Earnings call transcript: Cineplex Q2 2025 misses EPS forecast, revenue up

Cineplex Inc. reported its second-quarter 2025 earnings, revealing a miss on earnings per share (EPS) but a slight beat on revenue expectations. The company posted an EPS of -$0.03, falling short of the forecasted $0.10, marking a 130% negative surprise. Meanwhile, revenue reached $361.8 million, surpassing the expected $360.18 million by 0.46%. According to InvestingPro data, two analysts have recently revised their earnings estimates downward for the upcoming period, suggesting continued challenges ahead. Despite the EPS miss, Cineplex shares showed resilience, trading up by 0.29% at $10.36 in pre-market activity.

Key Takeaways

• Cineplex reported a 30.5% year-over-year revenue increase for Q2 2025.
• Adjusted EBITDA surged to $33.4 million from $900,000 in Q2 2024.
• Box office attendance grew by 32.7% year-over-year.
• EPS fell short of expectations, causing a 130% negative surprise.
• Cineplex shares edged up 0.29% in pre-market trading.

Company Performance

Cineplex demonstrated robust growth in its second quarter, reflecting a significant recovery in the cinema industry. The company achieved a 30.5% increase in revenue compared to the same period last year, driven by strong box office performance and increased attendance. The adjusted EBITDA rose to $33.4 million, a stark improvement from the previous year’s $900,000. However, InvestingPro analysis indicates the company is trading at a high EBIT valuation multiple, with a P/E ratio of 100, suggesting potential overvaluation. The company’s Financial Health Score stands at 2.2, rated as ’FAIR’ by InvestingPro’s comprehensive assessment system.

Financial Highlights

• Revenue: $361.8 million, up 30.5% year-over-year
• Adjusted EBITDA: $33.4 million, up from $900,000 in Q2 2024
• Adjusted EBITDA margin: 9.2%, up from 0.3% the previous year
• Cash position: $42.1 million, an increase of $24.1 million from Q1 2025

Earnings vs. Forecast

Cineplex reported an EPS of -$0.03, missing the forecasted $0.10 by a significant margin, resulting in a 130% negative surprise. While the EPS miss was notable, the company managed to slightly exceed revenue expectations, posting $361.8 million against a forecast of $360.18 million.

Market Reaction

Despite the EPS miss, Cineplex’s stock price showed a slight increase of 0.29% in pre-market trading, reaching $10.36. This movement reflects investor confidence in the company’s revenue growth and operational improvements. According to InvestingPro data, the stock has experienced significant volatility, with a YTD return of -10.11% and a market capitalization of $52.25 million. The stock remains within its 52-week range, with a high of $13.09 and a low of $8.4, indicating a stable performance in the broader market context. For deeper insights into Cineplex’s valuation and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Outlook & Guidance

Cineplex anticipates a decline of 3-5% in same-store revenue for its location-based entertainment segment in 2025. The company plans to maintain disciplined capital expenditures, projecting full-year net CapEx between $40 million and $50 million. Additionally, Cineplex is optimistic about its momentum, driven by diverse film content and strategic initiatives.

Executive Commentary

CEO Ellis Jacob expressed confidence in Cineplex’s strategic direction, stating, "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." CFO Gord Nelson noted, "We are seeing a return to rhythm, a confidence in the industry that’s beginning to feel familiar again."

Risks and Challenges

• Potential declines in location-based entertainment revenue.
• Competitive pressures from streaming services and alternative entertainment options.
• Economic uncertainties impacting consumer discretionary spending.
• Supply chain disruptions affecting operational efficiency.
• Leadership transition with CEO Ellis Jacob’s planned retirement in 2026.

Q&A

During the earnings call, analysts inquired about the details and timing of the restructuring program aimed at achieving $10 million in annual savings. There was also discussion about the potential renewal of the normal course issuer bid (NCIB) and the search for a new CEO following Ellis Jacob’s retirement announcement.

