Q4 2024 Cineplex Inc Earnings Call
Abhishek Rupan Blake Imtext www.imtext.co.in
Thank you very much. Thank you.
Alex: Hello and welcome to the Cineplex Inc Q4 2024 Earnings Conference Call. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question once the presentation has finished, please press star followed by 1 on your telephone keypad.
Speaker Change: If you'd like to withdraw your question, you may press star followed by 2. I now hand it over to our host, Rianne Asmat, Vice President Investor Relations, Corporate Development, Financial Planning and Analysis. Please go ahead.
Speaker Change: Good morning everyone. I'd like to welcome you to Cineplex's fourth quarter 2024 earnings release conference call today, hosted by Ellis Jacob, President and Chief Executive Officer, and Gord Nelson, Chief Financial Officer.
Speaker Change: Before we begin, let me introduce myself. I'm Rehan Azmat, Vice President Investor Relations, Corp Development, and Financial Planning and Analysis at Cinefix.
Speaker Change: I'll 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 beliefs and assumptions.
Speaker Change: information currently available. Actual results may differ materially from those expressed in forward-looking statements.
Speaker Change: Information regarding factors that could cause results vary can be found in the company's most recently filed annual information form and management discussion and announcements.
Speaker Change: 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: Thank you, Rehan. Good morning and welcome to our Q4 2024 conference call. Before we get started, I wanted to share that our thoughts are with our friends and colleagues in Los Angeles as they start to rebuild their communities following the tremendous loss due to the recent wildfires.
Ellis Jacob: As we look back on 2024 and our fourth quarter, I want to highlight some accomplishments across our businesses.
Ellis Jacob: Starting with Exhibition, despite the box office having a slow start last year, it definitely closed on a high note. Overall, the 2024 film slate offered moviegoers a wide range of films to keep them coming back to the box office.
Ellis Jacob: with sci-fi animated family favorites, a Marvel Cinematic Universe R-rated action comedy, and a majestic film adaption of a successful Broadway musical.
Ellis Jacob: The first quarter started off with the much-anticipated and now Oscar-nominated June Part 2.
Ellis Jacob: The film was one of Cineplex's top five movies of the year and it was clear fans of the film wanted to enhance their movie-going experience with 64% of its box office at Cineplex generated from premium experiences.
Ellis Jacob: The summer kicked off with family films, starting with Inside Out 2 in June, which captivated audiences around the world, becoming the highest-grossing animated film of all time.
Ellis Jacob: Surpassing a billion dollars in box office revenues in 19 days, the fastest animated film to do so.
Ellis Jacob: The movie also had remarkable stink pop with eight consecutive weeks in the top five at the domestic box office
Ellis Jacob: Despicable Me 4 followed closely behind in July and became the second highest grossing film in the franchise.
Ellis Jacob: generating 360 million at the domestic box office and holding a spot in the top five titles of the domestic box office for seven consecutive weeks.
Ellis Jacob: The bus-worthy Deadpool vs. Wolverine rolled onto screens in late July, becoming the highest-grossing R-rated film of all time.
Ellis Jacob: both domestically and globally, surpassing a billion dollars in worldwide box office revenue and staying for an astonishing nine consecutive weeks in the top five domestic box office.
Ellis Jacob: Wicked reinforced the power of the cinematic experience, bringing audiences together to enjoy the magical musical on the big screen.
Ellis Jacob: Stage-loving fans and newcomers to the story made this the top-grossing film worldwide based on a Broadway musical.
Ellis Jacob: Moana 2, originally intended for a streaming release on Disney+, showed the unreplaceable power of the theatrical box office as in delivering record-breaking results. It achieved the largest global opening of all time for an animated film.
Ellis Jacob: These record-breaking titles not only brought audiences of all ages to the theatre, but also achieved strong multiples week over week, showing their power beyond the opening weekend.
Ellis Jacob: These are just some examples of the remarkable films that captured audiences this year, many in premium formats, helping us achieve an annual box per person record of $13.09 and a concession per person record of $9.47.
Thank you.
Ellis Jacob: Looking specifically at the fourth quarter, the winning trio of Gladiator 2, Wicked, and Moantu helped deliver a record-breaking box per person of $13.26 and an all-time fourth quarter concession per person record of $9.41.
Ellis Jacob: The key initiatives helping us achieve these record-breaking results include our premium offerings, leveraging our robust data, and the ongoing success of our international programming.
Ellis Jacob: Last year, we saw premium experiences capture almost 42% of total box office revenues for the year.
Ellis Jacob: In 2024, we added three new ScreenX auditoriums, one Ultra AVX screen, one new D-Box location, and four iMac screens.
