Cineplex Inc

TSX:CGX

Earnings Call Transcript 2019-Q2

[Operator]

Good day, and welcome to the Cineplex, Inc. Q2 2019 Analyst Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Melissa Pressacco. Please go ahead.

[Melissa Pressacco]

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 condition. I will now turn the call over to our President and CEO, Ellis Jacob.

[Ellis Jacob, President, CEO & Director]

Thank you very much, Melissa. Good morning and welcome to Cineplex, Inc's 2019 Second Quarter Conference Call. We are pleased, you could join us this morning. I will begin by providing a top line overview of our second quarter results and a summary of our key accomplishments during the period, then we will 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 the question-and-answer period. Reinforcing the importance and strength of our diversification strategy, I'm pleased to report a record second quarter for Cineplex, resulting in an all-time quarterly total revenue record and second quarter record adjusted EBITDA. In addition to reporting our second highest ever Q2 box office revenue, we also achieved second quarter records in all other revenue line. These positive results are a great example of how our diversification strategy is on track to deliver more meaningful contributions to our bottom line.New all-time quarterly records were also achieved for BPP of CAD11.13 and CPP of CAD7.04, offsetting the small decline in theater attendance. Our premium priced offerings accounted for over 50% of Cineplex's box office in the second quarter. As we continue to see our guest gravitate toward immersive movie going experiences, that cannot be replicated at home. Top performing films for the quarter included Avengers: Endgame, Aladdin, Pokemon Detective Pikachu, John Wick: Chapter 3 and Shazam! and although Endgame went on to become the highest-grossing film worldwide and the second highest in North America, the second quarter, finished with a number of movies that did not meet expectation. This combined with the Toronto Raptors' success in the NBA Finals, contributed to the marginal theater attendance decrease in the quarter. However, we were able to leverage excitement brand wise by hosting over 40,000 guests at sold viewing parties of the finals at 46 theatres coast to coast in addition to driving business at The Rec Room. While Gord will go into greater details on the financials. It should be noted that the adoption of differ 16 in 2019 negatively impacted our net income by approximately CAD3.9 million in the current period and approximately CAD6.9 million or CAD0.11 per share as compared to Q2 2018. Now I would like to highlight some of our key accomplishments during the second quarter. Steelers. In addition to driving business at The Rec Room while Gord will go into greater details on the financials. It should be noted that the adoption of IFRS 16 in 2019 negatively impacted our net income by approximately CAD3.9 million in the current period and approximately CAD6.9 million or CAD0.11 per share as compared to Q2, 2018. Now, I would like to highlight some of our key accomplishments during the second quarter. During the quarter, we were pleased to open Cineplex Cinemas Park Royal and VIP in Vancouver, which features 11 auditoriums with recliner seating and UltraAVX auditorium, D-BOX Motion Seats and full VIP Cinema auditoriums. Then in June, we announced plans for a brand new all-in-one entertainment complex at Kildonan Place in Winnipeg, Manitoba. This new destination will include a 6 auditorium theater featuring all recliner seating, a large amusement game and attractions area and a range of dining options. Scheduled to open in 2021, the new complex will replace the existing Famous Players Kildonan Place Cinema.With entertainment at the heart of everything we do. This new space has been completely re-imagined with our guests in mind. Within theatre food service, our CPP reached the CAD7 mark for the first time ever. During the quarter, we expanded our alcohol service to an additional 12 theaters now totaling 66 locations within 3 provinces. We also added 9 locations to our Uber Eats offering, which means, you can now order our famous popcorn and other popular concession items right to your door from 101 theaters across our circuit.In addition to hosting the Raptors' viewing parties, Alternative Programming featured 2 live performances from The Metropolitan Opera and WWE's WrestleMania 35 as well as live broadcast of All About Eve from National Theatre Live and Noah from Sight and Sound Theatres. Cineplex's international film programming also featured several strong performing films in Punjabi and Hindi this quarter which we screened in select markets. Even though it's a small part of the total exhibition offering, international programing continues to grow. The Cineplex Store remains a strategic area of focus for us. During the second quarter. Active users of the Store increased by 86% and we recorded a 179% increase in device activations compared to the prior year period. As adoption of our online offerings continue to grow. We also saw an 800 basis point increase in online and mobile ticket purchases to 40% of total theatre admissions during the second quarter. Cineplex has a strong legacy of infusing innovation into everything we do to stay relevant and competitive. As such, this May, we were pleased to welcome Shawn Mandel to the senior leadership team as our new Chief Digital and Technology Officer. With proven experience in monetizing the value of data through analytics, Shawn will lead the company-wide digital product and IT strategies to drive innovation across the entire Cineplex ecosystem of businesses. He will also provide guidance and expertise to ensure our more than 70 million guests have an unparallel entertainment experience supported through the use of the latest in technologies.Moving to media. Our media business reported a record second quarter with a 21.5% increase in revenue as a result of growth in both cinema media, which was up 11.4% and digital place-based media up 41.3.