CNK - Earnings call transcript Q1 2018 | Cinemark Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Cinemark's First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I will now turn the conference over to Chanda Brashears.

Chanda Brashears

good and Crystal, you, morning, everyone. Thank and time, Cinemark Holdings, this call, Operating by Executive Officer. I and Financial earnings would to you hosted Officer; Chief Zoradi, welcome to Mark Gamble, Inc.'s Chief conference Chief Officer like release At Sean first XXXX quarter the that the Harbor this I may conference to matters constitute listeners States meaning members Safe by United forward-looking that our like discussed Litigation of of of within of Securities call provision the would XXXX. certain statements Reform remind are Private management during Act

and uncertainties the Forward-looking differ call statements certain are most be to including A of comparable webcast include Today's presented in Form recently in can accordance forward-looking statements. now measures. the with that the expressly indicated financial statements. and subject may to Report measures in the set no on found from release, factors Cinemark's to or any company's most Quarterly to their Mark Company's I the over to XX-Q recently The directly Annual update qualified call the press risks on forth Report in like Form GAAP results the most company these investors.cinemark.com. today's risk the by website, calculated non-GAAP undertakes publicly such XX-K. reconciliation and obligation non-GAAP financial turn measures company's entirety filed and would SEC, to may Zoradi. Such actual expectations implied filed cause revise filing materially are and or in

Mark Zoradi

I office, performance, this a commentary of box anticipated industry insiders the first-quarter in Considering record-breaking high XXXX for appreciate teens. sizable most and comparison We things the timing sensational first to quarter's decline film quarter on in somewhere the you mid off first with Thank us last a brief in year's you, to Chanda, lineup profile everyone. kick morning, the quarter call. results I'd and our industry's results. thought good joining

to However, declining for cultural North industry box of by America wound exceeded phenomenon the demonstrated up only report domestic office consistency attendance the at nature we operations by global content a also box driven almost positive in our by year-over-year, that success basis we're and office, our once XXX especially actual impressive adjusted Cinemark's as high and EBITDA In the and of driven margin attendance given comparison, North far XX%. of derive and and the became a Panther strategies of points fixed benefits continued unprecedented helped film. of breakout results our X% Black the with those a maintain an expectations impact to over our strength again that America cost result to contrast strategies These initiatives. this pressures exciting the outperformed in This pricing pleased business of we by potential is from industry quarter's the decline. faced powerful strategic the driven indexing

accomplish helped deeper results. So a into the dive little us that let's initiatives these

amenities, growing guest loyalty and M&A. our accretive organic include, our targeting our and continuing reminder, to membership a As and strategies enhance ongoing programs

All our circuit. AAA of create an these initiatives extraordinary while guest aim growing and experience to enhancing

highly Customer further initiative focus positive enhancing feedback guest So talk amenities, and to our Luxury about extremely our on financial lucrative. our be let's beginning with Loungers. continues seat remain recliner about returns

ROI of well outsized to includes to X,XXX in generating which Luxury added threshold. ticket caps recliner our XX% theaters our the domestic of half now attendance, and XXX continue spanning screens, in produce base, quarter first pricing, while Loungers per our XXX auditoriums During growth food we circuit. and nearly returns excess beverage

Loungers. XX% of opportunistic are track year featuring Luxury on and expansion to with amenity U.S. such, end in this the As this approximately remain screens we of our

food to beverage, going are next experience to guests. offerings and overall the for complementary expanded our movie Turning

core categories pay record. out our quarter ongoing growth sustainable roll quarter of set in while first efforts growth meaningful to to XXth with and another offerings, per dividends. continues new cap of We quarter consecutive XXXX driving product our Our completed first

selling next and We last continue example quarter. innings Hut is potential have and XX we're expansion products of theaters to middle extensive to remain cap believe Pizza on high-quality the Pizza in in our plans the partnership fresh, and at terms two discussed years. growth. One per strategic We're initiatives branded beverage the food our focused continued executing Hut for already over generate