Ellis Jacob: Nothing compares to watching a movie on the big screen with the best sound.
Ellis Jacob: The consumer demand for premium viewing options emphasizes the unique power of the cinematic experience. The consumer demand for premium viewing options emphasizes the unique power of the cinematic
Ellis Jacob: We attracted audiences to their favorite films this past year by leveraging our robust data. The use of data to drive incremental attendance and increased spend will continue to be a key differentiator for Cineplex's future growth.
Ellis Jacob: We are using data models, predictive analytics, and marketing automation platforms to drive attendance through personalized campaigns.
Ellis Jacob: In addition, we are leveraging the over 15 million ScenePlus members to drive new visits and target LAPS customers.
Ellis Jacob: Over one-third of our ScenePlus guests in Q4 were either first-time visitors or last customers who were coming back after a two-year or more absence.
Ellis Jacob: Leveraging the ScenePlus database and marketing channels will continue to be a strong acquisition opportunity.
Ellis Jacob: As a reminder, the Adjusted Evidel Contribution for each incremental guest is approximately $14.
Ellis Jacob: Also contributing to box office success this year in the quarter was the consistent strength of our international cinema.
Ellis Jacob: We have developed detailed phone seeker models that analyze global content to identify which international content will most likely resonate with Canadians in the right markets.
Ellis Jacob: Using these models helped us to break three Cineplex records this past year. Jack and Juliet 3 became the highest grossing Punjabi film in Cineplex history.
Ellis Jacob: Hello Love Again, the highest grossing Filipino language film for us, and The Last Dance, the highest grossing Cantonese language film in our history.
Ellis Jacob: We continue to be the destination of choice for international content amongst the diversified population across Canada.
Ellis Jacob: This is not only beneficial to our exhibition business, but a significant and unique opportunity for our media business, which we are leveraging to attract new clients and drive incremental media revenue.
Ellis Jacob: South Asian films left the international cinema box office in 2024, holding 9 of the top 10 international films at Cineplex.
Ellis Jacob: With the South Asian demographic being one of the fastest growing groups in Canada, we offer a unique advertising opportunity to transform audience engagement and create new opportunities for authentic brand connections.
Ellis Jacob: Paired with the strength of our international cinema, our first-party data can help advertisers reach South Asian moviegoers and extend cinema campaigns through digital channels.
Ellis Jacob: The ability to leverage both our extensive data and the strength of our international cinema will be a key opportunity for cinema media sales as we move forward.
Ellis Jacob: While the wide range of films brought guests into our theaters, we also had an incredibly busy fourth quarter, opening three new LBE locations across the country.
Ellis Jacob: The continued rollout of our Rec Room and Palladium locations plays an important role in delivering growth and shareholder value and strengthening our leading position as an entertainment destination for Canadians.
Ellis Jacob: The Rackroom Royal Mount opened in November, alongside a new five-screen premium cineplex theatre, making it our first LBE location in Quebec and becoming a one-stop destination for entertainment.
Ellis Jacob: It's located in the Royal Mount District, Montreal's premium shopping, dining and entertainment destination, set to become one of the leading retail developments in Canada.
Ellis Jacob: In December, the Rec Room Granville, a much-anticipated location on Granville Street in downtown Vancouver, opened featuring 45,000 square feet of gaming, attractions, and dining.
Ellis Jacob: It has become a top entertainment destination in downtown Vancouver and one of our top performing locations since opening.
Ellis Jacob: We're especially excited about our new mini-golf attraction area, The Palms, which is proving to be a huge draw for Millennials and corporate groups.
Ellis Jacob: Lastly, our fourth Palladium location opened in December, adjacent to a Cineplex Theatre at Fairview Mall in Toronto, attracting families from across the Greater Toronto Area.
Ellis Jacob: The box office strengthened as the year progressed and we saw our media business follow suit, achieving cinema media revenue per patron of $1.84.
which represents a 10% increase over 2023.
Ellis Jacob: As our recent Lumen study proved, cinema advertising stands out as the ultimate potential leader
Ellis Jacob: with 100% of audiences viewing ads on the big screen and an average of 80% active attention across all demographics and ad links.
Ellis Jacob: With proven attention scores 2 to 5 times higher than linear and connected TV, and up to 9 times higher than digital video channels, our cinema media business will continue to grow and capitalize on the unparalleled impact cinema advertising offers.
Ellis Jacob: We are one of the few movie companies that own our cinema media business.
Ellis Jacob: As a result of new digital out-of-home clients in 2024, including Cadillac, Fabio, and Pominar,
Ellis Jacob: Cineplex Digital Media achieved a 44.3% year-over-year revenue growth and a 70.2% Q4 revenue growth over prior year.
