Q2 2025 Cineplex Inc Earnings Call
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Good morning, everyone and thank you for joining us to discuss <unk> second quarter 2025 results.
I'm <unk>, Vice President Investor Relations corporate development and financial planning and analysis at Cineplex. Joining me today are Ellis, Jacob our President and Chief Executive Officer, and Gordon Nelson, Our Chief Financial Officer.
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's beliefs and assumptions regarding the information currently available.
<unk> results may differ materially from those expressed in forward looking statements information regarding factors that could cause results to vary can be found in the company's most recently filed annual information form and management's discussion and analysis.
Following today's remarks, we will close the call with our customary question and answer period.
I'll now turn the call over to Ellis Jacob.
Thank you Ram and good morning, everyone I am pleased to share with you today, our second quarter results with 2025.
Following a soft first quarter, we saw strong and steady rebound in quarter two.
The first time since 2019, we delivered box office revenues exceeding $15 million in each month of the second quarter and in the month of July. This is the first time since 2019, we've had four consecutive months of box office revenues exceeding.
$50 million, which is an encouraging sign of the sustained momentum in theatrical exhibition.
This performance was driven by consistent supply of high performing diverse titles with strong consumer demand for premium experiences.
Q2 box office revenue reached $158 5 million up an incredible 38% from the prior year, driven mainly by attendance, which grew by nearly 33% to $11 6 million guests.
We achieved an all time quarterly record for both box office per patron at $13 68.
Concession per patron at $10 in <unk>.
This is the first time, we delivered a CPP of over $10 in any quarter as a result of increased trips to concession large basket size and strategic pricing initiatives.
The top five films in queue to showcase the breadth of content driving our success.
<unk> grabbed the movie delivered the biggest opening of the year and the largest ever for a video game adaptations.
Mission impossible. The final reckoning achieved a franchise best opening domestically and the performance over indexed in Canada.
Nila and stitch and how to train your Dragon both live action adaptation of family friendly title stepped into nostalgia and delivered strong sustained performance.
<unk> the movie marked the biggest global opening for an Apple original with nearly 77% of its opening weekend box office coming from premium formats.
Premium experiences continue to be a popular choice with cinema guests.
In Q2 46, 2% of our box office came from premium formats up from 41, 4% in the prior year.
This reflects the growing appetite for immersive high quality theatrical experiences.
Whether it's ultra AVX IMAX VIP cinema screen X.
We are also seeing encouraging signs of increased moviegoing frequency, particularly among authentic club members.
Club is a great way to save where members receive a monthly movie ticket. They can use upgrade our rollover.
<unk> club members also receive a discount on concessions and exclusive offers and events.
The club has now surpassed 200000 members a major milestone for the program.
It had a very strong first half of 2025 growing by 10, 3% year to date.
In Q2 over 20% of new members opted for the annual plan, which is helping to reduce churn and drive more consistent visitation.
Cinema Club members continued to drive strong engagement visiting more frequently upgrading to premium formats and purchasing more concessions.
As we continue to scale, both the cynical advancing plus programs, our ability to understand and effectively target loyal guests through personalized marketing initiatives presents a meaningful opportunity to deepen engagement and drive incremental revenue across our ecosystem.
Turning to our media business, despite a soft advertising market a cinema media revenue grew 4% year over year. This growth was driven by strong short term performance and our ability to deliver a premium audiences in a high attention environment.
We remain one of the few exhibitors globally that own that cinema media business, an important strategic advantage.
Cineplex digital media also had a standout quarter project revenue grow grew 18, 2% over the prior year due to large scale deployments with Suncor and we will continue to see growth in hardware deployment.
In May we signed a 10 year agreement with the North Carolina Education lottery to deploy digital signage across more than 1500 retail locations and claim centers.
This marks a significant expansion into the U S and reinforces CDM leadership in data driven end to end digital signage solutions.
As we look ahead, we believe our media business with the unique combination of first party data premium inventory and national scale, continuing to offer advertisers a commit a compelling platform to reach and engage consumers.
With multiple touch points from the big screen to digital out of home assets have the ability to drive measurable impact and brand affinity in an increasingly fragmented media landscape.
Our location based entertainment business continues to be an important part of our entertainment offering welcoming millions of guests annually through our innovative venues that deliver a state of VR gaming dining options and live entertainment across Canada.
In Q2, our LTE revenue grew 13% year over year to $33 2 million with adjusted store level EBITDA nearly 22% the increase in revenue during the second quarter is primarily due to three additional locations compared to the prior year.
Well Q2 is historically the slowest quarter for LTE. These destinations continue to resonate with guests looking for a one stop entertainment and dining experience.
As we work towards solidifying our position as the entertainment destination choice for Canadians.
Our ability to offer a variety of experiences and food and beverage options under one roof continues to resonate strongly with our guests.
Before I close I'd like to provide a brief update on our appeal of the competition tribunal decisions regarding our online booking fee.
October 23, 2020 for Cineplex filed its notice of appeal with the Federal Court of appeal and with the competition Bureau consent was granted a stay regarding payment of the competition tribunal administrative monetary penalty bedroom pending the federal court of appeals decision or.
<unk> is now scheduled to be heard on October eight of this year.
As we look to the second half of the year, we are energized by the momentum we are seeing across our business. The summer movie season extended into the third quarter, starting in July with Jurassic World Rebirth, Superman and fantastic full first steps on the heels of these iconic superbly.
The rest of the quarter brings a wide range of genres, starting with family favorite the bad guys to weapons three three a Friday and Supernational.
Supernational borrowed the conjuring loss rates.