%. Robust showtime and pre-show advertising sales resulted in record cinema media revenue for the second quarter with automotive continuing to lead as the top category. In addition, digital place-based media reported an all-time quarterly record as a result of increased project installation revenue as deployments continue through existing customers such as 7-Eleven, A&W and Citizens Bank.Cineplex digital media the key growth area for Cineplex, as we continue to pursue strategies, strategic opportunities with top brands across the globe and within expanded verticals as evidenced by our recent partnership with Mountain Equipment Co-op. Additionally, we have a number of client opportunities and progress and anticipate further announcements this year.Moving onto amusement gaming and leisure. During the quarter, we opened our 7th location of The Rec Room at Avalon Mall in St. John's Newfoundland and have been very pleased with its performance to date. The 7 locations reported second quarter revenue of CAD20.9 million, up 33.4% because of the additional locations.As a result of improved cost management, store level adjusted EBITDA margins increased by 800 basis points to 20.6% during the second quarter. Coming to downtown Vancouver in 2021. We also announced plans for our newest location of The Rec Room to open in the lively Granville Entertainment District. For residents, visitors and tourist, The Rec Room will become the city's new hotspot with incredible dining options, exciting live entertainment, over 100 amusement games and features attractions like bowling and virtual reality all in one location.Later this year. We look forward to opening 2 locations of our new Playdium concept in Ontario, Orion Gate - Brampton, where we converted an existing theater will open in mid-September and Whitby Centrum will open in early November. Both will include approximately 2/3 games and attractions and 1/3 fresh food and beverage options targeting teens, young adults and families.Shifting our focus to Topgolf. While, I wish I could share more detail, I can tell you that we have secured a site for our first location within the GTA. Over the next couple of months, we will conduct our due diligence on the site and should have an announcement shortly. As you've heard me say before, location is everything and we want to ensure we have the very best location for our first and flagship top golf location similar to The Rec Room Roundhouse in Toronto.In eSports, World Gaming Network held its fourth annual Call of Duty tournament culminating with finals that took place at the Scotiabank Theater Toronto in April and our Collegiate Starleague held its 2019 Grand Finals in Atlantic City, where esports teams competed for over CAD100,000 in scholarships. Our loyalty program SCENE continues to grow as we reached 9.9 million members as of June 30. We are on the cusp of crossing the [ CAD10 million ] member mark, a huge milestone which could happen this week.Now let's take a look at some of the films in store for the balance of the year. The third quarter got off to a strong start with the Canadian box office up 10% quarter-to-date as a result of powerful titles like Spider-Man: Far From Home, The Lion King and Once Upon a Time in Hollywood. Looking ahead, the remainder of the year has a great lineup of films from sequels to first-time stories still to come. On August 16, we have the animated sequel, the The Angry Birds Movie 2 opening in theaters. Then on September 6, the highly anticipated IT: Chapter 2, opens, which we expect to do very well based on the success of Part 1 which became one of the highest-grossing films for the month of September when it opened 2 years ago.Next is Downton Abbey based on the popular mini-series and the Brad Pitt, film, Ad Astra both opening on September 20. Moving to the fourth quarter. Joker, a new take on the DC Villain backstory open on October 4. Then on October 11, Will Smith is back on the big screen with Gemini Man, as an aging hit man facing off against his younger clone self. Angelina Jolie returns in the starring role of the sequel Maleficent: Mistress of Evil on October 18. And Arnold Schwarzenegger is back with Terminator: Dark Fate on November 1. Opening November 15, we have Charlie's Angels, a reboot of the 2000 action comedy based on the 1970s television series. And Ford versus Ferrari starring Matt Damon and Christian Bale. Next up, we have 2 films that I think a lot of people are looking forward to. A Beautiful Day in the Neighborhood, starring Tom Hanks as the iconic Mr. Rogers and for our younger audiences, the greatly anticipated sequel, Frozen 2 both opening on November 22.Then right in time for the holidays, the sequel, Jumanji: The Next Level opens on December 13 with the star-studded cast including Dwayne Johnson, Jack Black, Kevin Hart and Karen Gillen returning to the game, only to discover, it's not what they expected. Then we close the year with 2 buzzworthy films opening on December 20, the film adaptation of the smash hit musical Cats with Jennifer Hudson and Taylor Swift.And the final chapter in the Skywalker saga with Star Wars: The Rise of Skywalker directed by J. J. Abrams. As you can see, we have a strong film slate for the balance of the year with an impressive lineup of films. To summarize, Cineplex experienced a record-breaking second quarter and accomplished a great deal. Entertaining people is what we do best, whether that's at one of our theaters, The Rec Room or our gaming locations and in this quarter we did just that.Our goal is to provide guests with multiple entertainment option, so that no matter what the occasion or where they are, Cineplex has an offering for them. We are very encouraged by the positive results from our diversified businesses as they continue to build scale and make more meaningful contributions. By utilizing existing expertise and leadership to strengthen and diversify our business into new entertainment and media categories, we remain confident that we are positioning Cineplex well for future growth.With that, I'll turn the call over to Gord.

