. The first ever Canadian cinema advertising attention study was conducted in partnership with Lumen, a global attention technology company. Marketers and advertisers are becoming increasingly conscious of the challenge in capturing an audience's attention due to online information overload. This study shows ads played in cinemas are virtually unmissable.

Ellis Jacob: As attendance continues to grow we expect further growth in our cinema media business.

Ellis Jacob: What makes cinema advertising so compelling is its attention.

Ellis Jacob: The first ever Canadian cinema advertising attention study was conducted in partnership with lumen global attention technology company marketers and advertisers are becoming increasingly conscious of the challenging capturing an audience's attention due to online information overload.

Ellis Jacob: This study shows adds played in cinemas are virtually on this one.

Ellis Jacob: 100% of cinema audiences not only viewed the ads but also paid an average of 80% active attention to the advertising content on the big screen, regardless of the ad's length. It also demonstrates an average brand recall of 75%, with audiences being 35% more likely to choose those brands as a result of exposure and scenarios. As the advertising sector continues to recover, we know cinema advertising provides a compelling ROI to clients and one our team is well positioned to capitalize on. As I mentioned earlier, we consistently surpass the industry's box office results and outperform our peers. In March alone, we exceeded the North American box office relative to 2023 by nearly 30%.

Ellis Jacob: 100% of cinema audience is not only view the ads, but also paid an average of 80% active attention to the advertising content onto the big screen.

Ellis Jacob: <unk> of the ads let.

Ellis Jacob: It also demonstrates an average brand recall, a 75% with audiences being 35% more likely to choose those brands as a result of exposure in cinema.

Ellis Jacob: As the advertising sector continues to recover we know cinema advertising provides a compelling ROI declines and one our team is well positioned to capitalize on.

Ellis Jacob: As I mentioned earlier, we consistently surpasses the industry box office results and outperform our peers in March alone, we exceeded the North American box office relative to 2023 by nearly 30%.

Ellis Jacob: This consistent outperformance is a direct result of our relentless efforts to elevate the guest experience and drive increased attendance and frequency through our alternative content and premiumization initiatives. We are at the forefront of bringing diverse content to movie lovers, and the box office has been responding. This past quarter, 13% of Cineplex's box office revenues came from international cinema, and this continues to be an important consideration for us to expand our office.

Ellis Jacob: This consistent outperformance is a direct result of our relentless efforts to elevate the guest experience and drive increases tendons and frequency through our alternative content and premium amortization and the initiatives.

Ellis Jacob: We are at the forefront of bringing diverse content movie lovers in the box office has been responding this past quarter, 13% of Cineplex's box office revenues came from international cinema and this continues to be an important content play for us to expand our offerings.

Ellis Jacob: When guests visit our Cineplex theater, not only do they have a variety of content to choose from they can also choose to upgrade and optimize their movie going experience in this quarter of 41% of box office revenue came from premium experiences like IMAX Altra AVX three D in VIP.

Ellis Jacob: When guests visit a Cineplex theater, not only do they have a variety of content to choose from, but they can also choose to upgrade and optimize their movie-going experience. In this quarter, 41% of box office revenue came from premium experiences like IMAX, Ultra AVX, 3D, and VIP.

Ellis Jacob: Cineplex's VIP in particular has been extremely successful and not many of our peers have been able to duplicate this offering.

Ellis Jacob: Cineplex's VIP in particular has been extremely successful, and not many of our peers have been able to duplicate this offer. Continuing our commitment to premium experiences, we are adding IMAX, ScreenX, and Ultra-AVX screens and upgrading to laser projections this year, further enhancing our portfolio and solidifying our position as leaders in the industry. We pride ourselves on giving guests an exceptional experience when visiting our theaters, and now we are also making their movie-going experience a more seamless one with the introduction of online and mobile concession ordering. When purchasing tickets on the Cineplex app or online, guests can add their favorite concessions to their cart and easily pick them up on their way to their seats.

Ellis Jacob: Continue our commitment to premium experiences, we adding IMAX screen next and ultra AVX screens and upgrading to laser projections. This year further enhancing our portfolio and solidifying our position as leaders in the industry.

Ellis Jacob: We pride ourselves on giving guests and expect.

Ellis Jacob: <unk> experienced when visiting our theaters and now we are also making their movie going experience more seamless one with the introduction of online and mobile concession Audrey.

Ellis Jacob: Purchasing tickets on the Cineplex Apple online guests can add their favorite concessions to their cart and easily pick them up on their way to their seats.

Ellis Jacob: We're also creating operational efficiencies through data automation and technology, we've shared in the past how we use data to attract and retain guests. We are also leveraging advanced data analytics automation and technology to create operational efficiencies across our business.

Ellis Jacob: We're also creating operational efficiency through data, automation, and technology. We've shared in the past how we use data to attract and retain guests. We are also leveraging advanced data analytics, automation, and technology to create operational efficiencies across our business. For example, using these tools helps us create more accurate attendance forecast models that help us anticipate business volumes and more precisely planned staffing levels.

Ellis Jacob: Using these tools helps us create more accurate attendance forecast models that help us anticipate business volumes and more precisely planned staffing levels.

Ellis Jacob: I also want to provide a brief update on the competition Bureau's allegations regarding online booking fee. We presented our case before the competition Tribunal in February we note that the competition Bureau has not been testing our rights to charge. The online booking fee is one is only contesting the manner in which.

Ellis Jacob: I also want to provide a brief update on the Competition Bureau's allegations regarding our online bookings. We presented our case before the Competition Tribunal in February. We note that the Competition Bureau is not contesting our right to charge the online booking fee. It is only contesting the manner in which we presented the fee to consumers.

Ellis Jacob: We presented the fee to consumers. We strongly believe we have complied with both the letter and spirit of the law and that the competition Bureau's allegations unfounded.

Ellis Jacob: We strongly believe we have complied with both the letter and the spirit of the law and that the Competition Bureau's allegations are unfounded. We await the competition tribunal decision in the coming months. Before I pass it on to Gord, I want to touch on last month's CinemaCon, our industry's annual trade show, and meetings the Executive Committee of the Global Cinema Federation had with studios and the Directors and Producers Guild. The feedback was extremely encouraging, as every studio and the guild spoke about the return of product and the importance of theatrical to the overall success of content.

Ellis Jacob: The competition drive unions' decision in the coming months.

Gord: Before I pass it on to God I want to touch on last month's cinema for our industry's annual Tradeshow and meetings. The executive Committee of the Global Cinema Federation had with studios and the directors and producers deals.

Ellis Jacob: The feedback was extremely encouraging has every studio and the bill spoke about the return of product and the importance of theatrical to the overall success of contact.

Ellis Jacob: As studios unveiled their film lineup for the next year and a half, the emphasis at CinemaCon and in our discussions was on the immense value of theatrical release. One resounding message from our studio partners was their commitment to both the volume of film releases and quality of content on the horizon. With the Hollywood strikes resolved and major players like Amazon and Apple meaningfully leaning into the theatrical business, our optimism for the box office in the latter half of the year and beyond is growing.

