Cineplex Inc

TSX:CGX

Earnings Call Transcript 2023-Q2

[Operator]

Hello everyone and welcome to the Cineplex Inc. Q2 2023 Earnings Conference Call. My name is Charlie and I'll be coordinating the call today you will have the opportunity to ask a question at the end of the presentation. [Operator Instructions] I will now hand over to our host, Mahsa Rejali, Vice President of Corporate Development President and Investor Relations to begin. Mahsa, please go ahead.

[Mahsa Rejali, executive]

Good morning, everyone. I would like to welcome you to Cineplex's Second Quarter 2023 Earnings Release Conference Call hosted by Ellis Jacob, President and Chief Executive Officer; and Gord Nelson, Chief Financial Officer. Before we begin, 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 may differ materially from those expressed in forward-looking statements.

Information regarding factors that could cause results to vary can be found in the company's most recently filed annual information form and management's discussion and analysis. 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.

[Ellis Jacob, executive]

Thank you, Mahsa. Good morning, and welcome to our Q2 2023 conference call. It is a pleasure to be with you today on the heels of a strong second quarter. Our business made tremendous strides during the quarter, and that momentum continues. We have much to report on and a lot to be excited about. The wave of blockbusters that hit the big screen during the second quarter did not disappoint as guests lock to our theaters to enjoy the shared immersive experience of moviegoing. This led to Cineplex's strongest post pandemic quarter where for the first time since the pandemic, our revenues exceeded $420 million and our EBITDAaL surpassed $60.3 million. Our strategic initiatives and sound execution helped us achieve strong patron results with quarterly BPP reaching $12.84 and a CPP of $9.21 both records for the second quarter.

We are pleased to announce that our strong quarterly performance enabled us to delever and repay $26 million of bank debt. This will surely remain a focus for us as business continues to ramp up. The third quarter is off to a sensational start with the month of July becoming our highest gross in July ever and the second highest grossing month in Cineplex's history. Even more promising is that July's EBITDA surpassed every month in 2019, and this momentum has continued into August. In fact, the first 8 days of August brought in 70% more box office revenues than the same period in 2019.

We are back in business and our results show just that. Clearly, consumer demand for the shared immersive and premium theatrical experience that Cineplex delivers is as strong as ever. There is simply no better way to amplify excitement and cultural relevance for films than with an exclusive theatrical release. The perfect illustration of this was seen with the Barbenheimer cultural phenomenon, where scores of moviegoers dressed up like characters from the Barbie and Oppenheimer movies, which opened on the same day.

The buzz around these films created an unprecedented box office and cultural event that transcended any streaming service experience by leaps and bounds. Guests arrived early in their special outfits took pictures and shared stories while waiting with great anticipation to watch these films. Some even watch them back to back and enjoyed many of our concession offerings for food and drinks during their extended stay. In addition, many guests chose to watch Christopher Nolan's Oppenheimer in our various premium formats as 58% of its box office came from our premium offerings.

This remarkable momentum led to Barbenheimer surpassing market expectations with Barbie passing the $1 billion market, the global box office and Oppenheimer exceeding the $0.5 billion mark globally. These phenomenal results, coupled with the impact of Tom Cruise's Mission Impossible led to Cineplex's highest July box office in history. A similar cultural phenomenon was seen with the Super Mario Brothers movie in April, where fans dressed up like Mario, Luigi, and Princess Peach to enjoy a special outing at our venues. Many guests watch the movie more than once choosing to enjoy in a shared immersive environment each time.

All in all, this was a great film that brought families to the theaters in rows, and it came as no surprise when it exceeded $1.3 billion at the global box office, making it the second highest animated film of all time. Experiences like these remind us of the significant role cinemas play in creating memorable experiences and how as exhibitors, we are uniquely capable of bringing people together to share cultural moments that stay with us forever. The momentum we experienced in the second quarter and third quarter to date was largely driven by the industry's recovery from a film supply perspective.

The second quarter was the first time since the pandemic where we benefited from a regular cadence of weekly films across multiple genres. Cineplex's top-performing films during the quarter included the Super Mario Brothers movie Guardians of the Galaxy Vol. 3; three, Spiderman across the spiders, which all surpassed $100 million at the domestic box office in their opening weekend. Then there was the Little Mermaid, FAST X and the impressive carryover of John Wick Chapter 4, which was distributed in Canada by distribution business Cineplex pictures.