[Gord Nelson, Chief Financial Officer]

Thanks, Ellis, I'm pleased to present the second quarter financial results for Cineplex, Inc. For your further reference, our financial statements and MD&A have been filed on SEDAR this morning and are also are available on our Investor Relations website at cineplex.com. Before I review the results, I'd like to note that Q2 2019 is Cineplex's second quarter reporting under the new accounting standard for leases IFRS 16. I would like to remind you, the new non-GAAP measure we are providing adjusted EBITDA after leases or adjusted EBITDA to assist with the comparability to prior years.Growth in results from all lines of businesses resulted in total revenue increase of 7.4%, to an all-time record of CAD439.2 million and adjusted EBITDA increasing by 6.9% to a second quarter record of CAD68.1 million.Turning to specific items, Cineplex's second quarter box office revenue increased 1.1% to CAD189.4 million compared to CAD187.2 million in the prior year. The increase was due to the all-time quarter, we'd BPP record of CAD11.13 an increase of CAD0.31, or 2.9% from CAD10.82 reported in 2018. The impact of the increase in BPP was partially offset by the 1.7% decrease in attendance. The second quarter benefited from the success of Avengers: Endgame which became the highest-grossing film worldwide and second highest grossing in North America. And an increase in the share of box office represented by premium priced offerings, which increased to 50.9% in the current quarter as compared to 49% in 2018.However, a wider appeal of the film slate in 2018, as well as the impact of the Raptors' playoff run impacting the attendance for the quarter. With respect to the reported Canadian industry increase of 2.5% by the Movie Theater Association of Canada. We have concerns about the accuracy of this growth rate, within an approximate market share for Cineplex of 76% in Q2. This would imply that the remainder of the industry achieved a growth rate of 6.9%, which we believe is inaccurate given our internal market data sources and independent market channel checks. Based on our data sources. We believe that the Canadian industry was up approximately 1.3%, which is in line with our increase of 1.1%. Food service revenue increased 6% to CAD129.6 million. Included in food service revenue is CAD9.8 million from The Rec Room. Excluding revenue from The Rec Room, theater food service revenue increased by 5.1% from the prior year to an all-time quarterly record of CAD119.7 million due to the 6.8% increase in concession revenue per patron to an all-time quarterly record of CAD7.04.This was partially offset by the previously mentioned decrease in attendance. CPP growth was attributed in part to expanded food offerings including those available at [ 30% Cineplex's ] VIP Cinemas, Outtakes, [ pricing ] changes and additional license locations.Total media revenue increased CAD8.8 million or 21.5% to CAD49.6 million for the quarter. Cinema media revenue, which is primarily theater-based increased 11.4% despite the theater attendance decline. Digital place-based media revenue increased 41.3% compared to the prior-year period, primarily due to higher project installation revenues. For the quarter. Project revenue was up 88.4% due to the increased installations including 7-Eleven and A&W.At the end of the second quarter, our location count of 14,095 locations represents an increase of 4.7% over the prior year and an increase of 4.3% during the first 6 months of 2019.Amusement revenue increased CAD9.5 million or 19.6% due to strong revenue growth from the P1AG as well as the additional locations of The Rec Room.P1AG revenues increased by CAD6.7 million due to increased distribution sales and an increase in route revenue, which was primarily due to revenue growth in the United States from the Cinemark agreement. Margins on the P1AG business increased 390 basis points as compared to the prior year to 11.5% for the second quarter and are 12.8% on a year-to-date basis.P1AG EBITDAaL for the second quarter increased 77.4% to CAD5.3 million. With respect to The Rec Room, total revenue grew CAD5.2 million over the prior year, primarily due to the additional locations, Square One operated for its first full quarter and Avalon Mall opened