Cinemark Holdings, Inc. Q3 FY2024 earnings call

• Box Office Strength: North American industry box office reached $2.7 billion, up 1% year-over-year, the highest grossing quarter since the pandemic. Films like Inside Out 2, Deadpool & Wolverine, Despicable Me 4, etc. performed strongly.
• Financial Results: Worldwide adjusted EBITDA grew 12% to $221 million, highest third quarter adjusted EBITDA in company history. Adjusted EBITDA margin expanded 140 basis points to nearly 24%, generated $64 million of free cash flow.
• Strategic Initiatives: Benefiting from strategic initiatives, including a loyal customer base with over 21 million members in global loyalty programs, and an extensive marketing reach. Maintained and enhanced circuit with investments in reclined seats, premium large format auditoriums, D-BOX motion seats, etc.

Domestic Segment: In the U.S., 37.6 million guests were entertained, market share grew 80 basis points year-over-year. Admissions revenue was $375.2 million, average ticket price increased 7% year-over-year to $9.98. Concession revenue was $299.6 million, achieving a new all-time high concession per cap of $7.97. International Segment: Hosted 22.8 million patrons, which was a 7% decline from the third quarter of 2023. Admissions revenue was $85.2 million, concession revenue was $67.7 million, and other revenue was $66.6 million. Overall, worldwide revenue grew 5% year-over-year to $921.8 million, adjusted EBITDA was $220.5 million, a 12% increase from the third quarter of 2023.

• 2025 Outlook: Optimistic about the continued rebound of new release volume in 2025 and beyond, with strong fourth quarter releases like Wicked, Gladiator II, etc., and a blockbuster 2025 film slate.
• Cash and Capital Allocation: Anticipate cash balance will remain elevated, with focus on strengthening balance sheet, investing for long-term success, and reevaluating returning excess capital to shareholders during 2025 budgeting process.

• International Risks: FX devaluation, particularly in Argentina, with inflation offsetting some results.
• Concession Costs: Inflationary pressures on certain concession categories, and potential step-up in COGS rate due to inflation and product mix beyond 2024.

Q: David Karnovsky asked about 2025 supply visibility and streamer content contribution.

A: Sean Gamble mentioned still early to assess 2025 fully, but optimistic about volume rebound, and while one streamer title shifted, others like Amazon are leaning into distribution.

Q: Eric Handler asked about concession revenue and merchandise.

A: Sean Gamble said concessions revenue is growing, with merchandise and popcorn tubs contributing, and e-commerce channel expanding.

Q: Omar Mejias asked about market share drivers.

A: Sean Gamble said mix of films (family, horror, nostalgia) and PLF performance helped, along with initiatives to connect with consumers.

Q: Chad Beynon asked about Latin American market and Movie Club.

A: Sean Gamble said Latin American performance will be balanced, and Movie Club is performing well with opportunities to add value and evaluate pricing.

Q: Daniel Duran asked about capital allocation and market share sustainability.

A: Melissa Thomas said reevaluating capital allocation, and market share may fluctuate but 100 basis points improvement relative to pre-pandemic is a reasonable expectation.

Q: Robert Fishman asked about studio partnerships and CapEx.

A: Sean Gamble said studios partner with loyalty programs, and Melissa Thomas said Cinemark's planned investment is in line with NATO report, with potential to over-index vs peers.

Q: Mike Hickey asked about consumer trade-down and pricing.

A: Sean Gamble said theatrical benefits from macroeconomic cycles, and Melissa Thomas said pricing is data-driven, with modest growth expected but Q4 lapping Taylor Swift may affect pricing.

Q: Jim Goss asked about alternative content and demographic shifts.

A: Sean Gamble said alternative content has potential, and breadth of content helps Movie Club efforts through appealing to various demographics.

Q: Stephen Laszczyk asked about competitive dynamics and pricing.

A: Sean Gamble said competitive dynamic is managed through data-driven pricing and analytics, focusing on consumer-oriented optimization.