Good day, and welcome to the Cineplex Inc. third quarter 2021 analyst conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mahsa Rejali, Executive Director of Corporate Development and Investor Relations. Please go ahead, ma'am.
Good morning, and welcome. With me today is Ellis Jacob, our President and Chief Executive Officer, and Gord Nelson, our Chief Financial Officer. Before I turn the call over to Ellis, let me remind you that certain statements being made are forward-looking and subject to various risks and uncertainties. Such forward-looking statements are based on management's beliefs and assumptions regarding the information currently available. Actual results could differ materially from those expressed in the forward-looking statements.
Factors that could cause results to vary include, among other things, the negative impact of the COVID-19 pandemic, adverse factors generally encountered in the film exhibition industry, risks associated with other national and world events, discovery of undisclosed material liabilities, and general economic conditions. Following today's remarks, we will close the call with our customary question- and- answer period. I will now turn the call over to Ellis Jacob.
Thank you, Mahsa, and good morning, everyone. We hope you and your families remain healthy and well. We appreciate you joining us today, an important day of Remembrance Day. I would like to take a moment to honor the brave Canadians who have served and continue to serve our country in times of conflict and peace. We acknowledge those individuals and their families who have given up so much in the name of our country. Thank you, and let us not forget. As I address the quarterly results, I am pleased to say that our business has turned a corner.
The global box office is back, and domestic openings like Shang-Chi and the Legend of the Ten Rings, Venom: Let There Be Carnage, No Time to Die, Dune, and Eternals are exceeding expectations, and in some cases, even over-indexing in Canada, as was the case with Shang-Chi, No Time to Die, and Dune. Our business and the industry are recovering thanks to the millions of Canadians who have clearly missed the sense of escape that only the theatrical experience can provide. For the first time since the pandemic began, we are reporting positive adjusted EBITDA of CAD 10.8 million for the quarter, as well as positive quarterly adjusted EBITDA across all our business segments.
This is a huge milestone for our team and our business, one that comes from 18 months of hard work and unwavering determination to get us through one of the toughest times in our history since the pandemic began in March 2020. With Gord speaking to our financial results shortly, I want to focus my remarks on three things. Our full reopenings and continued momentum towards profitability, our efforts to encourage habitual moviegoing, and get guests back to our theaters. Finally, I want to reaffirm our solid position for a strong recovery. Our entire circuit of theaters and entertainment venues nationwide were finally reopened early in the quarter, and we are seeing encouraging results in attendance as well as growth from all our other businesses, including P1AG, Cineplex Digital Media, and Cineplex Media.
As we have done throughout the pandemic, we maintained our prudent approach to cost management and reduced our average monthly net cash burn to CAD 2.9 million during the quarter, down from CAD 24 million in Q2 2021. This is a significant achievement, and I would like to thank our incredible employees across the U.S. and Canada for their perseverance, sacrifice, hard work, and best-in-class execution in carrying the company through this recovery. We truly could not have reached this state and be confidently welcoming our guests back without such a committed team.
When we look at the results coming out of the quarter, it's clear that movies are back and so is Cineplex. Since reopening our entire circuit on July 17th, we have welcomed over 12 million guests to our theaters. We are starting to see box office numbers progressively increase and approach pre-pandemic levels.
For example, when compared to pre-pandemic months in 2019 to 2021, July's box office reached 38% with only a partial month of openings. August was 62%, September was 67%, and the growth continued into October with box office revenue reaching 80% of the same month in 2019. This past weekend was our highest box office since the pandemic started, even exceeding the same weekend in 2019. During the third quarter, we also saw VPP and CPP reach all-time highs at CAD 11.38 and CAD 8.58, respectively. The combination of pent-up consumer demand and guests indulging in our concession offerings and premium formats were the key drivers of these exceptional results.
