This morning Cineplex (TSX: CGX) released their financial results for the third quarter of 2020. As expected, they saw a massive decline in theatre attendance with a 91% decline from the same quarter in 2019. Of course, the company was impacted by COVID-19, where they just began opening many of their locations within the reporting period.
Results are somewhat mixed, in that they increased 177.5% on a quarter over quarter basis, while still remaining down 85.4% on a year over year basis as the coronavirus continues to ravage the entertainment sector.
Over the last 9 months the company has an overall net loss from operations of $393.6M on $365.8M revenue; a 70.1% decline in revenue from the same 9 month period in one year earlier. Cineplex also saw their 9 month adjusted EBTIDA decline from $299M in 2019 to the tune of -$23.8M.
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Notably during the quarter Cineplex completed the convertible unsecured debenture offering of $275.0 million, which received an over-allotment for an additional $41.3 million. The vast majority of the proceeds were used to pay of the companies credit facilities.
The company finished the quarter with negative operating cash flow of $85.6M. Cash on the balance sheet of $13.2M down from $26.1M at the start of the year. The company which started the year with a current ratio of 0.43, has seen the ratio to 0.24 at the end of the quarter.
Notably during the quarter, Cineplex initiated a sales process for its head office building located at 1303 Yonge Street, Toronto, Ontario.
Cineplex warns investors of the second wave possibly restricting social gatherings in certain markets. They stated the reinstitution of restrictions on social gatherings would result in the closure theatres having a significant negative impact on the ability of the company to return to profitability.
Finally, in regards to the cancelled Cineworld transaction, a Statement of Defense and counterclaim was filed on September 2 by Cineworld in relation to the pending lawsuit filed by Cineplex. Following a response from Cineplex on September 15, a trial date has been set for September 2021. The company is not currently predicting the timing or final outcome of the legal proceedings.
Cineplex stock last traded at $6.37 at market close on November 12, 2020.
FULL DISCLOSURE: Information for this briefing was found via Cineplex, Sedar, and Google Maps. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
