Good day, and welcome to the Cineplex Inc. Second Quarter Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Ms. Pat Marshall, Vice President of Communications and Investor Relations.
Please go ahead, Ms. Marshall.
Good morning. Before beginning the call, we would like to 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, adverse factors generally encountered in the film exhibition industry risks associated with national and world events discovery of undisclosed material liabilities and general economic conditions.
I'd now like to turn the call over to President and CEO, Ellis Jacob.
Thank you, Pat. Good morning, and welcome to Cineplex Inc. Twenty sixteen second quarter conference call. We are pleased you could join us this morning. I will begin by providing a brief overview of our second quarter results and a summary of our key accomplishments during the period.
Then we will take a look at some of the most anticipated movies to complete the year's film slate. At the conclusion of my remarks, our Chief Financial Officer, Gord Nelson, will provide an overview of our financials and then we will follow with a question and answer period. Although our box office revenue is up 3.7% on a year to date basis, Cineplex's record second quarter in 2015 was a tough act to follow. We experienced a weaker film slate this quarter, which resulted in decreased attendance and impacted both box office and foodservice revenue. Results were also impacted during the quarter by start up costs for our new businesses and the continued development of newly acquired companies, which have not yet realized their optimum margin levels.
And as a result, adjusted EBITDA decreased €22,500,000 compared to the prior year period. Although attendance was down as a result of the film product, we continue success in our premium offerings and media businesses, and we set an all time quarterly record CPP of $5.74 during the second quarter. Top performing films during the period included Captain America: Civil War, The Jungle Book, Finding Dory, Apocalypse and Batman versus Dawn of Justice, all of which were available in premium movie going experiences for our guests to enjoy. Although these films performed well, many others did not meet expectations and they could not overcome the strong second quarter twenty fifteen results from the Age of Ultron, Jurassic World and Furious seven films, which were three of the highest grossing movies of all time. As I previously said, box office revenue will fluctuate due to the film product released from quarter to quarter, which is outside our control.
However, we continue to focus on what we can control by diversifying the company through related businesses, including media, digital media, digital commerce, amusement gaming, e sports and alternative programming as a means of offsetting the variability of our earnings. Cord will share the balance of the quarter results with you in a few moments. Now I'd like to highlight some of our key accomplishments during the second quarter. The expansion of our premium experiences remains a strategic priority for Cineplex. For the 2016, 50.4% of our box office revenue came from premium offering.
This is our highest quarterly premium percentage in Cineplex history. During
the quarter,
we installed D BOX systems into 18 theaters, which is part of the plan to significantly expand our existing D BOX footprint by an additional 23 auditorium. The remaining installations will be complete by year's end. We also announced plans to open a theater next year in Pickering, Ontario that will feature 12 auditoriums including four VIP cinemas. As previously mentioned, Cineplex announced a new partnership to add 4Dx immersive theater technology to Cineplex Cinemas Young, Dundas and VIP in Toronto in the 2016. The new premium offering will give guests the chance to experience the movie in specially designed motion seats with environmental effects like wind, mist and scent that all work in sync with the action on the big screen.
We are proud to offer our theater guests the most innovative entertainment experiences in the country. Subsequent to quarter end, we were pleased to announce that we added the Barco Escape experience to Cineplex's growing list of exciting premium offerings. Barco Escape auditoriums are specifically designed and feature two additional side screens creating a panoramic viewing range for guests. We launched three Barco Escape auditoriums at our Scotiabank theaters in Toronto, Vancouver and Edmonton this July. Alternative programming for the quarter included strong performances from the Metropolitan Opera Live in HD series, international film programming, WWE WrestleMania thirty two and Encore Presentations of National Theatre Live from London.
We also partnered with Maple Leaf Sports and Entertainment to bring the Toronto Raptors NBA Playoff Games live to select theatres in the Greater Toronto Area throughout April and May. These events helped raise over $44,000 for the MLSE Foundation to help more kids experience the joy of organized sport. Moving to media. This area of the business comprised of Cineplex Media and Cineplex Digital Media continued to experience record growth during the quarter. Cineplex Media revenue increased 3.6% primarily due to new media offerings and continued strength in the automotive category.