Further ahead in the later part of the year, we will see a powerful slate of films, including trauma areas. The return of Blender in alfalfa and Wicked. So good zootopia to five nights at Freddy's too the Spongebob movie search with square pants, and the highly anticipated avatar fire.
Speaker #1: As we work towards solidifying our position as the entertainment destination choice for Canadians, our ability to offer a variety of experiences and food and beverage options under one roof continues to resonate strongly with our guests.
Ellis Jacob: As we work towards solidifying our position as the entertainment destination choice for Canadians, our ability to offer a variety of experiences and food and beverage options under one roof continues to resonate strongly with our guests. Before I close, I would like to provide a brief update on our appeal of the Competition Tribunal's decision regarding our online booking fee. On October 23, 2024, Cineplex filed its Notice of Appeal with the Federal Court of Appeal and, with the Competition Bureau's consent, was granted a stay regarding payment of the Competition Tribunal's administrative monetary penalty pending the Federal Court of Appeal's decision. Our appeal is now scheduled to be heard on October 8 of this year. As we look to the second half of the year, we are energized by the momentum we are seeing across our business.
Nash these titles are expected to drive significant traffic and engagement reinforcing the enduring appeal of the theatrical experience.
Our market position remains strong supported by a diversified business model and our commitment to premium entertainment experiences at our venues.
Speaker #1: Before I close, I'd like to provide a brief update on our feel of the Competition Tribunal's decision regarding our online booking fee. On October 23, 2024, Cineplex filed its notice of appeal with the Federal Court of Appeal and, with the Competition Bureau's consent, was granted a stay regarding payment of the Competition Tribunal's administrative monetary penalty pending the Federal Court of Appeal's decision.
<unk> seen in Q2 combined with our strategic initiatives to win with our guests gives us confidence in our ability to deliver results as we move through the remainder of 2025.
Finally, as many of you know I announced my plans to retire at the end of 2026 and remains fully committed to leading cineplex through this transition and I am incredibly proud of what we've both together.
Speaker #1: Our appeal is now scheduled to be heard on October the 8th of this year. As we look to the second half of the year, we are energized by the momentum we are seeing across our business.
With that I will turn things over to Gordon.
Thank you Alex I am pleased to present, a condensed summary of the second quarter results for Cineplex, Inc.
Speaker #1: The summer movie season extended into the third quarter, starting in July with Jurassic World Rebirth, Superman, and Fantastic Four first steps. On the heels of these iconic superheroes, the rest of the quarter brings a wide range of genres, starting with family favorite The Bad Guys 2, Weapons, Freaky or Friday, and the supernational horror The Conjuring lasts right.
Ellis Jacob: The summer movie season extended into the third quarter, starting in July with Jurassic World Rebirth, Superman, and Fantastic Four: First Step. On the heels of these iconic superheroes, the rest of the quarter brings a wide range of genres, starting with family favorite The Bad Guys 2, Weapons, Precary Friday, and the supernational horror The Conjuring: Last Rite. Further ahead, in the later part of the year, we will see a powerful slate of films, including Tron: Eras, The Return of Glinda, and Elphaba in Wicked: For Good, Zootopia 2, Five Nights at Freddy's 2, The SpongeBob Movie: Search for SquarePants, and the highly anticipated Avatar: Fire and Ash. These titles are expected to drive significant traffic and engagement, reinforcing the enduring appeal of the theatrical experience. Our market position remains strong, supported by a diversified business model and a commitment to premium entertainment experiences at our venues.
For further reference our financial statements and MD&A have been filed on SEDAR, plus and are available on our Investor Relations website at Cineplex Dot com.
Our MD&A and earnings press release include a complete narrative on the operational results. So I'll focus on select highlights as well as commentary on liquidity capital allocation priorities and our outlook.
All elements referenced are from continuing operations unless otherwise stated.
Speaker #1: Further ahead in the later part of the year, we'll see a powerful slate of films, including Tron: Eris, The Return of Glinda, and Elphaba in Wicked for good, Zootopia 2, Five Nights at Freddy's 2, The SpongeBob Movie: Search for SquarePants, and the highly anticipated Avatar: Fire and Ash.
As Alex mentioned, we were pleased to see a strong rebound in diverse film content during the second quarter. Our slate helped drive a 32, 7% increase in attendance to $11 6 million guests a significant lift over the same period last year.
Total revenue for the quarter was $361 $8 million, representing a 35% increase over the prior year.
Speaker #1: These titles are expected to drive significant traffic and engagement, reinforcing the enduring appeal of the theatrical experience. Our market position remains strong, supported by a diversified business model and a commitment to premium entertainment experiences at our venues.
Adjusted EBITDA was $33 $4 million compared to just $9 million in Q2 2024.
It is important to note that this Q2 adjusted EBITDA amount includes a one time $2 $9 million restructuring charge, which I will discuss later.
Speaker #1: The success we've seen in Q2, combined with our strategic initiatives to win with our guests, gives us confidence in our ability to deliver results as we move through the remainder of 2025.
Ellis Jacob: The success we have seen in Q2, combined with our strategic initiative to win with our guests, gives us confidence in our ability to deliver results as we move through the remainder of 2025. Finally, as many of you know, I announced my plans to retire at the end of 2026. I remain fully committed to leading Cineplex through this transition, and I am incredibly proud of what we have built together. With that, I will turn things over to Gord.
Our consolidated adjusted EBITDA margin improved significantly to nine 2% up from 3% in the prior year.
Speaker #1: Finally, as many of you know, I announced my plans to retire at the end of 2026. I remain fully committed to leading Cineplex through this transition, and I am incredibly proud of what we've built together.
So, let's take a closer look at our segments.