Looking at our other businesses, P1AG delivered record quarterly adjusted EBITDA, driven by continued strength in the reopening of U.S. route locations, strong growth in Canada from reopening, and a focus on cost management. We are also seeing an encouraging ramp-up within Cineplex Media as client confidence returns and companies build out their advertising budgets for the fourth quarter and into 2022. The pipeline is strong, and we are seeing an increasing momentum as clients return to cinema media as a key component of their campaigns. Our team at Cineplex Digital Media has also been busy rolling out Flex Smart Engine, a data-driven machine learning software platform that optimizes digital signage to deliver the right content to the right audience at the right time.
As we look forward, we believe we can generate high- margin opportunities with this new platform. This was an important quarter for us.
Our entire circuit of theaters and entertainment venues are open, and we are seeing promising growth from our other businesses too as we continue momentum towards profitability. Combined with insights from our consumer surveys and recent trends, we know that Canadians have missed those shared social experiences and are excited to be back. Which is why now more than ever, we are providing every single guest that comes into our venues with a great entertainment experience. We are taking proactive steps to increase visitation and attendance in our theaters and entertainment venues through innovative offerings, marketing campaigns, and new programs. In support of this strategy, during the quarter we introduced our entertainment subscription program, CineClub.
For just CAD 9.99 per month, members receive one regular admission ticket every month with no expiration date, the opportunity to purchase additional tickets at a discounted CineClub price, 20% off concession items, and a variety of other benefits, including discounts on purchases at the Cineplex Store and on amusement gaming at our entertainment venues nationwide. We designed CineClub to appeal to a wide array of guests and entice them to enjoy the theatrical experience more frequently with their friends and families. The additional discounts included for concessions, the Cineplex Store, The Rec Room, and Playdium also provide our guests with even greater value to enhance the entertainment experience across the Cineplex [C-POPS system]. So far, the program has received an overwhelming positive response from our guests and has exceeded our expectations and internal benchmarks as membership continues to grow.
In September, we launched our new brand platform and tagline, Where Escape Begins. At its core, the campaign strategy is centered around reminding Canadians about the magic of cinema, the escape a movie theater provides, and to celebrate the unrivaled experience of the Cineplex big screen. It welcomes Canadians back to the theater experience and reminds them about what they've been missing for so long, the immersive cinematic escape, and of course, our famous popcorn, too. Also, during the quarter, we opened our first location of The Rec Room in British Columbia and our first standalone VIP Cinemas in Western Canada, both located at the amazing Brentwood Center in Burnaby, British Columbia. Later in the quarter, we also opened a location of The Rec Room in Barrie, Ontario, at Park Place, which was our 10th Rec Room location to open across Canada.
All locations opened extremely well, especially The Rec Room, Brentwood, which had one of our strongest location-based entertainment openings ever and remains the top-performing LBE site to date. Overall, our LBE venues continued to perform well this quarter, even with capacity restrictions in some provinces. This was especially evident in Alberta, where capacity restrictions were lifted for the quarter and our LBE locations performed at almost 90% of their 2019 levels. With our location-based entertainment venues now open coast to coast, we offer our guests even more options when it comes to spending their leisure time with us. Later this month and subsequent to quarter- end, we will celebrate another important milestone for our company. We are opening our 25th VIP Cinema location in Canada with Cineplex VIP Cinemas University District in Calgary.
Not only is this the province's first standalone VIP Cinemas, but it's also the next evolution of our VIP concept, offering new amenities. These include newly designed heated recliners with adjustable power headrests and VIP chaise lounges that turn the front row in our auditoriums into the best seats in the house. These are just some of the ways we are enticing guests back to our theaters and ensuring they enjoy an exceptional experience, one they cannot replicate at home. Of course, we will continue to closely monitor the fourth wave of the pandemic around the world and in Canada. However, the recent removal of capacity restrictions across the majority of provinces has been welcome news to the Cineplex team and movie lovers across the country. We are now open at full capacity at close to 90% of our circuit.
While capacity restrictions have changed, our commitment to the health and safety of our employees and guests remains the same. It's our top priority. We have and will continue to follow all guidelines set forth by all levels of government, including proof of vaccination requirements. Our field teams are doing a superb job with limited issues or concerns. I'd like to thank them for their flexibility and hard work as we implement these new protocols, sometimes with only a few hours' notice. One thing is for sure: our team and our guests are happy to be back.