As part of the naming rights partnership between Scotiabank and Cineplex, we announced the rebranding of two theaters, one in Ottawa and one in Winnipeg to Scotiabank theaters. These rebrandings bring the number of Scotiabank theaters across the circuit to 10. Cineplex Digital Media revenue grew by 43.8% compared to the prior year, largely because of an expanded client base, increased project installation revenue and network and advertising revenue growth. Also during the quarter, CDM was selected by the beer store to help digitize and revamp the shopping experience by reinventing the iconic beer wall. Traditionally, a static display of cans and bottles representing the stores offerings, the wall will be replaced with interactive tablets to better engage customers and streamline operations.
Moving on to amusement, gaming and leisure. We look forward to opening up our first location of The Rec Room in September. With construction almost complete, Edmonton will be the first community to experience Canada's premier social entertainment destination. As previously announced, plans are underway for our first Toronto location, which will be at the historic John Street Roundhouse and our Calgary location, both of which are expected to open in the 2017. In eSports, World Gaming hosted the Canadian Championships for Street Fighter V, which included online qualifying rounds along with regional events that culminated in a national final event held at our Scotiabank Theatre Toronto during the quarter.
We also announced our next tournament, Uncharted four, Peace Inn, the first team based Canadian championship offered by Cineplex and World Gaming. The online qualifying rounds began in the second quarter and we look forward to hosting the national championship in the 2016. Finally, our SCENE loyalty program continued to grow its membership, surpassing 7,700,000 members during the quarter. Now let's take a look at some of the films we have coming up for late summer and the balance of the year. The third quarter got off to a strong start with films such as The Legend of Tarzan, The Secret Life of Pets, Jason Bourne and Suicide Squad, which opened this past weekend.
This highly anticipated film had the biggest August opening ever, grossing $134,000,000 at the domestic box office. For the first five weeks of the third quarter, industry box office in Canada is up 5.3%. Opening this weekend, we have the family favorite Peach Dragon from Disney and Seth Rollins animated comedy Sausage Party that's got everyone talking. Later this month, we have War Dog starring Jonah Hill and Miles Teller. In September, we have the Clint Eastwood movie Sully starring Tom Hanks.
Bridget Jones' baby arrives in theaters continuing the adventures of the British publishing executive as she enters her 40s. The Magnificent Seven will bring us back to the Old West. The animated film Storks in three d provides a glimpse into a day in the life of Storks. And the IMAX film Deepwater Horizon starring Mark Wahlberg, Kurt Russell and John Malkovich comes to theaters on September 30. The fourth quarter kicks off with a highly anticipated film, The Girl on the Train based on the bestselling novel and stars Emily Blunt.
Ben Affleck becomes a forensic accountant who uncooks the books for illicit clients in The Accountant. Tom Cruise returns to star in the sequel, Never Go Back, and Ron Howard returns to direct the latest best selling in Dan Brown's billion dollar Robert Langdon series, Inferno. Then we kick off the holiday season with Marvel's Doctor Strange starring Benedict Cumberbatch from DreamWorks comes the smart animated comedy Trolls and Harry Potter fans anxiously await the prequel to the popular franchise, Fantastic Beats and Where to Find Them. Then on November 25, we have Moana, a Disney animated fairy tale set in the South Pacific featuring a headstrong young heroine and based on an ancient Polynesian legend. In December, we have the first standalone Star Wars film with A Star Wars Story, the adventure sci fi film Passengers starring Jennifer Lawrence and Chris Pratt.
And then in Assassin's Creed, we follow a captured bartender who comes from a long line of assassins. This one stars Michael Fassbender and Marion Colliard. Finally, from the studio that brought us Despicable Me, we have the animated comedy Sing, which is sure to delight families and those young at heart just in time for the holidays. As you can see, the film slate looks promising for the remainder of 2016, and we are encouraged by an exciting film slate for 2017. As previously mentioned, we continue to execute our diversification strategy.
In the fourth quarter, we will start to see revenue contributions from The Rec Room, and we see significant growth opportunities as we expand this new business model. In addition, we believe there are continued growth opportunities within our other new businesses, including CDM, CSI and World Gaming through organic growth, strategic acquisitions and an expanded client base in The U. S. Our constant focus on value creation and a diversified business model will result in a stronger Cineplex as we build this company for the future. With that, I'll turn the call over to Gord.
Thanks, Oates. I'm pleased to present the second quarter financial results for Cineplex Inc. For your further reference, our financial statements and MD and A have been filed on SEDAR this morning and are also available on our Investor Relations website at cineplex.com. For the second quarter, total revenues decreased by 2.2% to $338,000,000 and adjusted EBITDA decreased by 34.5% to forty two point eight million dollars The results for the quarter were negatively impacted by a 14.4% decline in attendance due to weak film product as compared to the record second quarter in the prior year and expenses arising from Cineplex's diversification into emerging businesses. Also impacting our top line results is the consolidation of Cineplex Starburst, Inc, which was equity accounted for in the prior year.