on April 18, 2019.EBITDA from The Rec Room increased CAD2.3 million or up 118.2% to CAD4.3 million, and store level EBITDA margin increased 800 basis points to 20.6% as a result of improved cost management.Turning briefly to our key expense line items, film costs for the quarter came in at 54.4% of box office revenue as compared to 54.7% reported in the prior year, reflecting the relative of mix of films in the quarter.Cost of food service for Q2 [ 2009 ] excluding CAD2.7 million incurred at The Rec Room was 21.4% as compared to 20% in the prior year period.Cost of food service at The Rec Room was 27.1% flat against that reported in the prior year. The increase in theater concession costs was primarily due to the mix of food and beverage items sold including the impact of the increased number of locations with alcohol sales. Other costs of CAD195.5 million decreased CAD18.3 million or 8.5% primarily due to the impact of the adoption of IFRS 16, partially offset by increased costs due to an increase in business volumes in the non-exhibition business, new theater location, increased operating hours in the exhibition business, minimum wage increases and a business interruption benefit recovery recorded in the second quarter of 2018.Other costs include theater occupancy expenses, other operating expenses and general and administrative expenses. Theater occupancy expenses were CAD16.7 million for the quarter versus a prior year actual of CAD52.8 million, a reduction of CAD36.1 million. This was primarily due to the impact of IFRS 16 which reduced rent expense by CAD39 million. Additional details on the movement arising from the transition to IFRS 16 can be found in our MD&A. Other operating expenses were CAD161.7 million for the quarter versus a prior year actual of CAD143.2 million, an increase of CAD18.5 million. Other costs are net of CAD4.7 million of cash rent related to the lease obligations, arising upon the adoption of IRFS 16. Increases included a CAD4.4 million increase for P1AG due to its growth in business volumes and increase in media expenses of CAD3.9 million due to increased business volumes. A CAD2.5 million increase in Rec Room expenses due to an increased number of locations and a CAD2.7 million increase due to new and acquired theaters, net of a reduction of CAD0.5 million due to disposed theaters.Same theater payroll increased by CAD1.9 million mainly due to increased operating hours and minimum wage increases in Alberta and BC. In addition, there was a CAD3.7 million benefit in business interruption insurance proceeds reflected in 2018. G&A expenses were CAD17.1 million for the quarter, which was CAD0.7 million lower than the prior year due to a CAD2.1 million decrease in restructuring costs, offset by [ CAD1.1 million -- CAD0.5 million ] increase in share-based compensation costs. Interest expense increased CAD11.7 million during the quarter to CAD18.3 million, primarily due to the inclusion of CAD12.2 million and lease related interest arising from the transition to IFRS 16.Net CapEx for the second quarter was CAD26.9 million as compared to CAD23.1 million in the prior year. We are continuing to confirm our net CapEx guidance of CAD155 million for 2019 and CAD170 million for 2020. Net income for the quarter was down CAD5 million to CAD19.4 million and basic EPS was down CAD0.07 per share to CAD0.31 per share, primarily due to the impacts of the adoption of IFRS 16, which negatively impacted our net income by approximately CAD3.9 million in the current period and approximately CAD6.9 million or CAD0.11 per share as compared to Q2 of 2018.As Ellis mentioned earlier, we have steadfastly focused on creating a diversified entertainment and media company for the future. We are prepared to prudently use both our operating cash flow in our credit facilities to invest in these new businesses. We'll continue to remain comfortable with where Cineplex, Inc. is positioned today. We are still in the early execution phase of a number of our diversification initiatives and our balance sheet allowed us to continue to invest in these growth initiatives to deliver future value for our shareholders.That concludes our remarks for this morning. And we'd now like to turn the call over to the conference operator for questions.

