Cineplex Inc.

Good morning or good afternoon all and welcome to the Cineplex Q1 2025 earnings conference. My name is Adam and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. And with that, I'll now hand the floor to Ray Asmat to begin. So, Ray, please go ahead when you're ready.

Good morning, everyone, and thank you for joining us to discuss Cineplex's first quarter 2025 results. I'm Rehan Azmat, 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 Gordon Elson, 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.

Thank you, Rehan, and good morning, everyone. I appreciate you joining us today as we discuss Cineplex's first quarter results for 2025. While we experience a softer box office this past quarter, we continue to execute our strategic initiatives and see encouraging signs across our multiple business segments. Our media business performed very well this quarter, helping to offset softer box office results. Entering the second quarter, April has already overperformed with phenomenal results and we are excited about the strong slate of upcoming films that will drive our business forward for the remainder of the year. Taking a closer look at the exhibition business in the first quarter, the box office performance delivered revenue of one hundred point nine million. The first two months of the quarter performed well. January delivered 100% of the prior year on the success of the extended runs of Mufasa the Lion King and Sonic the Hedgehog 3, where February outperformed the prior year by 24%, driven by major releases such as Captain America, Brave New World, and Dogman. The March box office underperformed in comparison to the prior year due to the tremendous success of June Part 2 and Kung Fu Panda 4 as both over-indexed to the North American box office at Cineplex in 2024. Our international content strategy continues to yield impressive results, delivering 14.7% of the first quarter box office, surpassing the North American box office at 5.9%. I'm pleased to share we've seen a significant upside in box office momentum at the start of the second quarter, which positions as well for the upcoming months and the balance of the year. April delivered 176% of the prior year's box office due to the tremendous success of the Minecraft movie, which had the biggest opening weekend ever for a video game adaptation. beating the previous record held by the Super Mario Brothers movie. Sinners also delivered a strong performance within the month, especially in premium formats like IMAX. On the strong opening performance of Thunderbolts, the first week of May is continuing a similar momentum where we have now fully covered the Q1 box office shortfall on a year-to-date basis, And as of today, we have achieved one hundred and five percent of prior box office and expect strong comparatives going forward. At CinemaCon this year, we were encouraged by the quality and quantity of films presented and engaged in productive discussions with our studio partners, reinforcing the vital role theater plays in the entertainment ecosystem. All major studios presented a solid slate of upcoming releases featuring key franchises, new originals, and marquee blockbusters. In addition to the excitement delivered by traditional studio partners, a significant highlight was Amazon MGM's commitment to theatrical releases, with plans to invest over $1 billion annually in theatrical film production and distribution. This commitment includes a slate of 12 to 15 films annually receiving exclusive theatrical windows, demonstrating their well-placed confidence in the theatrical experience. We are also encouraged by our ongoing conversations with Apple and look forward to the release of their film F1 at the end of June, which is already generating positive buzz. These industry developments, combined with our strong studio relationships, position as well to capitalize on the ongoing recovery of the theatrical exhibition business. The commitment we are seeing from both traditional and emerging studios reinforces our optimistic outlook. Taking a look at our media business, I'm pleased to report exceptional performance in the first quarter with total media revenues increasing by 32.9% to reach 29.7 million. This growth was driven by strong results across both our cinema advertising and digital place based media segments. Cinema media revenue showed remarkable resilience growing thirty eight percent to seventeen point one million. This growth reflects the continued recovery in advertising spending and our success in attracting new advertisers across diverse categories. The value of our on-screen advertising product continues to resonate with advertisers, offering them unparalleled access to engage audiences in a premium environment. As one of the few exhibitors that own our cinema media business, this allows us to benefit from an extremely high-margin segment with the majority of revenue flowing straight to the bottom line. In our digital place-based media business, revenue increased by 26.5% to 12.6 million. This growth was driven by new client acquisitions and expanded deployments with existing partners this quarter. Within our digital out-of-home business, all our new and existing mall networks saw growth over Q1 2024. A location-based entertainment business continues to expand with the revenue increasing 10.5% to $38.1 million in the first quarter due to three new locations being added at the end of 2024. As we continue to strive towards becoming Canadians' choice in entertainment, our ability to provide multiple entertainment options under one roof continues to resonate with guests. LBE generates strong EBITDA margins and offers a more predictable operating environment, given it's not dependent on content. The Rec Room and Palladium locations are contributing steadily and we're encouraged by the potential from recent new builds. Before I close, I wanted to share a brief update on our appeal of the Competition Tribunal's decision regarding our online booking fee. On October 23rd, 2024, Cineplex filed its notice of appeal with the Federal Court of Appeals and with the competition viewer's consent was granted a stay regarding payment of the competition tribunal's administrative monetary penalty pending the Federal Court of Appeals decision. We are diligently conducting all necessary court filings and other preliminary matters in order for the appeal to be heard expeditiously and hope the appeal will be heard in late 2025. Looking ahead, we are optimistic about the release schedule for the remainder of Q2 and beyond. The May lineup is filled with action and adventures for the whole family. Coming on the heels of Thunderbolts is Mission Impossible, the final recording, a fan favorite that traditionally does very well with Canadian audiences. Bringing the nostalgia back in May is the live action adaptation of Lilo and Stitch and Karate Kid Legend. Jumping into June, we'll see a broad range of titles catering to different audiences with the John Wick spin-off film, Ballerina, distributed by Cineplex Pictures, which has extended its partnership deal with Lionsgate until the end of 2026. There's also a live action adaptation of How to Train Your Dragon, the latest from Pixar Animation Studios, Elio, two horror films with 28 Years Later and Megan 2.0, and Apple's F1 starring Brad Pitt, which tells the story of a former Formula One driver who returns to the sport to mentor a young rookie driver. As the summer movie-going season continues, we are off to a roaring prehistoric start with Jurassic World Rebirth. Ten heroes, both big and small, hit the screens in Superman, Smurfs, The Fantastic Four, First Step, and Bad Guys 2. A reboot of the classic slasher film I Know What You Did Last Summer and the fourth installment of The Conjuring Last Rite will terrify moviegoers in the summer. For a dose of comedy, a remake of The Naked Gun starring Liam Neeson and the anticipated sequel Freakier Friday will hit theaters in August. Looking ahead to the fourth quarter, a wide array of content will hit the screens in time for the holiday movie-going season with Tron Heiress, The Black Phone 2, The Running Man, Predator Badlands, Wicked for Good, Zootopia 2, Five Nights at Freddy's 2, the SpongeBob movie Search for SquarePants, and the film longtime fans are eagerly awaiting, Avatar Fire and Ash. As we see the exhibition business gaining momentum ahead, we believe growth opportunities exist across all our business segments. Our media business will continue to capitalize on the robust film slate ahead. The LB segment presents an opportunity to capture our target guests with new menu items and value offerings launching in the quarter. Our market position remains strong, supported by a diversified business model and premium entertainment offerings. The early success we've seen in April and the beginning of May, combined with our strong upcoming slate and strategic initiatives, gives us confidence in our ability to deliver strong results as we move through 2025. Over the decades I've spent in this industry, one thing has remained constant, When economic uncertainty sets in, people still turn to the movies time and time again. We've seen that in tough times. The movie theater isn't just resilient. It becomes essential. It's where people go to escape to connect and to find a bit of joy where they need it most. With that, I will turn things over to Gordon Nelson.