Ellis Jacob: As studios unveiled their film lineup for the next year and a half the emphasis at cinemark on and in our discussions was on the immense value of theatrical releases one resounding message from our studio partners with their commitment to both volume of film release and quality of content on the horizon.

Ellis Jacob: In fact, over 30 new films have been added to the 2024 pipeline since December 2023. We are starting to see a buildup of content with exciting titles such as Kingdom of the Planet of the Apes, If, Garfield, Furiosa, Mad Max Saga, Inside Out 2, A Quiet Place, Day One, Despicable Me 4, Twisters, and Deadpool and Wolverine. In the back half of the year, the slate further strengthens with titles like Beetlejuice, Beetlejuice 2, Moana 2, Joker, Foley Adieu, Wicked, Gladiator 2, The Lord of the Rings, The War of the Rohirrim, Sonic the Hedgehog 3, and Mufasa the Lionheart.

Ellis Jacob: With the Hollywood strikes resolve the major players like Amazon and Apple meaningfully leaning into theatrical optimism for the box office in the latter half of the year and beyond is growing.

Ellis Jacob: In fact over 30, new firms have been added to the 2024 pipelines since December 2023.

Ellis Jacob: We are starting to see a buildup of content with exciting titles such as kingdom of the planet of the IFF Garfield Florio's Mad Max Saga inside out to acquired place. They won despicable me for Twisters, and Deadpool and Wolverine and.

Ellis Jacob: In the back half of the year the slate further strengthened with titles like Beatles juice vegetable juice Moana too.

Ellis Jacob: <unk> full year, two wicked Gladiator two the Lauder during the war after O'hanlon Sonic the Hedgehog, three and move faster the Lions gate looking.

Ellis Jacob: Looking ahead to 2025, we already see a robust film slate on the horizon, including another Jurassic World, Superman Legacy, the next installment of Mission Impossible, Valorina from the John Wick universe, Captain America, Brave New World, Minecraft, How to Train Your Dragon, live action, Fantastic Four, The Bad Guys 2, Blade, Snow White, Avatar 3, and many more. With this exciting lineup, we are returning to a consistent flow of new and diverse films landing on screens each week, and we are energized by the potential box office ahead.

Ellis Jacob: Looking ahead to 2025, we already see a robust film slate on the horizon, including another Jurassic World Superman legacy. The next installment of mission impossible ballerina from the John Wick Universe, Captain America, a brave new World Minecraft, how to train your Dragon live action.

Ellis Jacob: Tastic for the bad guys to blade Snow wise Avatar, three and many more with this exciting lineup. We are returning to a consistent flow of new and diverse films landing on screens each week and we are energized by the potential of box office ahead.

Ellis Jacob: Our recent refinancing has well-positioned our company to drive growth and effectively navigate periods of reduced film volume. We remain confident in our disciplined and balanced approach and in the successful strategic initiatives we've achieved so far. We have meaningful potential upside as we expand our LBE business and grow as an industry-leading diversified entertainment and media company. We are optimistic about the future and our ability to drive long-term shareholder return. With that, I will turn things over to Gord.

Ellis Jacob: Our recent refinancing is well positioned our company to drive growth and effectively navigate preferreds have reduced from volume.

Gord: We remain confident in our disciplined and balanced approach and in the successful strategic initiatives. We just achieved so far we have meaningful potential upside as we expand our <unk> business and grow as an industry, leading diversified entertainment and media company.

Gord: We are optimistic about the future and our ability to drive long term shareholder return with that I will turn things over to God.

Gord: Thanks Al So I'm pleased to present, the condensed summary for first quarter 2015.

Gord Nelson: I'm pleased to present a condensed summary of the first quarter 2024 results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on CDAR Plus and are also available on our Investor Relations website at Cineplex.com. Our MD&A and earnings press release include a complete narrative on the operational results.

Gord Nelson: Before results for supply.

Gord Nelson: For further reference our financial statements and MD&A ebb and flowed on SEDAR.

Gord Nelson: And are also available on our Investor Relations website.

Gord Nelson: Our MD&A and earnings press release include a complete narrative on the operational results. So I will focus on highlighting select items, including providing commentary on the gain on sale of <unk>.

Gord Nelson: So, I will focus on highlighting select items, including providing commentary on the gain and sale of QMDG, the loss on extinguishment of debt, and our outlook. For my comments on operations, all amounts falling will be from continuing operations unless otherwise stated. As Ellis mentioned, and you are all aware, our first quarter results were impacted by the actors' and writers' strikes, which delayed the release dates of a number of key titles.

Gord Nelson: The loss on extinguishment of debt <unk>.

Gord Nelson: For my constant operations all of them.

Gord Nelson: All of the following will be from continuing operations unless otherwise stated.

Gord Nelson: As Alex mentioned and you are all aware our first quarter results were impacted by the actors and writers strike switched away.

Gord Nelson: Have a number of key titles.

Gord Nelson: Notwithstanding, our total revenue increased 1.2% to $295 million. However, our adjusted EBITDA decreased to $4.6 million in 2024 as compared to $11.4 million in 2023, primarily due to minimum wage increases and legal costs in the quarter related to the Competition Bureau's lawsuit against us. Let's take a cultural look at our site.

Gord Nelson: Notwithstanding our total revenue increased one 2% to $295 million. However, our adjusted EBITDA increased to $4 $6 million in 2024 as compared to $11 $4 million in 2023, primarily due to minimum wage increases and legal costs in the quarter related.

Gord Nelson: So the competition bureau's lawsuit against Cineplex.

Gord Nelson: Let's take a closer look at our segments.

Gord Nelson: In the film exhibition and content segment, attendance was flat at approximately 9.8 million, total revenue increased 1.7%, and segment-adjusted EBITDA decreased $1.5 million, primarily as a result of minimum wage increases. We're using data, automation, and other initiatives to mitigate the impact of these increases going forward. In the media segment, as we mentioned previously, the cinema media business model post-pandemic has shifted to a CPM-based model. The media segment revenue was flat at $22.1 million, and adjusted EBITDA was down slightly by $0.8 million to $8.3 million. Cinema and media revenue was impacted by shifting release schedules and some pandemic-related commitments which were utilized in the prior year quarter.

Gord Nelson: The film exhibition and content segment attendance was flat at approximately $9 8 million total revenue increased one 7% and segment adjusted EBITDA decreased $1 5 billion, primarily as a result of the minimum wage increases.

Gord Nelson: We are using data automation and other initiatives to mitigate the impact of these increases.

Gord Nelson: Sure.

Gord Nelson: In the media segment as we mentioned previously the cinema media business model post pandemic.

Gord Nelson: Two a CPM based model.

Gord Nelson: The media segment revenue was flat at $22 1 million and segment adjusted EBITDA was down slightly by <unk> 8 million to $8 $3 million.

Gord Nelson: Cinema media revenue was impacted by shifting release schedules and some pandemic related commitments, which were utilized in the prior year quarter.

Gord Nelson: Our digital place-based media business had strong results, with total revenues up 24% to $9.9 million, primarily as a result of the addition of Cadillac Fairview to our shopping mall network beginning in 2024. And lastly, in our LBE segment, segment revenues were down nominally to $34.5 million from $35.1 million, in part due to the inclement weather experienced across parts of North America during the first quarter, which resulted in some location closures due to extreme conditions.

