The force awakens for Cineplex

With crowds flocking to see the latest Star Wars film, the Toronto-based co experienced record-breaking revenues to close out the final quarter of 2015.
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Cineplex CEO Ellis Jacob ended his Q3 quarterly call by saying, “May the force be with you.”

As it turned out the force was with him (and Cineplex) as the company ended the year with a record-breaking Q4 income of $76.8 million or $1.22 per share, doubling numbers for the same period the year before ($32.1 million/51 cents a share), and making 2015 the most successful year in Cineplex’s history.

Jacob and CFO Gord Nelson took a round of congratulatory messages from analysts on their investor call earlier this morning when they announced the results for the quarter ending Dec. 31. Revenues during the quarter also saw a 23% increase to $407.4 million.

Total revenues for the year hit $1.37 billion, an increase of 11% from the 2014′s $1.23 billion. Net income for the year was up 76% to $134 million.

The media and entertainment company’s increases were attributed to the success of box office behemoth Star Wars: The Force Awakens, which premiered on Dec. 18, 2015. Box office revenue was up $23.8 million from a year earlier reaching $196.3 million, with 22% of that revenue earned in the last 14 days of the year. Other films that did well included SpectreThe Martian and Jurassic World. 

Advertising revenues, which are based largely on showtime and pre-show advertising sales, also saw record gains, largely due to the addition of new clients. Overall, the company broke a record in annual media revenues, which hit $153.6 million, 14.5% more than in 2014.

Specifically Cineplex media revenues were $112.5 million for the year, almost 25% more than in 2014, most of those driven by advertising sales in the auto and electronic categories.

Cineplex Digital Media recorded higher digital advertising revenues in 2015 compared to 2014, including those in the TimsTV and Oxford shopping mall networks. These increases were offset by lower project revenues due to the timing of project installations which fluctuate with the timing of clients’ requirements.

The company’s digital signage business, Cineplex Digital Media, which is responsible for menu boards and other signage in Tim Hortons and McDonald’s venues, recently added American Dairy Queen as its biggest client to date. While the business posted higher advertising revenues in 2015, project revenues were lower, which Fisher explained was due to the lengthy wait periods based on installation demands. However, with the addition of the ADQ and A&W accounts, that business is well positioned for strategic growth in 2016.

The company said it set records for both fourth quarter and full-year revenue, while quarterly attendance was a record 20.4 million — up 7.1 per cent from the previous year

Its entertainment and food and concept, the Rec Room, is due to launch in Edmonton in Q2 this year followed by the launch of another space in Calgary in 2017. Both Fisher and Jacob said they were not overtly concerned about the impact of job losses and recession on the company’s movie or other business, with Jacob pointing out on two occasions during the call that economic downturns usually bring more people to local entertainment venues as people cut down on out-of-city travel costs. The company has plans to roll out 10 to 12 over a period of years. 

The quarter also saw the addition of a partnership with PlayStation for the World Gaming Tournament featuring Call of Duty: Black Ops III, which is soon to enter the regional finals stage to be played in 24 Cineplex theatres across the country. The Canadian finals will take place on March 6 at the Scotiabank Threatre in Toronto.

At the end of this week, the Scotiabank Theatre will also host an eSports event for the All Star NBA tournament.

The quarter also sees an extension of the Scotiabank Scene partnership to Oct. 31, 2025. Some 200,000 new members were added to the company’s loyalty program this year, bringing its membership up to 7.2 million and marking the third consecutive year that it has added over a million members.

In December Cineplex launched its “See the Big Picture” brand platform, which includes a short film titled Lily and the Snowman. That film, which previews before each film shown on a Cineplex screen, has been viewed 13.5 million times since it was launched and has been viewed 28 million times online.