Box office revenue in the film Entertainment and content segment was $158 $5 million up 38, 4% from the prior year driven by a 32, 7% increase in attendance to $11 6 million supported by a robust slate of quality films through a quart.
Speaker #1: With that, I will turn things over to Gord.
Speaker #2: Thank you, Ellis. I am pleased to present a condensed summary of the second quarter results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on CDAR+ and are available on our investor relations website at cineplex.com.
Gord Nelson: Thank you, Alice. I am pleased to present a condensed summary of the second quarter results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on Cedar Plus and are available on our investor relations website at cineplex.com. Our MD&A and earnings press release include a complete narrative on the operational results. I will focus on select highlights as well as commentary on liquidity, capital allocation priorities, and our outlook. All elements referenced are from continuing operations unless otherwise stated. As Alice mentioned, we were pleased to see a strong rebound in diverse film content during the second quarter. The slate helped drive a 32.7% increase in attendance to 11.6 million guests, a significant lift over the same period last year. Total revenue for the quarter was $361.8 million, representing a 30.5% increase over the prior year.
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Box office per patron reached an all time quarterly record of $13 68.
Speaker #2: Our MD&A and earnings press release include a complete narrative on the operational results, so I'll focus on select highlights as well as commentary on the liquidity, capital allocation priorities, and our outlook.
Supported by strategic pricing increases and sales mix of premium priced products.
Concession per patron also set a record at $10 <unk>.
Segmented adjusted EBITDA was $36 $3 million with an adjusted EBITDA margin of 12, 2% compared to one 3% in the prior year, highlighting our substantial operating leverage when supported by higher attendance.
Speaker #2: All outments referenced are from continuing operations and less otherwise stated. As Ellis mentioned, we were pleased to see a strong rebound in diverse film content during the second quarter.
Speaker #2: The swell at helped drive a 32.7% increase in attendance to 11.6 million guests, a significant lift over the same period last year. Total revenue for the quarter was $361.8 million, representing a 30.5% increase over the prior year.
Strong box office performance has continued into July.
Cineplex has now delivered four consecutive months of strong box office results with each months from April through July exceeding $50 million a level of consistency not seen since before the pandemic.
Speaker #2: Adjusted EBITDA was $33.4 million, compared to just $0.9 million in Q2 2024. It is important to note that this Q2 adjusted EBITDA amount includes a one-time $2.9 million restructuring charge, which I will discuss later.
Gord Nelson: Adjusted EBITDA was $33.4 million, compared to just $0.9 million in Q2 2024. It is important to note that this Q2 adjusted EBITDA amount includes a one-time $2.9 million restructuring charge, which I will discuss later. Our consolidated adjusted EBITDA margin improved significantly to 9.2%, up from 0.3% in the prior year. Let us take a closer look at our segments. Box office revenue in the film, entertainment, and content segment was $158.5 million, up 38.4% from the prior year, driven by a 32.7% increase in attendance to 11.6 million, supported by a robust slate of quality films throughout the quarter. Box office per patron reached an all-time quarterly record of $13.68, supported by strategic pricing increases and sales mix of premium priced products. Concession per patron also set a record at $10.04.
This trend reflects not only the steady supply steady flow of various genres, but also the enduring appeal of the theatrical experience.
Media revenue was $38 $31 8 million, representing a nine 1%.
Increase compared to the prior year.
Speaker #2: Our consolidated adjusted EBITDA margin improved significantly to 9.2%, up from 0.3% in the prior year. So let's take a closer look at our segments.
Cinema media revenue grew four 1% to $19 $3 million.
Supported by increased demand for Showtime advertising.
Financial services pharmaceutical and tourism.
Speaker #2: Box office revenue in the film entertainment and content segment was $158.5 million dollars, up 38.4% from the prior year. Driven by a 32.7% increase in attendance to 11.6 million, supported by a robust slate of quality films throughout the quarter.
Continued to be categories that capitalize on the value of cinema advertising.
In a challenging media environment, we were pleased to show growth in cinema advertising.
Digital place based media revenue increased 17, 8% to $12 $5 million.
Speaker #2: Box office per patron reached an all-time quarterly record of $13.68, supported by strategic pricing increases and sales mix of premium-priced products. Concession per patron also set a record at $10.04.
Project revenue was $4 $2 million up 18, 2%.
Driven primarily by the continued rollout of the digital signage network under our agreement with Suncor, which began with deployments in 2024 and will continue through 2027.
Speaker #2: Segmented adjusted EBITDA was 36.3 million dollars, with an adjusted EBITDA margin of 12.2%, compared to 1.3% in the prior year. Highlighting our substantial operating leverage when supported by higher attendance.
Gord Nelson: Segmented adjusted EBITDA was $36.3 million, with an adjusted EBITDA margin of 12.2% compared to 1.3% in the prior year, highlighting our substantial operating leverage when supported by higher attendance. Strong box office performance has continued into July. Cineplex has now delivered four consecutive months of strong box office results, with each month from April through July exceeding $50 million, a level of consistency not seen since before the pandemic. This trend reflects not only the steady flow of various genres, but also the enduring appeal of the theatrical experience. Media revenue was $38.8 million, representing a 9.1% increase compared to the prior year. Cinema media revenue grew 4.1% to $19.3 million, supported by increased demand for showtime advertising. Financial services, pharmaceutical, and tourism continue to be categories that capitalize on the value of cinema advertising. In a challenging media environment, we were pleased to show growth in cinema advertising.
Media and service revenue was $8 2 million up 17, 7%, reflecting growth in advertising sales across our mall networks, including both newer additions like Cadillac Fairview and Commodore.