Cineplex's second quarter box office revenue decreased 12.9% to $162,100,000 compared to $186,200,000 in the prior year as a result of an attendance decrease of 14.4%, partially offset by a BTP increase of 1.8% to $9.62 from $9.45 in 2015. The increase in BPP is due to an increase in the premium product percentage in the second quarter, increasing to a quarterly record of 50.4% of box office revenue in 2016 from 46.3% in 2015. The impact of premium priced product on the average ticket price was 1.38 for this quarter as compared to $1.1 in the prior year, primarily due to the success of three d product with all of the top five films in 2016 being released in three d as compared to four films in the prior year. Food service revenue decreased 10.7% to $96,800,000 as a result of the lower attendance, partially offset by a 4.4% increase in concession revenue per patron to $5.74 an all time quarterly record. The CPP growth was primarily a result of higher average transaction values as a result of expanded offerings, targeted premium core concession offerings, merchandise programs and increased penetration and visitation to outtakes of VIP cinemas.
Total media revenue increased $5,200,000 or 14.8% to $40,200,000 for the quarter. Cineplex Media revenue, which is primarily theater based, increased 3.6%. Cineplex Digital Media revenue increased 43.8% due to increased project revenue for recently announced new clients, including A and W and American Dairy Queen and growth in existing and new business opportunities, including advertising revenue from the Tim's TV network deployment and the Oxford Properties Group digital installations. During the quarter, Cineplex Digital Media was selected by The Beer Store to create digital and interactive display for their locations. With the acquisition of the remaining 50% of the equity of CSI on 10/01/2015, we began consolidating their results during the 2015.
Other revenue includes $22,200,000 of gaming revenue arising as a result of the consolidation of CSI's results. Turning briefly to our key expense line items. Film cost for the quarter came in at 55.9% of box office revenue as compared to 54.9% reported in the prior year. The increase in the film cost percentage is the result of box office revenue from a select number of titles during the quarter. Cost of foodservice for Q2 twenty sixteen was 22.3% as compared to 22.1% in the prior year as a result of the mix of food offerings, including VIP offerings.
Other costs of $183,300,000 increased $28,000,000 or 18%. Other costs include theater occupancy expenses, other operating expenses and general and administrative expenses. Theater occupancy expenses were $50,600,000 for the quarter versus a prior year actual of $50,500,000 Other operating expenses were $114,400,000 for the quarter versus a prior year actual of $89,200,000 an increase of $25,200,000 Major reasons for the increase include an increase of $19,600,000 due to the consolidation of CSI, an increase of $600,000 due to the impact of new and acquired theatres net of disposed theatres, higher media expenses of $3,000,000 due to the higher business volumes and costs related to new businesses, including the World Gaming Network and The Rec Room. G and A expenses were $18,300,000 for the quarter, which was $2,700,000 higher than the prior year due in part to higher LTIP expenses and higher head office payroll expenses. Interest expense of $4,900,000 was $600,000 lower than the prior year amounts of $5,500,000 Contributing to the decrease was a $700,000 decrease in noncash interest, mainly as a result of the full accretion of the EK3 earn out in 2015, offset by higher cash interest, mainly due to higher average borrowings.
The company recorded tax expense of $4,700,000 during the 2016, comprised substantially of current tax expense. Our blended federal and provincial statutory tax rate currently is 26.8%. Net CapEx for the second quarter was $16,400,000 as compared to $20,400,000 in the prior year. We continue to estimate that net CapEx will be approximately $100,000,000 for 2016.
While box office results for
the second quarter were softer than expected and greatly affected our overall results for the quarter, On a year to date basis, our box office revenue was up 3.7%. We continue to remain comfortable with where Cineplex Inc. Is positioned today. Our strong balance sheet and low leverage ratio allows us to continue to invest in future growth opportunities for the company and benefit from future strong film product. That concludes our remarks for this morning.
We'd now like to turn the call over to the conference operator for questions.
Thank Your first question will come from the line of Paul Steep of Scotia Capital. Gord,
could you maybe talk just a little bit about the trending on film cost and what we've seen over the past few quarters given that it moves around quarter to quarter. But has there been a trend towards higher concentration amongst the providers that are sort of moving the numbers?
