Cineplex Q1 loss narrows compared with a year ago, revenue up nearly 50 per cent

TORONTO –

An onslaught of high-profile films set to hit movie theatres this summer has the chief executive of Canada’s largest cinema chain confident that his business is well past the worst of its pandemic woes.

“We are excited by the amazing lineup of films for 2023 and believe we have overcome pandemic-related content supply challenges,” said Ellis Jacob, Cineplex Inc.’s chief executive on a Friday call with analysts.

His outlook comes on the heels of the releases of “The Super Mario Bros. Movie,” “John Wick: Chapter 4” and “Creed III” in recent months.

The summer will see “Barbie,” “Indiana Jones and the Dial of Destiny,” “Spider-Man: Across the Spider-Verse,” “Oppenheimer” and “the Flash” hit theatres, before the fall brings “Napoleon” from Ridley Scott and “Killers of the Flower Moon” from Martin Scorsese.

The busy film slate is reminiscent of pre-pandemic years and signals a departure from the health crisis, when film studios and distributors delayed the release of big flicks and sent others straight to streaming services, bypassing theatres altogether.

The slowdown in offerings along with forced temporary closures of cinemas to quell the virus hampered Cineplex’s business, which has been in recovery mode ever since.

On Friday, the Toronto-based company reported its first-quarter loss narrowed to $30.2 million or 48 cents per diluted share compared with a loss of $42.2 million or 67 cents per diluted share a year ago.

Revenue for the quarter ended March 31 totalled $341.0 million, up from $228.7 million in the first three months of 2022.

The increase in revenue came as theatre attendance totalled nearly 9.8 million, up from nearly 6.7 million in the same quarter last year.

Box office revenue per patron was $12.63, up from $12 a year earlier, while concession revenue per patron also rose to $8.85, up from $8.82 a year ago.

The results come as Jacob feels “a promising era in the exhibition industry” is on its way.

He is confident the forthcoming slate of movies will buoy Cineplex’s future financial results, even as the entertainment industry is facing the potential ramifications of a recent strike from the Writers Guild of America.

The union represents some 11,500 film and television writers, who walked out after failing to reach a new contract with the Alliance of Motion Picture and Television Producers at the start of the month.

Cineplex is monitoring the situation, but Jacob said the company doesn’t expect the strike to have a material impact on its business.

Such strikes typically have a greater impact on network TV and streamers, whose content is completed shortly before it is released, he said.

When the strike began, late-night shows immediately went off air with no one to write monologues, and began showing reruns. A slew of TV shows, including “Cobra Kai,” “Abbott Elementary” and “Stranger Things,” have reportedly closed their writers’ rooms or stopped production since.

“Given the long lead times in making theatrical films, such strikes have historically not had an impact on our industry,” Jacob said.

When the Writers Guild of America was on strike for about 100 days in 2007 and 2008 and earlier for 152 days in 1988, box office revenues were higher in the three years after the strike than in the three years prior, Jacob said.

If the strike begins to impact the film slate, Cineplex will have to rely on its digital movie streaming platform, signage business and array of entertainment and dining venues.

The company has long run RecRoom arcade and dining venues, but recently added theatre, dining and entertainment complexes called the Junxion to its portfolio.

The Junxion’s first location opened at Winnipeg’s Kildonan Place in December with reclining seats, an arcade area with more than 50 games, a party room, live entertainment space and dining options.

A second Junxion location will open at the Erin Mills Town Centre mall in Mississauga, Ont. this spring.

This report by The Canadian Press was first published May 12, 2023.