Ellis Jacob: CDM operates Canada's largest digital out-of-home shopping media network in public spaces such as malls and office towers.
Ellis Jacob: We believe the strength of our digital place-based media assets combined with our diversified channel offering make us a leader in the indoor digital signage industry and provides a platform for significant growth across North America.
Ellis Jacob: We attribute part of our strength in Q4 to the Canadian Out-of-Home Marketing and Measurement Bureau welcoming Cineplex Media as a new member.
Ellis Jacob: Together with Cineplex Digital Media, Cineplex Media became part of its inaugural ball measurement methodology.
Ellis Jacob: With this new accreditation and measurement approach, we ensure digital out-of-home clients receive the most value and transparency for their impressions.
Ellis Jacob: This further solidifies our leadership in the digital out-of-home advertising space as we continue to win new business and roll out new campaigns.
Ellis Jacob: Before I conclude, I'd like to provide a brief update on our appeal of the Competition Tribunal's decision regarding our online booking fee.
Ellis Jacob: On October 23rd, we filed a Notice of Appeal with the Federal Court of Appeal to overturn the Competition Tribunal's decision.
Ellis Jacob: With the consent of the Competition Bureau, the Federal Court of Appeal granted a stay of the Competition Tribunal's judgment pending a decision on Sinoplex's appeal.
Ellis Jacob: While we disagree with the Tribunal's decision, we have modified our website. We remain confident that our fee was always presented in a clear and prominent manner and fully complied with the spirit and letter of the law.
Ellis Jacob: As a reminder, this ruling has no impact on our ability to charge the online booking fee, and we will continue to offer the optional value-added convenience of advanced online seat selection to our guests.
Ellis Jacob: As we close 2024, I'm incredibly proud of what we accomplished last year.
Ellis Jacob: bring our media business and continue our efforts to stimulate the business.
and Sarah Walter Brooks.
Ellis Jacob: As we move into 2025, there are a few standout movies, including Captain America, Brave New World, and Paddington in Peru, which open on Friday, and Snow White releasing in March.
Ellis Jacob: We also have two international titles, Niza 2 in Mandarin, and Chahavo in Hindi, launching this week.
Ellis Jacob: Rolling into Q2, we have established IP like Mission Impossible 8, Lilo & Stitch, Karate Kid, and the live action How to Train Your Dragon.
in the back house, Jurassic World Rebirth.
Ellis Jacob: Superman Legacy, The Fantastic Four First Steps, Tron Heirs, Wicked Part 2, Zootopia 2, and Avatar Fire and Ash are set to draw an audience to experience these films on the big screen.
Ellis Jacob: Before I wrap up, I want to reinforce that we are optimistic the momentum of our business will continue into 2025, which is shaping up to be a strong year for the film slate.
Ellis Jacob: Our diverse media portfolio will drive unique value to advertisers to unparalleled consumer attention, capitalizing on the robust film slate, including our international titles.
Ellis Jacob: The recent growth of our LBE footprint across Canada further establishes as a one-stop destination for entertainment, offering guests best-in-class gaming, attractions, and dining, driving both revenue and bottom-line growth.
Ellis Jacob: As we look forward, we will continue to differentiate ourselves within the market and drive industry-leading results.
Ellis Jacob: We are confident we will sustain this momentum and our position as one of North America's leading entertainment and media companies. With that, I will turn things over to our CFO, Gord Nelson.
Gord Nelson: I thank Ellis. I am pleased to present a condensed summary of the fourth quarter and full year 2024 results for Cineplex, Inc. For further reference or financial statements and information, please follow us on social media.
are also available on our investor relations website at Cineplex.com
Gord Nelson: Our MD&A and earnings press release includes a complete narrative on the operational results, so I will focus on highlighting select items in addition to providing commentary on liquidity, capital allocation priorities, and our outlook.
Gord Nelson: For my comments on operations, all amounts fall in will be from continuing operations unless otherwise stated.
Gord Nelson: As Alice mentioned, we were pleased to see the continued return of the supply of film content in the fourth quarter.
Gord Nelson: As a result of the 60.1% attendance increase, our total revenue increased 15.1% to $362.7 million and our adjusted EBITDA increased 66.6% to $40.3 million.
Gord Nelson: Our consolidated EBITL marks an increase to 11.1% from 7.7% in the prior year.
Let's take a closer look at our segments.
Gord Nelson: In the film and entertainment content segment, attendance increased 1.5 million, or 16.1%, to approximately 11.1 million.
