Cinemark(CNK) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Cinemark Holdings, Inc. and Cinemark USA, Inc. for Q1 2025, detailing balance sheets, income, equity, and cash flows, which reflect a net loss, revenue decline, and significant share repurchases Cinemark Holdings, Inc. and Subsidiaries Financial Statements (unaudited) Cinemark Holdings, Inc. reported Q1 2025 total revenues of $540.7 million, a net loss of $38.6 million, and a decrease in cash to $699.4 million primarily due to share repurchases and dividends Condensed Consolidated Statements of Income (Loss) - Holdings | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $540.7M | $579.2M | | Admissions | $264.1M | $289.8M | | Concession | $210.4M | $224.2M | | Operating (Loss) Income | ($19.2M) | $17.6M | | Net (Loss) Income | ($38.6M) | $25.3M | | Diluted (Loss) Income Per Share | ($0.32) | $0.19 | Condensed Consolidated Balance Sheet Highlights - Holdings | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $699.4M | $1,057.3M | | Total Assets | $4,682.2M | $5,067.0M | | Total Long-Term Debt (Carrying Value) | $2,335.2M | $2,334.7M | | Total Equity | $357.6M | $603.4M | Condensed Consolidated Statements of Cash Flows - Holdings | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used for operating activities | ($119.1M) | ($22.7M) | | Net cash used for investing activities | ($15.3M) | ($23.3M) | | Net cash used for financing activities | ($230.1M) | ($10.4M) | | Decrease in cash and cash equivalents | ($357.9M) | ($60.5M) | Cinemark USA, Inc. and Subsidiaries Financial Statements (unaudited) Cinemark USA, Inc. reported Q1 2025 total revenues of $540.7 million and a net loss of $34.3 million, with key differences from the parent company primarily in debt structure Condensed Consolidated Statements of Income (Loss) - CUSA | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenue | $540.7M | $579.2M | | Operating (Loss) Income | ($18.2M) | $18.5M | | Net (Loss) Income | ($34.3M) | $27.9M | Condensed Consolidated Statements of Cash Flows - CUSA | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used for operating activities | ($111.1M) | ($16.4M) | | Net cash used for investing activities | ($15.3M) | ($23.3M) | | Net cash used for financing activities | ($20.4M) | ($10.4M) | | Decrease in cash and cash equivalents | ($140.2M) | ($54.2M) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, revenue disaggregation showing U.S. decline and international growth, dividend reinstatement, a $200 million share repurchase program, long-term debt terms, and no impairment charges - The company reinstated its quarterly dividend at $0.32 per common share per annum, paying $0.08 per share on March 19, 2025, for a total of $10.1 million[85] - On March 6, 2025, the Board approved a $200.0 million share repurchase program, which was completed between March 11 and March 27, 2025, funded by cash on hand[113] - The 4.50% Convertible Senior Notes became convertible during the second quarter of 2025 because the closing price of Holdings' common stock exceeded the trigger price of $18.60 per share for the required duration[89] - No impairment charges were recorded for long-lived assets, goodwill, or intangible assets for the three months ended March 31, 2025, following a qualitative impairment analysis[129][130] Revenue by Segment (Three Months Ended March 31) | Segment | 2025 Revenue | 2024 Revenue | | :--- | :--- | :--- | | U.S. Operating Segment | $417.1M | $457.0M | | International Operating Segment | $123.6M | $122.2M | | Consolidated Total | $540.7M | $579.2M | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 6.6% revenue decline to a weaker film slate, impacting U.S. attendance, while international revenue grew, and the company plans to repay maturing convertible notes using cash and shares - The success of the industry is contingent on the volume of new film content, which is still recovering from the COVID-19 pandemic and the recent Hollywood strikes[167] Consolidated Revenue and Key Metrics Comparison | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $540.7M | $579.2M | (6.6)% | | Attendance (millions) | 36.6 | 39.7 | (7.8)% | | Average Ticket Price | $7.22 | $7.30 | (1.1)% | | Concession Revenue per Patron | $5.75 | $5.65 | 1.8% | - U.S. attendance decreased 12.7% due to fewer tentpole releases, but average ticket price rose 2.6% and concession spending per patron increased 5.4% due to strategic pricing[185] - International revenue grew 1.1% as reported, but 16.0% in constant currency, driven by inflationary pricing actions and strong local film content[181][185] - The company expects to repay the principal of its 4.50% Convertible Senior Notes maturing in August 2025 with cash on hand, and intends to settle the remainder with shares[210] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate and foreign currency fluctuations, with a 100 basis point interest rate increase potentially raising annual interest expense by $1.9 million, partially hedged by interest rate swaps - The company has exposure to financial market risks, primarily changes in interest rates and foreign currency exchange rates[241] - A 100 basis point increase in market interest rates would increase annual interest expense by $1.9 million, based on variable rate debt outstanding at March 31, 2025[242] - The company utilizes three interest rate swap agreements to hedge a portion of the interest rate risk associated with its variable-rate term loan[243][246] Controls and Procedures As of March 31, 2025, management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[248] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[250] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings, including class action lawsuits and an appeal related to its Exhibitor Services Agreement with National CineMedia, which management deems not material to its financial position - The company is appealing a bankruptcy court's confirmation order regarding National CineMedia (NCM) that did not preserve Cinemark's rights under the 'most favored nations' clause of its Exhibitor Services Agreement[161] - The company faces several class action lawsuits, including allegations of violating the Fair and Accurate Credit Transactions Act, California labor laws, and deceptive trade practices. The company maintains the allegations are without merit and will defend itself vigorously[160][162][163] Risk Factors No material changes to the company's risk factors were reported from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported for the quarter[254] Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, Cinemark Holdings repurchased 8.53 million shares, including 7.93 million under a $200 million program completed by March 27, 2025 Share Repurchases - Q1 2025 | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | Shares Purchased Under Plan (thousands) | | :--- | :--- | :--- | :--- | | Jan 2025 | 0.53 | $29.31 | — | | Feb 2025 | 594.77 | $28.94 | — | | Mar 2025 | 7,931.11 | $25.22 | 7,930.94 | | Total | 8,526.41 | N/A | 7,930.94 | - A share repurchase program for up to $200 million was approved on March 6, 2025, and was completed by March 27, 2025[256] Other Information This section discloses executive officers' adoption of Rule 10b5-1 trading plans and provides supplemental consolidating financial statements for Cinemark USA, Inc. as required by senior notes indentures - Several executive officers adopted Rule 10b5-1 trading plans for the orderly sale of company stock for personal financial planning. Executives include: - Melissa Thomas (CFO) - Sean Gamble (CEO) - Valmir Fernandes (President, International) - Michael Cavalier (General Counsel) - Wanda Gierhart (CMO)[257][258][259][260][261] - Supplemental consolidating financial schedules for Cinemark USA, Inc. are provided as required by its senior notes indentures, separating restricted and unrestricted subsidiary groups[263] Exhibits This section lists exhibits filed with the Form 10-Q, including executive certifications under Sarbanes-Oxley Sections 302 and 906, and financial statements in iXBRL format - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and financial data in iXBRL format[279]