Gord Nelson: Our digital place based media business had strong results with total revenues up 24% to $9 $9 million, primarily as a result of the addition of Cadillac Fairview to our shopping mall network beginning in 2024.

Gord Nelson: And lastly in our <unk> segment segment revenues were down nominally to $34 5 million.

Gord Nelson: From $35 $1 million in part due to the inclement weather experienced across parts of North America. During the first quarter, which resulted in some location closures due to extreme conditions.

Gord Nelson: Lower level adjusted EBITDA margins for Q1, 2024 of 28, 1% continued to exceed our targets of 25%.

Gord Nelson: Store level adjusted EBITDA margins for Q1 2024 of 28.1% continue to exceed our targets of 25%. With the closing of the P1AG transaction in Q1 2024, we recorded a $67.3 million gain during the quarter, which is detailed in note 2 to the financial statement. I'd like to point out two things related to that gain.

Gord Nelson: With the closing of the <unk> transaction in Q1, 2024, we recorded a $67 $3 million gain during the quarter, which is detailed in note two to the financial statements.

Gord Nelson: I'd like to point out two things related to the game.

Gord Nelson: The gain is included in net income from discontinued operations.

Gord Nelson: And secondly, as a reminder, we will use a portion of our non capital losses to shelter any cash taxes payable, resulting from the game.

Gord Nelson: Also during the quarter, we executed and completed our comprehensive refinancing plan. This plan had three key initiatives.

Gord Nelson: First, the gain is included in net income from discontinued operations. And secondly, as a reminder, we will use a portion of our non-capital losses to shelter any cash taxes payable resulting from the... Also, during the quarter, we executed and concluded our comprehensive refinancing. At this point, I have three key initiatives. Goal one was to meaningfully extend debt maturity. We now have senior secured notes with a maturity of five years and an amended convert offering with a term of six years. Objective two was to reduce restrictions imposed by debt cuts.

Gord Nelson: The results, the repayment in full of the existing bank credit facility and the replacement with a $100 million revolver with a covenant blank structure. And finally, objective 3 was to reduce the potential equity dilution from the existing convertible debate. The result, the amendment, and principal repayment resulted in a reduction in potential equity dilution of just under 8 million shares or just under 28% of the potential equity dilution of the existing conversion.

Gord Nelson: Objective, one was to meaningfully extend debt maturities.

Gord Nelson: As a result, we now have senior secured notes with a maturity of five years.

Gord Nelson: And a new amended convert offering with a term of six years.

Gord Nelson: Objective two was to reduce restrictions in place.

Gord Nelson: <unk>.

Gord Nelson: As a result, the repayment in full of the existing bank credit facility and the replacement with a $100 million of revolver with a covenant light structure.

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

Gord Nelson: As a result, the amendments in principle repayment resulted in a reduction in potential equity dilution.

Gord Nelson: Just under 8 million shares or just under 28% of the potential equity dilution of the existing Cooper.

Gord Nelson: Well executed plan was a bold move to strengthen the balance sheet for the future.

Gord Nelson: A well-executed plan was a bold move to strengthen the balance sheet for the future. P&L shows a loss of approximately $54 million on the refinancing, which is primarily related to the treatment of the convertible to venture amendment as an extinguishment of debt. At year-end, the carrying value of the convertible debentures was $272 million versus a base value of $316 million, as a component was included in equity on original issues. Of the $54 million loss on extinguishment of debts, approximately $43 million was related to non-cash items, including this convertible item.

Gord Nelson: <unk> showed a loss of approximately $54 million on the refinancing which is primarily.

Gord Nelson: Related to the treatment of the convertible debenture amendment as an extinguishment of debt.

Gord Nelson: At year end, the carrying value of the convertible debentures was $272 million versus a face value of $316 million as a component was included in equity on original equipment.

Gord Nelson: Of the $54 million loss on extinguishment of extinguishment of debt approximately $43 million related to noncash items.

Gord Nelson: Building this convert.

Gord Nelson: And finally back to the P&L net income has increased to $5 $2 million from a loss of $32 million in 2023.

Gord Nelson: And finally, back to the P&L, net income has increased to $5.2 million from a loss of $30.2 million in 2023, primarily due to the aforementioned item. I would now like to move on and speak to our balance sheet, and in particular, our liquidity plan. At quarter end, we had $92 million in cash and nothing drawn under the covenant, like credit facilities which have a capacity of $100 million. As I mentioned earlier, with the Comprehensive Refinancing Plan, one of the objectives was to remove restrictions related to covenant testing, and no testing was required under the Credit Facilities Act.

Gord Nelson: Primarily due to the aforementioned items.

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

Gord Nelson: At quarter end, we had $92 million in cash and nothing drawn under the covenant like credit facilities, which has a capacity of $100 million.

Gord Nelson: As I mentioned earlier with the comprehensive refinancing plan one of the objectives was to remove restrictions related to covenant testing and no testing as required under the credit facilities at quarter.

Gord Nelson: As we've mentioned previously our capital allocation priorities include maintenance capital expenditures.

Gord Nelson: As we've mentioned previously, our capital allocation priorities include maintenance, capital expenditures, continuing to strengthen the balance sheet to achieve our target leverage ratios, investing in growth opportunities, and providing shareholder returns in the form of dividends and or share buybacks. With respect to CapEx for the quarter, we had a net CapEx of $13.2 million versus $12.2 million in the prior year.

Gord Nelson: Continuing to strengthen the balance sheet to achieve our target leverage ratios investing in growth opportunities and providing shareholder returns in the form of dividends and share buybacks.

Gord Nelson: With respect to Capex for the quarter, we had net capex of $13 $2 million versus $12 $2 million in the prior year.

Gord Nelson: Three LTE locations and one theater location under construction and to be opened in 2024.

Gord Nelson: Three LBE locations and one theatre location are under construction and to be opened in 2024. We are currently estimating net cap VACs for 2024 of approximately $80 million. As we look forward, in years when we would be bringing on three additional LBE locations and other growth initiatives, we would expect NetCapEx to be approximately $80 million, including approximately $30 million in maintenance capital. Our LBEs continue to deliver results in line with our targets and expectations. As such, growth cutbacks will continue to be allocated to the LVD business.

Gord Nelson: We are currently estimating net capex for 2024 of approximately $80 million.

Gord Nelson: As we look forward in years, where we would be bringing on three additional LTE locations and other growth initiatives.

Gord Nelson: We would expect net capex to be approximately $80 million, including approximately $30 million in maintenance Capex.

Gord Nelson: <unk> continued to deliver results in line with our targets.

Gord Nelson: And as such growth Capex will continue to be allocated towards the EBIT.

Gord Nelson: 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 this is a world, where we achieve or exceed pre pandemic adjusted EBITDA levels on 75% to 80% of pre pandemic attendance levels.

Operator: 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. This is a world where we achieve or exceed pre-pandemic adjusted EBITDA levels on 75% to 80% of pre-pandemic attendance. With no near-term cash taxes due to the NOLs, we would generate in excess of $100 million of free cash flow due to our business model, and use this free cash flow to invest, de-lever, and provide shareholder returns.

