TD comments on last resultsQ2/21 First Look: CGX Narrows Loss, Beats Consensus Derek J. Lessard Cheryl Zhang, (Associate)
Event
Cineplex reported Q2/21 adjusted EBITDA of -$16.9mm, above consensus of -$44mm. Our -$13mm estimate was the street high.
Impact: SLIGHTLY POSITIVE
As a result of COVID-19, the majority of CGX's theatres and LBE venues were either closed and/or operating at significantly reduced capacity in Q2/21, and as expected, these results are reflective of that. However, with a potential fourth wave (of COVID-19) looming and a nervous market (i.e. the stock is down 23% since CGX announced the re-opening of its Ontario theatres one month ago), we do not think that these results will be the bone that is going to feed into any selling pressure today, if there is any.
Revenue (BEAT): Consolidated revenue of $65mm > consensus of $59mm with most of the sequential and y/y improvement due to the partial re-opening of theatres (i.e. outside of Ontario).
Adj. EBITDA (BEAT): CGX continued to narrow its quarterly loss to $17mm (from -$30mm in Q1/21 and -$41mm in Q2/20). This was significantly better than consensus, which was looking for a $44mm loss.
Monthly cash burn (IMPROVED): The monthly cash burn was ~$24mm, better than the ~$27mm cash burn reported in Q1/21. This improvement is consistent with even the slightest incremental lift in attendance. We estimate that CGX has sufficient liquidity to operate until the anticipated rebound in attendance in the second half of 2021, at which point, we expect business conditions to normalize.
There is really not much more to this story, in our view, other than the re-normalization of attendance. The obvious risk to the timing of that rebound is the impact stemming from a potential re-acceleration of COVID-19 cases