experiences THX the launched we all only in our XX% XD guest first offer of year virtual XXX by up effects movement, let's response a through in friends scale designed next Loungers, fully reality and of Secrets to members virtual further XD's can brand. office. is plans of as Spaces premium domestic with social are park combined and The of Wars: campaign. in to The the and nicely and campaign that label summer. last consumer box with both and our kicked and VR XD's a cold, In fully virtual seats, past emerging our XD vein, wind, the process Star implement getting four to also first completion certification, are reality favorable early been announced phase the experience our I'm has that to recently providing sound such currently our multifaceted technology plan guests. we our communal has In the talk Virtual Theater just our with San we've heat, the later auditoriums extraordinary phenomenal. eager technologies with adding installing best are to Spaces explore while And report these experience technology quarter, auditoriums We equipment of two approximately awareness THX week auditoriums XD immersive experience superior a as we for and a nearing anything comprised screens, depth environmental global attraction to XD private been to running yet a generated for certification seeks Also about been the Cinemark by Reality reality to this consumers, our open reality excited and acoustics, unlike Spaces you screens executives of is is through to starting guest experience family was can environment feature that X% and and reproduction unique and forward Oakridge extend along test immersive, be Empire America. just standards XD Animation. guests. coupled virtual at Spaces Theater X% format multi-sensory to founded Latin multipoint theme brand immerse calibration, Dallas how premium provide. to certification those at water THE new DreamWorks looking the very a that two recently target speaker attraction moving this thrilled brand orchestrates marketing this or and we and through of technology, off at props, ultimate worldwide validates levels completed our experience We're phase We highest are VOID large hyper-reality consistently experience in physical and to second formats, domestic the headquarters. been also XD our architecture, already which dynamic that realm experience we've the fall. Luxury our configuration. that we're expanding consumers. to Jose, reviews. enjoyed our experience surround Now premium home. the adjacent of is our from the and level with in brought Cinemark specifically former they Plans a

to customer loyalty Turning efforts. our the page

nearly members you location. We've reported since our XXX is days earnings on and the the held Club, the XX our update far exceed that That also represents pleased give original constant grown. members. our theater me key of proprietary per provided for memberships or remains the call maintained ramp I'm have incredibly Movie last cadence all movie up It's of that our Movie we during program's ago. launch, we an an expectation consumer metrics Club sign-up program. subscriptions have launched our enthusiasm strong. membership nearly to program initial now That XXX,XXX noteworthy Let following and double say average last surpasses recently

the program. one-third We sign-ups coming guests were of who see not previously new loyalty that to are Connections continue from of our part

of Movie Additionally, over Meanwhile, to movie tickets program office April admissions grow revenue. active, that box our of X% XX% Movie represents with overall credits Club our already Club utilization of is approximately by issued percentage derived the continues and remains redeemed. very

provide of expand X% their we're overall are Cinemark our our our Club's rather experience and just have And been to and propensity drive accumulate while Club upgrades Movie worldwide, members. continue validates going with build. beyond our the continue our the still consumer the now and million loyalty a than use circuit, many that about increased very Club data and purchase our Furthermore, have service. guests We format enhancing laser-focused early, XD, tailored also XD align frequency. that grew widely to to geographic more the XX% Club's base, varied which members approximately to flexibility, masses across higher free ease While research with Movie and and on membership such concessions program benefits members we're frequent members quarter. customer these this service, Movie with X lines, have select premium to to programs progress to most loyalty diverse consumers. of features, encouraged than attractive personalized continuing more movie are Club, remain likely as Along which last value-seeking exceptional seeing since approximately raving highly footprint XX% Movie the to signups early non-Movie we're using We starting also

with the approximately to And regards we're consistent the box of Our domestic sustaining Connections of quarter, very U.S. terms our traditional our the results. domestic strategic that to X.X visit in all members industry-leading initiatives they're making of for our our office. in and X providing benefits nearly moviegoer. in progress Connections first continued members XX% times represented pleased times of We're the

our to Before forward-looking as briefly comment international content. turning business, film the to as well call I'd over like also on Sean,

Panther, Beast and My time, volume Mother Ferdinand family, the year's of able last is included all films compared of not stronger the of Coco Brazil's Beauty breakout it they benefited first highest XXXX, the even favorable the not films from Latin like while During though that dates did Furthermore, become of benefited the from in runaway of U.S. run Black and America it grossing the to action challenging the hit X. were a a that comparison of U.S., release and to local film became office and strong box quarter local quarter match Character