Operator: With no near term cash taxes due to the Nols, we would generate in excess of $100 million of free cash flow due to our business model and use this free cash flow to invest delever and provide shareholder returns.

Operator: With the confidence coming out of CinemaCon, as Ellis has described, the long-term view for exhibition is solid, and we believe the world that I am describing is real and coming soon, commencing in the back half of this year. We see a continued path to hitting our leverage target of 2.5 to 3 times and reintroducing shareholder returns, including share buybacks and or dividends. In summary, we believe there's a lot to be excited about, and with that, I would like to turn the call over to the conference operator for questions.

Operator: With the confidence coming out of a sudden mccaughan is L. A has described the long term view for exhibition is solid and we believe the world that I am describing is real and coming soon commencing in the back half of this year.

Operator: We see a continued path to hitting our leverage target of two and a half to three times and reintroducing shareholder returns, including share buybacks <unk> dividends.

Operator: In summary, we believe there is a lot to be excited about and with that I would like to turn the T.

Operator: Call over to the conference operator for questions.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If your question has been answered, or you wish to remove your question, please press star followed by 2. As a reminder, if you are using a speaker phone, please pick up your handset before asking your question. Our first question comes from the line of Maher Yaghi with Scotiabank. Maher, your line is now open.

Maher Yaghi: Your question has been answered or you wish to remove your question. Please press star followed by too.

Maher Yaghi: As a reminder, if you are using a speakerphone. Please pick up your handset before asking your question.

Operator: Our first question comes from the line of Larry Yaghi with Scotiabank.

Maher Yaghi: Your line is now open.

Maher Yaghi: Great. Thank you for taking my question.

Ellis Jacob: Great. Thank you for taking my question. I wanted to, you know, maybe we can have a discussion on your expectation for Mobi releases in Q2, Q3, Q4. Since we started the quarter, as you mentioned this morning, and slightly on the weaker side, how should we think about conversion of attendance to revenues to EBITDA as the year progresses? As a follow-up, you indicated your expectation for additional expansion of some of your opportunities on the entertainment side. Any indications on what that will entail in terms of CAPEX? Thank you.

Ellis Jacob: I wanted to.

Ellis Jacob: Maybe if we can have a discussion on your expectation for mobile releases in Q2 Q3 Q4 since we started the quarter as you mentioned this morning.

Ellis Jacob: Slightly on the weaker side.

Ellis Jacob: How should we think about the <unk>.

Speaker Change: <unk> enough.

Ellis Jacob: And then to revenues.

Ellis Jacob: As the year progresses, and as a follow up.

Ellis Jacob: You indicated your expectation for additional expansion.

Ellis Jacob: Some of your.

Ellis Jacob: Opportunities.

Ellis Jacob: The payments side.

Ellis Jacob: Any indications on what to implicate that in terms of Capex. Thank you.

Ellis Jacob: Okay.

Ellis Jacob: Okay, I'll answer the first part of the question, and Gord, I'll turn it over to you on the CapEx for the LBE side. The product, to me, looks extremely strong, you know, especially in the back half of 2024. We have strong movies coming out, with Planet of the Apes on Friday, and we've got, you know, If from Paramount, Garfield, Furiosa, all that in the month of May, and then in June, we've got Inside Out 2, which I think will be one of the larger movies for 2024.

Ellis Jacob: Okay.

Speaker Change: Answer the first part of the question in the quarter I will turn it over to you on the Capex for the <unk> side.

Ellis Jacob: The product to me looks extremely strong, especially in the back half of 2024, we have strong movies coming out with planet of the apes.

Ellis Jacob: On.

Ellis Jacob: Friday, and we've got you.

Ellis Jacob: If from Paramount Garfield 40, or so all of that in the month of May and then June we've got inside out too, which I think will be one of the larger movies for 2024, we've got a quiet place also for Paramount. So there's a lot of product to look forward to the back end is even much stronger than what.

Ellis Jacob: We've got A Quiet Place also from Paramount, so there's a lot of product to look forward to and the back end is even much stronger and what we see is a lot of movies being put into the slate as we move forward and it's the reverse to COVID when things were being pushed out, now they're being pushed in, which is overall strong for us. In July we've got Despicable Me 4, we've got Twisters, we've got Deadpool 3, then going through to the balance we've got Beetlejuice, Transformers, The Wild Robot and then November you've got a big slate with Gladiator, Wicked and Moana and then we end the year with some strong films like Lord of the Rings, Karate Kid, Mufasa, The Lion King, Sonic the Hedgehog and Nosferatu, so I'm pretty confident that the product is coming back and it's going to be strong and one of the things when we did our global cinema presentations and met with the studios and the guilds, some countries like for example India and France In 2023, India did 99% of its 2019 box office and France did over 90%. So once the content is there, our guests want to come back and have

Ellis Jacob: What we see is a lot of movies being.

Ellis Jacob: Being put into the slate as we move forward and it's the reverse to corporate when things were being pushed out now they're being pushed in which is overall strong for us in July we bought Despicable me full we've got twisters, We've got Deadpool three then going through to the balance sheet got betelgeuse transform.

Ellis Jacob: <unk> the wild robot and then November you've got a big slate with Gladiator Wicked and Moana and then we ended the year with some strong firms like Lord of the rings Karate Kid move faster the Lion King Sonic the Hedgehog and I'll figure out too so I'm pretty confident that product is.

Ellis Jacob: Is coming back and that's going to be strong and one of the things when we did our global.

Ellis Jacob: Cinemark presentations and met with the studios and the gills.

Ellis Jacob: Some countries like for example, India and France.

Ellis Jacob: In 2023, India did 99% of its 2019 box office in France that over 90%. So once the content as their guests wanted to come back and have that experience hope that helps.

Gord Nelson: And then on your second question, I just want to remind you because, Maher, when you're talking about attendance and the contribution to EBITDA, I just want to kind of remind people that you use sort of the 2023 metric, that each, you know, incremental gap. And that's why we see the path to getting back to pre-pandemic. Before we talk about the CapEx question, I think the investors I'm speaking with are trying to figure out what the run rate of the business is that can be sustained now that we've passed COVID. We've passed the exam.

Speaker Change: And then second question I, just wanted to market, but I think remember when youre talking about attendance and the contribution to EBITDA.

Gord Nelson: Just want to kind of remind people if you use sort of the 2023.

Gord Nelson: <unk>.

Gord Nelson: H.

Gord Nelson: Incremental gas contributes events between 12 and $13 in EBITDA. So.

Gord Nelson: Huge operational leverage there.

Gord Nelson: And that's why we see the path to getting back to peak.

Gord Nelson: EBITDA.

Gord Nelson: On.

Gord Nelson: 75 years.

Gord Nelson: Pretty good.

Gord Nelson: On your question related.

Gord Nelson: Naples, Florida.

Gord Nelson: Maybe before we talk about the Capex question.

Gord Nelson: I think the.

Gord Nelson: Investors I'm speaking with trying to figure out.

Gord Nelson: What is the run rate of the business.

Gord Nelson: That Ken.