Full transcript - Cineplex Inc. (CGX) Q2 2025:

Operator/Moderator: Good morning or good afternoon all, and

Operator: welcome to the Cineplex Q2 twenty twenty five Earnings Conference Call. My name is Adam, and I’ll be your operator for today. I will now hand the floor to Rehan Asmat to begin. So please go ahead when you’re ready.

Operator/Moderator: Good morning, everyone, and thank you for joining us to discuss Cineplex’s second quarter twenty twenty five results. I’m Rehan Asmat, 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 Gord 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.

Actual 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 discussion and analysis. 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, President and Chief Executive Officer, Cineplex: Thank you, Rehan, and good morning, everyone. I’m pleased to share with you today our second quarter results for 2025. Following a softer first quarter, we saw a strong and steady rebound in quarter two. For the first time since 02/2019, we delivered box office revenues exceeding $50,000,000 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 $50,000,000 which is an encouraging sign of the sustained momentum in theatrical exhibition.

This performance was driven by a consistent supply of high performing diverse titles with strong consumer demand for premium experiences. Q two box office revenue reached 158,500,000.0, up an incredible 38% from the prior year and driven mainly by attendance, which grew by nearly 33% to 11,600,000 guests. We achieved an all time quarterly record for both box office per patron at $13.68 and concession per patron at $10.04. 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 q two showcased the breadth of content driving our success.

The Minecraft, the movie delivered the biggest opening of the year and the largest ever for a video game adaptation. Mission Impossible, The Final Reckoning achieved the franchise best opening domestically, and the performance over indexed in Canada. Lilo and Stitch and How to Train Your Dragon, both live action adaptations of family friendly titles, tapped into nostalgia and delivered strong sustained performance. F one, 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 for cinema guests.

In q two, 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 cinemas, or ScreenX. We are also seeing encouraging signs of increased movie going frequency, particularly among our Cineclub members. Cineclub is a great way to save where members receive a monthly movie ticket they can use, upgrade, or rollover. Cineclub members also receive a discount on concessions and exclusive offers and events.

Cineclub has now surpassed 200,000 members, a major milestone for the program. It had a very strong 2025, growing by 10.3% year to date. In q two, over 20% of new members opted for the annual plan, which is helping to reduce churn and drive more consistent visitation. Cineclub members continue to drive strong engagement, visiting more frequently, upgrading to premium formats, purchasing more concessions. As we continue to scale both the CineClub and SCENE plus programs, our ability to understand and effectively target loyal guests who personalized marketing initiative presents a meaningful opportunity to deepen engagement and drive incremental revenue across our ecosystem.

Turning to our media business. Despite a soft advertising market, our cinema media revenue grew 4% year over year. This growth was driven by strong showtime performance and our ability to deliver premium audiences in a high attention environment. We remain one of the few exhibitors globally that own its 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 ten year agreement with the North Carolina Education Lottery to deploy digital signage across more than 1,500 retail locations and claim centers. This marks a significant expansion into The US and reinforces CDM’s 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 continue to offer advertisers a a compelling platform to reach engaged consumers. With multiple touch points from the big screen to digital out of home, our 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 to our innovative venues that deliver state of the art gaming, dining options, and live entertainment across Canada. In q two, our LPE revenue grew 13% year over year to 33,200,000.0 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. While q two is historically the slowest quarter for LBE, 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’s decision regarding our online booking fee. On 10/23/2024, 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. 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 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 to weapons, Free Free of Friday, and the supernational supernational horror, The Conjuring, Lost Rites. Further ahead in the later part of the year, we’ll see a powerful slate of films including Tron Heiress, The Return of Glinda and Alfaba in Wicked, For Good, Zootopia two, Five Night at Freddy’s two, 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. The success we’ve seen in q two 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,

Gord Nelson, Chief Financial Officer, Cineplex: as many of you know, I announced my plans to retire at the 2026. I remain fully committed to leading Cineplex through this transition, and I am incredibly proud of what we’ve built together. With that, I will turn things over to Gord. 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 and A have been filed on SEDAR plus and are available on our investor relations website at cineplex.com. Our MD and 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. As Ellis mentioned, we were pleased to see a strong rebound in diverse film content during second quarter. The slate helped drive a 32.7% increase in attendance to 11,600,000 guests, a significant lift over the same period last year.