Latin quarter As such, Cinemark's were for in mid-teens. results of a line more decline the with the industry the and expectations first box America in year-over-year original office our

the ebb and entertainment and we've attendance release America. evaluate across indicated office past, box media timing economic based the flow As as and and on appeal, and results content times broader volume, will the in film dynamics consumer Latin we of landscape general many

our prospects believe prospects content movie-going We per Avengers: financial support remain theaters that is Latin additions growth briefly recently that to remiss performance continued during opportunistic be particularly would On evidenced I of in XXXX. the effort completed intact drive healthy as And continue Brazil. strength our of growth acquisition outperformance War. Brazilian an consumer confidence of the following overall and long-term company. and exceptionally our remain positioned and that believe screens throughout strong future the Cinemark to record-breaking in the to across landscape, we region fundamentals about screens Infinity And XX will in our we release three Avengers along robust XX didn't the relative considering global market mention film if gigantic within to-date, screen America, XX by mid-April. sizable These the well our note, growth comprising share, about screen I industry, with the optimism of attendance towards

start with Story, the Wars to fantastic Deadpool The A stellar Star come is World: Jurassic lineup still off Kingdom. X, Solo: X, and second Fallen a quarter a Incredibles to including

titles year. reassured and us studio recent further meetings of of XXXX. CinemaCon pipeline Such and lineup films Wasp, film strategic as and Additionally, The towards footage which visibility skews diverse remains Ant-Man and my the Sean content coming the grow prepared we the performance. remainder the ahead historically of early throughout to Wreck-It Ralph as for we that second a – our our film Aquaman, We'll turn incredibly That the promising the to over our the Into to of their incredibly viewed remain XXXX this circuit. discussion all content execute now during remarks. benefits strength. and Venom, continues position this address into company our to in initiatives Impossible I'll Fallout, release we more financial call Spider-Verse, content, continue reap X, play discussed the detailed dates. family get Mission: our of to quarter, over Spider-Man: that half Sean? Last excitement enthusiasm friendly the concludes films well more

Sean Gamble

Thank you, everyone. morning, Mark, and good

Before in a significant such revenue. component diving into In that recognize affects due ASC certain related summary, quarter's adopted first other the NCM to accounting we revenue amortization financing method revenues change of beginning financial for used items. will as to for the revenue, XXXX, pronouncement of like inclusion you XXX a I'd our deferred January our details X, how deferred increase results, which remind well we the as to

In addition, on fees net basis. now be recorded will versus gross a transaction

Finally, do from our loyalty footnotes effect quarter, of can And financial revenues results. impact concession a we we last Further associated new this changes pronouncement the we information adoption our expect of will have of as those believe XX-Q. these members. on to material overall admissions about not a of deferring be found and a in our points Connections slight on indicated the revenues issuance portion with

In all resulted global Now and U.S., first up margin year's of declined XX.X quarter, million, EBITDA of to shifting revenues results, quarter to generated against in attendance first our X.X% during EBITDA of an going million time, XX.X%. highest-grossing the the total of patrons. $XXX.X financial adjusted last our which adjusted million $XXX company

mentioned However, American Mark that result earlier. by industry outpaced the basis as North XXX points,

year. basis a exceeded results outperformance quarter faced, challenging box XX-basis-point XXX American attendance first the the of points growth having drove by industry North in outsized office last comparison Our in also despite we

million surpassed increase resulted XX and pricing strategic admission revenues opportunities average quarter domestic ticket We conversions other office included actions. of an of were through to and results for box industry This have the our X.X% past for $XXX.X now Total quarters. $X.XX. out XX increase price from recliner the generated

described. to yielded Our X.X% were revenue in adjusted EBITDA XX.X by U.S. previously margin audiences of this despite revenues $X.XX last changes U.S. which slate Domestic varied beverage to quarter's film recognition that grew American $XXX.X and a did a a operations Overall, total did patron concessions and increased year delivered XXX.X% I of translate $XXX.X million. the Hollywood quarter U.S. XX% as as revenue concession declined results in revenues million attendance in Latin generated of our XX.X%. per food decline other attendance. EBITDA of million, total first of adjusted million, the not an it with These accounting initiatives primarily $XXX.X well record patrons to Internationally, line as and result revenues driven of

quarterly were reported, $XXX.X highs. were Additionally, as which our historic and we currency. declined challenging in XX.X% year in were results XX.X% admissions attendance International million, comparison with a line last with versus faced down that constant prior-year revenues

translated average inflationary patron currency increase Our ticket $X.XX as was reported, grew primarily currency. price to of was driven reported price X.X% and International a per of X.X% concessions that constant in by growth. constant $X.XX