[Operator]

[Operator Instructions] And we'll take our first question from Derek Lessard with TD Securities.

[Derek J. Lessard, Research Analyst]

And congratulations on the quarter. Maybe if we're going to talk about eSports first, we haven't really talked about it in a while, it's back in the news for a variety of reasons. And you got the teenager wedding at CAD3 million. And then secondly, there is concerns about first shooter games. One of your gaming peers added it to their res. So my question is, does this change your strategy in any way?And secondly, maybe just a quick update on the business itself.

[Gord Nelson, Chief Financial Officer]

Sure. The ecosystem in eSports world, transitions and changes pretty rapidly as the various business models and the industry continues to grow. Our focus has always been providing a diversified selection of games, including games, which would be [ Weibo's ] First Person Shooter games, but also we have a strong focus on traditional eSports applications and traditional sports games, including NBA 2K, Madden and NHL. So we're trying to provide a diversified portfolio of games that meets the needs of the gaming population as there is a growth. We are not singularly focused in any one game, which some of the pro-teens are and which some of the publisher titles are and so would be [ a good ] reason that they would want to identify some of those additional risks.The landscape is evolving, we have a strong position in -- what I would call the [ pass and the pros ] and as we look forward, we look to work with other members of the ecosystem to provide a growth platform in the future for us, and other players in this space.

[Derek J. Lessard, Research Analyst]

Okay, thanks for that update. And maybe just a question on the, on the margin compression in the EBITDA -- sorry margin compression in the quarter for the film and entertainment segment, just wondering, what was driving that.

[Gord Nelson, Chief Financial Officer]

So look, what we focus on is sort of the OpEx numbers is the Avengers title was a 3 -- slightly over 3 hour title, which required us to extend our operating hours in order to deliver the revenue amounts that we were able to deliver during the quarter. So that impacted our payroll costs, which I kind of flagged it in our same-store payroll numbers as well as in addition to that as we roll out alcohol, and we roll out other enhanced food offerings to our locations. But you see the benefit in CPP, but there is an incremental cost of training the team to serve liquor and then also additional labor to service that offering. So it's not every quarter that the -- talk -- that the dominating film is a 3 hour film but it did cause us to extend our operating hours and impacted our labor costs.

[Derek J. Lessard, Research Analyst]

All right. Well, thanks for taking my questions. I'll requeue.

[Ellis Jacob, President, CEO & Director]

Thanks, Derek.

[Operator]

And we'll take our next question from Adam Shine with National Bank Financial.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

I mean, obviously this is very much a quarter focused on revenues, where you really clicked at all cylinders. Maybe just going back to the prior question on costs. I mean, we also saw some minimum wage increases in Alberta and BC, and of course, naturally, some of the upsided revenues at CDM drove some additional project installation costs, but maybe Gord and or Ellis, what else would you highlight in terms of maybe some timing issues around some potential cost items and whether there is another round of we can call it restructuring, but maybe more better said a focus on further cost efficiencies to address some of the cost creep that's going on other OpEx.

[Gord Nelson, Chief Financial Officer]

Adam, one and, one other item that I should have mentioned when I replied to Derek's question was, in the prior year, when you're looking at the exhibition EBITDA margin percentage is the one thing that we need to remember that the Exhibition segment in the prior year. And from a cost perspective, benefited from a CAD3.7 million business insurance claim. So that's also another factor that I would kind of call out that's really impacted sort of the year-over-year margin.So when you look at the EBITDA from the Film Entertainment and Content segment in 2019 versus '18 and you remove that benefit in the prior year. What you'll see is that the EBITDA was actually relatively flat in spite of the attendance decline. So I just wanted to kind of call that one out, first to. It's the first part of your question. On the second part of your question, what we did last year, I would say is that we fine-tuned a number of the operating businesses. A number that we didn't agree even through acquisitions, particularly in the Digital Media space and then the P1AG space. As we look forward, we look at sort of optimizing our ecosystem and opportunities across all our businesses and we see opportunities either improved revenues or reduced cost, but it's, we're always focused on cost reduction, but I believe taking a more ecosystem view, we'll provide benefits, both from a cost perspective and a revenue perspective as we go forward and that's really our focus this year.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

Okay. And just maybe one for Ellis. You addressed the Topgolf and we're obviously waiting on the first location. How should we be thinking up there with [ GSI ]. I mean, obviously, it requires a big part of land, you want to get it right and certainly start off with the ideal location. As it relates to the roll out of Topgolf, is this a situation where you'll get going with the first one in the GTA. You will see how it goes and then you move forward on 2, 3 and so on, or you're prepared to roll out in parallel before getting a full read on the first, the first location.

