Cineplex Inc. shares rose about five per cent after the company reported record high revenue for its third quarter and outperformed analyst expectations, helped by a strong film slate including “The Lion King” and “Spider-Man: Far From Home.”
Shares in the movie theatre chain rose $1.14 or 4.94 per cent to $24.24 in early afternoon trading on the Toronto Stock Exchange. They reached a high of $24.99 earlier in the day.
The jump came as the company reported higher-than expected third-quarter profit and revenue.
Cineplex reported Thursday that its third-quarter profit rose to $13.4 million or 21 cents per share this year compared with $10.2 million or 16 cents per share in the same quarter last year.
Revenue totalled $418.4 million, up 8.3 per cent from $386.4 million, as theatre attendance increased 1.8 per cent due to what Cineplex called a stronger film slate compared with last year.
CEO Jacob Ellis said on a conference call with analysts Thursday that the result marked a “record total revenue” for the company.
Analysts on average had expected Cineplex to report a profit of 14 cents per share and $418 million in revenue, according to financial markets data firm Refinitiv.
Box office revenue grew to $177.9 million compared with $173.3 million a year ago, which RBC Dominions Securities analyst Drew McReynolds wrote in a note was “slightly lower than expected.” RBC estimated it would be $181 million.
In addition to The Lion King and Spider-Man, Cineplex attributed the strength to films such as “Fast & Furious Presents: Hobbs & Shaw,” “It Chapter Two” and “Once Upon a Time in Hollywood.”
The current quarter was also off to a good start, said Ellis, largely due to the success of “Joker,” which has become the highest grossing film to open in October, reaching $316 million in domestic box office to date.
Ellis said the line up for the remainder of the year was strong, highlighting “Ford v Ferrari,” “A Beautiful Day in the Neighbourhood,” “Frozen 2” and “Star Wars: The Rise of Skywalker.”
In addition to the improvement at the box office, Cineplex said food services revenue totalled $125.6 million, up from $115.6 million.
Media revenue rose to $43.4 million compared with $33.5 million a year ago, while amusement revenue increased to $58.1 million compared with $53.8 million. Other revenue, which includes the Cineplex Store, promotional activities, screenings, private parties, corporate events and other items, rose to $13.6 million compared with $10.6 million a year ago.
“These positive results are a great example of how our diversified businesses continue to build scale and make more meaningful contributions to our bottom line,” Ellis said.
The results come as Cineplex faces growing competition from streaming services.
Earlier this week, The Walt Disney Company launched its new subscription platform, Disney Plus. The Canadian offering spans nearly 500 films and 7,500 TV show episodes.
Disney Plus is the latest entrant to an increasingly packed streaming space. Its competitors in Canada include Netflix, Bell Media’s Crave service, Amazon’s Prime Video and Apple’s TV Plus.
Ellis said the industry has faced disruptions over the years including VHS, DVD, the internet and now streaming.
“But time and time again, over the past 30-plus years, moviegoing has long excelled amid changes in the industry,” he said.
When there’s great content available, consumers want to see the film in the way it was intended: on the big screen with great sound and amenities, he said.
That’s why the company remains focused on offering viewers an experience that can’t be replicated at home, he said, such as through IMAX, 3D and other types of viewings.
This report by The Canadian Press was first published Nov. 14, 2019.
Companies in this story: (TSX:CGX)
Aleksandra Sagan, The Canadian Press