currency. with and constant adjusted However, EBITDA and incremental income. EBITDA $XX revenues were million margin result the attendance as XX.X% revenues promotional benefited to in reported, an in was as predominately $XXX.X reported down XX% were and of currency. $XX.X total recognition were increase Overall, the X.X% increased as million from XX.X%. $XX.X and revenues decreased International of XX.X% changes, adjusted lower which million in constant million, as accounting in concession This driven aforementioned an quarter, and reported a of screen advertising revenue growth by also international other

if continue foreign sustained first single-digit to expect approximate to expected, high in causing on to X.X% reported mid fluctuations currency XXXX. And difficult translation the would current we headwind As currency percentage while predict, financials. a our returned remainder the rates of a headwind hold, an are throughout quarter to drag future

currency, international operating in film As transacted a rental expenses. the local our are expenses facility and lease of majority vast reminder, including

driven basis increased costs total and of year-over-year total was Collectively, of decreased were changes. basis was professional marginally total rent. fees the an and XX and percentage driven of benefits slight year's of increases XX revenue Salaries basis was a a enhanced concentration office. revenues films to wages the as by This quarter on global percentage G&A circuit. XX.X% also grew the lease staffing predominantly we costs income in was admissions XXX(k) back of percentage slightly points increase compared base larger remodeled U.S. of concession accounting XXXX. consolidated increase that the Shifting a million. a and as as fees. last So results, percentage at the result exchange well first G&A of theaters. percentage a quarter percentage increased predominantly expenses transaction as reduced revenues costs attendance revenues, of concession by in points total translation-based the Meanwhile, rates, points timing a reform gross quarter's new claims, by $XX.X first insurance decline by not across currency film year first impacted as filling basis as this prior of fixed due positions is of by and quarter impact associated to of recently wage XX a XX level mix revenues by labor points pre-tax revenues a This XX.X%. by open recognition higher product increased XXX total basis reduced worldwide recording our and a basis new rental comparison box and tax our other to following by declined transaction-oriented. revenues of in our And standards. the advertising quarter to and from driven to with percentage for Facility as of over in basis points of resulting driven as XXX points, utilities increase inflation, Conversely, by versus by as health net total leverage

cash balance the income to million Our We Inc. position quarter's successfully million was $XX capital and another per by $X.X to prudent we X.XX%. dedicated maturity debt further cash With tax balance included we our as to instruments $XXX a plus amendment $X.X sheet, XX-basis-point extension rate well our during ended improved and net a first was Holdings, of share. our net yet financial credit our senior well These Cinemark a which approximately XX.X% as or position by and $X.XX to of staggering our effective diluted attributable the extending quarter remain planning reduction an and with annual respect secured facility completed three billion. to interest million. years changes its LIBOR by of quarter benefiting as as coupon debt

that advantage states sheet screens take ability structure. the to extremely we quarter attention at XX consistent favorability of provide our to theaters pleased operated improvements DMAs opportunistically footprint, are continues our U.S. in debt us XXX debt of our We to XXX in and the drive markets X,XXX end. and strength balance and in the meaningful Shifting

that at X of theater its theater the with and lease the screens XX opened screens X end During term. was closed quarter, and we X

during X and XX screens theaters XX XXXX. We screens have X open representing to theaters signed XXXX, subsequent and to commitments

in approximately these expect million screens. for We to XXX $XX spend CapEx

of across theaters countries during to anticipate additional screens America. approximately we XXX year. XX closing X,XXX one remainder Latin operated also theaters We and the the Internationally, two in

XX subsequent spending to and XX we open X As XXXX, new representing X screens. screens in $XX anticipate commitments We quarter-end, theaters million during and to approximately for of XX CapEx XXXX. had screens theaters these signed

international Consistent the our Additionally, to Mark long-term in added screens we continue adding Brazilian a in theaters we we year XX with America per completed of growth X screens to comments, we XX anticipate and a prior and April opportunity recently between previously XX as as view Latin near-term. result that referenced. the acquisition

spent $XX.X that $XX.X we in conversions. was on first recliner the including million quarter, $XX.X CapEx, and overall with new million builds, Regarding existing theaters million predominately on associated

existing million approximately the and include building, XXXX, conversions $XX and with headquarters is spending $XXX approximately CapEx domestically core of completing Luxury food for is run-rate, associated and renovation million theater We and of new that continue line is of $XXX and both full-year our internationally, Lounger to million historic flow screens million our for cash with initiatives. million the during maintenance beverage for anticipate projects designated in varied is $XX builds $XXX which residual generating of additional

to ahead are the are as financial the maintain work making benefits that that strength content strategic remarks, I like progress $XXX your We annual lines of like prepared continue capital our as ongoing I for million we open enthusiasm would regard increase lies well would to you of amortization will that about strong echo And to expenditures. and to result to $XXX results. we the to consistency in million of our and want to for XXXX morning. our deriving questions. this and we and In expect approximately film our time depreciation our concludes now up to a thank Crystal, these we all as of with closing, initiatives as Mark's pipeline

Operator

And the our Ng with Michael first question Goldman of comes line from Sachs.