This consistent supply of product is what we dearly missed since the pandemic began. While some titles had mixed results with the regular supply of products, strong performance offset films that fell short of expectations. Now that we are seeing a regular weekly cadence of films, we are encouraged to see box office results that exceed or approach the pre-pandemic period. This speaks to the strength and resilience of the theatrical exhibition industry despite inflation and recessionary dynamics. While the second quarter and third quarter to date saw accelerated moviegoing as we look forward, we are cognizant of the potential impact of the writers and active strikes on our future release dates.

We are monitoring these strikes closely. The degree of any downstream delays will ultimately depend on the duration of the strikes by the screen actor skilled and the writer's guilt of America. While there may be temporary shifts in the future film slates, it's important to recognize the adjust temporary, and these loans will have their day in theaters. Any potential delays will not affect consumer interest for moviegoing our studio plans for scaling theatrical volume to pre-pandemic levels.

Our studio partners have seen time and again the irreplaceable value proposition of an exclusive theatrical release. As I've said before, we are still the engine that drives the train. Even nontraditional studios such as Amazon and Apple are committing to theatrical releases to maximize returns on their best films. Apple is releasing 2 long-awaited films, Martin's Scorsese's Killer Of The Flower moon, starring Leonardo DiCaprio and Ridley Scott Napoleon, both slated for later this year. And Amazon has already had tremendous success with the release of Creed III and Air earlier this year.

Notably, these nontraditional studios are expressing intentions to scale theatrical film production over the next few years to levels comparable to traditional studios. As we look forward, the flow of content coming from both traditional and nontraditional studios gives us great confidence about the long-term recovery of content volumes to pre-pandemic levels and beyond.

In the meantime, Cineplex remains well equipped to navigate any potential short-term delays and film shifts as we have done effectively in the past. You have heard me previously talk about our content diversification strategy and our ability to outperform the North American industry when there has been a lack of films. We continue to build this part of the business, which isn't tied directly to Hollywood.

Through our relationships with international content suppliers and our ability to understand consumer preferences, we have attractive audiences such that the contribution of international product to our box office has increased from 4.3% in 2019 to 9.4% in the first half of 2023. The rest of the industry in North America only generated 3.4% of its box office from international product. We will continue to grow and capitalize on this part of our business with the use of data analytics, which continues to get stronger.

Additionally, we are pursuing the expansion of our distribution business, Cineplex Pictures, where we look to source content from all over the world and distribute it to Canadian audiences. On a year-to-date basis, we have successfully distributed 8 titles. And as always, we are focused on delivering alternative programming, including Opera, concerts, educational programming, sporting events and much more.

Our diversified businesses also continue to perform well and contribute to the company's performance. This helps offset any potential impact of a shift in Hollywood slate. Our P1AG business continues to shadow records quarter after quarter for top line, bottom line and margins. This growth is driven by the high-margin family entertainment segment further recovery in the theater segment and the expansion of attractive new verticals, including the lodging and leisure space within the roof business.

During the second quarter, P1AG generated record adjusted EBITDA of $13.1 million and an impressive margin of 23.7% up 570 basis points from the same quarter last year. Our LPE business generated revenue of $29.1 million, which is the second quarter record and an EBITDA of $6.3 million. This part of the business continues to scale and add meaningful bottom line contributions. On the media side, both Cineplex Media and Cineplex Digital Media performed well despite the challenging macroeconomic environment.

While there are some economic headwinds in the advertising sector, it is important to remember that cinema continues to be the most attractive and captivating form of advertising. Cinema attention consistently scores 4 to 7x greater than other video channels, including TV, social and digital ads across a variety of brands and categories. Both our media teams are focused on data initiatives, and we anticipate this will provide a competitive advantage as advertisers increasingly return to spend in the cinema and mall space.

I'd now like to provide an update on our strategic priorities. During the quarter, we opened our second Junxion location in Mississauga, Ontario. This new concept features multiple entertainment options, including movies, amusement, gaming, live events and expanded food and beverage offerings all under one roof. While it is so early days, we are extremely pleased with the performance of these 2 new locations and the concept as a whole as it allows us to maximize revenue per square foot in our venues while driving incremental attendance and spend from expanded offerings.