With a new appreciation for friends and family and social settings that have been restricted for so long, we are focusing on providing our guests with the one thing they can't get at home: an immersive, shared entertainment experience. Looking ahead, we are encouraged by the continued easing of restrictions and the availability of new film products, including blockbuster titles. We are also seeing tremendous success with our international titles. Three of the top 10 highest- grossing Punjabi films in Cineplex history were released in 2021, which indicates significant post-pandemic growth. For the third quarter, our top five grossing films were Shang-Chi and the Legend of the Ten Rings, Black Widow, Jungle Cruise, Free Guy, and F9. Shang-Chi overindexed in Canada and set an all-time record for the biggest Labor Day weekend box office in North America.
October box office numbers were even more encouraging, with films like Venom: Let There Be Carnage, No Time to Die, Halloween Kills, Dune, and Eternals all drawing guests back to the theater. In fact, the opening weekend of Dune generated box office revenue that surpassed 2019 numbers for the same weekend. It is clear the global film industry is poised for a big return as restrictions continue to ease and content supply is strong. For the remainder of the fourth quarter, there are a variety of films for all audiences coming from multiple studios. Just to name a few, we have Ghostbusters: Afterlife, House of Gucci, West Side Story, Spider-Man: No Way Home, The Matrix Resurrections, and Sing two.
We have what is expected to be one of the strongest film slates awaiting movie lovers in 2022, with films like Morbius, The Batman, Sonic the Hedgehog two, Doctor Strange in the Multiverse of Madness, Top Gun: Maverick, Jurassic World Dominion, Minions: The Rise of Gru, Mission: Impossible seven, Spider-Man: Across the Spider-Verse, Black Panther: Wakanda Forever, Avatar: The Way of Water, and Aquaman and the Lost Kingdom. All of this is extremely encouraging, and with the healthy movie-going behavior we have witnessed since reopening, we know we are moving in the right direction as an industry on the road to recovery. Before I turn things over to Gord, I would like to provide a brief update on the Cineworld litigation. As you may have heard, the trial has now concluded, with the closing arguments having finished last week.
We feel confident in the integrity of the process that unfolded before the Ontario Superior Court and anticipate a judgment in several months. Looking ahead, as always, we are preparing for the unknown, especially as we enter the winter months. We are closely monitoring COVID infection rates and are ready to adapt as we continue navigating the pandemic while positioning our company for ongoing success. The bottom line is that Canadians want to reconnect and recharge with family and friends, and that's exactly what our theaters and entertainment venues offer. Our business is in recovery mode, and as we look towards our future, we are confident in our efforts to control costs and solidify our financial position. We are confident in our plans to increase visitation and welcome guests back, and we are confident in the industry's ability to come back.
With that, I will turn things over to Gord. Thank you.
Thanks, Ellis. I am pleased to present a condensed summary of the third quarter results of Cineplex Inc. For further reference, our financial statements and MD&A have been filed on SEDAR and are also available on our investor relations website at cineplex.com. Our MD&A and earnings press release includes a fulsome narrative on the operational results, so I will focus on highlighting and quantifying some of the key items, including commentary on cost control, liquidity initiatives, and outlook. As Ellis mentioned, our business turned a corner as we were finally fully reopened, albeit with selected capacity restrictions by the end of the third quarter. Despite all locations not being open for the entire quarter, we reported box office revenues of CAD 94.1 million, which was approximately 53% of the box office revenue for Q3 2019.
In addition, we were extremely pleased to report our first positive EBITDA quarter since the beginning of the pandemic, with EBITDA of CAD 10.8 million. In addition, we reported positive EBITDA in all reportable business segments. With the positive EBITDA, we were able to materially reduce the average monthly net cash burn to CAD 2.9 million from CAD 24 million when comparing Q3 2021 to Q2 2021. We continue to be focused on cost control as we reopen the circuit, and I wanted to provide some comments on our largest fixed and semi-fixed costs and the impacts of subsidies and abatements during the quarter. For the third quarter, we reported government subsidies of approximately CAD 18.5 million, as compared to CAD 28.5 million in the second quarter of 2021.