Gord Nelson: Be sustained.

Gord Nelson: Now that we've passed.

Gord Nelson: We spot the.

Gord Nelson: What is your view on what the company's operational performance could look like on a steady-state basis on the top line and the EBITDA level? Yeah, so. Okay, and I think the question is, and if you look at last year's numbers as an example, which, you know, we had total EBITDA of $157 million in a constrained sort of media market, so there's lots of upside from the media side. But if you looked at the incremental, you know, the number I gave with respect to incremental content. For more information, visit www.cineplex.com. That would be 53 million people versus 48 million people.

Gord Nelson: The Hollywood studio.

Gord Nelson: Strike et cetera.

Gord Nelson: What is what is your view on what the company is operational performance could look like on a steady state basis.

Gord Nelson: On the top line.

Gord Nelson: And the EBITDA line.

Speaker Change: Yeah. So.

Gord Nelson: Look at it and I think the question is if you went to last year's numbers as an example, which we.

Gord Nelson: Total EBITDA of $157 million in a constrained sort of media markets. So there's lots of upside and mark on the media side.

Gord Nelson: But if you looked at the incremental.

Gord Nelson: The number I gave with respect to incremental incremental contribution of each.

Gord Nelson: Somewhere between 12 and $13.

Gord Nelson: And potentially if youre up to 80% of the pre pandemic level a level of 53 million people.

Gord Nelson: Versus 48, roughly $48 million last year, so 5 million additional gas at 12% to $13.

Gord Nelson: So, you know, $5 million additional gas at $12 to $13 is... Take that on top of the 157, and you're at 220, 230. So we kind of see that path coming, and as I mentioned in my remark. I see that world beginning in the back half of us. So that's, you know, that's around where we believe kind of this new world runs. And then it's incumbent enough to find other reasons. Above that, 75.

Gord Nelson: Is $60 million to $70 million of incremental EBITDA. So you take that on top of the $1 57, and Youre in a $222 30 range.

Gord Nelson: Which is in excess of where we were pre pandemic. So we kind of see that path come in and as I mentioned in my remarks.

Gord Nelson: I see that we're all commencing in the back half of this year.

Gord Nelson: And into new so that's.

Gord Nelson: That's around where we believe kind of the.

Gord Nelson: Run rate.

Gord Nelson: And then it's incumbent on us to find other reasons why people want to come together that.

Gord Nelson: We can potentially increase attendance above that 75% to 80%.

Speaker Change: Great. Thank you for your question.

Gord Nelson: On CapEx, at the end of this year, we'll be up to about 16 LBEs out there. We've communicated that we have plans to, or we think there's opportunity for about 30, so that's 14 additional locations. We kind of communicated on an average cost of $10 million, so that's $140 million. All from that business. In my comments, I mentioned about, you know, would we do about three a year? That's probably around where we would be in that kind of world. We'd be at levels of around $80 million a year for CapEx.

Gord Nelson: Capex is.

Gord Nelson: At the end of this year will be up to about 16, it'll be he's out there.

Gord Nelson: Communicated definitely have plans to.

Gord Nelson: We think there's opportunity for about 30.

Gord Nelson: So thats 14 additional locations, we've kind of communicated potentially an average cost of $10 million left $140 million.

Gord Nelson: To wrap up to that full capacity, which will double the EBITDA contribution.

Gord Nelson: From that business.

Gord Nelson: In my comments I mentioned about would we do about three a year, that's probably around where we would be in.

Gord Nelson: And that kind of world is but we'd be at levels of around $80 million of capex.

Gord Nelson: I would suggest that next year we don't have three that we're committed to and will be opening, so it'll be a little bit less than that in 2025 but could ramp up to that number as we kind of complete that rollout over the next four to five years.

Speaker Change: I will suggest that next year, we don't have that.

Gord Nelson: We're committed to and we'll be opening so it'll be a little bit.

Gord Nelson: A bit less than that in 2025.

Gord Nelson: But could ramp up to that number as we kind of complete that rollout.

Gord Nelson: Four to five years.

Speaker Change: Great. Thank you.

Operator: Great, thank you.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from the line of Sheryl Zhang with TD Catlin Cheryl Your line is now open.

Operator: Thank you. Our next question comes from the line of Cheryl Zeng with TD Catwin. Cheryl, your line is now open.

Cheryl Zeng: Hi, Thanks, Alison Gordon this is Cheryl.

Ellis Jacob: Hi, thanks Ellis and Gord, and this is Cheryl standing in for Derek, who's on another call. So, thanks for taking my question. Our first question is around the LBE business. So, in addition to the weather impact, you were lacking a pretty tough comp on both the top line and margins last year. Could you just remind us why it was so strong last year? And I think in the MD&A, you alluded to the strength that you saw at the end of the quarter. Is that carrying into Q2? And maybe just how do you see it developing over the rest of the year? Yeah, so

Ellis Jacob: Sure.

Speaker Change: Alright, Gary Koos on another call.

Ellis Jacob: Thanks for taking my question first question was around the Albion business.

Ellis Jacob: In addition to the weather impact you.

Ellis Jacob: You were lapping a pretty tough comp on both the top line and margins last year could you just remind us why it was so strong last year.

Ellis Jacob: And I think in the MD&A you alluded to.

Ellis Jacob: The strength I saw at the end of the quarter.

Ellis Jacob: Is that carrying into Q2.

Ellis Jacob: And maybe just how you see that developing over the rest of the year.

Speaker Change: Yes, so first of all.

Gord Nelson: Yeah, so first of all, you know, the top line was relatively in line despite the inclement weather this year. Last year in the first quarter, we did make, we provided some commentary that the Ibadel margins benefited from certain one-time items last year and were roughly 35%. And you know, as we've described, our expectation is to be at 25%. We were above that for the full year last year, and we've been above that for the first quarter.

Gord Nelson: The topline was relatively in line display.

Gord Nelson: Inclement weather this year last year in the first quarter, we did make we provided some commentary.

Gord Nelson: The EBITDA margin benefited from certain one time items last year.

Gord Nelson: And roughly 35%.

Gord Nelson: And as we've described are our expectation is to be at 25% above that for the full year last year and we've been above that for the first quarter. So it was really that there was some sort of onetime benefits that were reflected in last years, which included some items related to kind of labor being kind of over overused.

Gord Nelson: So it was really some one-time benefits that were reflected in last year, which included some items related to labor being underutilized or over-constrained, I guess, during the quarter, that really made the first quarter last year more of an anomaly.

Gord Nelson: Underutilized or over constrained I guess during the quarter.

Gord Nelson: That really made the first quarter last year more of an anomaly.

Speaker Change: Okay. Thanks.

Gord Nelson: Okay, thanks. I'm curious how you see it developing for the rest of the year, like, in terms of the top line and the margin.

Speaker Change: Just curious how you see it developing for the rest of the year in terms of the top line and the margin.

