Cineplex Inc.

Good morning, all. Good afternoon, all, and welcome to the Cineplex Q2 2025 earnings conference call. My name is Adam, and I'll be your operator for 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 1 on your telephone keypad. Now, we'll now hand the floor to Rehan Azmat to begin, so please go ahead when you're ready.

Good morning, everyone, and thank you for joining us to discuss Cineplex's second quarter 2025 results. I'm Rehan Azmaz, Vice President, Investor Relations, Corporate Development, and Financial Planning and Analysis at Cineflex. Joining me today are Ellis Jacob, our President and Chief Executive Officer, and Gordon Ellison, 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 severity 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 Jacobs.

Thank you, Rayan, 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 2019, we delivered box office revenues exceeding $50 million 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 million. 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. Q2 box office revenue reached 158.5 million up an incredible 38% from the prior year and driven mainly by attendance, which grew by nearly 33% to 11.6 million 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 Q2 showcased a breadth of content driving our success. On 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 a franchise-best opening domestically and the performance over-indexed in Canada. Lilo & Stitch and How to Train Your Dragon, both live-action adaptations of family-friendly titles, tapped into nostalgia and delivered strong, sustained performance. F1, 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 Q2, 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 Cine Club members. Cine Club is a great way to save where members receive a monthly movie ticket they can use, upgrade, or roll over. Cine Club members also receive a discount on concessions and exclusive offers and events. Cine Club has now surpassed 200,000 members, a major milestone for the program. It had a very strong first half of 2025, growing by 10.3% year to date. In Q2, over 20% of new members opted for the annual plan, which is helping to reduce churn and drive more consistent visitation. Cine Club members continue to drive strong engagement, visiting more frequently, upgrading to premium formats, and purchasing more concessions. As we continue to scale both the Cine Club and ScenePlus programs, our ability to understand and effectively target loyal guests through 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 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 10-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 U.S. and reinforces CDM's leadership in data-driven end-to-end digital signage solutions. As we look ahead, we believe our media business with their unique combination of first-party data Premium inventory and national scale continue to offer advertisers a compelling platform to reach and engage consumers. With multiple touchpoints 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 Q2, our LPE revenue grew 13% year-over-year to $33.2 million, 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 Q2 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 October 23rd, 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 Appeals decision. Our appeal is now scheduled to be heard on October the 8th of this year. 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 2, Weapons, Freakery of Friday, and the supernational horror The Conjuring Lost Rights. 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 Elphaba in Wicked for Good, Zootopia 2, Five Night at Freddy's 2, 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 Q2, combined with our strategic initiative to win with our guests, gives us confidence in our ability to deliver results as we move through the remainder of 2025. Finally, as many of you know, I announced my plans to retire at the end of 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.