Speaker #2: Strong box office performance has continued into July. Cineplex has now delivered four consecutive months of strong box office results, with each month from April through July exceeding $50 million dollars, a level of consistency not seen since before the pandemic.
And longstanding clients such as Oxford.
With the growth in revenues segment EBITDA for the quarter increased to $14 6 million from $13 8 million in the prior year.
Location based entertainment segment revenue was $33 2 million, an increase of 13% compared to the prior year driven by the addition of three new locations that opened in late 2024.
Speaker #2: This trend reflects not only the steady supply, steady flow of various genres, but also the enduring appeal of the theatrical experience. Media revenue was $38.31 million dollars, representing a 9.1% increase compared to the prior year.
Adjusted store level, EBITDA was $5 8 million up 21, 8% over the prior year.
Speaker #2: Cinema media revenue grew 4.1% to $19.3 million, supported by increased demand for showtime advertising. Financial services, pharmaceuticals, and tourism continued to be categories that capitalized on the value of cinema advertising.
With an adjusted store level EBITDA margin that improved to 17, 5% from 16, 2% in the prior year.
Margins are typically lower in Q2 than the full year run rate as Q2 is the slowest quarter of the year for the <unk> business.
Same store revenue in Q2 declined four 4% compared to the prior year an improvement from the same store decline in Q1.
Speaker #2: In a challenging media environment, we were pleased to show growth in cinema advertising. Digital place-based media revenue increased 17.8% to 12.5 million dollars. Project revenue was $4.2 million dollars, up 18.2%, driven primarily by the continued rollout of the digital signage network under our agreement with SunCore.
Gord Nelson: Digital place-based media revenue increased 17.8% to $12.5 million. Project revenue was $4.2 million, up 18.2%, driven primarily by the continued rollout of the digital signage network under our agreement with SunCore, which began with deployments in 2024 and will continue through 2027. Media and service revenue was $8.2 million, up 17.7%, reflecting growth in advertising sales across our mall networks, including both newer additions like Cadillac Fairview and Commoner, and long-standing clients such as Oxford. With the growth in revenue segment, EBITDA for the quarter increased to $14.6 million from $13.8 million in the prior year. Location-based entertainment segment revenue was $33.2 million, an increase of 13% compared to the prior year, driven by the addition of three new locations that opened in late 2024.
Given current economic conditions for 2025, we are anticipating a year over year same store revenue decline in the range of 3% to 5% as communicated in the prior quarter call.
Despite this our strong operating discipline drove segment adjusted EBITDA to $4 $4 million.
Speaker #2: Which began with deployments in 2024, and will continue through 2027. Media and service revenue was $8.2 million dollars, up 17.7%, reflecting growth in advertising sales across our mall networks, including both new additions like Cadillac Fairview and Commodore, and long-standing clients such as Oxford.
With an improved adjusted EBITDA margin of 13, 3% compared to 10, 9% in the prior year.
Our G&A expenses were up $3 $5 million during the quarter for two reasons.
Our <unk> expense increased $1 million due to increased stock price during the quarter.
And we reflected a $2 9 million restructuring charge related to organizational changes implemented in may to streamline our structure and combined with the adoption of new technologies and tools create a more efficient agile operating model.
Speaker #2: With the growth in revenue, segment EBITDA for the quarter increased to 14.6 million dollars, from 13.8 million dollars in the prior year. Location-based entertainment segment revenue was $33.2 million dollars, an increase of 13% compared to the prior year, driven by the addition of three new locations that opened in late 2024.
We expect annualized savings of approximately $10 million across the organization as a result of these changes.
I want to speak briefly about our liquidity and capital priorities. We ended the quarter with $42 $1 million in cash an increase of $24 1 million from Q1 and.
Speaker #2: Adjusted store level EBITDA was 5.8 million dollars, up 21.8% over the prior year, with an adjusted store level EBITDA margin that improved to 17.5%, from 16.2% in the prior year.
Gord Nelson: Adjusted store level EBITDA was $5.8 million, up 21.8% over the prior year, with an adjusted store level EBITDA margin that improved to 17.5% from 16.2% in the prior year. Margins are typically lower in Q2 than the full year run rate, as Q2 is the slowest quarter of the year for the LBE business. Same-store revenue in Q2 declined 4.4% compared to the prior year, an improvement from the same-store decline in Q1. Given current economic conditions for 2025, we are anticipating a year-over-year same-store revenue decline in the range of 3% to 5%, as communicated in the prior quarter call. Despite this, our strong operating discipline drove segment-adjusted EBITDA to $4.4 million, with an improved adjusted EBITDA margin of 13.3% compared to 10.9% in the prior year. Our G&A expenses were up $3.5 million during the quarter for two reasons.
And no drawings under our $100 million Covenant light credit facility.
Speaker #2: Margins are typically lower in Q2 than the full year run rate, as Q2 is the slowest quarter of the year for the LBE business.
Our liquidity position remains strong as we strive to two.
To a target of $50 million of cash on the balance sheet and full capacity under the revolver and we continue to manage working capital and capital expenditures with discipline.
Speaker #2: Same store revenue in Q2 declined 4.4% compared to the prior year. An improvement from the same store decline in Q1. Given current economic conditions, for 2025, we are anticipating a year-over-year same-store revenue decline in the range of 3% to 5%, as communicated in the prior quarter call.
Our capital allocation priorities remain unchanged, we are focused on maintaining appropriate levels of maintenance capital expenditures strengthening the balance sheet to achieve our target leverage ratios.
Strategic investments in our assets to support long term growth and providing shareholder returns over time.
Speaker #2: Despite this, our strong operating discipline drove segment-adjusted EBITDA to $4.4 million, with an improved adjusted EBITDA margin of 13.3% compared to 10.9% in the prior year.