The CAD 18.5 million reported in Q3 2021 includes approximately CAD 16.2 million in wage subsidies under the CEWS program and approximately CAD 2.3 million under the CERS program in provincial property tax and utility subsidies. Our wage subsidies under the CEWS program increased CAD 541,000 to CAD 16.2 million in Q3 as compared to Q2, as our gross wages increased with the reopenings, and this more than offset the declining participation rate given the tail off of the CEWS program and our revenue increases. Our occupancy-related subsidies decreased to approximately CAD 2.3 million as compared to CAD 12.9 million in the second quarter, primarily as provincial support ceased after the mandated closures were lifted.
In addition to the government subsidies, we continued to receive abatements from our landlords, albeit at declining amounts as time has passed and our locations reopened. For the third quarter, we received the benefit of abatements totaling CAD 4.9 million, as compared to abatements and the sale of lease rights totaling CAD 13.1 million in the second quarter of 2021. I also wanted to highlight some additional costs incurred during the quarter. Enhanced cleaning protocols and additional staffing costs related to the verification of vaccine passports amounted to approximately CAD 1.4 million during the quarter. Also, as the Cineworld litigation moved to the trial stage on September 13th, our legal costs related to this litigation increased to CAD 4.1 million during Q3.
For the third quarter of 2021, we reported net CapEx of CAD 3.5 million and approximately CAD 35.1 million during the past 18 months of the COVID-19- impacted period. As we look forward for the remainder of 2021, we will only be completing contractually committed projects and required maintenance CapEx projects. As such, we expect that net CapEx for 2021 will be approximately CAD 30 million. Beyond 2021, we will continue to be prudent with our growth initiatives and will seek out opportunities within the disrupted retail landscape. I would now like to focus on our liquidity position. For Q3 2021, we were pleased to have net repayments under our credit facilities of approximately CAD 26 million. Throughout 2021, we have managed our debt balance by minimizing our cash burn and looking for liquidity opportunities.
Key liquidity opportunities on a year-to-date basis include the receipt of the income tax receivable and the head office sale- leaseback proceeds. As a reminder, on the latest credit facility amendment, we extended the suspension of financial covenant testing to the fourth quarter of 2021, but provided for a monthly liquidity test until the financial covenants are reintroduced. As of September 30, 2021, we had approximately CAD 272 million in availability under our credit facilities. We significantly decreased our average net monthly cash burn to CAD 2.9 million during the latest quarter, and we believe we have positioned the company well to handle any further uncertainties through the next 12 months. As we continue to ramp-up, we will continue to focus on cost controls and liquidity while driving revenues.
For the month of October, we are pleased to advise that our box office revenues were approximately 80% of our box office revenues in October 2019, and we had positive EBITDA. The signs continue to be encouraging as we look forward. We see restrictions being relaxed, we see pent-up consumer demand, and we see a backlog of film titles to supply the market. We continue to focus on the safe operations of our businesses and cost management while exploring opportunities for value creation. That concludes our remarks for this morning, and we'd now like to turn the call over to the conference operator for questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one for questions. We will take our first question from Derek Lessard with TD Securities.
Yeah, good morning, everybody, and hope everybody is safe, and congrats on navigating this tough operating environment. Just taking a look-
Thanks, Derek.
Yeah. Just taking a look at your film costs, which are trending maybe a few percentage points below 50%. I'm just curious as to the dynamic going on there and whether this might be the studio's way of maybe helping theaters in the industry get back into the black.
It's, Derek, it's mainly because of the mix of film products and the studios that are coming out with the movies, and also the international films that we have as part of the overall movies that were released during the quarter.
Okay. That's helpful.
Sure.
Maybe just one last one for me. Maybe it's a little premature here, but just wondering if you've started to think about, you know, life post-pandemic and what that means for paying down debt further and maybe resuming a dividend payment.