Gord Nelson: Yeah so I mean one thing about the LVE business as we mentioned last year too is you know as anything in Canada it's a beautiful day in Toronto here but you know as weather you know as we suffer from bad weather because we can't open when weather is strong and good in the springtime is people often don't want to be inside so depending on if we have great weather on weekend that can hurt the overall results and we we called that out last year during the second quarter which impacted that but we continue to look on and you know over the course of the year we see the average unemployment of ten million dollars and you know that we haven't even done a margin of an excess of 25 percent so now you will see the three locations coming on probably in the fourth quarter and typically sort of out of the box you know as we as we have training and other things as they may not hit their margins right out of the box those new ones but but the old ones sort of the existing ones we expect to continue on on the trajectory that doesn't exceed our targets for the course of the year.

Speaker Change: Yes, so I mean one.

Gord Nelson: The one thing about the <unk> business as we mentioned last year to us.

Gord Nelson: Is there anything in Canada.

Gord Nelson: A beautiful day in Toronto here.

Gord Nelson: But as weather.

Gord Nelson: As we suffered from bad weather.

Gord Nelson: We can't open when whether it's strong and good in the springtime as people up and don't want to be inside of the pending enough we have great weather weekend.

Gord Nelson: That can hurt the overall results and we called that out last year during the second quarter, which should impact the impact of that but we continue to work on over the course of the year, we see the average unit volumes of $10 million.

Gord Nelson: We have an EBITDA margin of in excess of.

Gord Nelson: 25% so.

Gord Nelson: Now you will see the three locations coming on but likely in the fourth quarter.

Gord Nelson: And typically sort of out of the box.

Gord Nelson: As we as we have training and other things as they may not hit their margins right out of the box with new ones.

Gord Nelson: But but the old ones or the existing ones.

Gord Nelson: We expect to continue on the trajectory of that business.

Gord Nelson: Got it and exceed our targets for the course of the year.

Speaker Change: Okay. Thanks, that's very helpful. And then just one more requiring Q.

Gord Nelson: Okay, thanks. That's very helpful. And maybe just one more question before I go. Could you remind us again about your plan for increasing shareholder returns and more specifically maybe on the timing and the prerequisites to do so? And also, is there a preference when it comes to dividends versus share buybacks and also considering the LBD investment?

Gord Nelson: Could you remind us again around your plans for increasing shareholder returns and more specifically maybe on the timing and it's a prerequisite to do so.

Gord Nelson: And also is there a preference when it comes to dividend versus share buybacks or.

Gord Nelson: Just curious how you prioritize or execute on that balancing act. Thank you. Yeah, thanks, Sheryl.

Speaker Change: And also considering DLP impact just curious how you prioritize where I spoke to you on that Paul Yeah. Thank you.

Gord Nelson: Yes, thanks Cheryl for that question. And so, you know, we've been pretty clear in our communication, and just reinforce it again: our focus is to get into our targets of leverage of two and a half to three times. And I described sort of the world that we see that we're going to get into in the back half of the year and into next year. You know, the question... For all of us, it's really how many sustainable quarters do people want to see once we're in that zone.

Sheryl: Yes, thanks for that question and so.

Gord Nelson: <unk> been pretty clear in our communication and just reinforces again as you know our focus is to get into our target zone of leverage of two and a half to three times.

Gord Nelson: And.

Gord Nelson: I described sort of the world that we see that we're going to get into in the back half of the year and into next year.

Speaker Change: The question.

Gord Nelson: For all of US is really how many sustaining quarters because people want to see what we are in that zone.

Gord Nelson: You know, probably a minimum of two, I would suggest, which probably puts us into, you know, the beginning of next year. So we will continue to monitor and evaluate, and with respect to a decision of, you know, do we do dividends versus share buybacks, I think that would be based on sort of where the share price sits at that point in time. Right now, we would evaluate whether or not to do either of those options.

Speaker Change: Probably a minimum of two I would suggest.

Gord Nelson: And which probably puts us into.

Gord Nelson: The the beginning of next year.

Gord Nelson: So we will continue to monitor and evaluate and with respect to <unk>.

Gord Nelson: And a decision of.

Gord Nelson: Do we.

Gord Nelson: Do we do dividends versus share buybacks I think that would be based on sort of where the share price sits at that point in time.

Gord Nelson: Right now we would evaluate.

Gord Nelson: And then the last part of your question, I just want to make sure that in the world that I communicated to you, we would have $100 million of free cash flow. That already includes investing in three LBEs. So, I want to make that clear that the LBE investment does not, and we do not believe that it will constrain us in the short term from considering a return on capital as we've just chatted about.

Gord Nelson: Either of those options and then the last part of your question I just want to make sure that in the world that I communicated.

Gord Nelson: We would have $100 million of free cash flow that already includes investing in three LTE.

Gord Nelson: So.

Gord Nelson: So I want to make that clear that <unk> investment does not do we do not believe that would constrain us in the short term.

Gord Nelson: Considering the return of capital is as we've just yet.

Speaker Change: That's very helpful. Thank you Greg.

Gord Nelson: That's very helpful. Thank you, Gord.

Speaker Change: Thank you.

Operator: Our next question comes from the line of Drew McReynolds with RBC Capital Markets. Drew, your line is now open.

Gord Nelson: Our next question comes from the line of trailing Mcreynolds with RBC capital markets truly your line is now open.

Drew McReynolds: Yes, thanks, very much and good morning.

Drew McReynolds: Yeah, thanks very much and good morning. Just sticking with the LBE expansion and, you know, the 14 locations. Gord, you allude to, you know, just wondering, as you build those out, the nature of those locations, are they kind of materially different from, you know, what the first kind of 16 would be? And are you able to, with some additional scale, squeeze out some additional profitability? And then the second question, just on the outlook for CDM, how do we, You know, I guess I'm asking for specific quarterly guidance. How do we model this?

Drew McReynolds: Just sticking with the LTE expansion in 2014 locations.

Drew McReynolds: Gordon you allude to.

Drew McReynolds: Just wondering as you build those out.

Drew McReynolds: The nature of those locations, so they kind of materially different than what the first kind of 16 would be in <unk>.

Drew McReynolds: Are you able to.

Drew McReynolds: With some additional scale.

Drew McReynolds: Squeeze out some additional profitability.

Drew McReynolds: And then the second question just on the outlook for CDM.

Drew McReynolds: How do we.

Drew McReynolds: I know you have 2 disclosed revenue streams, the project revenues and other revenues. Just how much of the overall kind of growth here will be so-called recurring versus one-time? Just any help on rules of thumb on that would be great.

Drew McReynolds: I guess asking you for specific quarterly guidance, how do we model. This I know you have to.

Drew McReynolds: Revenue streams, the project revenues and other revenues just how much.

Drew McReynolds: The overall.

Ellis Jacob: Thank you.

Drew McReynolds: Growth here will be so called recurring versus one time, just any help on that rule of thumb on that would be great. Thank you.

Ellis Jacob: So drew on the amusement and leisure side of the business as you know every time, we've opened one of these locations we learn a great deal as to how do we better our overall.

Gord Nelson: So Drew, on the amusement and leisure side of the business, as you know, every time we've opened one of these locations, we learn a great deal as to, you know, how to improve our overall, you know, square footage, what our returns are going to be, and depending on the marketplace. And as Gord said earlier, we basically have to make sure that it's in a location that is financially strong for us as we move forward.