Net cash capital expenditures for the quarter were $6 3 million of which approximately half related to maintenance maintenance with the remainder related to the timing of cash payments.
Speaker #2: Our G&A expenses were up 3.5 million dollars during the quarter for two reasons. Our LTIP expense increased $1 million dollars due to increased stock price during the quarter, and we reflected a 2.9 million dollar restructuring charge, related to organizational changes implemented in May to streamline our structure, and combined with the adoption of new technologies and tools, create a more efficient agile operating model.
We continue to expect full year net capex to be in the range of $40 million to $50 million.
Gord Nelson: Our LTIP expense increased $1 million due to increased stock price during the quarter, and we reflected a $2.9 million restructuring charge related to organizational changes implemented in May to streamline our structure and, combined with the adoption of new technologies and tools, create a more efficient, agile operating model. We expect annualized savings of approximately $10 million across the organization as a result of these changes. I want to speak briefly about our liquidity and capital priorities. We entered the quarter with $42.1 million in cash, an increase of $24.1 million from Q1, and no drawings under our $100 million covenant light credit facility. Our liquidity position remains strong as we strive to a target of $50 million of cash on the balance sheet and full capacity under the revolver. We continue to manage working capital and capital expenditures with discipline. Our capital allocation priorities remain unchanged.
With prior guidance.
There is no activity under the NCI b during the quarter as we continue to recover from the softer Q1 results and balance our capital priorities.
The past several months have marked a meaningful shift in the theatrical land landscape with a steady cadence of diverse content and consistent audience engagement, we're seeing a return to rhythm.
Speaker #2: We expect annualized savings of approximately $10 million dollars across the organization, as a result of these changes. I want to speak briefly about our liquidity and capital priorities.
Our confidence in the industry, that's beginning to feel familiar again.
We believe this momentum is more than a trend it's a signal of what's possible when content experience and execution aligned.
Speaker #2: We ended the quarter with $42.1 million dollars in cash, an increase of 24.1 million dollars from Q1, and no drawings under our $100 million dollar covenant-like credit facility.
With a strong foundation and a clear focus.
We're energized by what lies ahead and are well positioned to deliver long term value for our shareholders.
Speaker #2: Our liquidity position remains strong, as we strive to a target of $50 million dollars of cash on the balance sheet and full capacity under the revolver.
We're excited about the path ahead and remain focused on executing our strategy.
And with that I'll turn things over to the conference operator for questions.
Speaker #2: And we continue to manage working capital and capital expenditures with discipline. Our capital allocation priorities remain unchanged. We are focused on maintaining appropriate levels of maintenance capital expenditures, strengthening the balance sheet to achieve our target leverage ratios, making strategic investments in our assets to support long-term growth, and providing shareholder returns over time.
As a reminder, if you'd like to ask a question on todays call. Please press star followed by one or no telephone keypad now to enter the queue.
To ask a question. Please ensure your mute locally.
Gord Nelson: We are focused on maintaining appropriate levels of maintenance capital expenditures, strengthening the balance sheet to achieve our target leverage ratios, making strategic investments in our assets to support long-term growth, and providing shareholder returns over time. Net cash capital expenditures for the quarter were $6.3 million, of which approximately half related to maintenance, with the remainder related to the timing of cash payments. We continue to expect full year net CapEx to be in the range of $40 million to $50 million, consistent with prior guidance. There is no activity under the NCIB program during the quarter as we continue to recover from the softer Q1 results and balance our capital priorities. The past several months have marked a meaningful shift in the theatrical landscape.
And our first question comes from Derek Lessard from TD Cowen Derek. Please go ahead. Your line is open.
Yeah, good morning, everybody and congrats on the quarter.
Probably three years later than expected, but congratulations well deserved and enjoying the next phase.
Speaker #2: Net cash capital expenditures for the quarter were $6.3 million dollars, of which approximately half related to maintenance, with the remainder related to the timing of cash payments.
Thank you very much.
Maybe I'm just going to start on the new restructuring program. Thanks, Cort you highlighted the savings you intended to get from the program.
Speaker #2: We continue to expect full year net CapEx to be in the range of 40 to 50 million dollars, consistent with prior guidance. There is no activity under the NCIB during the quarter, as we continue to recover from the softer Q1 results, and balance our capital priorities.
Curious, which can maybe talk about the timing maybe some more color on some of the specific initiatives you have in place.
Yes so.
As I mentioned.
There is numerous elements to the program. So we've looked at some of the technology tools that we've been investing in and developing over time in order to create a more sort of agile and efficient.
Speaker #2: The past several months have marked a meaningful shift in the theatrical landscape. With a steady cadence of diverse content and consistent audience engagement, we're seeing a return to rhythm.
Gord Nelson: With a steady cadence of diverse content and consistent audience engagement, we are seeing a return to rhythm, a confidence in the industry that is beginning to feel familiar again. We believe this momentum is more than a trend; it is a signal of what is possible when content, experience, and execution align. With a strong foundation and a clear focus, we are energized by what lies ahead and are well-positioned to deliver long-term value for our shareholders. We are excited about the path ahead and remain focused on executing our strategy. With that, I will turn things over to the conference operator for questions.
Operating model and we're at the point this year, where we're able to kind of execute and look at some head count reductions that allow us to operate more efficiently. So so it's a combination.
Speaker #2: A confidence in the industry that's beginning to feel familiar again. We believe this momentum is more than a trend; it's a signal of what's possible when content experience and execution align.
Of operating model changes focus on key initiatives as well as use of some of the tools that we've invested in and developed over the past number of years that will just make us operate more efficiently.