Gord Nelson: Total revenue increased 15.4% and segment adjusted EBITDA increased 259% to $26.6 million, primarily as a result of the attendance increase.
Gord Nelson: We achieved record Q4 VPP and CPP results, which was quite an achievement given the premium ticket price and significant food and merchandise spending provided by Taylor Swift Vans in Q4 2023.
Gord Nelson: We continue to focus on our portfolio and our costs. Although we added one new theatre to our portfolio, our theatre cash rent paid payable was down.
are here due to theater closures and renegotiated rent deals.
Gord Nelson: compared to the pre-pandemic Q4 2019 period, our theater portfolio has decreased by nine locations and our theater cash rent payable has decreased by 6.8% as we continue to focus on strategies to reduce our fixed rent costs.
Overall, the segment margin increased 9.6%.
increased to 9.6% from 3.1% in the prior year quarter.
Gord Nelson: In the fourth quarter, media segment total revenue increased 27.1% to $51.5 million, and segment adjusted EBITDA increase by $2.5 million to $29.4 million.
Gord Nelson: As compared to the prior year, cinema media revenue increased 5.7% to $30 million, primarily due to the attendance increase.
Gord Nelson: Our digital place-based media business had strong results with total revenues up to 70.2 percent.
to $21.8 million.
Project revenues were $3.3 million, or 112.6%.
Gord Nelson: And other revenue, which includes mall advertising revenue, was up $5.7 million, or 57.6%, primarily as a result of the addition of Cadillac Fairview beginning in 2024.
Gord Nelson: For the quarter, digital place-based media revenue increased to 42% of our overall media revenues.
up from 31% in 2023.
Gord Nelson: As a result of this makeshift, although segment EBIDTA increased, the overall segment margin decreased to 57.1% from 66.3% in the prior year.
Gord Nelson: And lastly, in our LBE segment, segment revenues were down slightly to $33.6 million from $34 million in the prior year. We opened three locations during the quarter, which resulted in pre-opening and other additional costs during the quarter.
Gord Nelson: Store-level adjusted EBITDA margins were 23.6% versus 28.1% in the prior year, primarily as a result of the impacts of minimum wage increases, contractual occupancy cost increases.
Gord Nelson: and select nominal expense recoveries reflected in the fourth quarter of 2023.
Gord Nelson: At the segment level, segment EBITDA was negatively impacted by pre-opening costs of $2.8 million.
Gord Nelson: At year end, we had $84 million cash and no drawings under the Covenant White Credit Facility, which has a capacity of $100 million.
Gord Nelson: With the comprehensive refinancing plan, we have meaningfully pushed out near-term maturities and removed restrictions related to covenant testing, and no testing was required under the credit facility at year end.
Gord Nelson: As Ellis mentioned, with respect to the Competition Bureau matter, we filed our Notice of Appeal on October 23rd and have been granted a stay regarding the payment of the Administrative Monetary Penalty pending the Federal Court of Appeals decision.
Gord Nelson: As we have mentioned previously, our capital allocation priorities include maintenance capital expenditures, continuing to strengthen the balance sheet to achieve our target leverage ratios.
Gord Nelson: investing in growth opportunities and providing shareholder returns in the form of share buybacks and or dividends.
Gord Nelson: We are pleased to report that under our NCIB program, Simplex has purchased a cumulative of 620,275 common shares at an average share price of $10.48, resulting in a cash flow of approximately $6.6 million.
Gord Nelson: This program reinforces our confidence in our business plan and our continued commitment to creating shareholder value.
with respect to CAPEX.
are net cashing effects for 2024 with 66.4 million dollars.
which is below our initial guidance of approximation.
$80 Million
with four locations opening in late Q4.
Gord Nelson: A portion of the CapEx related to these bills will fall into 2025, and as such we expect our net CapEx for 2025 to be approximately $165,000.
Gord Nelson: I would like to take a few moments to discuss the potential of new tariffs.
Gord Nelson: As a reminder, our business is primarily based on providing compelling entertainment experiences to our guests in Canada and not transferring physical goods across borders.
Gord Nelson: With respect to the threat of any U.S. trade tariffs, approximately 99% of our revenue is generated in Canada through our operations and facilities in Canada.
and with respect to any potential reciprocal Canadian trade tariffs.
Gord Nelson: Film rent, employee costs, and occupancy costs, all intangible items and not caught by any current tariff discussions, represent 70% of overall costs.
Gord Nelson: The next largest cost category is food costs, which represents approximately 8% of our overall cost.
Gord Nelson: We are continuing to evaluate any potential impacts and additional sourcing opportunities for any items potentially caught by tariffs.
