Cinemark(CNK)2024-02-15 16:00Theatre Operations - As of December 31, 2023, the company operated 501 theatres and 5,719 screens across the U.S. and Latin America, with 309 theatres and 4,324 screens in the U.S. and 192 theatres and 1,395 screens in Latin America[22]. - The company operates 293 XD auditoriums, the largest exhibitor-branded premium large format footprint in the world, along with 15 IMAX and six ScreenX auditoriums[38]. - The company has a significant presence in major cities in Latin America, being the largest exhibitor in Brazil and Argentina, and has theatres in 15 of the 20 largest metropolitan areas in the region[39]. - As of December 31, 2023, the company operated 192 theatres with 1,395 screens across 13 countries in Latin America, with Brazil contributing approximately 7.6% of consolidated 2023 revenue[72]. - As of December 31, 2023, the company operates 461 theatres, with 269 in the U.S. and 192 internationally[112]. Financial Performance - Total revenue for 2023 reached 2,454.7 million in 2022[150]. - Admissions revenue increased by 24.8% to 1,246.9 million in 2022[153]. - Concession revenue rose by 27.0% to 938.3 million in 2022[153]. - The company reported an operating income of 89.8 million in 2022[150]. - The company’s revenues are historically seasonal, with higher earnings typically during summer months (May to July) and the holiday season (November to year-end)[55]. Market Trends - North American box office revenues for 2023 were approximately 2.4 billion for 2023, up more than 33% compared to 2022[28]. - The average video and digital release window for major films has decreased to around 45 days, which may impact theatre attendance if guests opt for in-home releases[71]. - The company’s results of operations are influenced by the quantity and quality of films shown, with fluctuations based on film release schedules[67]. - The Writers Guild of America strike in May 2023 and the SAG-AFTRA strike in July 2023 resulted in a decrease in film content released in 2023, impacting future film availability[66]. Competition and Market Position - The company ranked either first or second in box office revenues in 21 of its top 25 U.S. markets for the year ended December 31, 2023[38]. - The company competes with major U.S. exhibitors like Regal and AMC, and international competitors vary by country, including Cinépolis and Cine Colombia[53]. - The company faces intense competition from various entertainment forms, including streaming services and alternative film distribution channels, which could adversely affect attendance and revenue growth[70]. Customer Experience and Innovations - The company has transitioned approximately 14% of its auditoriums to new laser projectors and features Luxury Lounger heated recliner seats in 68% of its domestic circuit[32]. - The company offers advanced mobile concession ordering at virtually all U.S. theatres and in all Latin American theatres, enhancing customer convenience[32]. - The company’s domestic subscription membership program, Movie Club, offers monthly ticket credits and discounts, enhancing customer loyalty[52]. - The company has invested in technological innovations such as laser projectors and motion seats to remain competitive in the industry[100]. Cost Management and Economic Factors - Food and beverage costs have been particularly affected by inflationary pressures, especially for core commodities, prompting the company to seek alternative products and implement strategic pricing actions[48]. - Inflationary pressures and supply chain interruptions have impacted concession supplies expenses, which fluctuate with concession revenue and product mix[131]. - Labor shortages may hinder the company's ability to hire and retain employees, potentially leading to extended wait times and reduced operating hours[73]. - Legislative initiatives related to climate change may lead to increased operating costs for the company[101]. - The company is subject to risks related to currency fluctuations and governmental regulations in foreign markets, which could adversely affect international operations[72]. Debt and Financial Obligations - The company has significant long-term debt obligations totaling 1,972.1 million of CUSA debt, and 4,429.0 million, with long-term debt at 460.0 million of 4.50% convertible senior notes, maturing on August 15, 2025[178]. - CUSA's obligations under the Credit Agreement are guaranteed by Holdings and certain subsidiaries, secured by interests in substantially all personal property[184]. Shareholder and Investment Information - Holdings owns 4.4 million shares of National Cinemedia, Inc. (NCMI), representing approximately 4.5% ownership, with revenues from NCMI of 52.2 million, and $53.3 million for the years ended December 31, 2021, 2022, and 2023 respectively[90]. - Holdings suspended its dividend in March 2020 due to COVID-19 impacts, and it is uncertain when dividends will resume[88]. - Future sales of substantial amounts of Holdings' common stock could result in a decrease in stock price and dilute existing stockholders[89]. - The conversion of the 4.50% Convertible Senior Notes may dilute existing stockholders' ownership interests and could depress the price of Holdings' common stock[85]. Risk Management and Internal Controls - The company maintains insurance for cyber risks, but future events could result in costs exceeding available coverage[98]. - The Chief Technology Officer oversees the information security program, which includes various security measures and controls[110]. - The company has adopted a risk-based approach to cybersecurity, utilizing third-party security firms for assessments and technology[106]. - The company maintained effective internal control over financial reporting as of December 31, 2023, according to an independent audit[216].