Yeah. Derek, look, one thing is we've always said is, you know, in the short-term, we've significantly reduced our cash outflows from what we had done historically, so the dividend is not there right now. And also the CapEx has been materially reduced from where it was kind of pre-pandemic. You know, our focus right now is let's get reopened. Let's get our balance sheet back more into that target zone that we feel comfortable with. And as we've always said, you know, our comfort zone is, you know, a leverage of somewhere between 2.5x and 3x . So let's get there first, and then, you know, we'll take a look at that question.
Okay. Thanks, everybody.
Thank you.
We will take our next question from Jeff Fan with Scotiabank.
Thanks. Good morning, everyone. Nice to see positive EBITDA. A couple of questions. On your theatrical metrics, the VPP and CPP were extremely strong compared to Q3 levels that you've stated. How sustainable do you think this is? It seems like some of it was price increases, some of it is mix. How do you see this kind of playing out? A couple of number questions as well. One is just the cash burn, Gord. You guys gave us some very good month-to-month capacity or attendance numbers versus 2019. Wondering if you could just talk about the cash burn from month- to- month, how much of an improvement that you saw from July to September, and then maybe in October as well.
Then the final question is just on inflation, and the potential impact on costs. Are you seeing any of these pressures in your numbers yet? Also, as you look out to 2022, I guess with the Ontario minimum wage increase, can you help us re-quantify what that is, if you have that handy yet? Thanks.
Jeff, I'll take the first part of your question, and then I'll turn it over to Gord. On the VPP, as we saw, it was up, you know, over 20%, compared to last year. A large amount of that is coming because of premium format and the guests wanting to partake in, you know, the UltraAVX, the IMAX, the VIP, all of those different formats, which come with a higher VPP. Then on the CPP, which was up, you know, close to 16%, we basically are seeing a real desire for our guests to indulge in all of the, you know, food items we have to offer.
Because when we had the, you know, restricted capacities, we had the benefit of processing, you know, our guests in a quicker way through the, concessions and, some of those areas. In addition to that, for example, in VIP, you can pre-order your food before you get to the cinema, which has also been very positive. As far as will these trends continue, as the, you know, guests increase, it gets to be, you know, a little more challenging. You know, we will see and work hard to try and maintain as much as possible in the, concessions as we move forward. I hope that, gives you a good color on where it's from.
Thanks, Ellis.
And then, um, on-
Thanks.
Sorry, Jeff. I'll take your next two questions then. First of all, with respect to cash burn, then, you know, we provided some monthly data to you. We were pleased. We're pretty much in line with where we expected. I think last time we spoke, we expected, you know, Q3 box office to be around 55%, I think is what we said, 55% of 2019's levels. We came in at 53%. With the reopening, we ramped up, you know, month by month, in terms of our achievement of 2019 box office.
We had a strong July, you know, relative to other months. September is typically a weak month for us. When you look at cash burn, you know, you gotta remember that the interest costs are relatively fixed. The CapEx is a bit lumpy, as we've opened in a few locations. But look at it. At the end of the day, we were encouraged by having positive EBITDA and the marginally negative cash burn during the quarter. As we go forward, you know, we need to think about those attributes too, as we go forward. Things are encouraging.
We were really pleased that we paid down, you know, CAD 26 million of debt during the third quarter. Although we had negative cash burn, as you know, we had some working capital improvements that helped us get there. With respect to your second question, then on inflation then is we are seeing, I guess, a couple of two macro effects that you know, people are hearing about. One is some instances of supply chain disruption, which means, you know, some level of product substitution that we're seeing, you know, at the theaters, particularly from the food and the you know, cups and bags item. Nothing that's been disruptive to us.
We have a great procurement team that's been able to source products at no additional cost. In the long-term, you know, obviously, you know, we do see impacts in terms of, and you mentioned labor, and as well as, you know, an inflationary environment coming ahead. You know, we do believe that we have headroom and the ability to pass on inflationary costs, as others are doing. You know, once we see that impacting us, we do believe that we have the ability to pass on that in terms of costs. I think with respect to your question on minimum wages, that was something that we were expecting to see.
There will be obviously an impact where we are looking to use, you know certain tools to sort of optimize our labor scheduling to hopefully offset some of the impact of that. That is definitely an impact that we're gonna see going forward.