Gord Nelson: and do not believe that the currently proposed tariffs will have a material impact on our business.
Gord Nelson: Now I'd like to take a few moments to remind our investors of the work we see going forward.
Gord Nelson: With no near-term cash taxes due to the NOLs, in this scenario we can generate an excess of 100 million dollars of free cash flow and use this free cash flow to invest, de-lever, and provide additional shareholder returns.
Gord Nelson: When the product 12 returned in the back half of 2024, we achieved 71% of pre-pandemic attendance.
Gord Nelson: And if one excluded October, which is impacted by the performance of Joker 2.
We achieved 74% of pre-pandemic attendance.
So we believe we are well on the way.
Gord Nelson: In summary, we believe there is a lot to be excited about. With our long history of disciplined operations and capital management, we remain highly focused on creating long-term share for value.
Gord Nelson: And with that, I would like to turn things over to the conference operator for questions.
Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star 5x1 on your telephone keypad. If you would like to remove your question, you may press star 5x2. Please ensure you are unmuted locally when asking your question.
Speaker Change: Our first question for today comes from Derek Lessard of TD Cohen. Your line is now open, please go ahead.
Speaker Change: Hey, good morning Ellis and Gord. This is Cheryl calling for Derek who is away at the moment. The first question is on the box office outlook. I'm just curious if you could talk about your outlook on the box office for 2025 and perhaps give us a breakdown by quarter and also anything you've heard in terms of the production activities, perhaps any impact from the recent fires in Los Angeles.
Yeah
Speaker Change: Good question and bottom line is for 2025 we are looking at much stronger film slate as we move forward
Speaker Change: On this coming weekend, Friday, we are opening Captain America, which I expect to do very well, and Paddington in Peru, which is already opened overseas and is doing quite well. So that will get the month of February going in a good direction.
Speaker Change: And then in March, we've got Disney's Snow White, we've got Warner Brothers' Mickey 17. And April, there's Minecraft. And then as we go through, there's a significant number of other movies.
Speaker Change: Superman which is going to be good, F1 there's you know lots of titles coming through so we feel pretty strong about the balance of 2025 and I can't forget Mission Impossible one of my favorite movies
And then towards the end of the year, you've got...
Speaker Change: you know, Wicked 2, you've got, you know, Avatar, Five Nights at Freddy's, there's a lot of films for the balance of the year. And what's good is we are not seeing the movement in the film scape like we did in the past. So to me, that's, you know, going to be very positive. And from a quarterly perspective, I think, you know, quarters two and forward should get
much stronger as we get to the balance of 2025.
Hope that helped you.
Speaker Change: Yeah, awesome. Thanks so much for the color. And I guess just one more before I recue. So very strong results, obviously, on the digital place-based media. So I'm curious, is the Cadillac Fairview contract still ramping up, or should we expect more moderate growth going forward? And if you see any room or opportunity for more contract with like this in Canada. Thank you.
Speaker Change: We're very excited about the addition of Cadillac Fairview to our network. Obviously in our discussions in previous quarters we talked about, you know, the ramp-up of that new business throughout the first half of the year. So as you take over
Speaker Change: you know a new network typically the business ramps up so we're excited to see where we ended the year in that network and so you would expect growth over 2024 into 2025 just because the
Here
Speaker Change: included a ramp up here. We also have common art which we added at the midpoint.
Speaker Change: in Q2 of 2024, so you'll see the incremental full year impact of that. There are some other opportunities within Canada that we could look to add to our mall network, but obviously Cadillac Fairview was a huge win for us.
Thank you very much.
Peace.
Speaker Change: Thank you. Our next question comes from Adam Schein of National Bank Financial. The line is now open, please go ahead.
Adam Schein: Hi, good morning. So, you've alluded to in the reporting that, you know, you've rolled out fully now across the circuit the online concession booking. Can you talk about, you know, some of the initial experience in terms of any upselling as well as any efficiencies from a margin perspective in that effort?
Gord Nelson: Sure, Adam, it's Gord here. So, you know, as we look at the back half of the year, you know, again,
Gord Nelson: Vincent, the adoption is typically low as you roll out new platforms, you know, an average can only go to the...
Peter
Speaker Change: five times a year so take a kind of traction we are seeing incremental purchasing off of the app which is expected but again it's early days and it's low adoption at this point.
Speaker Change: And Adam, it's a convenience for our guests. It's very important, an overall attribute of what Cineplex can provide.
Gord Nelson: Thanks for that. The Cineplex store, a nominal sale, but curious why even do that sale? And then separately, you know, any other non-core divestitures possibly contemplated this year? And Gord, I'm sorry, I did not hear the CAPEX guidance for 25. Maybe you can just repeat it. Thank you.
