Cineplex Galaxy Income Fund 2006 Third Quarter
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Transcript of Cineplex Galaxy Income Fund 2006 Third Quarter
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Cineplex Galaxy Income Fund Cineplex Galaxy Income Fund
2006 Third Quarter2006 Third QuarterCineplex Galaxy Income Fund Cineplex Galaxy Income Fund
2006 Third Quarter2006 Third Quarter
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Cineplex Entertainment Circuit
Famous Players
Theatres: 54Screens: 575
Cineplex Odeon
Theatres: 52Screens: 507
Galaxy Cinemas
Theatres: 26Screens: 227
As of September 30, 2006
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Famous Players Acquisition - Rationale
The leading film exhibitor in CanadaThe leading film exhibitor in Canada
Accretive to distributable cashAccretive to distributable cash
Complementary operations will lead to cost savingsComplementary operations will lead to cost savings
Opportunities to increase distributable cash through revenue Opportunities to increase distributable cash through revenue
growthgrowth
– Increase advertising market share and other incomeIncrease advertising market share and other income
Addition of high quality theatres in metropolitan marketsAddition of high quality theatres in metropolitan markets
Superior combined managementSuperior combined management
The leading film exhibitor in CanadaThe leading film exhibitor in Canada
Accretive to distributable cashAccretive to distributable cash
Complementary operations will lead to cost savingsComplementary operations will lead to cost savings
Opportunities to increase distributable cash through revenue Opportunities to increase distributable cash through revenue
growthgrowth
– Increase advertising market share and other incomeIncrease advertising market share and other income
Addition of high quality theatres in metropolitan marketsAddition of high quality theatres in metropolitan markets
Superior combined managementSuperior combined management
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Box Office Market ShareMarket Share of Canadian Box Office RevenuesMarket Share of Canadian Box Office Revenues
Cineplex Galaxy32.1%
Cineplex Galaxy32.1%
Other 6.9%Other 6.9%
Cineplex GalaxyCineplex Galaxy
AMC 6.3%AMC 6.3%
Famous Players42.6%
Famous Players42.6%
Empire 6.0%Empire 6.0%
Landmark 3.1%Landmark 3.1%
Guzzo 3.0%Guzzo 3.0%
Combined After DivestitureCombined After Divestiture
Cineplex Entertainment64.2%
Cineplex Entertainment64.2% Empire 13.6%Empire 13.6%
Other 9.8%Other 9.8%
Guzzo 3.0%Guzzo 3.0%
AMC 6.3%AMC 6.3%
Landmark 3.1%Landmark 3.1%
Source: A.C. Nielsen EDI dataSource: A.C. Nielsen EDI data
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Six Top-Tier Brands
SilverCity22 theatresSilverCity
22 theatresColiseum4 theatresColiseum4 theatres
Famous Players25 theatres
Famous Players25 theatres
Cineplex Odeon52 theatres
Cineplex Odeon52 theatres
Galaxy26 theatres
Galaxy26 theatres
Colossus3 theatresColossus3 theatres
As of September 30, 2006
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IndustryIndustry
Industry Overview
overviewoverview
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Canadian Box Office Revenue1965 - 2005
Canadian Box Office Revenue1965 - 2005
Consistent Long-Term Box Office Revenue Growth
Canadian Recessionary PeriodsCanadian Recessionary Periods
$0
$250
$500
$750
$1,000
1965 1970 1975 1980 1985 1990 1995 2000 2005
CAGR since 1965: 5.6%CAGR since 1965: 5.6%
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Industry Box Office
Canadian Industry*
Cineplex Entertainment
Canadian Industry*
Cineplex Entertainment
2005 Q3 2006 YTD2005 Q3 2006 YTD
* Source: Motion Picture Theatre Associations of Canada* Source: Motion Picture Theatre Associations of Canada
-8.6% + 2.0% -8.6% + 2.0%
-6.1% +4.5% -6.1% +4.5%
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Highest Grossing Films Released in 2005
Star Wars: Episode III $380 M
The Chronicles of Narnia $291 M
Harry Potter and Goblet of Fire $290 M
