Cineplex (OTCPK:CPXG.F) Update / Briefing Transcript

Cineplex Investor Call Summary - October 16, 2025 Company Overview - Company: Cineplex (OTCPK:CPXG.F) - Industry: Digital Media and Entertainment Key Points Sale of Cineplex Digital Media - Cineplex has entered into a definitive agreement to sell its digital place-based media business, Cineplex Digital Media (CDM), to Creative Reality, Inc. for a total cash purchase price of $70 million [4][5] - The transaction is expected to close in the coming weeks, pending regulatory approvals [6] - This sale is viewed as a strategic move to unlock value for shareholders, strengthen the balance sheet, and provide capital flexibility for share buybacks and debt reduction [5][6] Financial Implications - The gross purchase price reflects an approximate 10 times multiple on the estimated $7 million adjusted EBITDA for 2025 [7][13] - Post-transaction, Cineplex Media will remain the exclusive advertising sales agent for CDM-operated digital out-of-home networks across Canada [5][8] - The company aims to maintain a target leverage ratio range of 2.5 to 3 times and will allocate up to $18.5 million for opportunistic share repurchases from the proceeds of the sale [9][39] Strategic Considerations - The decision to sell CDM was influenced by the opportunity to strengthen the balance sheet and the current market conditions [30] - The sale marks the exit from Cineplex's last B2B business, allowing the company to focus on core operations [30] - The management has been engaged in discussions regarding this sale for several months, indicating a proactive approach to capital management [14][32] Market Context - The multiple achieved in the sale was considered a pleasant surprise, although some analysts noted that other media businesses have transacted at higher multiples [26][34] - The company acknowledged that the blend of media advertising revenues and hardware sales contributed to the valuation, with hardware typically commanding lower multiples [27][28] Future Outlook - Cineplex plans to use the proceeds from the sale to enhance shareholder value while being mindful of existing debt agreements and restrictions on capital allocation [9][45] - The management expressed confidence in the transaction's strength and its potential to improve the company's financial position moving forward [41][44] Additional Notes - The majority of CDM's profitability is expected to occur in the fourth quarter of the year, with other quarters operating near breakeven [55] - The company is committed to delivering value to shareholders and has extended its Normal Course Issuer Bid (NCIB) to facilitate share buybacks [39][40] This summary encapsulates the key discussions and strategic decisions made during the Cineplex investor call, highlighting the company's focus on enhancing shareholder value through strategic asset management and financial discipline.