Sure, so CapEx is $60 to $65 million.
Speaker Change: And again, that includes carryover of the locations that we've completed in the fourth quarter of 2020.
Go to Beadaholique.com for all of your beading supplies needs!
And then on the store, so again, you know, the
Speaker Change: The business world has evolved over the past number of years. We, you know, we provide as a service to our customers, worked very well during the pandemic.
Speaker Change: when people couldn't come out and see movies but with you know the expansion of kind of in-home options for content and the fact that we had
Speaker Change: that was interested in acquiring the business from us, because we thought at this point in time, it made sense to entertain that option and sell the business. So again, the store was built in 2012.
Speaker Change: consumer habits have changed. With respect to your other question about you know, other assets, you know this time we're still looking to kind build all of our existing businesses and we're excited about where they're going. They never say never if someone came in and you know they made a
Speaker Change: an offer that we thought was very creative and we would entertain it.
Thanks a lot.
Speaker Change: Thank you. Our next question comes from Maya Yagi of Scotiabank. The line is now open. Please go ahead.
Maya Yagi: Great, thank you for taking my question. Maybe I'll start just with the closures of one of your competitors in Montreal. How should we think about attendance impact and maybe help that we see in Q1 since they closed, I think, yesterday?
Maya Yagi: So, any idea of what kind of attendance this can bring to your Montreal?
Maya Yagi: the errors in terms of upside and on the media side
Maya Yagi: Can you maybe just, you know, give us a sense of why your CMPP numbers went down in Q4 versus last year, even though
Maya Yagi: general revenues increased. Is that the repricing happening in terms of how much you charge or just a volume?
issue. Thank you.
Speaker Change: I'll take the first question and then Gord will respond to the second. As it relates to the theatres in Montreal, you know that we opened a new cinema, Royal Mount, and with five screens we have seen some very strong results, and that should continue to improve because of certain of the closures.
Speaker Change: And, you know, it's really about where the theaters are located and what the impact is going to be as far as, you know, our locations.
We have...
Speaker Change: some benefits and that will continue to get better as we move forward because the theaters were just closed a couple of days ago so we expect to see continued improvement in the overall attendance in certain of the theaters in Quebec.
Thank you.
Do you have a sense of what is the...
Speaker Change: Sorry, just to follow up on this one. Do you have a sense of what is your market share in the Montreal area?
in terms of the TIA rep tendons.
We have about...
I think this is for the 60% market share.
Speaker Change: 60% to above 70% market share and the main other player in the marketplace.
who's, you know, some independence and then, uh...
Okay, thank you.
Speaker Change: And sorry, Mayor, on the question on the media and the cinema media for patient statistics going down in the fourth quarter. You know, you really need to look at the top films in the quarter. Both of the top films were more oriented to kids audiences, and so advertisers are more focused on
you know, connecting with adults.
Speaker Change: And we had Taylor Swift, obviously, last year, which is what advertisers want to be connected with.
Speaker Change: So it's more the type of product that was playing in the quarter. We also did see just towards the end, you know, into the fourth quarter, you know, a little bit of, you know, as advertisers look at consumer confidence, we came in a little bit and there's a little bit of a pullback on spend. We also...
Speaker Change: You know a big category it's been for us is Pharmaceuticals and you know, they typically do not associate with kids oriented products. They can't
Speaker Change: Yes, I agree. So that's a good thing. So I just wanted to ask you in terms of capsule allocation,
Speaker Change: Could that be a 2025 event, or at this point you're mostly focused on the buyback? And on the buyback, I noticed you were quite...
Speaker Change: active in October and November. You dropped off a little bit in December. I have not seen anything in January in your filings yet. Can you just help us understand a little bit your
Speaker Change: your buyback strategy, how much you've allocated for the buyback on a typical year basis in terms of the amount of dollars you want to purchase. Anything quantifiable would be helpful.
Speaker Change: Yeah, so there's a lot in that question, Mark. So, you know, in terms of the first part of your question was related to dividends, you know, I think we've been pretty clear that you want to see us on a sort of retroactive basis being at two and a half to three times in terms of our overall leverage ratio. So, you know, that would be the precursor.
Speaker Change: to see that happening. On share buybacks, we've been kind of clear in our communication to say that we're going to be opportunistic and balancing, you know, our investment.
Speaker Change: to generate kind of growth capex. So, you know, you wait at the timelines in the fourth quarter, you know, we open four new locations and we'll have a little bit of that cost going through. So we're just at this point in time balancing that investment in growth as well as, you know, the share buybacks which happened.