[Ellis Jacob, President, CEO & Director]

Adam, as we get started, we will roll them out over a period of time, so we won't be waiting to engage on the next location until we open the first one, because it does take a period of time to get these locations up and running, but for the starting location, we just wanted to get a location that was basically a location that would resonate right across the country.

[Adam Shine, MD, Head of Montreal Research & Research Analyst]

Okay. Maybe one more for you, Ellis. I mean, obviously there is a lot of talk around Disney Plus coming out in mid-November. And some people have taken to headlines suggesting that maybe that creates some dynamics around how Disney approaches the film studio. But the success of Disney this year, clearly highlights that they're fully engaged on the exhibition front hitting record results and moving forward, would be safe to say that it's very much status quo vis-a-vis Disney in regards to its full commitment to the theatrical window as well as you know, the context of film costs that should not necessarily skew meaningfully higher, as it relates to the film splits with you guys.

[Ellis Jacob, President, CEO & Director]

Well, on Disney, they have been an awesome partner as far delivering some great product from a box office perspective, as we've seen in 2019 and their commitment is to continue to do that. In 2020, they've got 2 big Pixar movies Onward and Soul and Marvel has got Black Widow and Eternals and you've also got with the balance of this year, Frozen 2 plus you've also got Star Wars. So I think, from looking at their line up, they have focused on the theatrical experience and it's very important to be good partners from their end and from our end in delivering the box office that we've been able to do with their films. As far as their streaming service, they will create content that will be specific to their streaming service and they've been very committed to the theatrical window.

[Operator]

[Operator Instructions]. And our next question comes from Jeff Fan with Scotiabank.

[Jeffrey Fan]

I just want to sit back and kind of think about the diversification strategy that you guys have employed over the last few years. I think, it's safe to say over the last couple of years, you've been going through a transition. And I guess, this quarter started to show some even though there were some higher costs. I think the EBITDA growth for the quarter was pretty healthy at 7% and as you alluded to, Gord, if you exclude the insurance proceeds, EBITDA growth is actually in the double-digit range. It looks like the media and the amusement and leisure contributions is starting to play out on the EBITDA line and that's driving the overall growth despite box office coming in a little bit lighter later in the quarter.So I guess, my question is as you look out the next couple of quarters, the medium-term. Wondering, if you're comfortable to say that the EBITDA growth has now kind of reached a level where you can kind of sustain that positive growth to show that some of the investments that you've made in the last couple of years is perhaps starting to play out on your operating results. Thanks.

[Gord Nelson, Chief Financial Officer]

Yes, absolutely, I mean that's obviously the focus and the strategy and the diversification as we are finally hitting scale and I think in the last 2 years, our comments have been in the that -- what you've seen in the results is that as we've restructured some of the businesses that were done through acquisition as we've optimized and refine the operating model at The Rec Room. Is there any bump in the quarter has taken on a much more significant potentially negative connotation from your perspective. And as we scale up, we're seeing the growth now and you should continue to see growth. Now, as we look in the exhibition business, the attendance was down with. As Ellis mentioned, we've got strong outlook for the remainder of the year. So it's all relative to how the exhibition businesses performs at will always drive, our overall EBITDA in the short term, but yes, we continue to roll out 4 to 5 Rec Rooms a year. We're going to add scale. And as we work to execute the roll out in the digital signage business with new customers and with P1AG as it's -- focuses on the sort of share shift and adding new customers too. We expect to see growth in all of those emerging businesses.

[Ellis Jacob, President, CEO & Director]

And Jeff in summary, I think what was important is that as we gain scale, these businesses now start to provide us with better and stronger returns and looking at the overall ecosystem, Cineplex as an organization benefits tremendously as these other businesses grow right across, whether it's media, whether it's amusement and gaming, whether it's content. We are all focused on the goal of achieving a stronger organization in delivering the bottom line results for the shareholder.

