Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cineplex Inc (CPXGF, Financial) achieved record-breaking box office and concession per person revenues in Q4 2024, driven by popular films like Gladiator 2, Wicked, and Moana 2.
- The company expanded its premium offerings, adding new ScreenX, UltraAVX, D-Box, and IMAX screens, which contributed to 42% of total box office revenues.
- Cineplex Inc (CPXGF) leveraged its robust data and Scene+ membership to drive attendance, with over one-third of Scene+ guests being first-time or returning visitors.
- The international cinema segment saw significant growth, with international programming representing 10.2% of total box office revenues, up from 3.7% in North America.
- Cineplex Inc (CPXGF) reported a 44.3% year-over-year revenue growth in its digital media segment, driven by new digital out-of-home clients and increased advertising opportunities.
Negative Points
- Despite revenue growth, the LBE segment experienced a decline in store-level adjusted EBITDAaL margins due to minimum wage increases and preopening costs.
- The company faced challenges with the Competition Tribunal's decision regarding its online booking fee, leading to an appeal and ongoing legal proceedings.
- Cineplex Inc (CPXGF) experienced a decrease in Cinema Media revenue per patron in Q4, attributed to a film slate more oriented towards kids, affecting advertiser interest.
- The company is still navigating the impacts of potential US and Canadian trade tariffs, although it believes these will not materially affect its business.
- Cineplex Inc (CPXGF) is managing increased costs related to minimum wage hikes, which could impact profitability if not offset by revenue growth.
Q & A Highlights
Q: Can you discuss your outlook for the box office in 2025 and any potential impacts from recent events in Los Angeles?
A: Ellis Jacob, President and CEO, stated that 2025 is expected to have a stronger film slate, with significant releases like Captain America, Paddington in Peru, and Disney's Snow White. He anticipates quarters 2 and 4 to be particularly strong, with no major disruptions in the film slate expected.
Q: Regarding the digital place-based media, is the Cadillac Fairview contract still ramping up, and are there opportunities for similar contracts in Canada?
A: Gord Nelson, CFO, confirmed that the Cadillac Fairview contract is still ramping up, and growth is expected into 2025. There are additional opportunities within Canada to expand the mall network, and Cadillac Fairview was a significant win for Cineplex.
Q: Can you provide insights into the initial experience with the online concession booking and any efficiencies gained?
A: Gord Nelson noted that the adoption of online concession booking is in its early stages, but they are seeing incremental purchases through the app. Ellis Jacob emphasized the convenience it offers to guests.
Q: What impact do you expect from the closure of a competitor's theaters in Montreal on your attendance?
A: Ellis Jacob mentioned that Cineplex's new Royalmount cinema in Montreal is performing well, and they expect continued improvement in attendance due to the competitor's closures. Cineplex holds a significant market share in the Montreal area.
Q: Can you elaborate on the decline in media and events revenue in the LBE segment?
A: Gord Nelson explained that corporate events increased year-over-year, but walk-in traffic was down slightly in December, possibly due to consumer confidence. The warm weather in October also impacted venue traffic.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
