Cineplex Q2 gets boost from its media, arcade and Rec Room businesses

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People use an escalator at the Cineplex Entertainment company's annual general meeting in Toronto on May 17, 2017. The owner of Canada's largest chain of movie theaters, Cineplex Inc., says its strategic diversification into multiple forms of entertainment helped drive the company's second quarter revenue to $439.2 million, a record high. THE CANADIAN PRESS/Nathan Denette

TORONTO — The owner of Canada’s largest chain of movie theatres says its strategic diversification into multiple forms of entertainment helped drive the company’s second-quarter revenue to a record high $439.2 million.

In the main theatre business, Cineplex Inc. said a 1.7 per cent decline in attendance from last year was offset by higher box office revenue per patron and higher concession revenue per patron.

Secondary businesses — including advertising sales and alternative forms of entertainment — helped push up total revenue by $30 million or 7.3 per cent from $409.1 million in last year’s second quarter.

Cineplex says its media increased 21.5 per cent or $8.8 million to a second quarter record of $49.6 million due to the growth in both in-theatre advertising and out-of-theatre digital signage.

Revenue from its amusement solutions business, which supplies equipment to third party arcades, bowling alleys and amusement parks, was up 16.8 per cent or $7 million to $48.4 million.

The Rec Room group of leisure locations grew revenue by 33.4 per cent or $5.2 million to $20.9 million.

However, net income was down compared with last year, a decline that Cineplex chief executive Ellis Jacob attributed largely to a couple of unusual circumstances.

For one thing, “Avengers: Endgame” — one of the biggest box office draws in history — added to expenses at its theatre business because it was three hours long.

“So to make up the revenue, you had to extend the hours . . . and you end up with higher labour costs,” Jacob said.

In addition, he said, last year’s profit included an unusual insurance payment received in the second quarter.

As a result, Cineplex’s 2019 second quarter net income fell to $19.4 million, or 31 cents per share, from $24.4 million, or 38 cents per share, in the comparable period last year.

Analysts had estimated $429.08 million of revenue and $15.35 million or 24 cents of net income, according to financial markets data firm Refinitiv.

Cineplex shares gained about six per cent to $24.41 in afternoon trading, but remained at the low end of a 52-week range between $22.34 and $36.65.

 

Companies in this story: (TSX:CGX)

David Paddon, The Canadian Press


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