Well, I'll take that question. And you are correct. What's happening is there is a continued concentration of the box office amongst a few titles. The big films are getting bigger and the lows are getting lower. So you end up with the slanting towards the larger films, which result in the higher film costs.
But that can vary from quarter to quarter depending on the film slate. And I actually look back for the last five years and looked at the 70,000,000 to $100,000,000 movies. And back in 2011, they made up 22 movies in total. This year, there were only five so far. So you could see that the movies are either the $300 plus million movies or the lower movies that don't have a huge impact.
I guess just related to that, Ellis, there's been no other change. It's just strictly the nature of the business, but no other changes by the studio to try to change the rate or anything like that?
No. Our deals with the studios pretty much the same.
All right. Perfect. The other one I wanted to follow-up on was you highlighted, I guess, in your prepared comments about esports. Maybe you could talk a little bit about the lineup. Should we really be looking to that first team based game in Q3 as really the first good trial?
And maybe talk a little bit about what you learned so far out of the first one.
Yes. Okay. That's all, Gord. I would say 2016 is a year where we're kind of building this business, and we're experimenting with different types of games and events that are occurring in the theaters. Primarily to date, we've been focused in the first two quarters on console based single player games.
Third quarter is our first console based multiplayer game. And so as we roll out into next year, what you'll also see is kind of PC based, team based games also. So we're building out and really testing the technology and the operations of each of these different types of events as we look to kind of build a more scheduled event into 2017 and beyond.
Okay. Thank you.
And your next question will come from the line of Derek Lessard of TD Securities. Please go ahead.
Good morning, everybody. I was just wondering if you were able to quantify the impact of the Easter shift on the box office. And maybe for Ellis, if we can get your view on some of the films that didn't work this quarter and maybe some thoughts on the franchises like X Men that are several iterations in?
Yes. I think your first part, I didn't hear the question, but was it to do with Easter?
Yes. In the MD and A, you mentioned
Yes. That's because the holiday fell in a different quarter from year to year. That impacted our results because you've got that extra holiday period, which drives the box office and people are off and there's a higher tendency to go to the movies. For 2015, as we mentioned in the script, we had three of the highest grossing movies of all time. So it
was a pretty
hard follow-up in 2016. But movies like Alice Through the Looking Glass, the Ninja Turtles, all of those movies, The Shallows, didn't really work in the second quarter, and that resulted in a lower comp compared to the previous year. The other thing we saw is that in the second quarter, you had a movie like Finding Dory, which opened on June 17. And those kids' pictures tend to do a little bit less on a percentage basis compared to our U. S.
Peers. And secondly, our school don't close-up till June 25, whereas The U. S. Schools close-up a lot earlier in the month of June. So we see that variation from there to here.
Okay. And maybe just also in your prepared comments,
you talked about the start up cost of new business. I think you
touched upon some of them. I was just wondering if you can maybe add a little bit more color there and sort of in terms of what we should expect in terms of expenses maybe as a percentage of revenues going forward?
Sure. It's Gord here. In the MD and A, we talked a little bit in our other operating expense discussion on start up costs primarily related to our entry into the kind of the amusement gaming and leisure space, which would include both The Rec Room and the esports initiatives. In the quarter, we identified those amounts as roughly $3,000,000 during the quarter. Obviously, as we move into Q3, we will open the first rec room something that's Edmonton.
And so we'll start showing the revenues related to them, but there have been in start up costs related to both esports and the
referee. And
your next question will come from the line of Adam Schine of National Bank Financial.
Thanks a lot. Good morning. Ellis, we know you don't have much of an acquisition appetite on the theater front outside of Canada. You've been pretty clear about that. But maybe if you could just talk a little bit about what we're seeing in terms of AMC's appetite.
And I guess, broadly speaking, one particular player getting very large in the marketplace. So thoughts on that? And also maybe cycling back to one of the questions at the outset in terms of any implications coming from that one bigger and larger player as it might relate to how studios may adjust film costs or other related issues in the marketplace?
Look, Adam, I can't speak for AMC because they have got their own focus and decisions to be made. And Wanda has publicly stated they want to look at owning 25% of the world box office, and AMC is part of the Wanda Group. And, you know, as you have seen and I have seen publicly is they're on the hunt for locations. They acquired the Odeon chain, which deal hasn't closed, and they've also got the Carmike Theaters. From a film cost perspective, I think one has to look at every company negotiates independently.