Total revenue for the quarter was $361,800,000, representing a 30.5% increase over the prior year. Adjusted EBITDA was $33,400,000 compared to just $900,000 in Q2 twenty twenty four. It is important to note that this q two adjusted EBITDAL amount includes a onetime $2,900,000 restructuring charge, which I will discuss later. Our consolidated adjusted EBITDAL margin improved significantly to 9.2, up from point 3% in the prior year. So let’s take a closer look at our segments.

Box office revenue in the film entertainment and content segment was a $158,500,000, up 38.4% from the prior year, driven by a 32.7% increase in attendance to 11,600,000, 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. Segmented adjusted EBITDAL was $36,300,000 with an adjusted EBITDAL 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 $50,000,000, a level of consistency not seen since before the pandemic. 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 point $31,800,000, representing a 9.1% increase compared to the prior year. Cinema media revenue grew 4.1% to $19,300,000, supported by increased demand for showtime advertising. Financial services, pharmaceutical, and tourism can can 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. Digital place based media revenue increased 17.8% to $12,500,000. Project revenue was $4,200,000, 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. Media and service revenue was $8,200,000, up 17.7%, reflecting growth in advertising sales across our mall networks, including both newer additions like Cadillac, Fairview, and Commodore, and long standing clients such as Oxford. With the growth in revenue segment, EBITDAL for the quarter increased to $14,600,000 from $13,800,000 in the prior year.

Location based entertainment segment revenue was $33,200,000, an increase of 13% compared to the prior year, driven by the addition of three new locations that opened in late twenty twenty four. Adjusted store level EBITDA was $5,800,000, 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 EBITDAL to $4,400,000 with an improved adjusted EBITDAL margin of 13.3% compared to 10.9% in the prior year. Our G and A expenses were up $3,500,000 during the quarter for two reasons. Our LTIP expense increased $1,000,000 due to increased stock price during the quarter, and we reflected a $2,900,000 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 $10,000,000 across the organization as a result of these changes. I wanna speak briefly about our liquidity and capital priorities.

We ended the quarter with $42,100,000 in cash, an increase of 24,100,000 from q one, and no drawings under our $100,000,000 covenant light credit facility. Our liquidity position remains strong as we strive to to a target of $50,000,000 of cash on the balance sheet and full capacity under the revolver. 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.

Net cash capital expenditures for the quarter were $6,300,000, 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 40,000,000 to $50,000,000 consistent with prior guidance. There is no activity under the NCIB during the quarter as we continue to recover from the softer q one 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, 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. 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. 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.

Operator: Thank you. And our first question comes from Derek Lessard from TD Cowen. Derek, please go ahead. Your line is open.

Derek Lessard, Analyst, TD Cowen: Yes. Good morning, everybody, and congrats on the quarter. Ellis, I know probably a few years later than expected, but congratulations. Well deserved, and enjoy the next phase.

Ellis Jacob, President and Chief Executive Officer, Cineplex: Thank you very much, sir.

Derek Lessard, Analyst, TD Cowen: Maybe I’m just going to start on the restructuring program. Thanks, Gord. You highlighted, the savings you intended to to get from the program. Just curious if you can maybe talk about the timing and maybe some more color on some of the specific initiatives you have in place.

Gord Nelson, Chief Financial Officer, Cineplex: 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. 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. So so it’s a combination, 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.

Derek Lessard, Analyst, TD Cowen: Okay. That’s super helpful. And and maybe just on the, cinema media, just curious on how much visibility you have on sort of the the advertising spend just given the, I guess, the content mix and maybe with the given the context of the, the economic backdrop.

