Cinemark(CNK) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2024, North American industry box office reached approximately $8.8 billion, climbing to within 3% of 2023 levels despite prior year strikes in Hollywood [10] - Cinemark delivered worldwide revenue of more than$ 3 billion with $590 million of adjusted EBITDA, maintaining a solid 19.4% adjusted EBITDA margin, flat year over year despite a 4% decline in attendance [12][13] - For Q4 2024, Cinemark's worldwide revenue grew nearly 28% to a record$ 814.3 million, with adjusted EBITDA nearly doubling year over year to $156.9 million, expanding adjusted EBITDA margin by 680 basis points to 19.3% [38] Business Line Data and Key Metrics Changes - Domestic operations generated$ 666.4 million in revenue and $128 million of adjusted EBITDA, yielding a 19.2% adjusted EBITDA margin [42] - Internationally, Cinemark entertained 18.4 million guests in Q4, growing international revenue 23% year over year to$ 147.9 million, with adjusted EBITDA increasing 160% to $28.9 million, yielding a 19.5% adjusted EBITDA margin [43] Market Data and Key Metrics Changes - Cinemark maintained market share flat in Q4 2024 compared to elevated levels in Q4 2023, with significant share gains of more than 100 basis points compared to pre-pandemic levels [39] - International attendance reached 90% of 2019 levels, with market share continuing to outperform pre-pandemic figures [43] Company Strategy and Development Direction - The company plans to capitalize on the anticipated recovery in box office attendance by refining programming and showtime scheduling, leveraging marketing, pricing, and loyalty capabilities, and pursuing concession sale opportunities [31][32] - Strategic initiatives include enhancing guest experiences, investing in premium amenities, and optimizing operational efficiencies to drive long-term growth [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a diversified film slate for 2025 and a recovery trajectory for the industry following the 2023 strikes [28][29] - The company aims to maintain a balanced approach to capital allocation while addressing remaining COVID-related debt and focusing on long-term shareholder value [34][56] Other Important Information - Cinemark reinstated its cash dividend of$ 0.32 per share, reflecting confidence in future prosperity and resilience [34][55] - The company ended 2024 with a healthy cash balance of $1.1 billion, benefiting from$ 315 million of free cash flow generation [49] Q&A Session Summary Question: What will drive further growth in concessions? - Management highlighted a range of initiatives including optimizing product assortment, improving purchase ease, and strategic pricing to drive incidents and overall growth in food and beverage sales [59][61][65] Question: How is the content schedule for 2025 looking? - Management noted that while the first quarter is lighter, the rest of the year shows a promising increase in volume and diversity of content, which is expected to maximize occupancy [68][70][71] Question: How will the company handle convertible note maturities? - The company plans to repay the principal amount of convertible notes using cash on hand upon their August 2025 maturity, with flexibility to settle any exposure above the principal amount based on stock price [76][78] Question: What are the prospects for new builds and screen additions? - Management confirmed the reactivation of the new build pipeline, with ongoing projects and opportunities being explored, particularly in suburban markets [92][93][110] Question: How does the company plan to improve margins in 2025? - Management expects margin expansion driven by higher operating leverage from increased box office, but noted potential headwinds from rising film rental rates and ongoing wage pressures [95][100][106]