Michael Ng

just Sean, details the up, was for one for housekeeping ASC question. on any Thanks a just quarter? take I all and change. like wanted morning. the in the to question from thanks one whomever impact EBITDA the Mark, Sean, follow for Good would XXX for it. I accounting for have on there to

Sean Gamble

revenue. on impact slight The up a was gross our biggest interest the deferred EBITDA. of of that driver There NCM was

slight see which impact note really would to rate were of by up EBITDA Also statement, was effectively that about our the change. the expense The of result NCM our for was The timing fees. the that an adjustment yielded that offset says our – accounting interest revenue by on of benefits deferrals. didn't from impact wanted line gross is a as from however, income have have derived million, the of that largely EBITDA our of benefit; magnitude NCM shifting loyalty the offset NCM, deferred to on you'll the on net gross quarter. a shown been much the impact As just that also amortization $X transaction interest margin program basically

Michael Ng

Okay. as the that Thanks. that. up consistent a just each I is a follow pretty forward? And we contribution to Should see EBITDA deferred of quarters NCMI revenue quarter-to-quarter? going for similar guess,

Sean Gamble

pretty consistent. Yeah. It's

I that's So, assumption. a safe think pretty

Michael Ng

Thanks. like that on overall? And Great. virtual Okay. this then, something do your like positive How or going? initiatives helps fit Mark, your traditional in people thanks these premium for convert color do reality movie more all isolation the into VR. is Specifically, and initiatives XD strategy to returns generate

Mark Zoradi

Michael, as indicated, we just are here. starting I

these. We excited at here premium terms to have it. of And each point, effort this and very broadly in we're in optimistic theaters of of Dallas going kind have very, to incredibly which a Jose, would Spaces in with one both they're about But about them. early marketing a terms we're say I make it's for THE us. of what think in how go a we're little At VOID, or we San going to huge effect rollout

that. a We think it, opportunity and but predictions too make to very a it's think have a a with return on from that create to partnership return any we good on good them, have we I positive standpoint early

Michael Ng

U.S. there outlook Latin this translate you. was see of And the that office the horizon? on you rest films you the then, any you well? if on box America for could that wondering other I year. lastly, Are Are local particularly comment will think notable films Okay. language Thank just there Great. your any

Mark Zoradi

are very regards Incredibles particularly And strong done, like to been in we pleased so we and America. things like of index in office, fourth Avengers kind things third adventure Well, Venom. and forward And Brazil and movies particularly even films box as quarter, have that see because in been how action there. Wreck-It The Ralph like extremely these then, has it's with World, Jurassic we've and Latin then, the going you look into well

to first Latin I second this box about of remainder we're quarter, looks the and of what America for quarter, positive off like. remainder year of year, and So – think the that the especially somewhat the office the looks recover pretty

Michael Ng

Thank Thank Sean. Okay. you, Mark. you,

Sean Gamble

Michael. Thanks,

Operator

question with comes MKM the line Eric next Our Partners. from of Handler

Eric O. Handler

Good of the and couple you questions for thanks morning, Yes. for guys. A question.

that to the of granted, small starting see America? is are made thawing tip some and maybe that it see or you a you Brazil, the but First, it's activity, in acquisition in in the we're iceberg Latin relatively this U.S. M&A a to starting be

Mark Zoradi

and would think theaters this to I think was Brazil, strong don't iceberg. I as markets us. put it. They was acquisition the the tip were of is it not M&A I what for opportunistic – good was were in this we a for a in very able pay reasonable price

clearly want and But Latin both countries to don't acquisitions think to see tip but at of overstate throughout in the it we're that. for like won't sudden we we look more. doesn't going very the I to to aggressive indicative wouldn't that that is overstating all be operate I this We're in continue country looking call significantly mean iceberg. a It would it think America. the this I this of this, XX

Eric O. Handler

terms to Got – of And in your then Hut, any Mark, rolling of it. be spending Pizza theaters, since, you metrics going more you as lot choice in secondly, XX purchase out you're your since or just improve Pizza pizza this when to up that theaters, in switch a does I'm brought intentions? of mentioned curious your you Hut new