Speaker Change: You know, I would call it like Q3 to date. So again, we'll look for new opportunities, look forward to how we allocate capital to share buybacks and growth.
Speaker Change: Thank you. As a reminder if you'd like to ask a question please press star, solidify 1 and press the thank you pad.
Speaker Change: Our next question comes from Drew McReynolds of RBC. The line is now open, please go ahead.
Drew Mcreynolds: Yeah, thanks very much. Good morning. Just to follow up on Adam's question, Gord, on the Cineplex store, just, is there any real, any material financial impact that we should kind of consider as we model 2025?
No.
Thank you.
No, I'm going to be myself.
Drew Mcreynolds: I mean look at, sorry guys, as you see, you will see from the Ebanel level, you know, I'm all...
Drew Mcreynolds: you know contribution from any way on from another revenue perspective and we'll probably flag it as we go along but you'll see you know a small decrease in other revenue category.
both cleats in the magnitude of minus.
Speaker Change: Yes, sorry Gord, you're cutting out on my end here. I think you were quantifying a little bit of that.
Speaker Change: Yeah, so I said at the EBIDEL level, you know, relatively negligible. At the other revenue level, so right now the store revenue would be in other, sorry, the store revenue would be in other revenue, roughly, you know, around $10 million on an annualized basis.
Thank you.
Speaker Change: Got it, got it. Okay, that's helpful. And then a couple of items...
Speaker Change: just for 2025 just to help us kind of think through to an earlier question on Cineplex digital media and how
Speaker Change: The two more recent contracts kind of flow through here year-over-year in 2025
Speaker Change: At a high level in 2024, you did $56 million in Cineplex Digital Media. Can you give us a sense of just what kind of year-over-year growth, even if it's a broad range, we could see for 2025? And then secondly, on the cost side,
Speaker Change: There's obviously minimum wage impacts that flow through in 2024. What kind of minimum wage and residual impacts do you expect will be still hitting Cineplex in 2025?
Speaker Change: Yeah, so thank you on both of those questions. And so first of all, you know, to date, obviously, you've seen tremendous growth in the digital media network on a year-over-year basis with the addition of those two networks. As I mentioned, we...
Ellis Jacob: We were really pleased, and as Ellis mentioned in his remarks, to get certifications of all network under the CONE.
Ellis Jacob: certification. That will provide advertisers with more comfort on the metrics that they're getting and advertise it in our mall network. So you should expect to see continued growth into 2025.
Ellis Jacob: I will say you're not going to see the same level of growth that we achieved in 2024 given that we're not adding new networks to date.
Ellis Jacob: And on your second question, which is on minimum wages, look it, we've seen, we would hope and we encourage provinces across the country to increase minimum wages in line with CPI growth.
Ellis Jacob: That is where the business community would like to see things go. We do know that there's early announcements in one province, Nova Scotia, to go above that amount. But we would expect, you know,
Ellis Jacob: and hope that minimum wage increases across the board would be sort of potentially in that 4% aggregate range.
Ellis Jacob: But on that, we are using our technology to help us as it relates to the weight of the
and the employees that are working at our location.
Yeah, got it. Yeah, thanks Ellis. Okay, last one.
Speaker Change: that to get back to that level takes a little bit of ramp up just given some dilution from some of the locations you opened in Q4 or just how should we think about that one?
Speaker Change: Yeah, look at our ultimate goal to be the 25% EBITDA level margin, you know, when we look at some of the metrics that we've described previously, you know, on an annualized basis.
Speaker Change: We're looking to do about $10 million dollars average on box.
at a 25% EBITDA margin for 2024.
We're at about 9.8 million dollars so slightly below that
Um, you know...
But we have
Speaker Change: We had invested fairly heavily in virtual reality as an attraction.
Speaker Change: and most of our LVE boxes, we're transitioning out into new attractions that will drive increased spending within the block. So, yeah, we're comfortable to get back to the levels that we had previously described.
Okay, thanks. Thanks very much.
Thank you.
Thank you.
Speaker Change: Thank you. Our next question comes from Aravinda Galapathich from Canaccord Genuity. Your line is now open, please go ahead.
Aravinda Galapathich: Good morning. Thanks for taking my questions. Just on the CPP and BPP numbers you had alluded to, sort of some price action to go with inflationary conditions. Maybe just, Gord, you can talk to sort of any kind of sensitivity you've sensed there and
Speaker Change: your inclination to perhaps continue to use price adjustment to drive forward those metrics? I'll maybe stop there.