[Jeffrey Fan]

And maybe just a quick follow-up for Gord. The capital spending for this year and also for next year in light of I guess the timing on Topgolf?

[Gord Nelson, Chief Financial Officer]

Yes. So the, we are reconfirming the numbers that we had confirmed last quarter, which was 155 in total for '19 and 170 for last year -- sorry, for 2020. And last quarter, we sort of modified those numbers to reflect the timing of the first Topgolf moving into 2020.

[Operator]

And we'll take our next question from Drew McReynolds with RBC.

[Drew McReynolds, Analyst]

A follow-up on Jeff's question here. It's great, you have a little bit more visibility on that first TopGolf location. In terms of timing in 2020. Can you fine tune for us when, you could see the opening of that first location?

[Ellis Jacob, President, CEO & Director]

It would probably, Drew, be towards the end of 2020 or early 2021 is kind of the timing, we are looking at because there are a number of hurdles that we have to cross before we get to the stage of starting construction.

[Drew McReynolds, Analyst]

Okay. And also a follow-up maybe for you, Ellis. In terms of Shawn Mandel 's priorities here as the Chief Digital Officer. It seems like you've already done a fairly good job on the digital front and technology front. So just wondering, kind of where there is the biggest opportunities here to certainly squeeze the towel here and do better, I guess in the various parts of your business.

[Ellis Jacob, President, CEO & Director]

It's a great question. And again as I said before, we are close to approaching 10 million SCENE members. And Shawn is coming in with an overall outlook of how we can basically use data to better our theater attendance, grow our businesses and have that coordination between our different businesses like The Rec Rooms, eventually Topgolf and the movie theaters and creating a system that benefits the overall company. And it's about having an improved overall user experience on all of our digital products and also personalizing and marketing through the different digital means that we have. And we see, we have great data, we now have to make sure that we are monetizing it to achieve the highest results from it. And again what the advantage we have over a number of our peers is we've had this program for 12 years and close to 1 out of 3 Canadians are now SCENE members and over 60% of the households have SCENE loyalty cards.So we feel that this is a great opportunity to continue to gain benefits as we move forward in all the businesses.

[Drew McReynolds, Analyst]

Last one on the over the top or SVOD platforms that are obviously some big elephants launching, clearly the signals are getting more and more into movie product. I would assume that getting into kind of more of the movies, it's still a [ fluid ] and dynamic kind of strategy for these tech platforms. But Ellis, any update or anything you can share with us in terms of some of that product coming through the theaters in terms of it, an added supply of what could be reasonably good product for the theater operators?

[Ellis Jacob, President, CEO & Director]

We've always said that we are very happy to play the product again, as long as the theatrical window is part of that decision making. And we have seen some of the streaming companies put their product into the theater, because at the end of the day, it is one of the best ways to market the product. It's the engine that drives the train and it basically is important from a brand perspective and also building customer loyalty and having that. And it's a different experience when you go to the movie theater and you have that social experience on a big screen with great sound system, and all of the different amenities we've put in place, where today, there is 9 different ways you can watch a movie than there were say 15 years ago.So we feel that -- what also is important is a study was done by the National Association of Theatre Owners and what it said is people that streamed more actually came to the movie theaters more frequently. And that to us is very similar to what happened when the VCR came along. So having more content is good. At the theater level, I think there will still be the strong commitment to create movies that are specifically focused on the theatrical experience and we welcome the streaming companies as long as they follow the same rules as our other suppliers to be part of our ecosystem.

[Operator]

And we'll take our next question from Derek Lessard with TD Securities.

[Derek J. Lessard, Research Analyst]

Yes. Just one more for me. I know you guys said that you're still in the early innings with The Rec Room. But I was just wondering, how you view the opportunity to expand the concept outside of Canadian borders?

[Ellis Jacob, President, CEO & Director]

Good question, Derek. We just want to make sure that we've got all of the elements perfected, before we start looking beyond the Canadian marketplace. And this comes to size, efficiencies, offerings all of those capabilities.

[Operator]

And it appears that there are no further questions at this time. I would now like to turn things back over to Ellis Jacob for any additional or closing remarks.

[Ellis Jacob, President, CEO & Director]

Thank you all for joining us this morning. We hope you enjoy the rest of your summer. And we will speak with you again during our third quarter conference call in November. Have a great weekend. Thank you.

[Operator]

And that does conclude today's conference. Thank you for your participation, you may now disconnect.