Consolidated Graphics, Inc. Q1 FY2026 earnings call

• Industry and Content Pipeline Updates
  • CinemaCon 2026 generated the highest level of industry excitement in years, with a deep, high-quality slate of upcoming major releases confirmed for 2026 and beyond.
  • Major studios (Universal, Paramount, Sony, Disney) have reaffirmed commitments to exclusive theatrical windows of at least 45 days, and non-traditional studios (Amazon MGM, Netflix) are expanding theatrical release plans, including Netflix's planned 49-day exclusive wide theatrical release for its upcoming Narnia film.
  • New WGA and SAG-AFTRA labor agreements have resolved production pipeline uncertainty, providing greater industry stability.
• Q1 2026 Operational Performance
  • Cineplex achieved its highest Q1 revenue since 2019, with total attendance up 17.3% year-over-year to 9.8 million guests. Five films generated over $100 million in domestic box office in Q1, compared to two in Q1 2025.
  • Premium format adoption continued to grow, reaching 38.2% of total box office (up from 35.6% year-over-year), driving record Q1 per-guest box office ($12.94, +6.6% YoY) and per-guest concession revenue ($9.54, +4.5% YoY).
  • International content represents a distinct strength for Cineplex, making up 13% of Q1 box office (more than double the North American domestic average), with Cineplex consistently over-indexing on international release performance.
  • Cineplex Pictures (Canadian distribution) continued to grow in scale, with strong contributions from late-2025 release The Housemates and a successful Q2 2026 opening for Michael.
• Growth and Guest Engagement Initiatives
  • Cine Club membership surpassed 230,000 members, with members demonstrating higher visit frequency, higher premium format adoption, and higher per-visit spending.
  • The ScenePlus loyalty program expanded to over 15 million members with the addition of Tangerine and Shell partner integrations, extending the program's reach into everyday consumer spending categories including fuel and financial services.
  • New guest experience initiatives launched include an online merchandise shop and ongoing popular programs like Monday Surprise Premieres and $5 Tuesday, which drive attendance and re-engage lapsed moviegoers.
• Financial and Capital Update
  • Cineplex ended Q1 with $77.9 million in cash and no drawings on its $100 million revolving credit facility. The company extended its bank credit agreement maturity to September 2028 (or March 2029, subject to secured note status), strengthening liquidity and financial flexibility.
  • Full-year 2026 net capital expenditure guidance is maintained at ~$50 million, and $5 million in common shares were repurchased in Q1 under the company's normal course issuer bid.

1. Film Entertainment and Content: Box office revenue increased 25% year-over-year to $127.4 million, accounting for ~43.8% of total company revenue. Theatre food service revenue increased 22.5% year-over-year to $93.9 million, accounting for ~32.3% of total company revenue. Other segment revenue increased 22.2% year-over-year, with strength from Cineplex Pictures. Segment adjusted EBITDA was $8.9 million, a significant improvement from a $12.4 million loss in Q1 2025. 2. Media: Revenue declined 18.9% year-over-year to $13.9 million, accounting for ~4.8% of total company revenue. Adjusted EBITDA decreased to $9.6 million from $12.9 million in Q1 2025. 3. Location-based Entertainment: Revenue decreased 8.1% year-over-year to $35 million, accounting for ~12.0% of total company revenue. Store-level adjusted EBITDA margin remained at the targeted 25% (27% excluding 2024 new builds), and segment adjusted EBITDA was $7.2 million, down only slightly from $7.7 million in Q1 2025. Segment adjusted EBITDA margin increased modestly to 20.7% from 20.2% year-over-year. Consolidated total revenue for Q1 2026 was $291 million, up 15.6% from $251.7 million in Q1 2025. Consolidated adjusted EBITDA was $4.1 million, compared to a $10.7 million loss in Q1 2025.

• Full-year 2026 capital expenditure guidance is maintained at approximately $50 million, with capital allocation priorities unchanged: maintenance capital expenditure, balance sheet strengthening to hit target leverage ratios, shareholder returns via share buybacks and dividends, and selective growth investment.
  • Management expects Q2 2026 and full-year 2026 box office and attendance growth to continue the positive momentum from Q1, with year-to-date Q2 box office already up 23% over the prior year as of the call.
  • Cineplex Media is expected to grow in line with attendance for the remainder of 2026, offsetting the year-over-year headwind from lower 2026 pharmaceutical advertising spend (following unsustainably high 2025 spend ahead of weight loss drug patent expirations).
  • The FIFA World Cup 2026 is not expected to create the same level of advertising spend diversion that impacted Q1 media results from the 2026 Winter Olympics, and is expected to drive increased foot traffic to Cineplex's location-based entertainment venues.

• Broader macroeconomic and consumer spending pressure continues to impact discretionary spending, particularly in the location-based entertainment segment, resulting in an 8.1% year-over-year revenue decline in Q1 2026.
  • A continued industry trend of reduced alcohol consumption in North America has negatively impacted location-based entertainment concession revenue.
  • The Federal Court of Appeal upheld a Competition Tribunal ruling against Cineplex's presentation of online booking fees; Cineplex has filed for leave to appeal to the Supreme Court of Canada and received an interim stay on penalty payment pending the court's decision.
  • General advertising market weakness across Canada in Q1 2026 negatively impacted Cineplex Media results, alongside the temporary diversion of spend to the Winter Olympics and tough year-over-year comparables from 2025 pharmaceutical advertising.

Q: What commitments did studios make around marketing at CinemaCon, and what is the outlook for Cineplex Media in Q2 and around the FIFA World Cup? / A: Management noted strong collaborative work with studios to promote upcoming releases across the next 18 months, with longer theatrical windows supporting extended marketing and exhibition runs. For media, the Q1 decline was driven primarily by expiring weight loss drug patents that led to abnormally high 2025 Q1 pharmaceutical spend, with only a small impact from the Olympics. Management does not expect FIFA to cause similar advertising diversion, and expects media revenue to grow in line with attendance for the rest of 2026.

Q: Are there tangible benefits from stabilizing/lengthening theatrical windows, and is premium format demand still resilient to price increases? / A: Lengthening windows have clear tangible benefits: longer theatrical runs increase total box office, reduce consumer confusion about release timing, and the trend is now broadly adopted across all major studios, including streaming-native players like Netflix. Premium experience demand remains very strong, with no evidence of price trade-downs, as guests view premium theatrical experiences as irreplicable at home, and many guests even rewatch films in different premium formats.

Q: Can you comment on recent media reports of a potential sale or strategic review of the company? / A: Management stated that the company does not comment on market rumors, and that the current focus is on strengthening the company's balance sheet and operating performance to capitalize on the strong 2026-2027 film slate.

Q: Is the operating leverage dynamic for Cineplex still intact, and what should we expect for restructuring activity for the rest of the year? / A: The historical operating leverage metrics remain intact: incremental EBITDA per attendee is ~$13.50 for exhibition and ~$1.50 for media. Restructuring and operational optimization activity will continue at moderately elevated levels compared to pre-pandemic historical averages, as the company continues to refine its cost structure post-pandemic. Management also noted that other advertising categories are being developed to offset the 2026 pharmaceutical spend headwind.