Mark Zoradi

prepared branding Hut the there of you Hut for this, pizza. that a having Pizza it the of pizza it, is I Pizza tell Pizza lot Hut fresh Eric, I'll branded is increases this buying. guests mean, like Having pizza a and behind

the that's so, will has continue circuit. sales significantly, it to this our roll out of pizza across And why improved and we

Eric O. Handler

about off just expense as should of And adjusted impact revenue the going if for it. – $X for the rate with line Michael thinking then up run EBITDA, the XXX, of Ng, is the Sean other last the line? question well what we one other sort Got follow on operating the as how million last be impact quarterly of ASC

Sean Gamble

I on to We somewhere quarter, can is will of forward And a that's total other we as around as the we've minus anticipate that of – is big as offset quarterly got it'll of on be consistency the you're a revenue think one amount expense going you that this be there Oh, result basis in and recorded going a for impact company other disclosed, see, adjustment. see as interest $XX.X chunk of well. it of – a million the about what an expense That basis this. line.

Eric O. Handler

Got much. you very it. Thank

Mark Zoradi

Thanks, Eric.

Operator

Robert comes of Our the MoffettNathanson. question next Fishman with from line

Robert Fishman

morning. and term you new years on does for Cinemark of this have board right the team pause macroeconomic region? I'm Latin global appetite does I landscape, for the wondering Argentina in understand issues there, rethink and about risk how from longer think given the further make in Mark, the I while the expansion, one with issues executive current the development, going just especially related, changes for different LatAm experience aside on the mall in maybe And the Good now? America. many many one in dealing combined Sean. Mark current political has with

Mark Zoradi

operating years Latin – and and Robert, there to distribution familiar America companies you thanks very many years. for there developed Latin XX America personally ago. glad it having I'm been the XX XX we've out Disney's pointed – question. of with for Relative I'm

and over America. again this Latin have over in We seen

back continue You the in the ebbs when and disruption, what excuse of go if to political and or look business much Argentina, movies. or you – happens, you go maybe – in government, high back but – you environment. to if times over worse flows in the people it movies. And unemployment go the times even disruptions current especially one and me to history, Latin to of XXXX than America, for inflation we to worst high People look through of continued the saw the go

relatively So movie-going is inexpensive.

to is it. most and get way You time have their economical to out of families. the enjoy don't for people travel It with homes their for

continues coming content content, teams with and the Latin experienced of enthusiasm our decreased hasn't XXXX see which improve America well family film latter very operating to and this for XXXX. there in because used So, forward we're the we especially America, for to half Latin extremely do into simply and

Robert Fishman

have that LatAm, And us margins about other operates operational what strong with you both the you margins, still help No, film Cinemark rental, expense with Sean, and already levers keep sense. to in given salaries, Okay. think side, higher U.S. efficiently on and driving just overhead? makes can especially

Sean Gamble

which richer margins Sure. to premium continue do boost Clearly, initiatives. is projects, cost retailer to with working and think space upgrade be of all to other a whole but to any mean, that that trying on we in any ongoing going serve those it, of we're productivity tend people to area to offer range that obviously select that like less. I will those there's to, one have pressures options face, just I more

of generating lobbies the So, defray make that things as just phone, of simple more of there's theater to them help can automate as kiosks transactions us that just activities, that more redeploy to in and able and or more moving to things processes efficient. using revenue nature your some simplify onto that to labor be

to So, we sustain I to would big those continue areas and the that hopefully, look say to ways of of are as improve two margins. kind

Robert Fishman

If just I to that. more one related could,

inflating like, impact yet? the do is of noticeable Club in see investment any in that So, we right Movie is the now, that expenses U.S.,

Sean Gamble

certain impact basically our down now, a things since theaters over come are but new payroll well time. had That has small level line, drive as it's promotion at program. on we've theater to in ambassadors program, will as that, of a our a Those heightened bit of our line advertising a just degree to little the are had as awareness and a

Robert Fishman

Thank both. Okay. you

Mark Zoradi

Thanks, Robert.