War of the Worlds $234 M
King Kong $218 M
Star Wars: Episode III $380 M
The Chronicles of Narnia $291 M
Harry Potter and Goblet of Fire $290 M
War of the Worlds $234 M
King Kong $218 M
Source: Box Office Mojo
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Highest Grossing Films Released in 2006
Pirates of the Caribbean 2 $421 M
Cars $244 M
X-Men: The Last Stand $234 M
The Da Vinci Code $217 M
Superman Returns $199 M
Pirates of the Caribbean 2 $421 M
Cars $244 M
X-Men: The Last Stand $234 M
The Da Vinci Code $217 M
Superman Returns $199 M
Source: Box Office Mojo
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Upcoming Films for 2006
Night at the Museum December 2006
Casino Royale November 2006
The Santa Clause 3 November 2006
Happy Feet November 2006
Charlotte’s Web December 2006
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2007 Films
FILM RELEASE DATE North American Box Office of Prequel Films ($ millions)
1 2 3 4
Spiderman 3 May 4, 2007 $403 $374 - -
Shrek the Third May 18, 2007 $268 $441 - -
Pirates of the Caribbean: At Worlds End
May 25, 2007 $305 $421 - -
Ocean’s 13 June 8, 2007 $183 $126 - -
Fantastic Four: Rise of the Silver Surfer
June 15, 2007 $155 - - -
Harry Potter and the Order of Phoenix July 13, 2007 $318 $262 $250 $290
The Bourne Ultimatum August 3, 2007 $122 $176 - -
Rush Hour 3 August 10, 2007 $141 $226
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CompanyCompanyoverviewoverview
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Increasing Revenue per Guest
$6.65 $6.97 $7.28 $7.45 $7.73 $7.93
$2.64 $2.77 $2.89 $3.04$3.44 $3.74
$0.99$1.11
$0.74$0.67$0.53$0.54
2001 2002 2003 2004 2005 Q3 YTD2006
Box Office Concessions Other
$9.83$9.83 $10.27$10.27$11.23$11.23$10.84$10.84
$12.28$12.28 $12.51$12.51
Revenue per Guest Revenue per Guest
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Synergies
1. Reducing overhead costs and adopting best practices– Consolidating two head offices– Staff reductions– Adopting best practices
Enhanced revenues Operating savings
2. Media sales efficiencies and effectiveness– Creation of Cineplex Media
3. Improved purchasing and merchandising opportunities– Supplier contracts– Merchandising strategies– Concession management
1. Reducing overhead costs and adopting best practices– Consolidating two head offices– Staff reductions– Adopting best practices
Enhanced revenues Operating savings
2. Media sales efficiencies and effectiveness– Creation of Cineplex Media
3. Improved purchasing and merchandising opportunities– Supplier contracts– Merchandising strategies– Concession management
Three Core Synergies:Three Core Synergies:
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Prospectus Q1 CurrentProspectus Q1 Current
Acquisition SynergiesAnnualized Synergies: ($ millions)Annualized Synergies: ($ millions)
General and Administrative $15 $15 $15
Media 5 5 9
Operations - 5 6
Total $20 $25 $30
General and Administrative $15 $15 $15
Media 5 5 9
Operations - 5 6
Total $20 $25 $30
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Looking Into the Future
Leverage Over 60 Million GuestsLeverage Over 60 Million Guests
Magazine
In-Theatre
Interactive Media-Web
Loyalty
Naming Rights
Magazine
In-Theatre
Interactive Media-Web
Loyalty
Naming Rights
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Marketing
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Growth
1. Other income initiatives
– Digital pre-show network
– Cineplex Media
– Alternative programming
2. Merchandising
3. Theatre openings
1. Other income initiatives
– Digital pre-show network
– Cineplex Media
– Alternative programming
2. Merchandising
3. Theatre openings
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Digital Pre-Show Network Rollout Plan
Phase 1:April 1 Launch
Toronto Extended Market Area- 21 Locations; 215 Screens
Phase 2:Complete
Nationwide - Additional 800+ ScreensTOTAL 89 theatres & 1020 screens
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Cineplex Media
Magazine publishing:– Famous Magazine, Famous Kids, Famous Quebec