Thanks, Gord.
Once again, if you would like to ask a question, please press star one. We will take our next question from Adam Shine with National Bank Financial.
Thanks a lot. Good morning. I guess Jeff asked the question on sort of the BPP, CPP. I'll move on to a few other revenue lines, if you don't mind. On the media front, you know, you talked about how you're seeing some degree of recovery, and otherwise, obviously, media has been a bit of a lag in regards to, you know, keeping pace with what's clearly been a recovering box office. Maybe Gord, you, or Ellis, can you talk to sort of how things are truly playing out so far in the Q4? Are we expected to see, you know, a meaningful recovery in media, both segments of media, in the Q4?
Adam, as you said, you know, there's always a bit of a lag, and, you know, it's a couple of months before you see the return on the media side. With you know, attendance continuing to grow, we anticipate you know, a stronger Q4 from a media overall perspective and much more into 2022 as things normalize. We feel you know, confident that that will continue into the future.
Okay. On P1AG, I mean, P1AG in Q3 was about 82% of the level of Q3. I mean, that's obviously seen the greatest pace of recovery. You touched on that a little bit. Maybe you can elaborate. Are there, you know, any particular drivers to note? Are there any potential new contracts that may have been announced or pending?
Yeah. Adam, it's Gord here. Look at the one thing to remember about P1AG is, you know, roughly between 60% and two-thirds of its business is driven out of the U.S.
Yep.
You know, obviously, the U.S. has been open much more widely open than Canada. We're seeing a resurgence of people wanting to get out and, particularly in the U.S., and go to LBE- type concepts, and you know, play the types of games that we supply. The other thing that I wanna kind of just mention out there too is from a top-line perspective, we were really pleased with the results out of P1AG. From a bottom-line perspective, we were probably exceedingly pleased. There was a record quarterly EBITDA for the business, an all-time record quarterly EBITDA. Now it was impacted by you know, some wage subsidies that were included in those results over the pandemic. It's kind of culled its customer base.
Some of our low- margin or negligible contributing customers, we have exited out of those relationships. I think what you're seeing, though, as you're seeing in the numbers, is that's not really impacting the overall top-; line, and it's definitely helping the margin. I guess the last thing to comment on the P1AG business is, you know, with what you're hearing about supply chain disruptions, and in terms of, you know, in the tech space, is the equipment sales side of the business, you know, hasn't been as significant as it has been in prior years. That's probably not unexpected. That would be the lower margin element of the business. Summary, very pleased with the business. It's a great quarter for that business.
I think we've really optimized it, and very encouraging results.
No, thanks for that color, Gord. I guess that's a lead into the final question, just on the revenue segments. You know, when we look to the LBE, which did impress in the period, you know, the skew of revenue was dramatically towards the gaming side, sort of 70% of revs this period compared to, let's say, you know, 55% or lower, in a similar period back in Q3 2019. Is that just, you know, the gaming side of the equation is simply resonating? You know, we're now back in Canada. We're not talking about the U.S., you know, opening dynamic here. There's traction there. Are you guys doing anything to maybe, you know, drive promotions, offers, or otherwise, on the gaming side of the equation across the LBE circuit?
Yeah. Adam, I think it's actually a little bit of the inverse. Look, the gaming's doing really well, but I think I would suggest it's more the inverse, is that the food and beverage side. You know, we've had some operating hours restrictions in certain provinces. The other thing, not surprisingly, is you know, you think about a location like our Roundhouse corporate lunches, obviously not happening these days. I think, you know, really what you're seeing is a reduction in operating hours from the food and beverage side, you know, fewer corporate occasions. Part of the issue in terms of restricting.
Some of the operating hours of the kitchen is the labor shortages that everyone's kind of familiar with in terms of getting kitchen staff. That's one area, you know, if you look across our entire business, that's probably the one area where labor challenges are more prominent than others. It's really that the food and beverage has suffered a little bit during the quarter. Gaming is doing well. Hence, you also see, you know, the margin, the EBITDA margin from that business, the percentage, being higher than it's been historically because the revenues is more weighted on the amusement side. We were benefiting from some labor subsidies during the quarter.