In addition, we continue to advance our data analytics capabilities to create personalized campaigns that aim to upsell, cross-sell and increase conversion and visitation across the Cineplex ecosystem. This is combined with utilizing sophisticated marketing techniques that leverage our highly valued and engaging loyalty programs, including the Scene Plus program with over 13 million members and our industry-leading subscription program CineClub.

which has nearly 135,000 members. And while we pursue multiple data support revenue-generating opportunities, we are also leveraging data tools to improve productivity and optimize showtime planning decisions.

Overall, we remain disciplined and focused on maximizing the use of our square footage and resources, drive attendance and effectively manage costs. Before I turn the call over to Gord, I want to provide an update on the Competition Bureau's allegations regarding our online booking fee. Cineplex filed its response to the Competition Bureau's allegations on June 30, and the bureau filed as required on July 14. And an administrative case management conference to determine scheduling and procedural matters was held on July 27.

We strongly believe that we have complied with both the letter and spirit of the law. We believe the Competition Bureau's allegations are unfounded, and we continue to seek an early determination of this matter. Moving on to Cineworld. They emerged from bankruptcy on July 31, and as previously disclosed, our claim recovery will be minimal. We are just as disappointed with the outcome as our shareholders, but I want you to know that we will work tirelessly to explore all options to optimize the value of the litigation judgment. We will now put this chapter behind us.

Looking ahead, we remain highly confident in the strength of our exhibition and other businesses. We are excited about our strong year-to-date results, which reflect positive momentum from the industry's rebound and our strategic actions to maximize attendance, box office and drive growth from our diversified businesses. As previously discussed, our diversification strategy is just one of several compelling factors that differentiate Cineplex from our North American peers.

We hold a leading market position for entertainment destinations in Canada. We are the most innovative exhibitor when it comes to guest experiences from premium formats to enhance gaming in our venues to new entertainment destinations like Junxion, Cineplex is a first mover innovator in the exhibition industry. We hold a leading market position in international cinema and alternative content. Our full ownership and control of the Cinema Media business drives industry-leading revenue profit results.

The consumer data we collect is utilized across the Cineplex ecosystem to drive additional revenue and make our operations more efficient. Overall, Cineplex is well positioned to achieve great success and a history of driving industry-leading results. Our innovative and successful growth initiatives, along with our disciplined capital and cost management will serve us well for years to come. I am extremely proud of the Cineplex team and want to thank them for their agility, resourcefulness and determination as we work together to grow our business.

With that, I will turn things over to Gord.

[Gord Nelson, executive]

Thanks, Ellis. I am pleased to present a condensed summary of the second quarter results for Cineplex Inc. For further reference, our financial statements and MD&A have been filed on SEDAR Plus and are also available on our Investor Relations website at cineplex.com. Our MD&A and earnings press release include a complete narrative on the operational results. So I will focus on highlighting and select items and providing commentary on our liquidity and [ output ].

As Ellis mentioned, we were extremely pleased with our Q2 operating results. We reported total revenue of $423.1 million attendance of 12.8 million people and adjusted EBITDA of $60.3 million, our strongest quarterly results since 2019. We reported net income of $176.5 million, which included a tax benefit of $158.4 million, which I will discuss later.

For the second quarter, total revenues increased 20.9% to $423.1 million from $349.9 million in the prior year. and adjusted EBITDA increase 68.5% to $60.3 million from $35.8 million in the prior year. Adjusted EBITDA margin for the quarter was 14.2% and which is in excess of the full year 2019 amount. We experienced excellent results in our film exhibition and content businesses with segmented revenue increasing 24.9% to $312.8 million, adjusted EBITDA of more than doubling to $45.6 million and adjusted EBITDA margin increasing to 14.6% from 8.5%, all as compared to the prior year quarter.

Box office revenues increased by 20.6% compared to the prior year, with BPP at an all-time second quarter record of $12.84 primarily due to consumer demand for premium experiences. Premium product accounted for 46.6% of our box office in the second quarter. Theater food service revenues increased 20.3% to $118 million, our second highest quarterly result ever with CPP of $9.21, establishing a new second quarter record.

Attendance for the second quarter increased 15.5% to $12.8 million and represented 75% of Q2 2019's attendance. On a month-by-month basis, April was 86% of April 2019, May was 60% of May 2019, and June was 82% of 2019. For the second quarter, 2 months were above 80% of the 2019 attendance levels. And it was only May, which was below, and this was primarily due to Avengers Endgame. The second highest grossing film of all time, having a significant impact in June -- or sorry, in May 2019.

