Cineplex Q3 Revenue Rises 310%, Loss Narrows

Cineplex (CGX) revenues rose sharply in its third quarter and its loss shrank as audiences grew with all theaters of Canada’s largest movie theater chain open again.

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Revenue & Earnings

Revenue for Q3 2021 came in at C$250.4 million, an increase of 310.3% from the revenue of C$62 million reported in Q3 2020. Box office revenues increased by 547.7% to C$94.1 million, due to an increase in attendance as Cineplex was able to reopen all theaters. Theater food services revenues increased 515.9% to C$70.9 million during the quarter.

Cinema media revenue doubled to C$6.6 million, while Amusement revenues increased by 302.8% to C$53.3 million. Other revenues increased to C$8.9 million from C$5 million a year ago.

Cineplex reported a net loss of C$33.6 million (C$0.53 per diluted share) in the quarter ended September 30, compared to a net loss of C$121.2 million (C$1.91 per diluted share) in the prior-year quarter.

The company reduced its average monthly net cash burn to C$2.9 million in the quarter, down from C$24 million in the second quarter of 2021. (See Insiders’ Hot Stocks on TipRanks)

Management Commentary

Cineplex president and CEO Ellis Jacob said, “Looking ahead, we remain confident in our solid financial position and disciplined cash management processes supporting the continued recovery of our businesses. We are encouraged by the strong pipeline of upcoming film product and the signs of a return to normalcy that we are all craving. Canadians want to reconnect and recharge with family and friends, and we will continue to capitalize on that pent up demand.”

During the quarter, Cineplex introduced CineClub, a new subscription program. The company also launched Where Escape Begins, a brand new platform.

Analysts Recommendation

On August 13, TD Securities analyst Derek Lessard reiterated a Buy rating on CGX while lowering its price target to C$18 (from C$20). This implies 20.7% upside potential.

The rest of the Street is cautiously optimistic on CGX with a Moderate Buy consensus rating based on two Buys and one Hold. The average Cineplex price target of C$19 implies 27.3% upside potential to current levels.