Operator

Riley. from comes Eric line of with the Wold B. question next Our

Eric Wold

you. Thank Disney to good not it's does pretty done happen, pick morning. Two Fox moved that on combined Disney could offsets to what could Good you about you calculation what chooses to that to combination kind potential are if one, or impact have questions. well have that? that your a there's for up have titles the rent I all that if happens that anticipated Disney-Fox thinking if studio up the film little P&L, reduce a if output, scale, the But studios of guess those titles. opportunity other I bit further, guess, the

Mark Zoradi

going Disney-Fox that stage try that's relative certain At of what's and think this company other Eric, come premature. and don't acquisition. no, done we the that. know I in haven't happen Clearly, for or we to to game, little any a might complete that

So, at time, run we've not this any those of numbers.

Eric Wold

Okay.

Sean Gamble

scales. The obviously, to add film our are comment other is, just would thing rental I that on that deals

performance that the titles. of just level those of is of determinate part also So, of

performing a so, it'll the The versa the range. higher film title, increased bigger rental and the vice smaller carry for titles. – the And it's

Eric Wold

last tests your done the in exhibitors, guess, within What are or those are weekend and I thoughts your some what out discounts, cetera? pricing rolling various what testing thoughts of any et are year the seat Tuesday on about if surcharges, throughout by general? of this the then other different auditorium, industry pricing And question, you that are being thinking

Mark Zoradi

several that start ago. let's Tuesday years to with Eric, Cinemark brought discounts. light really

So for of or circuit Tuesday of is that's with the additional many Discount years. – the markets several our been us is been to most highly just synonymous There's night. Cinemark. been standard pricing, relation usually, Saturday we've highest variable operating years. for a pricing price of the majority across highly In week Friday on variable for procedure in doing again, our

children, of that the So military. steep while. kind down seniors, variable we've in place quite we had of a for line then, do for pricing level And pricing

been doing. for pricing, it's variable years. in of significant in place to we lot relative that have a to discount something So, Relative it's Tuesdays, experience several

Eric Wold

Thank Perfect. you.

Sean Gamble

Thanks for the Eric. questions,

Operator

with Our next JPMorgan. of the Julia question comes Yue line from

Julia Yue

Thank Hi. you.

you us guys there have haven't or experience the I'm the for at some of it Are in come point? order centers taken taken of much kind you now? theaters behind now, people you more still converted the far right how portfolio is wondering recliner pricing are along with up to and visit conversions, that increase screens this how get Given to

Sean Gamble

for there potential. is the Yes. say, still question, increased would Thanks I yes, Julia.

and because versus ticket recliners also the our for the to last somewhat. it overall philosophy tied year. at price Part a those But to year we lot X.X% balancing box quarter of were overall part look our towards you average that If second that pricing is during price growth, plays of of optimize of that industry last is half to that how office. just of the completed attendance trailed

haven't So, been taken ramping we as much price they've as over up, as we can potentially time.

recliners think answer up opportunity full those is scale that and there's of we and short get running. fully incremental yes, to their kind as they are So, in

Julia Yue

the increasing your a your box then, talked change guess, (XX:XX:XX) kind of there? you're outsized given you small peel-off rolling additional presence results with with but on screens marketing And percentage strong screens, screens it. doing I or of views, total XD the office your does and about Got out this generating potentially initiatives, what

Mark Zoradi

Julia, new have, existing no, every an an opportunity all. it or build to if absolutely in we put opportunity theater, at we screen change mean, do any doesn't it's I it see we there, want whether a XD to it.

the of adds added philosophically things because that is things. done THX auditorium the size brand. we with we that screen One existing two theater, make is when where to screens this just an new really awareness we've well, certification One that of to commensurate the XD to we're the high-quality brand that and relative operationally that or But of the want within we – the sure have we screen really, developing converting of size screens. done how any was

theater. certain won't size we So, depending a below that go on particular

XD for of the a in size to footprint, will And our very and within small in existing always circuit more limitation try existing it's every development, unless we new adding new put So, a screens. screen. only is us

Julia Yue

Thank very you it. Got much.

Sean Gamble

Julia. you, Thank

Operator

comes line question Research. Jim of the next Goss Our Barrington from with

James Charles Goss

Thanks a lot.

software-based or modifications a certification existing costs? what at are systems physical it certification, Regarding there of THX and a is or involved any overlay is it

Mark Zoradi

cost to yes, we do go having make with that significant did And one this we're associated love going be to reviewed but because in did with but for it, everything significant relative certification But is many collaboration theaters went tweaked has to properly to us we our order for will have the screens, and is of We insignificant. the each to not changes, THX look XD get and a our and known There's it? sure them. us been of that very to no, be in capital It incurring there relative big that. years.