On the media side of the business, we reported second quarter Media segment revenue of $26 million, adjusted EBITDA of $13.6 million and segmented adjusted EBITDA margin of 52.3%. As we continue to see growing traffic in our cinemas and in malls, we expect to see further recovery in our media businesses.

Our amusement and leisure businesses had another incredible record-breaking quarter, with a combined 15.1% increase in revenue and a 13.3% increase in adjusted EBITDA compared to the prior year. This business segment continues to outperform the pre-pandemic period. P1AG business continues to benefit from growing theater attendance and the expanding FEC market in Canada and the U.S.. It reported all-time record quarterly revenues of $55.2 million and record quarterly adjusted EBITDA of $13.1 million.

Our LBE business reported record Q2 revenues of $29.1 million. G&A expenses increased $1.4 million to $16.7 million from $15.3 million in the prior year, primarily due to a $1.1 million increase in LTIP expense. G&A is described in more detail in our MD&A. Total interest expense increased to $30.5 million from $28.6 million in the prior year. I encourage you to read our MD&A disclosure as we break out the components of interest expense.

Cash interest expense increased 2.8% to $31.4 million with cash rent -- sorry, cash interest, excluding the lease interest expense decreasing 6.4% or $1 million to $14.9 million primarily as a result of lower effective borrowing costs on the bank credit facilities. Noncash interest expense increased to $3.3 million from a recovery of $2 million in the prior year primarily due to the shift in the mark-to-market adjustments on our hedges.

We recorded a net income tax recovery of $158.2 million comprised of a current tax expense of $0.3 million and a deferred tax recovery of $158.4 million. The deferred tax recovery as a result of the reasonable expectation of the utilization to offset future periods of taxable income, given our current outlook. As a reminder, we have approximately $427.5 million of noncapital losses to utilize against future periods. This item is described in more detail in Note 3 of our financial statements.

Before discussing our liquidity position, I want to briefly touch on CapEx and an update on our Cineworld claim. For 2023, we reported second quarter net CapEx of $15.1 million and on a year-to-date basis, $29 million. Our guidance for net CapEx for 2023 remains at $60 million and we will continue to be prudent and opportunistic with our growth initiatives, focusing on initiatives that drive incremental revenue and returns.

And then lastly, CineWorld emerged from bankruptcy protection on July 31, 2022. Their plan contemplates all holders of general unsecured claims, which includes Cineplex's claim of $1.24 billion, receiving a share of a total pool of USD 10 million in cash plus interest in our litigation trust, which are not expected to be material. The distribution to general unsecured creditors will not happen immediately, and we may not receive our distribution until 2024. We do not anticipate Cineplex's allocated portion to be material and no amount has been accrued in Cineplex's financial statements.

I would now like to move on and speak to our balance sheet and in particular, our liquidity position. For Q2 '23 -- for Q2 2023, we reported net repayments of $26 million under our credit facilities, which left us with [ $330 million ] drawn and approximately $203 million available under our credit facilities at June 30, 2023. As at June 30, 2023, we reported a senior leverage ratio of 2.03x as compared to a covenant of 2.75x.

Now I'd like to take a few moments to look forward. I want to revisit the world I described during our last analyst call. This is a world where we could potentially achieve pre-pandemic adjusted EBITDA levels on 75% to 80% of pre-pandemic attendance levels due to our diversified business model and then use this free cash flow to delever. For the second quarter, we achieved 75% of Q2 2019 attendance level. 87% of box office and 100% of theater food service revenues.

Our EBITDA was approximately $60 million. Our cash interest and long-term debt was $14.9 million our net CapEx was $15.1 million for simple net free cash flow of approximately $30 million, and we repaid $26 million under our credit facility. We know what is not as simple as multiplying by 4, but our Q2 results give us confidence that this world is within our grasp.

Now let's talk about the balance sheet. At the end of Q1 2023, we had approximately $896 million face value of debt, including $316.3 million in convertible debentures which have a conversion price of $10.94. All of our equity research analysts have a 1-year target price in excess of the conversion price. In the 75% to 80% world, we believe that the convertible debentures would convert to equity. And with the adjusted current debt balance of $580 million, excluding the converts, we would be at the low end of our target leverage ratio range of 2.5 to 3.0x. And on the path to consider the reintroduction of a dividend.