Speaker #2: With a strong foundation, and a clear focus, we're energized by what lies ahead, and are well positioned to deliver long-term value for our shareholders.
Okay. That's super helpful and maybe just on the cinema media just curious on how much visibility you have on sort of the advertising spend just given I guess the content mix and maybe with given the context of the economic backdrop.
Speaker #2: We're excited about the path ahead, and remain focused on executing our strategy. And with that, I'll turn things over to the conference operator for questions.
Speaker #3: Thank you. As a reminder, if you'd like to ask a question on today's call, please press star followed by one on your telephone keypad now to enter the queue.
Sure. So look we had a spectacular Q1.
Conference Operator: Thank you. As a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad now to enter the queue. If you are preparing to ask a question, please ensure you are unmuted locally. Our first question comes from Derek Lissard from TD Cowen. Derek, please go ahead. Your line is open.
In our media business cinema media business in particular.
Speaker #3: When preparing to ask a question, please ensure you are unmuted locally. And our first question comes from Derek Lassard from TD Cowan. Derek, please go ahead, your line is open.
With the.
The announcements coming out from south of the border on tariffs and other things created a significant amount of economic uncertainty.
Speaker #4: Yeah, good morning everybody, and congrats on the quarter. Ellis, I know it’s probably a few years later than expected, but congratulations, well deserved, and enjoy the next phase.
Derek Lissard: Yeah, I thought good morning everybody and congrats on the quarter. Alice, I know probably a few years later than expected, but congratulations, well deserved, and enjoy the next phase.
During the first quarter.
Which is impacting sort of the general advertising environment as we look forward. So as we mentioned in our commentary we're very pleased that despite that backdrop is.
Speaker #1: Thank you very much, Derek.
Ellis Jacob: Thank you very much, Derek Lissard.
Speaker #4: Maybe I'm just going to start on the restructuring program. Thanks, Gord. You highlighted the savings you intended to get from the program. Just curious if you could maybe talk about the timing and provide some more color on some of the specific initiatives you have in place.
Derek Lissard: Maybe I am just going to start on the restructuring program. Thanks, Gord. You highlighted the savings you intended to get from the program. Just curious if you can maybe talk about the timing and some more color on some of the specific initiatives you have in place.
We are both say existing show the growth in cinema advertising, so as we look forward.
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The attractiveness of cinema advertising the attention, which is the key statistic that advertisers look at is significantly above most other almost all other advertising mediums. So as we look forward as a challenging <unk>.
Speaker #2: Yeah, so you know, as I mentioned, there's numerous elements to the program, so we looked at some of the technology tools that we've been investing in and developing over time in order to create a more sort of agile and efficient operating model.
Gord Nelson: Yeah, so you know, as I mentioned, there are numerous elements to the program. We looked at some of the technology tools that we have been investing in and developing over time in order to create a more sort of agile and efficient operating model. We are at the point this year where we are able to kind of execute and look at some headcount reductions that allow us to operate more efficiently. So it is a combination of operating model changes, focus on key initiatives, as well as use of some of the tools that we have invested in and developed over the past number of years that will just make us operate more efficiently.
Advertising environment.
And we will we will fight and.
Deliver strong results relative to that backdrop.
Speaker #2: And we're at the point this year where we're able to kind of execute and look at some headcount reductions that allow us to operate more efficiently.
Okay, maybe I'll just slip one final one for myself.
<unk> expiring agenda. This month, just curious on your views for the future future buybacks again, congrats on the corner.
Speaker #2: So, it's a combination of operating model changes, a focus on key initiatives, as well as the use of some of the tools that we've invested in and developed over the past number of years that will just make us operate more efficiently.
Yes, Thanks, Doug.
I think one would expect sort of a.
A renewal of that.
Speaker #4: Okay, that's super helpful. And maybe just on the cinema media just curious on how much visibility you have on sort of the advertising spend just given the, I guess, the content mix and maybe with given the context of the economic backdrop.
Derek Lissard: Okay, that is super helpful. Maybe just on the Cineplex Media, just curious on how much visibility you have on the advertising spend, given the content mix and the context of the economic backdrop.
The next question comes from three Mcreynolds from RBC. Please go ahead. Your line is open.
Yes, thanks, very much and good morning, and just would echo L. S. Congratulations.
On your pending retirement.
Wish you all the best.
Speaker #2: Sure, so look, we have a spectacular Q1 in the in our media business, cinema media business in particular. With the announcements coming out from South of the Border on tariffs and other things created a significant amount of economic uncertainty, during the first quarter, which is impacting sort of the general advertising environment as we look forward.
Thank you very much drew.
Gord Nelson: Sure. Look, we had a spectacular Q1 in our media business, cinema media business in particular, with the announcements coming out from south of the border on tariffs and other things created a significant amount of economic uncertainty during the first quarter, which is impacting the general advertising environment as we look forward. As we mentioned in our commentary, we are very pleased that despite that backdrop, we are able to show the growth in cinema advertising. As we look forward, the attractiveness of cinema advertising, the attention, which is a key statistic that advertisers look at, is significantly above most other, almost all other advertising mediums. As we look forward, it is a challenging advertising environment, and we will fight and deliver strong results relative to that backdrop.
So some color just a couple of clarifications here just first on the NCI.
In terms of being active.
Most renewal just what are your kind of puts and takes to kind of how.
How aggressive.
You want to be with with share repurchases.
Speaker #2: So as we mentioned in our commentary, we were very pleased that despite that backdrop, we were able to save show growth in cinema advertising.
And then second on.
The restructuring so thanks for the additional color on the timing of these savings just how the cadence kind of flows through.