Gord Nelson, Chief Financial Officer, Cineplex: Sure. So, look. We had a spectacular q one, in the in our media business, cinema media business in particular. With, the announcements coming out in 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. So as we mentioned in our commentary, we are very pleased that despite that backdrop, is we are both saying this will show growth in cinema advertising.

So as we look forward, you know, the 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. So as we look forward, it’s a challenging advertising environment, and we will we will fight and, you know, deliver, strong results relative to that backdrop.

Derek Lessard, Analyst, TD Cowen: Okay. Maybe I’ll just log one one final one, for myself. The NCIB is expiring at the end of this month. Just curious, on your views, for the future future buybacks. Again, congrats on the quarter.

Gord Nelson, Chief Financial Officer, Cineplex: Yes. Thanks, Derek. I think one would expect sort of a renewal of that.

Operator: The next question comes from Drew McReynolds from RBC. Drew, please go ahead. Your line is open.

Drew McReynolds, Analyst, RBC: Yes. Thanks very much, and good morning. And just would echo, Ellis, congratulations on your pending retirement. Wish you all the best.

Ellis Jacob, President and Chief Executive Officer, Cineplex: Thank you very much, Drew.

Drew McReynolds, Analyst, RBC: So so, Gore, 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 you want to be with with share repurchases? 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? Thank you.

Gord Nelson, Chief Financial Officer, Cineplex: Yeah. Thanks, Drew. Hopefully, I got all those. But on your first question then on the NCIB and and your during my notes, I obviously gave our capital allocation priorities, You know, one of those elements is is considered to get more active would be once we sort of hit that $50,000,000, you know, cash balance and have the full, draw on the operating facility, you know, that would be 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. On the restructuring charges on the timing, you know, I’ve I’ve mentioned in my commentary that we implemented this in May. So, you should expect to see the savings into the back half of the year and then and then going forward. And then I think your last question was on sort of the operating leverage, and, know, I’ve given you sort of a kind of a or I’ve given most investors sort of a ballpark of around $13 a person is, you know, the incremental EBITDA contribution of each incremental guest. And and so that would that would really continue on.

That would, not change that statistic material.

Drew McReynolds, Analyst, RBC: Okay. No. That’s great. Final one for me on the LVE side. Again, appreciate kind of the same store kind of guidance on modeling this.

In terms of adding to the footprint, it feels like you’re on I can’t remember your phrase last quarter, but a prudent pause, think it was. Any update in terms of returning to more of an expansion mode or, you know, you’re you’re comfortable on the prudent pause at least through the end of this year?

Ellis Jacob, President and Chief Executive Officer, Cineplex: 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, and we will continue to be opportunistic as we move forward.

Maher Yaghi, Analyst, Scotiabank: Okay. Thanks very much.

Ellis Jacob, President and Chief Executive Officer, Cineplex: Thank you.

Operator: We have a question from Maher Yaghi from Scotiabank. Your line is now open. Please go ahead.

Maher Yaghi, Analyst, Scotiabank: Yes. Thank you for taking my question. Sorry, My question was asked. I got cut off two times already today on the call. So, Ellis, congratulation on your retirement.

Long long career. I wanted to ask you, you know, the transition. What what is the board looking for in a new CEO? And if you can just update us on, you know, the path forward. 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 what what is the process and and and the objectives of who you’re looking for, what the board is looking for.

Ellis Jacob, President and Chief Executive Officer, Cineplex: You know, as I’ve said before, we have spent the last four decades, you know, 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. And the eighteen 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 the extensive search so we can get the best candidates that they feel, you know, could basically move this thing forward. And, you know, I think, it’s important to realize that we’ve got a very strong senior team at the company.

Operator/Moderator: You no further questions at this time?

Operator: May I please go ahead if you have any follow ups? With no further follow ups at this time, we have no further questions. So the final call, that’s star one.

Ellis Jacob, President and Chief Executive Officer, Cineplex: Thank you again for joining our calls. 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.

Operator: This concludes today’s call. Thank you very much for your attendance. You may now disconnect your lines.

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