Gord Nelson: Square footage, what our returns are going to be and depending on the marketplace and as cord said earlier, he basically have to make sure that it's in a location. It is financially strong for us as we move forward. So yes, we'd like to get to 30, but thats not going to happen overnight.

Gord Nelson: So yes, we'd like to get to 30, but that's not going to happen overnight. It's going to take a bit of time, because as we've seen, the locations that we have really make a difference as to, you know, the guests coming and enjoying the experience. So we will continue to review that and look at the square footage, depending on the, you know, the demographics in the area we are building and choose between, you know, whether I'll turn it over to the Board to talk about CDM. Yeah, thanks. Thanks, Al.

CDM: Could it take a bit of time because.

Board: As we've seen the locations that we have really make a difference as to you know the guests coming in enjoying the experience. So we will continue to review that and look at the square footage depending on the.

Board: The demographics in the area, we are building and choose between whether we build a rec room or a palladium.

Board: In the communities that we are going into.

Gord Nelson: I'll turn it over to ward to talk about CDN, yes, thanks picks up and just to add on I think we've clearly learned I think the size of the rec room doesn't need to be as large.

Ellis Jacob: And just to add on, like I think we've clearly learned, you know, I think the size of the record doesn't need to be as large as the initial ones that were deployed, so we're constantly learning and refining. You know, there are significant synergies between the learnings that we're seeing in the recreation room and then the theaters too. So, you know, food service, as an example, is one that kind of expand

Ellis Jacob: The initial ones that were deployed so we're constantly learning and refining.

Ellis Jacob: The box as we go forward.

Ellis Jacob: And.

Ellis Jacob: There are significant synergies between the learnings that we're seeing in the Rec room and then the theatres too. So foodservice as an example is one that kind of expensive.

Ellis Jacob: The connection with scene means that we can drive entertainment customers into our walk. There are so significant synergies between the kind of the LED business and the theater business. And then, of course, the obvious one is the junction concept, which is we're basically..., and the theater, putting it on webcast, great opportunities there. The question on digital media, then, so this is one that I'm kind of excited about because we took over Cadillac, Fairview, and Common Air in the first quarter.

Ellis Jacob: So this is the connection with <unk> that we can drive entertainment customers of Dod work, so significant synergies between kind of the.

Ellis Jacob: The business in the theater business.

Ellis Jacob: And then of course the obvious one is the junction concept, which is we're basically taking it and there'll be an instigator of putting into one box so great opportunities there.

Ellis Jacob: On the question on digital media that so this is one that I'm kind of excited about because we took over Cadillac Fairview common or.

Ellis Jacob: In the first quarter, if you look at the split between project revenue.

Ellis Jacob: If you look at the split between project revenue and other revenue, which includes media advertising revenue, during the fourth quarter, you'll note that that increased 38% year-over-year for the other. And then the other thing that you need to remember is that we only started selling those additional networks beginning January 1, and there's always a little bit of a lag and a slowdown when you take over a new network because you need to communicate that you're the agent of record for that network, so you're not ramped up to its full potential in those early periods. That has a ramp-up to where we're going to be, and it's going to be 50% or more as we go forward, given the additional...

Ellis Jacob: And other revenue wishes and particularly to the media advertising revenue during the fourth quarter, you will note that that increased 38%.

Ellis Jacob: On year over year, so the other revenue.

Ellis Jacob: And then the other thing that you need to remember is that we only started selling those additional networks beginning January one and theres always a little bit of a lag of a slowdown when you take over new network, because you need to communicate that you or the agent of record for that network. So youre not ramped up to its full potential in those early periods.

Ellis Jacob: As you look forward the project revenue can be a little bit lumpy, depending on who's deployed and who's not deploying.

Ellis Jacob: But that 38% growth in other I would suggest is.

Ellis Jacob: That has a ramp up to where we're going to be and it's going to be 50% or more as.

Ellis Jacob: As we look as we go forward given the additional et cetera.

Speaker Change: Okay. That's helpful. Thank you for that money, maybe one last one here.

Ellis Jacob: Okay, that's helpful, Gord. Thank you for that. Maybe one last one here, maybe back to you, Ellis. You've done such a great job on the international film side of the equation and, you know, obviously, a 13% in Q1 contributed. Historically, and I guess, let's talk pre-COVID, you know, what kind of contribution, apples to apples, would you say this kind of category of film product would have been contributing?

Ellis Jacob: Maybe back to you Alex you've done such a great job on the international film side of the equation, obviously, 13% in Q1 it contributed.

Ellis Jacob: Historically, and I guess, let's talk pre COVID-19.

Ellis Jacob: You know what kind of contribution.

Ellis Jacob: <unk> would you say this kind of category.

Ellis Jacob: Our films product would've been contributing.

Ellis Jacob: Historically, we won the 2% to 3% range as far as international content and that has continued to grow and we are using all of our data and all of the information we have available and the relationships with the.

Ellis Jacob: Historically, we were in the 2% to 3% range as far as international content goes, and that has continued to grow. And we are using all of our data and all of the information we have available and the relationships with the distributors for those films, and they have really helped grow business nicely in Canada. Fantastic. Thank you.

Ellis Jacob: Distributors for those films and they have really helped grow the business nicely in Canada.

Ellis Jacob: Fantastic. Thank you foresee that will continue.

Ellis Jacob: Sorry.

Ellis Jacob: Thank you. Our next question comes from the line of Adam Shine with National Bank Financial Adam Your line is now.

Operator: Thank you. Our next question comes from the line of Adam Shine with National Bank Financial. Adam, your line is now.

Adam Shine: Thanks a lot. Good morning.

Adam Shine: Yeah.

Adam Shine: Thanks, a lot. Good morning couple of questions Court, what I'd look at the other line in other Opex can you just elaborate a little bit I see whats there at Cineplex pictures store and some other stuff, but it did move up quite a bit in the period is that more related to do with some of the international.

Gord Nelson: A couple of questions. Gord, when I look at the other lines in other op-ecs, can you just elaborate a little bit? I see what's there. It's the Cineplex Pictures store and some other stuff, but it did move up quite a bit in the period. Is that, you know, more related to do with some of the international activities that you might be bringing in via Cineplex Pictures, or are there other things that might be a bit one-time in nature in the particular period? Yeah, I know that.

Gord Nelson: It'll activity that you might be bringing in fire Cineplex pictures or are there other things that might be one time in nature in that particular period.

Gord Nelson: Yeah, Adam, this one-time item is in the prior year, so if you went back two years, you'd see it's kind of more in line with that number. In the prior year, there was kind of a retro-adjustment related to... primarily related to scene that impacted the other revenue and the other by about the same magnitude. So it was really, that's the issue.

Gord Nelson: Adam just one time items in the prior year.

Gord Nelson: So if you went back two years, just give kind of more in line with that number.

Gord Nelson: In the prior year, there was kind of a retro adjustment related to.

Gord Nelson: Primarily related to <unk> that impacted the other revenue right.

Gord Nelson: The other by about the same magnitude so it was really that.

Gord Nelson: That's the issue.

Speaker Change: Perfect. Thanks for the reminder, and then maybe just can you talk I know you've already talked quite a bit about the movie slate, but more specifically we've seen a number of the studios.