Now let's talk about initiatives to optimize our capital structure. As I said last quarter, I want to make it clear that we're primarily talking about the composition and maturity of our debt stock, including items such as rating strategies, mix of bank versus private versus public debt, U.S. versus Canadian issuance, not die or measures such as issuing common equity to reduce debt. With the strong return of our business in Q2, you should see us moving forward with some of these initiatives in the near future.

And finally, speaking of common equity, our business is typically traded at a premium given our market share and diversified business. However, with the positive results of our business and momentum in the industry, we have not seen the same valuation return that our peers in the U.S. have experienced. We are trading at an approximately 25% discount to our target price. We understand that our Canadian listing means we are subject to more of a show-me view, but we would expect that our Q2 results should give you some confidence that we are showing you. With a continued strong movie slate for the balance of 2023 and the incredible results from our diversified businesses, there is a lot to be excited about. And with that, I would like to turn the call over to the conference operator for questions.

[Operator]

[Operator Instructions]

Our first question comes from Derek Lessard of TD Securities.

[Derek Lessard, analyst]

And glad to see the improvement across your businesses. And on that, it looks like you guys are doing well in most of the areas that you do have control over and I -- but I did want to touch on the area where you don't mess that's over the lag on the strike. And Ellis you touched on a little bit in your opening remarks. I just wanted to hit on how you think about the evolution of the strike and Gord, maybe how should we be thinking about this in terms of how you prepare particular -- the balance sheet, particularly as you come up to covenant testing in Q4 again?

[Ellis Jacob, executive]

So on the initial comments on the strike, we are looking to a situation where the strike gets resolved relatively quickly. And most of our -- all of our studio partners are doing everything they can to minimize the disruption of the product flow to us. And we are working with them also from a marketing perspective and using our data to basically promote the films that are coming out and helping them work together with us.

Now unlike COVID, this is not a shutdown. To me, this is just, as I said, a temporary postponement of some of the movies of the strike is for a prolonged period. And I think we will be back and running strongly as we move forward to some of the areas of the business. Now the difference for us, too, is we have a very strong slate of diversified products coming from international locations and we will continue to pursue that. It's not replacing Hollywood, but at least it gives us an ability to continue to have guests come to our venues including things like Opera and sporting events and other items that we can show them at our theaters.

So to me, I hope it's a short-term situation, but I can't really guarantee anything because we'll have to wait and see what both the union groups decide to do as we move forward. But the number of individuals getting impacted, I think we will see -- move forward and try to a resolution of the situation. I hope that answers your question.

[Gord Nelson, executive]

And Derek, I'll answer the second half of your question. So first of all, I want to say I am not concerned with this at all from a covenant perspective. So you've got to recall that coming into Q3 and into Q4, we were impacted by what I would call -- and this is last year, sorry, we were impacted by what I would call our supply chain disruption with a significant shift of a number of titles commencing in sort of late July 2022.

So we're dropping off on an LTM basis, some pretty weak quarters coming out of Q3 last year and Q4 last year and even into Q1 of this year. And so the strength that we're seeing now going into Q3, and as Ellis mentioned in his conference call script, to have our highest EBITDA monthly EBITDA in July behind us, is -- and the risk of shift that I would say is probably over. It's something that's overstated out there right now.

And so from a covenant perspective, we got some weak periods coming off, and this is going to be no worse than some of the disruption that we had faced in prior periods.

[Derek Lessard, analyst]

Thanks super helpful. And maybe on a more positive. I wanted to drill down a little bit on that strong LBE performance. First, more on what you're seeing in terms of consumer behavior against the sort of cloudy macro backdrop? And second, how should we view sort of the potential new locations and your pipeline there?

[Gord Nelson, executive]

Yes. So let me talk about performance. And look, I'm going to dig down into a little bit more of your question because I think there may be some others asking about the LBE. So let's first and foremost, say that the LBE business has been -- and both our amusement and leisure businesses have been extremely strong, kind of coming out of the post-pandemic. For the business, there is a bit of a seasonality to this business that we need to be conscious of. As Canada sort of in general, moves out of the winter months and into the spring into the summer. Those first couple of months where there's nice weather outside is the business suffers a little bit of Canadians wanting to be outside.