Speaker Change: Sure, so, you know, in 2024, when you look at the year-over-year comparisons,
Speaker Change: You know, pricing increases, let's just call them on that, about 5%, so 5% for ticket prices, 5% for concession prices.
But if you recall, we were coming out of...
a higher evolutionary period through 2023 and 2024.
Speaker Change: We, again, the primary driver for attendance is really only a film product. We like to say that we're a low-cost form of at-home entertainment. We do know that customers want value, and we look for value through other means to our customers, which includes pricing and selective discounting. So, you know, going forward, we will see, you know, the incremental impact of some of those pricing changes that have been put in place in late 2024.
Speaker Change: from a box office perspective in the mid-point of 2024 from a...
Speaker Change: And on the BBC which is the box office, it's really the premium offerings that also make a difference in the overall box per person because
Speaker Change: We have 41% of our patrons come through and see movies in these premium offerings. And some of the premiums, you know, have higher pricing compared to others, but that helps with the overall box per person.
Speaker Change: and concessions. We continue to, you know, increase the basket size and also the benefits of the alcohol that we've had over the last number of years.
Speaker Change: have that discussion, but we're seeing the return of big franchises like the Avengers and so forth. Maybe Ellis, very generally, you can share conversations you've had in the industry about that. Anything you can share on that front would be helpful.
Speaker Change: Yes, and most of our studios are basically looking at 2026 as being a normal year as we look forward because we've gone through, we went through COVID, we went through the strikes and now, you know, as things move forward.
months that they've been allotted for.
Speaker Change: And you also have both, you know, Amazon very interested and Apple also continuing.
Speaker Change: And I just got a note about the movie F1 that we saw in Los Angeles and said it was extremely strong. So those are the kinds of extra product that we will look to do and do extremely well with.
Okay, awesome. Thank you.
I'll pass the line.
Speaker Change: Thank you. Our next question is a follow-up from Derek Blassard of TD Cohen. The line is now open, please go ahead.
For more information, visit www.FEMA.gov
Speaker Change: Hi, thank you Allison, Gord. Just a couple of follow-ups. So, first on the LBE revenue, in the MD&A you've noted a decline in media and particular events. So, could you provide some more color there? Is that driven by reduced corporate spending or what are you seeing in terms of the non-corporate consumers?
Speaker Change: So we're about 22% in Q4 coming from groups and events versus about 20% in the prior year. So the corporate events are doing well. If we saw anything in the quarter
You know it was perhaps
Speaker Change: occurring, there's two impacts in the quarter I would maybe potentially call out. One was, so in the month of October
Speaker Change: So we did not get as much in-venue traffic as we typically would in October. November was up.
Speaker Change: And then in December, in that holiday period, so those two weeks, and as I mentioned groups and events, so corporate events was up, but the walk-in traffic went down a little bit in those two weeks.
Speaker Change: and that could be a early sign of where consumer confidence was in, but you know nothing that we expect to see sort of on a go-forward basis. Those are just some of the nuances that we saw recorded.
Speaker Change: Okay, thank you so much for that color. And then just one more from me. In terms of your theater occupancy, I think the costs are quite low at $16 million compared to Q1 to Q3 at around $18 to $19 million. Is this even or is that somewhat tied to the rent renegotiation that you mentioned earlier in your prepared remarks?
What would be a reasonable level to assume going forward?
Yeah, so typically on those
Speaker Change: You know, we, from time to time, we'll get recoveries with respect to property tax appeals. So, it's...
Speaker Change: I would say the Q4 amount is low relative to where you should expect things to go on a go-forward basis. And just so everyone knows on the call,
Speaker Change: you know whatever 16 the least costs are not recorded as part on the income statement.
It's just what we call common area maintenance.
Thank you.
Speaker Change: So, those are the items that appear in the $17 million number that Cheryl has listed.
Speaker Change: Sorry Gord, I think you were cutting out at the end, so did you say around 17 millions per quarter or was that a different number?
Speaker Change: Yeah, so sorry, the number that you described, so the roughly 17 million dollars per quarter represents the common area maintenance, taxes, and insurance related to our buildings.
Speaker Change: So when you see an amount below that in a quarter, it's typically that there's been a recovery, which is more of a one-time recovery.
Great, thank you very much.
Speaker Change: Thank you. At this time we currently have no further questions so I'll hand back to Alice Jacob, President and CEO, for any further remarks.
Alice Jacob: Thank you all for joining us this morning. We're excited about the outlook for 2025 and beyond. We look forward to sharing our first quarter results in May 2025. Have a wonderful day and enjoy the movie.
For more information, visit www.FEMA.gov
Alice Jacob: Thank you all for joining today's call. You may now disconnect your lines.