Adam Shine: Perfect. Thanks for the reminder.

Ellis Jacob: And then maybe, Ellis, just can you talk a little bit about, you know, the movie slate? I know you've already talked quite a bit about, you know, the movie slate, but more specifically, we've seen a number of the studios, you know, releasing results recently. Some of them are sort of rethinking their, you know, output going forward with, obviously, trying to improve some of the quality that we've Maybe you can, you know, address some of the commentary that you've heard, things that you might have already heard at CinemaCon in regards to some of the strategies regarding output going forward.

Ellis Jacob: Releasing results recently some of them are sort of rethinking.

Ellis Jacob: Their output going forward with obviously try to improve some of the quality that we've seen in the last year or two maybe you can address some of the commentary that you've heard things that you might have already heard at cinema Cod in regards to some of the strategies regarding output going forward of course.

Ellis Jacob: And of course, you know, you've mentioned many times that the streamers are waking up to the opportunity to put out more product, and we're actually starting to see a bit more of that in recent quarters. Maybe just elaborate on any updates. Thanks.

Ellis Jacob: You've mentioned many times that the.

Ellis Jacob: The scrubbers are waking up to the opportunity to put out more product and we're actually starting to see a bit more of that in recent quarters, maybe just elaborate on any updates. Thanks.

Ellis Jacob: Yes, I have to tell you Adam It was very very positive and all this the global cinema Federation with Cineplex as part of the Executive Committee, we met with a number of studios in a couple of the deals and they were all very positive about product and what the future is going to look like and they've come to the.

Ellis Jacob: Yeah, I have to tell you, Adam, it was very, very positive and all the global cinema federation which Cineplex is part of on the executive committee, we met with a number of studios and a couple of the guilds and they were all very positive about product and what the future is going to look like and they've come to the conclusion, which we all knew, that the cinema experience is the engine that drives the train and to me that is very important and Disney reiterated that, Universal did, so I think, you know, once the shackles are off and we are behind the COVID and the strikes, you're going to see a lot more content coming through and I also said previously, in countries where the content was there, they were close to 100% of their 2019 numbers and, you know, as Gord mentioned, if we even get back to 80% of the attendance, which is very possible and even better, we will be better than where we were in 2019 from an EBITDA perspective. Okay.

Ellis Jacob: Conclusion, which we all knew that the cinema experience is the engine that drives the train and to me that is very important and Disney reiterated that universal did so I think.

Ellis Jacob: Once the shackles are off and we are behind the cohort and the strikes you're going to see a lot more content coming through.

Ellis Jacob: And I also said previously in countries, where the content was there they were close to 100% of the 2019 numbers and.

Ellis Jacob: As cord mentioned, if we even get back to 80.

Ellis Jacob: 80% of it yes.

Ellis Jacob: Tenants, which is very.

Ellis Jacob: Possible uneven better we will.

Ellis Jacob: Will be better than where we were in 2019 from an EBITDA perspective.

Adam Shine: Okay. Thank you very much. We'll leave it at that.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you.

Adam Shine: Thanks.

Speaker Change: Thank you.

Operator: Our next question comes from the line of Derek Lessard with TD Cowen. Derek, your line is now open.

Adam Shine: Our next question comes from the line of Derek Lessard with TD Cowen Derek Your line line is now open.

Operator: Okay.

Derek J. Lessard: Hi, thank you. This is Cheryl. I'll call you again. And just a few follow-ups. One is just for modeling. We know there are some ongoing cases, but how do we view the litigation expense going forward from a modeling perspective?

Derek J. Lessard: Hi, Thank you Sheryl.

Cheryl: And just a few follow ups.

Derek J. Lessard: Well just for modeling.

Derek J. Lessard: I know, there's an ongoing case, but how can we view the litigation expense going forward from a modeling perspective.

Derek J. Lessard: Ed.

Gord Nelson: We were in the tribunal phase during the first quarter, so I would suggest that the expenses would be elevated in the first quarter, and they will decline significantly from that in future years.

Derek J. Lessard: Okay.

Derek J. Lessard: We're in the tribunal face during the first quarter, so I would suggest that.

Gord Nelson: The expenses will be elevated in the first quarter and they will decline significantly off of that in future quarters.

Speaker Change: Okay. Thanks for that.

Gord Nelson: Okay, thanks Gord for that. And then the last one for me is just, are there any wins or takeaways that you can point to now that you've completed the rollout of the online mobile ordering and the upside that you see from the CPP and theater food service? Thank you. Yeah, so again, it's early on, and so the adoption is low, but what we're seeing is, you know, that will...

Gord Nelson: You're welcome Jeff.

Gord Nelson: Yes.

Gord Nelson: Are there any wednesday or takeaways that you can point to now that you've completed the rollout of the online.

Speaker Change: By ordering any upside.

Speaker Change: From on the CPM.

Gord Nelson: No.

Speaker Change: Thank you.

Gord Nelson: Yes, so again, it's early on and so the adoption is low but what we're seeing is that will increase over time and we are seeing.

Gord Nelson: Yeah, so again, it's early on, and so the adoption is low, but what we're seeing is, you know, that will increase over time. And we are seeing, you know, significant lifts on the transactions that are occurring to date. I don't want to give you a number right now because it is kind of early days and early adoption, but we're very, very pleased with the results, and as I've mentioned to you previously, we think this is a real opportunity, you know, to use data, to have personalized messaging, to lift sales at the concession stand, and a real opportunity for growth in CPP going forward.

Gord Nelson: Significant less on the transactions.

Gord Nelson: That are occurring to date.

Gord Nelson: I don't want to give you a number.

Gord Nelson: <unk> right now.

Gord Nelson: Does it is kind of early days and early adoption, but we're very very pleased with the results and as I've mentioned to you.

Gord Nelson: Previously as we think this is a real opportunity.

Gord Nelson: These data to personalize messaging to lift sales at the concession stand.

Gord Nelson: And a real opportunity for growth in CVP going forward.

Gord Nelson: Right.

Gord Nelson: Yeah.

Speaker Change: Thank you.

Operator: There are no questions registered at this time. So, as a reminder, if you would like to ask a question, it is star 1 on your telephone keypad. There are no questions registered at this time, so I would like to pass the call back to Ellis Jacob for any closing remarks.

Speaker Change: There are no questions registered at this time so as a reminder, if you would like to ask a question. It is star one on your telephone keypad.

Operator: There are no questions registered at this time, so I would like to pass the call back to Ellis Jacob for any closing remarks.

Ellis Jacob: Thank you very much and I would like to thank all of you for joining the call. This morning, and we look forward to a strong summer and look to speak with you in August for our second quarter 2024 results.

Ellis Jacob: Thank you very much, and I would like to thank all of you for joining the call this morning, and we look forward to a strong summer and look to speak with you in August for our second quarter 2024 results. Have a great day. Thanks again.

Ellis Jacob: Have a great day, thanks again.

Speaker Change: That concludes today's call. Thank you for your participation you may now disconnect your lines.

Operator: That concludes today's call. Thank you for your participation. You may now disconnect your line.