So the May, June period, we see a little bit of a drop in demand, which then picks back up in July, and we've reported -- we've got one of our strongest months in July that we're going to report. So we see a bit of seasonality there. The business is still extremely strong. And I want to address margins because people may ask about margins during the second quarter. And being a little bit lower than where they had been historically in the past number of quarters. I talked a little bit about the seasonality In May, in particular, with the strong weather as we saw a dip in volume.

And so the margin in the LBE business for the month of May itself was about 13%. If you took out the month of May, so if you just looked at April and June, the margin for the LBE business was about [ 25% ]. So we have kind of a 1-month anomaly. We perhaps didn't react as strongly as we could have to the volume decline in the month of May. But as we look into July, I see the margins coming right back up. So strong business, strong indicators. We have a couple in the pipeline next year. So we have one in Vancouver and one in Quebec. So those are scheduled to open towards the end of 2024. And as I said, we use the pandemic to really optimize the authorization of our LBE business, and we're seeing the success and the benefits as we look forward. .

[Operator]

Our next question comes from Drew McReynolds of RBC Capital Markets.

[Drew McReynolds, analyst]

Yes. Just congrats on the results. Two questions for me. First, on the Cineplex Media side, a little bit of a tough comp that you alluded to in the MD&A. And Ellis, in your opening remarks, you elaborated a little bit more on the data ecosystems that Cineplex have underneath the hood, just wanting to better understand as this business moves forward, it is tied to attendance, but also tied to things you can do with your data. So just wondering how that's evolving. .

And then second question on the amusement outlook. It looks like there was some additional equipment sales and wage subsidy in there maybe for you, Gord. Just how should we be looking at the sustainability of what is obviously a very strong Q2.

[Gord Nelson, executive]

So with respect to the media business, Drew, I'll take both the questions. But I want to talk about what we've been describing to you historically with respect to this business. Is that there's a lag in this business of the return of both mall traffic and theater attendance before typically our advertising partners look for the confidence that a film is going to play and make sure that they've got their engagement and strategies in place.

With respect to -- and I'm going to go over the numbers first then. So with respect to the prior year for Q2 2022, it benefited from some advertisers who had annualized commitments that they had deferred during the pandemic. And with Top Gun coming out in Q2 is the somewhat piled on and put some of those commitments into Q2 2022. So we benefited a bit from that perspective.

Now I will -- when we look at media revenue as a percentage of the prepandemic level, is we've been in a range of sort of anywhere in this quarter was about 60% of prepandemic up to a high of 72% in Q4 last year. So we've been hovering a range in kind of that 60% to 70% range. And as we described and what we were expecting to see is that to be a little bit of a lag between where attendance was coming.

I will say that as we look forward and our data strategies are really engaging advertisers to sort of prove and connect with our customers, is that we're seeing sort of the media revenue come back more in line with our attendance pattern. And as an example, for the month of July, which we've described now, our attendance was about 93% of 2019 levels. Our media revenue for the month of July was about 94%. So we are coming back. We're right on line with that attendance level.

As I look forward to the next number of quarters, our expectations is that the media revenue compared to 2019's levels will now track in line with the tenets as opposed to being behind it. So we're very encouraged that our advertising customers our understanding and recognizing the relevance and the returns that they get on spending in cinema, and we're happy to kind of see that lag what we think is now behind us.

[Ellis Jacob, executive]

And Drew, the big thing is basically using our data to provide a return on investment to our advertisers and agencies. And to me, that's something that's very critical. Because we are able to prove how beneficial it is to be on the screen at our theaters. And that's an important differentiator from us to some of the other companies out there. .

[Gord Nelson, executive]

And Drew, on your second question on the P1AG business. This business, I would say, is on fire and the whole space is on fire. So as we look at exhibitors, as we've looked to open our Junxion concept, we see exhibitors in the U.S. look into utilize extra space for amusement gaming concepts. So lots of opportunity there. We see an explosion in FEC concepts across North America. We see landlords looking as retail tenants exit looking for entertainment-type concepts to come into the malls. So there's a massive opportunity for revenue growth in the P1AG business and we're seeing that happen. And the way with scale of the business is there's tremendous economies of scale because we can service those customers without having to have a lot of additional kind of overhead to service that customer base. .

You mentioned, yes, there was a benefit of an employee tension or credit in the third -- sorry, in the second quarter, which is really a onetime event. So we won't see that going forward.