In-theatre advertising:– Magazine, onscreen, posters, monitors, buildings,
naming rights
Magazine publishing:– Famous Magazine, Famous Kids, Famous Quebec
In-theatre advertising:– Magazine, onscreen, posters, monitors, buildings,
naming rights
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Alternative Programming
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Loyalty Strategic Alliance
Strategic Alliance
60 million Cineplex guests - 132 Cineplex locations
967 Scotiabank Canadian branches – 6 million Scotiabank Canadian customers
To create Canada’s first and foremost entertainment loyalty program
Includes media rights and naming rights for five Cineplex locations
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Merchandising
Concession Per PatronConcession Per Patron
$2.86 $3.05 $3.17
2004 2005 Q3 YTD 2006
Core RBO
$3.04$3.04$3.44$3.44
$3.74$3.74
$0.20$0.39
$0.56
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The Best Partners
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New Theatres
9 Theatres 89 Screens9 Theatres 89 Screens
Brand Location Screens OpeningBrand Location Screens Opening
Galaxy Milton 8 June
Cineplex Odeon Brossard 16 June
Galaxy Brockville 6 July
Galaxy Saskatoon 12 September
Cineplex Odeon Oshawa 10 Q4
Galaxy Collingwood 7 2007
SilverCity Burloak 12 2007
SilverCity Hamilton 10 2007/2008
Galaxy Brantford 8 2008
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FinancialFinancialhighlightshighlights
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Annual Total Revenue($ millions)($ millions)
2005 excludes divestitures and includes FP for partial year2005 excludes divestitures and includes FP for partial year
2000 2001 2002 2003 2004 2005 Pro FormaLTM March
2005
$250.2$250.2$316.4$316.4 $330.0$330.0 $353.7$353.7
$490.3$490.3
$740.0$740.0
$197.5$197.5
678678 394394 740740775775
1,2751,275 1,2691,269
613613
Screen CountScreen Count
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Annual Attendance
21.125.5
30.7 30.4 31.8
39.9
60.1
2000 2001 2002 2003 2004 2005 Pro FormaLTM March
2005
(millions)(millions)
2005 excludes divestitures and includes FP for partial year2005 excludes divestitures and includes FP for partial year
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Annual EBITDA($ millions)($ millions)
$24.1
$41.7
$63.0$68.5
$74.5
$101.4
$77.6
12.2%
15.8%
21.1%20.4%
19.4%
16.7%
13.7%
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
2000 2001 2002 2003 2004 2005 Pro forma LTM
March 2005
without
synergies
5.0%
15.0%
EBITDA Margin
Adjusted EBITDA Margins – LTM March 2005:
CGX 20.2%
FP 9.0%
2005 EBITDA excludes divestitures and non-recurring/transaction related items and includes FP for partial year2005 EBITDA excludes divestitures and non-recurring/transaction related items and includes FP for partial year
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Total Revenue – 9 months ended September 30($ millions)($ millions)
$297.1
$545.3$511.4
2005 2005 Pro Forma 2006
+6.6%
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Attendance – 9 months ended September 30(millions)(millions)
25.1
41.8 43.1
2005 2005 Pro Forma 2006
+2.9%
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Adjusted EBITDA – 9 months ended September 30($ millions)($ millions)
$33.3 $31.1
$81.2
2005 2005 Pro Forma 2006
Margin 11.2% 6.1% 14.9%Margin 11.2% 6.1% 14.9%
+161%
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Distributable Income(per unit)(per unit)
Q3 2006 Q3 YTD 2006
LTM Sept 2006
Distributable Income per Unit
$0.46 $0.99 $1.45
Distributions Declared $0.29 $0.86 $1.15
Payout 63% 87% 79%
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Credit Facilities
Development facility
– Capacity - $60 million
Working capital facility
– Capacity - $50 million
Term facility
– Capacity - $235 million
Development facility
– Capacity - $60 million
Working capital facility
– Capacity - $50 million
Term facility
– Capacity - $235 million
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Questions