Thanks. Maybe I'll just throw one other in. I mean, you've got the covenant retest going. It shouldn't be much of an issue. I think you've talked previously that, you know, you need at least 65% box office versus 2019, let's call it CAD 36 million of EBITDA. You know, given the pacing that Ellis referred to back in terms of October at 80% level, obviously, you know, a record recent weekend and some good products still coming, are you prepared to venture, you know, an assumption in regards to the Q4 level or 65% at least is obviously, you know, what you're striving for, but could easily come in materially better than that, correct?
Yeah. Look, Adam, I think, you know, the Q4 is always typically based. October is the slowest month of the-
Yep.
End of the quarter. Q4 is always made from U.S. Thanksgiving to, you know, to the last day of the year. You know, we need to see how the product performs during that period, but we're encouraged by it.
Super. Thanks a lot.
Thank you.
We'll take our next question from Tim Casey with BMO.
Hi. Thanks. Good morning. Just a couple for me. Have you begun to downsize any of your locations yet? I noticed there was one location in Toronto that's closed. I'm just wondering if that's just a one-off sort of specific lease arrangement, or are you doing kind of a network-wide review of and looking at and maybe closing some underperforming or older locations? Second, Gord, you've talked in the past about how you're trying to bring in automated processes into the theater, you know, people being able to order concessions by their phone and some sort of delivery into the theater or to the seats, depending on the type of theater.
I'm just wondering if you can update us on if you're accelerating that type of program and just hoping to, you know, to kind of almost automate the process for going into next year, and in that way, you can, you know, really preserve margins. Any comments there would be helpful. Thanks.
Tim, on the first part of the question and sell us on the locations themselves, we continue to evaluate locations across the country. Where we've got older locations and a newer theater within a close proximity, we look at rationalizing our positions within those marketplaces. That's something that, you know, we look at on an ongoing basis. Given the situations we were faced with, it was smart to kind of consolidate our positions in certain areas across each of the provinces. That's really the overall as it relates to the rationalization of the screen count across the country.
On your second question, and specifically. Sorry.
Sorry. As you say, is there any metrics you're willing to provide about how much you think you'll rationalize or what type of location or screen count you'll get to?
No, it's really looking at each individual area that we are operating in and seeing what the future is from an overall perspective, and where we are moving forward, and the proximity of an existing theater. There's no real big, you know, analysis that we've done at this point, but we'll continue to review it on an ongoing basis.
Got it.
Tim, on your second question on rolling out, you know, sort of automation initiatives. You know, just prior to the pandemic, as we had rolled out the mobile ordering app, which is the food service ordering, in advance for our VIP locations. With, you know, with the pandemic, with now reserved seating or assigned seating everywhere, it makes the rollout of mobile ordering easier than having a non-assigned seating environment. That's on our radar to for the first half of next year is to roll that out across the circuit.
Thank you.
Thank you.
As a reminder, if you would like to ask a question, please press star one, and we'll pause for just a moment. We have no further questions at this time. I would like to turn the conference back to Mr. Ellis Jacob for any additional or closing remarks.
Thank you. Just want to thank you all for joining our call this morning. As you heard today, we are in a strong position and have a lot to look forward to as we move ahead. Our circuit is open nationwide and close to 100% capacity in almost every province. There's a strong slate of films ahead and a reaffirmed commitment from our studio partners. We've been proactive with our efforts to encourage habitual moviegoing and to increase attendance and visitation through strategic offerings like the launch of CineClub. Momentum is building in our other businesses with a strong pipeline ahead. Our financial position is on solid ground, and we are prepared for what's to come as we continue to ramp-up across the businesses. Above all this, we are beyond thrilled to be back doing what we do best, entertaining Canadians.
I look forward to speaking with you all again for our fourth quarter and year-end conference call early next year. As we say goodbye on this Remembrance Day, I hope you can all take a moment to acknowledge those individuals who have served and continue to serve our country today and every day. Take care, be well, and head to the movies. Thank you.
That concludes today's presentation. Thank you for your participation. You may now disconnect.