Cinemark(US:CNK)2023-05-05 18:29Financial Data and Key Metrics Changes - The company generated total revenue growth of 33% year-over-year to more than $610 million in Q1 2023 [104] - Adjusted EBITDA increased by 242% year-over-year to $86 million, resulting in an adjusted EBITDA margin of 14% [76][99] - The company ended the quarter with $650 million in cash and generated positive operating cash flow, with only modestly negative free cash flow [80][135] Business Line Data and Key Metrics Changes - Domestic segment served 25.2 million patrons, an increase of 22% year-over-year, generating $244.7 million in admissions revenue [105] - Domestic concession revenue grew 32% year-over-year to $186.8 million, with concession per cap increasing 9% to $7.41 [77] - International segment delivered $66.3 million in admissions revenue, $49 million in concession revenue, and $16.3 million in other revenue, totaling $131.6 million, a 49% increase [78] Market Data and Key Metrics Changes - North American box office grew by almost 30% versus 2022, driven by strong performances from films like Avatar: The Way of Water and Puss in Boots: The Last Wish [54] - April box office was up almost 55% year-over-year, nearing pre-pandemic averages [90] - The company maintained a market share increase of approximately 100 basis points compared to pre-pandemic levels [71] Company Strategy and Development Direction - The company aims to balance capital allocation with a target net leverage ratio of 2 to 3 times while focusing on deleveraging [4] - Strategic actions include enhancing guest services, optimizing pricing, and expanding revenue channels through online food and beverage ordering and merchandise sales [101][102] - The company is optimistic about the recovery of theatrical exhibition and expects to gain further operating leverage as box office rebounds [81] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the ongoing recovery of theatrical exhibition and the strength of consumer demand for movie-going experiences [41][81] - The company is closely monitoring the impact of the writer strike, noting that the immediate effect is limited, but longer strikes could pose risks to future productions [16][17] - Management highlighted the importance of maintaining a disciplined approach to pricing and marketing spend to encourage movie attendance [123] Other Important Information - The company anticipates approximately $150 million in capital expenditures for the year, focusing on maintaining a high-quality circuit and ROI-generating initiatives [109] - The company has seen a significant increase in alternative content, which accounted for over 8% of box office in Q1, compared to the historical average of around 2% [32] Q&A Session All Questions and Answers Question: What percentage of your box office revenue was premium and how does that compare to the prior year? - The company reported that premium box office as a percentage of total was about 12.5% in the U.S. and about 12% overall, consistent with last year [83] Question: How sustainable should we think about your share at current levels? - The company believes that market share gains are sustainable, supported by a strong content mix that resonated well with audiences [112] Question: Can you discuss the impact of the writer strike? - Management noted that the impact of the writer strike depends on its duration, with longer strikes posing more risk, but current productions are unlikely to be materially affected [16][17] Question: What are your expectations regarding inflationary cost pressures for the balance of the year? - The company expects to see some modest pressure in COGS rates relative to 2022, particularly on commodities, despite some easing in certain prices [120] Question: How do you view pricing opportunities moving forward? - The company sees significant opportunities for organic price increases, as current pricing has increased below inflation since Q1 2019 [155]