And that's the situation of a relationship between the studio and the companies, And it varies by country, by location, and it's something that is basically between the two parties.
Okay, fair enough. And I guess if we go back to one of the earlier questions relating to film costs, we did see a relatively lower concentration in the top two or three films of this quarter versus last quarter. Maybe there were some other moving pieces, but do we really just chalk it up to a Disney trifecta in terms of the top three films and maybe that's ultimately the key driver of that SKU year over year?
No. As I said, and you're right, the concentration had an impact. But another reason that year over year where you see ours went up and a lot of the peers were about the same or went up slightly or down slightly, there are a number of films that played in The U. S. That didn't play in Canada.
And this happens in this particular quarter, the box office from these firms were double what they were in 2016. So in 2016, we had doubled the revenue coming into those U. S. Players, and we didn't have the same revenues. And they come with much lower film costs because they're usually movies that, in some cases, open in The US, and they just send them right through to DVD and the EST in Canada.
The second area was our Canadian distributors who usually release singles and doubles, and they had a very weak quarter hurting our film averages as these films usually offset those high priced home runs. So those are variances that change from quarter to quarter, but that's part of
the reason you see that difference.
Great. No, I appreciate that, Ellis. And maybe last one. You went through a slew of initiatives that you have underway and there's certainly a lot of them. One item that continues to be asked of you is just some of the work that you're doing, maybe on a more beta testing basis in regards to pricing, dynamic or otherwise.
Any update there in terms of FOX strategy?
Well, we have as you saw, we had the highest percentage of premium offerings this quarter. And if you compare us to our peers, I think all of the major peers in The U. S. Actually saw a decline year over year, quarter to quarter, whereas we had an increase to reach a record level. So our focus is we continue to look at pricing, but it's all about what we offer the guests, and we've continued to try and improve that offer on an ongoing basis.
And as part of that, we've been able to get higher VPPs from our guests. That's not to say, given our cost structures and what's going on with minimum wage, that we won't continue to look at pricing as a driver into the future.
Great. Thanks a lot.
Thank you.
Thank you. Next question will come from the line of Rob Goff of Echelon Wealth Partners. Please go ahead.
Good morning and thank you very much for taking my question. Actually, two questions, if I may. The first one would be back on the film costs. Is there any correlation between those films that do particularly well on the premium services and perhaps a higher film component? And then my second question would be further on the esports and just your emerging view there in terms of is the opportunity more towards online versus in theater and perhaps any international discussions you're having there?
Yes, I'll do the film cost and leave eSports to Gord. But on the film cost question, what happens is with these premium offerings, of course, the box office goes up and it's based on a percentage of the overall revenue. So that's the result in higher costs as a result of the premium offerings. But it's a percentage that we pay, so it's kind of a royalty. So the larger the the box office number, the higher the royalty percentage.
So that gives you an answer on that one, and I'll turn it over to Gord on the eSports side.
Sure. Thanks, Alfin. So Rob, like our key differentiator of eSports is the ability to provide both kind of location based play and online base play. So we will and we will look to have, you know, the location based play drive online and vice versa. One initiative that you may not be as familiar with, in our esports platform is is actually our college league, so our Collegiate Star League, which this will be our first college season where we're actually in control of the world gaming asset.
It's on over four fifty campuses across North America, primarily online, but does include combination of a live competition. So that's an exciting initiative for us, also one that's focused in The U. S. And with respect to your question on other expansion and discussions, and those are still ongoing as we kind of build out the model and the platform here, It is ongoing dialogue with some of our peers globally to extend our business model.
Okay. Thank you.
Your next question will come from the line of Ben Mogul of Stifel. Please go ahead.
Can you hear me okay?
Yes. Hi, Yes. Okay, great.
Ellis, you commented about sort of the high films, high performing box office films hitting highs and the lows hitting lows was certainly an interesting one, and that's been talked about a little bit as well by some of your peers. When you look at what's going on, is your view that the lower the smaller ones are getting crowded out, people are sort of spending for three d and for IMAX and then they're sort capped out? Are the smaller films not able to spend the community they need to spend to get to the system? Curious your thoughts on that.
That question is really a question, Ben, about content and the quality of the content and what people actually want to see. Like, you look back in the old days, you had movies like The Intern, Bridge of Spies, all of those kinds of movies that did pretty decent business in the 75 to a $100,000,000 range. And we aren't seeing as many of those. And even like the Woody Allen movie, it did okay, but not kind of Woody Allen numbers of the past. So, it's hard to tell whether it's, you know, the quality of the content or it's basically people doing alternative ways of watching movies.