James Charles Goss

Okay.

branding comes much with So, outlay? not the that

Mark Zoradi

That right. is absolutely

James Charles Goss

over quantity that Eric addition. little was Wold about. Following asking Disney extent on last about stressing even an quality Fox to the bit without night was I up as their a what talking was wondering of

have any larger day, on you you'd that so and strategy? the Now, a quality that to sure I'm trade taken of impact the share rent far that noticed quantity over quantified take film do box your have you the have wondering attribute to impact you but you'd scales if I'm margins extent any their any they've office.

Sean Gamble

would way, it this I answer Jim.

a last the a driven or larger higher the the end course in the films past. been has of had office If significant years, film over driven now, you kind rate probably it our few of by our over the look history, that haven't of box rental at by a we has films concentration concentration rate. of of given higher It's fluctuation than in larger

has a – I of from lot and that come don't So, Disney.

it you So, suggest just time, significant there if over at be expected. effect the a isn't would that of look I that relative of to think movement that

James Charles Goss

last One thing. Okay.

were discussing those also the Movie with probably both Club your You from success some compare MoviePass. so wonder in getting I could of how admissions far, your throughput but I assume you're areas? you

Mark Zoradi

for changed has Nothing MoviePass. relative to us

to card as the continue they abide existing accept long We the MoviePass by agreements. as

of on MoviePass. to same the not in X% it's X% overly It's the So terms in to significant attendance of us. range category in kind

and set to depends to by go-forward, they So, we don't significant, their it have relative go-forwardness, future, overly not see on it up. the existing and or whether been just their that abide continue but all regulations as rules

James Charles Goss

Bye. the questions. for Thanks right. All

Sean Gamble

Thanks, Jim. Appreciate it.

Operator

Baker of Research. And Bill with our the comes next GARP question line from

Bill Baker

Can down operating and wages, you salaries, a drill the expenses, hi. and utilities and Yes, just please? about more little

Mark Zoradi

sorry. I'm

welcome - all, Bill. you Sorry of Can to First the call, –

Bill Baker

you. Thank Thank you.

Mark Zoradi

elaborate on aspect that, just that Can you looking what you're for?

Bill Baker

end sometimes of wage increase lower like a to... I the (XX:XX:XX) there. utilities Yeah. vary kind been and salaries you those And portion buoy just I out generally, that you little there's as wages. can most see of pressure numbers, XX%-ish and employment there a that color know and And it's provide I wage out guess guys on in something

Mark Zoradi

Sure.

Bill Baker

...why it flips (XX:XX:XX) down. up or

So.

Sean Gamble

Sure.

utilities changes with ASC recognition starting quarter, seeing accounting the really you're with XXX. Well, the this other, Thanks. revenue driven the by and increase Okay. just there it's

If either those a basis, expenses you driven wage-rate and just The our that other and pressures, flat would part of form in a essentially the global that utilities we're wages aggregate, remove salaries on general year-over-year. the just were to inflation. by in seeing be of is

in hikes. those both and as fixed certain of well level the theaters. to wage in to minimum U.S. internationally a certainly that we keep theater labor run need inflation the clearly inflation have There's as You

lose We So, our in business of that additional a some of the that we labor. come with depressed with our attendance that of labor. leverage some into see flexibility over government restrictions fixed play base environment, we particularly in international level much on operating how that have

some we're revenues. would also the too, as timeframe and one efficiency that to Club recliner of generating item, working asked that's there's line insurance a seeing tend we've so are in the the in the quarter earlier in over but company, in early earlier, have a we bit time also Robert this We're so that And then Movie self-insured higher a on the our been some we're improve thing a of that impact some lower comes other more normal. claims The I claims than health call. include which – bit such and got that our of there. to those cost builds, some initiatives then investments, playing conversions mentioned that we've little margin-generating of of of ambassadors our on about higher those bit food beverage had new little through have line, as little

utilities and the line So, with of that's of other. salaries well what's as on wages drivers really component the as and the going and that

Bill Baker

you. a That's for explanation. much complete very very you good. thank very Well, Thank

Sean Gamble

Thanks, Bill. Appreciate it.

Operator

At questions or no closing this now are call remarks. for I queue. in will time, the there additional back to further turn presenters the

Mark Zoradi

our and for speaking Bye, now. morning, you much again forward very all, you, we with this following us to Thank second joining look quarter.

Operator

call. conference today's concludes This

and may have disconnect, You a now wonderful day.

Cinemark (CNK) 9 May 182018 Q1 Earnings call transcript