Shares rise 12% as moviegoers return
Cineplex (CGX.TO) saw its stock jump nearly 12 percent Thursday after the company reported third-quarter earnings as consumers returned to movie theaters.
The movie company said net income for the three months ended Sept. 30 rose to $30.9 million, or 43 cents per diluted share, compared with a loss of $33.6 million, or 53 cents per diluted share, in the same period last year. in the year Total sales grew 35.7 percent year-over-year to $339.8 million, as participation increased in the quarter.
The results sent Cineplex shares up nearly 12 percent in early trading Thursday. The company’s shares were trading at $10.11 on the Toronto Stock Exchange at 12:50 p.m. ET, up 4.3 percent from Wednesday’s close.
“These results, along with many other examples from the past year, demonstrate that consumer enthusiasm is as strong as ever,” CEO Ellis Jacob said in a conference call with analysts on Thursday.
“The bottom line is that when there’s compelling content, guests are coming back to our theaters.”
Despite earnings growth in August and reduced business volume in September, the company received limited content from Hollywood due to pandemic-related production delays. Cineplex says it changed its strategy, focusing on marketing initiatives to boost attendance and international product offerings. The company says it earned 80 percent of the North American box office for the Punjabi film. Chhalla Mud Ke Nahi Aaya, and 28 percent of Disney’s Bollywood film North American market share Brahmastra First Part: Shiva.
“These are strong numbers, especially for Cineplex, which generally takes seven to eight percent of the North American box office for Hollywood releases,” Jacob said.
Box office sales are still below pre-pandemic levels, with third-quarter revenue at 70 percent of 2019 levels. October box office revenue fell to 62 percent of 2019 levels, but Jacobs said it released several new titles in the fourth quarter, including. Black Panther: Wakanda Forever and Avatar: The Way of Water.
Cineplex also struck a deal with Netflix to release its movie theatrically in October Glass Onion: Knives Out mystery before being added to the streaming service, a pattern Jacob hopes will continue.
“It’s becoming increasingly clear that streamers’ approach of collapsing theatrical windows and focusing on growing their subscriber base is not sustainable or competitive,” Jacob said, adding that he sees plenty of opportunity for streamers, including Apple and Amazon.
“What you’re going to see is moving towards the (theatre) window… It’s very exciting and I’m pretty sure we’re going to see more content on the big screen.”
As the movie theater business continues to recover from its pandemic downturn, there are growing concerns in Canada about the global economic slowdown and potential recession. Cineplex CFO Gord Nelson says the movie theater industry tends to do “very well” during recessionary cycles.
“As consumers trade in out-of-home experiences, going to the movies becomes an affordable option,” Nelson said.
“In fact, in seven of the last nine recessions, box office receipts have grown.”
Alicja Siekierska is a senior reporter for Yahoo Finance Canada. Follow him on Twitter @alicjawithaj.
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