[Operator]

Our next question comes from Maher Yaghi of Scotia Capital, Maher, your line is open. Please go ahead. .

[Maher Yaghi, analyst]

Congratulations, guys, on a nice quarter. I wanted to just go back to the strike. And the discussion we have was also with our U.S. companies that we cover seems to -- like it's in the best just for everybody to find a solution like you mentioned, Gord. So Hopefully, it will be short-lived.

But I wanted to ask you, in terms of the slate of movies that you were expecting in your SEDARs for 2023. Are you seeing any shifts in terms of time line for the movies that were slated to come this year being pushed out? Or it's more the 2024, 2025 type movies that are being maybe starting to move away?

[Ellis Jacob, executive]

In response, it's Ellis. The only movie today that's moved out that would have been one that we would have seen has been a reasonable hit is Ghostbusters, which is moving to March 29, 2024, from December 25, 2023.

And to me, the first quarter to have a big movie move into that quarter is in a good positioning for us because there are a lot of other movies if they keep their dates all the way through from the third quarter to the fourth quarter, you've got some strong product coming out with Gran Turismo, Equalizer, the Nun 2, Big Fat Greek Wedding, Dumb Money, PAW Patrol, SAW. So there's a lot of -- and that's just in the third quarter.

When you go to the fourth quarter, you're looking at movies like Killers of the Flower Moon, The Exorcist, you've got Dune, you've got the Marvels, The Hunger Games, Napoleon, Wish, Aquaman, Wonka. So there's a lot of movies that are still there. And as long as they don't move, I think we will continue to perform extremely well. .

And again, when you look at the 3 movies that are playing in our theaters now, we expect them to continue to move forward like Barbie, Oppenheimer and Mission Impossible and we have done extremely well on a percentage basis compared to our North American numbers on an overall. And then for Barbie, we had 2 of the top 10 locations in North America for Oppenheimer are the same. And Oppenheimer, we are close to 10% of the North American growth and Barbie, we are getting close to 8.5%, and we keep going up every week.

So I think content-wise, as long as the disruption doesn't continue for a significant period of time. I don't think we will see a major impact to us.

[Maher Yaghi, analyst]

And maybe just a follow-up in terms of your discussion with the studios in the U.S., what is their view on the return on their investment -- on their investments in movies and have they changed their view? Like basically, yesterday, Disney was saying that they are still committed to making strong movies. They are focusing on quality rather than on quantity. Can you maybe just talk a little bit about how you see the studios moving forward with their investments and how that could affect your business overall?

[Ellis Jacob, executive]

The good news in that area is you've got companies like Amazon and Apple also wanting to participate. And I think it is going to increase the number of movies that are being released into the movie theater. And like I've always said, we are still the engine that drives the train. But again, you're going to have movies that are going to do extremely better than we anticipated, and they are ones that are not going to do as well. But on an overall basis, as long as we are ahead, both from a studio and an exhibitor perspective than everybody wins in that process.

And if you told me, and this is saying if you ask me 2 years or 3 years ago, would Barbie be $1 billion movie, I would have said, hey, that doesn't sound like we'll get there. And it's done really well, and it will continue to do well. And Warner Bros. did an incredible job in promoting that film. And basically, it has filled our theaters on an ongoing basis. So from an overall perspective, we've had years where this is always the case. Some movies do better than we expect and others a little less than we had expected.

[Maher Yaghi, analyst]

And maybe my last question on screens. And I think in Q2, you had some weeks where you had more movies and screens that you had available. How is the situation right now going into the summer period and the fall in terms of utilization?

[Ellis Jacob, executive]

There is a lot of product, but we continue to use our data and analytics to basically derive which locations should have what film. And that is really helping us as we move forward. And we had a lot of situations where we can't get as many screens on a particular movie, but what then ends up happening is our guests come in later weeks of the run, and we catch up on an overall position. To me, as I said to you, it's a high-cost problem when you've got a lot of movies and not enough screens.

[Operator]

At this stage, we currently have no further questions. I'll hand back over to Ellis Jacob for any closing remarks. .

[Ellis Jacob, executive]

I want to thank you all again for joining the call this morning. We look forward to speaking with you in November for our third quarter 2022 results and make sure you get to see Barbie and Oppenheimer and have a wonderful and a great day. Thank you. .

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.