Cineplex shares plunge on earnings miss
Ticket and concession revenue increased but profits dipped
TORONTO — Hit films helped deliver box office and concession stand gains for Cineplex Inc., but that wasn’t enough to keep the entertainment giant from missing expectations as lower profits caused the company’s shares to fall by nearly 20 per cent.
The Toronto-based movie theatre operator said Wednesday that it earned $10.2 million or 16 cents per diluted share for the company’s third quarter, a 40.7 per cent drop from $17.2 million or 27 cents per diluted share the year before.
Revenue for the period ended Sept. 30 increased 4.4 per cent to $386.7 million, up from $370.4 million.
The company was expected to earn 30 cents per share on $400.2 million in revenues, according to analysts polled by Thomson Reuters Eikon.
Cineplex shares lost $7.12 at $28.93 in early afternoon trading on the Toronto Stock Exchange after hitting a low of $28.54.
President and chief executive officer Ellis Jacob attributed the decreased profits to lower advertising revenue and some screens that were out of commission.
However, he said he considered the quarter’s performance “an anomaly.”
“It was a tough quarter,” he said, referencing the advertising dollars the company attracted. “The large contracts in some of the automotive areas ... pushed out or reduced, and then we also had the change in the (Ontario) government and there has been less spending in comparison to the prior year.”
Cineplex’s earnings were also hampered by higher share-based compensation and $1 million in restructuring costs.
Jacob stressed that Cineplex is not expecting to see in the fourth quarter — typically Cineplex’s best quarter — the decline it saw in the third quarter.
“This is not a business where the floor is falling out from under it,” he said on a call with analysts.
Later, in an interview with The Canadian Press, he added, “we would like to be up, but this quarter has been such a big mess that it’s drawn a lot of attention, but we think the fourth quarter will be back to normal.”
Concession revenue per patron rose to $6.25, up from $6.01 in the same quarter last year and box office revenue per patron was $10.07, an increase from $9.81 a year ago.
Theatre attendance was up 2.6 per cent to 17.2 million, compared with 16.8 million. That increase was attributed to moviegoers flocking to see “Mission: Impossible Fallout,” “Ant Man and the Wasp,” Jurassic World: Fallen Kingdom,” “Crazy Rich Asians” and “Hotel Transylvania 3: Summer Vacation,” Jacob said.
Jacob said he still considers the movie business to be “strong,” especially when content is good and a social experience can be delivered for the price of a film ticket.
“It is a very small price to pay,” he said. “It costs you more to park your car than to go to a movie.