Speaker #2: So as we look forward, you know, the attractiveness of cinema advertising the attention, which is a key statistic that advertisers look at, is significantly above most other almost all other advertising mediums.
And then the bigger question here.
Often highlighted the operating leverage at every additional patron.
Tendencies and what flows down to adjusted EBIT down just wondering if theres any kind of change to that operating leverage. Following this this type of restructuring. Thank you.
Speaker #2: So, as we look forward, it's a challenging advertising environment, and we will fight to deliver strong results relative to that backdrop.
Thanks drew and hopefully I got all of those but on your first question then on the CIB and during my notes I, obviously gave our capital allocation priorities.
Speaker #4: Okay, maybe I'll just lob one final one for myself. The NCIB is expiring at the end of this month, just curious on your views for the future buybacks.
Derek Lissard: Okay, maybe I will just lob one final one from myself. The NCIB program is expiring at the end of this month. Just curious on your views for the future buybacks. Again, congrats on the quarter.
One of those elements.
Considered to get more active will be once we sort of hit that $50 million.
Our cash balance and have it before.
Speaker #4: Again, congrats on the quarter.
Draw on the operating facility that would be a trigger were obviously always opportunistic too as we look at where share prices are.
Speaker #2: Yeah, thanks, Derek. And so, I think one would expect sort of a renewal of that.
Gord Nelson: Yeah, thanks, Derek. I think one would expect sort of a renewal of that.
So that would be my commentary with respect to the NCI on the restructuring charges on the timing.
Speaker #3: The next question comes from Drew McReynolds from RBC. Drew, please go ahead; your line is open.
Conference Operator: The next question comes from Drew McReynolds from RBC. Drew, please go ahead. Your line is open.
I've mentioned.
Speaker #2: Yeah, thanks very much, and good morning, and just would echo Ellis' congratulations on your pending retirement and wish you all the best.
In my commentary that we implemented this in may.
Gord Nelson: Yeah, thanks very much, and good morning. I would just echo Alice, congratulations on your pending retirement. I wish you all the best.
So you should expect to see the savings into the back half of the year and then and then going forward.
Speaker #1: Thank you very much, Drew.
Ellis Jacob: Thank you very much, Drew.
And then I think your last question was on sort of the operating leverage in.
Speaker #4: So Gord, just a couple of clarifications here, just first on the NCIB, you know, in terms of being active post-renewal just what are your kind of puts and takes to kind of how aggressive you want to be with share repurchases?
I've, given you sort of what kind of Butler of given most investors sort of a ballpark of around $13 a person is the.
Gord Nelson: Gord, just a couple of clarifications here. First on the NCIB, in terms of being active post-renewal, just what are your kind of puts and takes to how aggressive you want to be with share repurchases? Second on the restructuring, thanks for the additional color on the timing of these savings, just how the cadence flows through. The bigger question here, Gord, you have often highlighted the operating leverage of every additional patron in attendance and what flows down to adjusted EBITDA. Just wondering if there is any change to that operating leverage following this type of restructuring. Thank you.
The incremental EBITDA contribution of each incremental guest.
And so that would that would really continue on that would not change that statistic material.
Speaker #4: And then second on the restructuring, so thanks for the additional color. On the timing of these savings, just how the cadence kind of flows through, and then the bigger question here Gord, you've often highlighted about the operating leverage of every additional patron in attendance and what flows down to adjusted EBITDA, just wondering if there's any kind of change to that operating leverage following this type of restructuring.
Okay great.
Final one for me on the LTE side again.
Again appreciate.
Kind of the same store guidance on modeling this in terms of.
Adding to the footprint.
It looks like you're on I can't remember your.
Your your phrase last quarter, but prudent pause I think it I think it was any update.
In terms of returning to more of an expansion mode or you are comfortable in the prudent pause at least through the end of this year.
Speaker #4: Thank you.
Speaker #2: Yeah, thanks Drew. Hopefully I got all those, but on your first question then on the NCIB and your during my notes, I obviously gave our capital allocation priorities.
Gord Nelson: Yeah, thanks, Drew. Hopefully you got all those. On your first question, on the NCIB, during my notes, I obviously gave our capital allocation priorities. One of those elements to consider to get more active would be once we sort of hit that $50 million cash balance and have the full draw on the operating facility. That would be a trigger. We are obviously always opportunistic too, as we look at where share prices are. That would be my commentary with respect to the NCIB. On the restructuring charges on the timing, I mentioned in my commentary that we implemented this in May. You should expect to see the savings into the back half of the year and then going forward. I think your last question was on sort of the operating leverage.
So we already have one that we plan to open in 2026 in the second quarter and that will move forward and you know.
Speaker #2: You know, one of those elements is to consider to get more active would be once we sort of hit that $50 million dollar cash balance and have the full draw on the operating facility, you know, that would be a trigger.
We are just looking at our capital and where we should be allocating our dollars and we will continue to be opportunistic as we move forward.
Speaker #2: We're obviously always opportunistic too as we look at where share prices are. So, you know, that would be my commentary with respect to the NCIB.
Okay. Thanks very much.
Okay.
Thank you.
Speaker #2: On the restructuring charges, on the timing, you know, I mentioned in my commentary that we implemented this in May. So you should expect to see the savings in the back half of the year and then going forward.
The front of a Monday that star followed by one on your telephone keypad to ask a question today.
We have a question from Matt Young from Scotiabank. Your line is now open. Please go ahead.
Speaker #2: And then I think your last question was on sort of the operating leverage and, you know, I've given you sort of a kind of I've given most investors sort of a ballpark of around 13 dollars a person is, you know, the incremental EBITDA contribution of each incremental guest.
Yeah.