And I think it's really driven by the content as we saw in the fourth quarter of last year and the first quarter of this year, how people flock to the cinema based on the content that was playing. And it varied all the way from action movies like Star Wars to kids features like Jungle Book and Finding Dory.
That's great. Thank you very much.
Thanks.
Your next question will come from the line of Robert Peters of Credit Suisse. Please go ahead.
Good morning. Thank you for taking my question. Just looking at CDN, I was wondering if you could provide us an update as to what inning you guys are in, in terms of the new screen installations. And I also just wanted to confirm that you guys haven't started on the installations at DQ yet.
On on the second part of your questions with DQ is is, yes, there has been the commencement of the installation of of vocations with DQ. And in terms of the inning, I think, with your with your reference on where we are, I think, you know, what we've said is, you know, we've opened an office in The US. We've announced a few, you know, new clients, and we're commencing rollouts, that could take place over, you know, a couple of years. But we're also involved in a number of processes where we're very optimistic about where we expect the outcome may be, and we just have not announced those yet.
Perfect. And maybe just a follow-up to that. When you look at the higher installation revenue at the start of some of these contracts, in general, do you think you're now at a critical mass given that you have a number of these installations going on at the same time where once you're done one, you'll see the installations just ramp up on the next contract? Or are there going to be any kind of low, that we saw kind of from when you got the Tim Hortons contract completed and then rolling out the next one?
You know, in in some ways, it's,
dependent on the way the brand or our customer is looking to install. Some customers, you know, digital is a key element of their overall strategy, and they wanna deploy within you know, a one year period. You know, others are are take more of a multiyear approach. So so each customer can be different. We ended up in the at wall period that you're referencing because, two of our customers at the time, both Tim Hortons and RBC, were very, very focused on deploying as quickly as possible, whereas others kind of deploy over longer periods of time.
So it's a difficult call, one, to answer. It's based on the mix of the customers.
Perfect. And if I can, one quick one for me and then I will pass the line. On esports, you've now had two titles and go through your tournaments with Call of Duty and Street Fighter, and those are two kind of different types of titles. Are you finding that there's any sensitivity around the titles in in terms of the higher demand for a fighting game versus a a first person shooter such as Call of Duty, or is it good traction regardless of the title offered?
Yeah. Look. And I mean and there's all kinds
of stats that they're on, popularity of various e sports events and both from a viewership and a participation perspective. So, yeah, I mean, the first person shooter and the, and the multiplayer games. It's primarily the multiplayer games, honestly, are the ones that have the highest e sports attraction. And that's why when we get into 02/2017, you know, you see us kind of expand and and and look to deploy some of those titles as we move forward. So so it's been a learning.
Each title has been a little bit different, but first person shooter and multiplayer games are obviously the top two kind of ranked games in esports.
And our next question comes from the line of Derek Lessard of TD Securities. Maybe just
some housekeeping. Back to the installs, Gord, do you have the number of installs that are currently in place on the digital media?
Yes. We're at roughly 10,600 locations.
Okay. And maybe just on depreciation. There was a bit of a jump this quarter. What should we be looking for going forward?
Well, far as what you're getting in terms of the depreciation jump year over year is the CSI acquisition and additional kind of amortization related to the assets we acquired on World Gaming. So both of these particularly World Gaming was a technology based company. So whenever we're buying something that has a little bit more technology in it, you've got a quicker amortization period.
And
your next question will come from the line of Andrew McReynolds of RBC Capital Markets.
Yes, thanks very much. Just a final one for me. Gord, last quarter you just talked about Alberta being a minor headwind on the concession side, but overall, the business grew in defense. I'm just wondering if that continues to be the case, if you kind of noted any greater or less drag from Alberta. I mean, we certainly didn't see it in the concession number, I didn't think, this quarter.
Yes. No, I'd say it's nothing really new from the perspective of Alberta. It's not growing as quickly as the rest of the country, but still growing and no impact on block office.
And there are no further questions at this time. I'd like to hand it back over to Mr. Ellis Jacob for closing remarks.
Thank you for joining us this morning. We hope to see many of you at the opening of our first location of The Rec Room in South Edmonton Common next month, and we will speak with you again during our third quarter conference call in early November. Enjoy the rest of the summer and take in a few movies.
This concludes today's call. Thank you for your participation. You may now disconnect your lines.