Yes. Thank you for taking my question I'm sorry.
Gord Nelson: I have given you sort of a kind of a, or I have given most investors sort of a ballpark of around $13 a person is the incremental EBITDA contribution of each incremental guest. That would really continue on. That would not change that statistic material.
My question was asked I got cut off two times already today on the call.
So Alex.
Congratulation on your retirement.
Speaker #2: And so that would really continue on; that would not change that statistical material.
Long.
Long carrier.
I wanted to ask you.
Transition what what is the board looking for.
Speaker #4: Okay, no, that's great. Final one for me, on the LBE side, again, I appreciate kind of the same store guidance on modeling this in terms of adding to the footprint. You know, it feels like you’re on, I can’t remember your phrase last quarter, but "prudent pause," I think it was. Any updates in terms of, you know, returning to more of an expansion mode, or, you know, are you comfortable in the prudent pause at least through the end of this year?
Derek Lissard: Okay. No, that is great. Final one for me on the LBE side. Again, I appreciate kind of the same-store kind of guidance on modeling this in terms of adding to the footprint. It feels like you are on, I cannot remember your phrase last quarter, but a prudent pause. I think it was any update in terms of returning to more of an expansion mode or you are comfortable in the prudent pause, at least through the end of this year?
And the new CEO and she can just update us on.
The path forward I know, it's been there's still quite a bit of time until your official departure, but maybe just give us an idea of what what is the process.
And the objective who youre looking for what the board is looking for.
You know as I've said before we have spent the last four decades.
Building up the business and.
Speaker #1: So, we already have one that we plan to open in 2026 in the second quarter, and that will move forward. And, you know, we are just looking at our capital and where we should be allocating our dollars. We will continue to be opportunistic as we move forward.
With Covid basically impacted us and I think now.
Ellis Jacob: We already have one that we plan to open in 2026 in the second quarter, and that will move forward. We are just looking at our capital and where we should be allocating our dollars, and we will continue to be opportunistic as we move forward.
We want to see the business has come back nicely and I think it's stabilized.
And the.
Of the 18 months as more to give the board the opportunity to look inside and outside within the <unk>.
Company and they have an adequate amount of time to conduct.
Speaker #4: Okay, thanks very much.
Derek Lissard: Okay. Thanks very much.
So it's so we can get the best candidates that they feel.
Speaker #1: Thank you.
Ellis Jacob: Thank you.
Speaker #3: For the final reminder, that's star followed by one on your telephone keypad to ask the question today. We have a question from Mayor Yagi from Scotiabank.
Good basically move this thing forward.
Conference Operator: For the final reminder, that is star followed by one on your telephone keypad to ask the question. Today, we have a question from Mayor Yaghi from Scotiabank. Your line is now open. Please go ahead.
And.
I think it's important to realize that we've got a very strong senior team at the company.
Speaker #3: Your line is now open. Please go ahead.
Speaker #2: Yes, thank you for taking my question. Sorry if my question was asked, I got cut off two times already. Today on the call. So Ellis, congratulations on your retirement.
Mayor Yaghi: Yes, thank you for taking my question. My question was asked. I got cut off two times already today on the call. Alice, congratulations on your retirement. Long career. I wanted to ask you, the transition. What is the board looking for in a new CEO? If you can just update us on the path forward. I know there is still quite a bit of time until your official departure, but maybe just give us an idea of what the process and the objectives of who you are looking for, what the board is looking for.
Given that you saw there are no other questions at this time.
Ma'am. Please go ahead, a few you have any follow ups.
With no further follow ups at this time, we have no further questions for the final call about Star Wars.
Speaker #2: Long career. I wanted to ask you, you know, the transition: what is the board looking for in a new CEO? And if you can just update us on, you know, the path forward.
Thank you again.
Paul.
Thank you again for joining us this morning, and we look forward to sharing our third quarter results in November Thanks, again and have a great day.
Speaker #2: I know it's been, you know, there's still quite a bit of time until your official departure, but maybe just give us an idea of what is the process and the objectives of who you're looking for, what the board is looking for.
This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.
Speaker #1: You You know, as I've said before, we have spent the last four decades building up the business and with COVID it basically impacted us and I think now we want to see the businesses come back nicely and I think it's stabilized.
Ellis Jacob: You know, as I have said before, we have spent the last four decades, you know, building up the business. With COVID, it basically impacted us. I think now we want to see the businesses come back nicely, and I think it is stabilized. The 18 months is more to give the board the opportunity to look inside and outside within the company, and they have an adequate amount of time to conduct an extensive search so we can get the best candidates that they feel, you know, could basically move this thing forward. I think it is important to realize that we have got a very strong senior team at the company.
Speaker #1: And the 18 months is more to give the board the opportunity to look inside and outside of the company, and they have an adequate amount of time to conduct an extensive search, so we can get the best candidates that they feel could basically move this thing forward.
Speaker #1: And you know, I think it's important to realize that we've got a very strong senior team at the company.
Speaker #4: Given that you still have further
Speaker #3: Questions at this time? Mayor, please go ahead if you have any follow-ups. We have no further follow-ups at this time. We have no further questions for the final call.
Conference Operator: We have no further questions at this time. Mayor, please go ahead if you have any follow-ups. We have no further follow-ups at this time. We have no further questions. For the final call, that is star one.
Speaker #3: That's star one.
Speaker #1: Thank you again for joining our call. We appreciate your time this morning, and we look forward to sharing our third quarter results in November.
Ellis Jacob: Thank you again for joining our call. Thank you again for joining us this morning, and we look forward to sharing our Q3 results in November. Thanks again and have a great day.
Speaker #1: Thanks again and have a great day.
Conference Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.