CNK - Earnings call transcript Q2 2019 | Cinemark Holdings, Inc.

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Operator

Good day. My name is Shelby, and I'll be your conference operator today. At this time, I would like to welcome everyone to Cinemark's Second Quarter Earnings 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. you. Thank Instructions] [Operator

like Vice the Please President ma'am. now Ms. go over Chanda Brashears, of to would call turn to ahead, I Investor Relations.

Chanda Brashears

you, Inc. this everyone. to Thank you good would welcome Holdings, I like At Cinemark to and Shelby, time, morning,

Earnings Officer. Call hosted XXXX Executive Zoradi, by Officer Financial Conference Gamble, Sean and Chief Release and Quarter Mark Chief Second Officer; Chief Operating

or of Act are Harbor to by with statement. of other the statements members Reform the discussed materially Cinemark's Litigation implied cause that matters Safe Such provision that performance during factors may of accordance risks such call certain different to In Securities XXXX, statements. indicated and this constitute be management by the Private from actual may and forward-looking uncertainties subject are performance

are webcast the any financial or include update filings. Such Company's to non-GAAP no XX-Q; and forth most press release; revise to these measures. undertakes risk website, today's in Company's filing call SEC quarterly reconciliation may the the obligation Today's on in GAAP Form the factors Company The publicly on directly financial A can non-GAAP forward-looking investors.cinemark.com. statements. Company's found within of measures or measures be comparable set

turn to would now to Mark Zoradi. call I like the over

Mark Zoradi

global across the per morning, quarter, by the us Thank second during quarterly joining to circuit. were share. propelled our we you, XXXX Chanda, Thank delivered and global These good net discuss second in to EBITDA thrilled high that everyone. revenue, adjusted report our you strength and for achievements quarter We're all-time income, results. earnings

in of by our the domestic XX trend Mexico surpassed surged since over include new highest sold adjusted results highlights to another XX points international growth beverage and our international per international increase XX% double-digit XX%, domestic million extended attendance office quarterly noteworthy high, and outperformance that in we A to a basis the quarters; and patrons, XXXX; cap industry XX produced North America XXX box per over food in of attendance, increase past operation a few EBITDA. all-time cap; XX% which our which year-over-year

the customer-oriented on these We as providing amenities, our which top personalized service notch These by strengthening achieved quarter’s variety our beverage and initiatives strategic and execute theaters. and well capitalizing strong of the enhancing guest lineup, initiatives. continuing include as food second comprehensive entertainment physical to customer center all interaction film and within both quality with offerings, the experience, our guests, beyond results our targeted on and and

dig initiatives, several To the a Cinemark better Movie our of let's into of status key picture, provide starting with Rewards.

During combining and we our tier, to with rollout the quarter, Movie That of domestic modification structure program. tier, paid Rewards our under a Club, Movie of subscription free modification second singular Movie loyalty along Fan, the a involved our the completed umbrella. loyalty enhancing

are support developing this during Following enrollments over in extends for with quarter, whom experiences uptick and million content. more outreach significant change, to signups second nearly upcoming current global a loyalty we the our new XX new program, which we Movie film free to XXX,XXX and seen guest Fan have members already to unique personalized our

commitment. well online ability This paid doesn't and to theater movie Movie a drivers for monthly our convenience prior food location. which X,XXX and more long-term XX% Meanwhile, and to XXX,XXX than of as expectation. ability straightforward figure in credits, members satisfaction companions members unused Since exceed tier call tickets to fees, excess earnings beverage to to as high in roll that the in unused key Club's Club benefits, include of Movie value results over per as equates membership grown remains to and the continue XX% waived May, movie a growth credits, membership Movie cite a continued require discount, share a our our cumulative add-on has Program members. exceptionally Club

Club program. alone, of And Club and movie film. office, the and ago, year million Movie our during second launched over the we XX% about Movie a sizes Since a domestic represented all of half we quarter through sold box spanning tickets genres have XX

strong use. movie we summer quarter during fact, the which an seasonality credit of slate, ease attributable In saw the from to second movie-going XX%, Movie uptick is Club’s XX% film in quarter redemptions the to of of the and appeal

the that is of redemption, and they outperformance, A of our Club. moviegoers visits to Club theater our joining observed report office fact are both the for sustained members and and industry fundamental theaters which box more frequently occasional stimulate incremental program witnessing utilization the attending our ongoing objective of frequent credit that high Movie we're attendance Movie in through since XX%

has Importantly, consistent this since stat held launched the we program.

behavior are over to members more for addition over ongoing our see as validated purchasing visit. as size members We during in comparable cap products XX% non-members, our trips they that Similarly, are report year-to-date. visiting growth XX% though transactional to our even the per of discount Club’s half this that incremental in and concession basket stand domestic the to well more Movie theater, are is each often that up

and contributor domestic Movie price and When So, overall meaningful Club’s high with we growth success. beverage we’re performance, ticket a and office sustained initiatives per thrilled to key strategic Club see food our ongoing all-time box with as we our Movie caps, circuit’s results. growth along continued evaluate other

cap in expansion and factor in offerings XX domestic expansion is and food our enhancement Another beverage which key success per quarters to our of has led growth. enhancement and consecutive year-over-year

stand film results continued of of core efforts focus consumption the purchases spot few. throughput our efforts buyers, quarter’s and on just that driving to stimulate volume, partnership, growth incremental that accelerate sustained sweet of Pizza designs of concession new name fountain include popcorn, these Examples incremental were volumes was concession candy alcohol a the a and strategic activations, growth. impulse fair, to core team’s in expanding a increased to Hut mix played by new our right many drinks this driver encouraged of multicultural content and merchandise, super and While charged

tremendous and with delivered. success trend food with our And teams theater future. the pleased are We continuously new into we’re growth experimenting this beverage, the and sustain deploying operation have to innovations extremely

Two loungers the total are penetration are our and also investments driving we’ve premium enhancing experience lounger theaters, guest large more the exhibitors. major among our made growth initiatives that XX% in which Luxury luxury in the XD our seats featured format is recliner highest auditoriums. of are domestic now in

the with further amenity. to ticket these customer feedback well lift direct attendance, continue in Furthermore, that theaters to to enjoy repositioned in recliner Our realize seats at locations. as been from willingness evidenced we drive to and this concession satisfaction purchases by guests sizable as as benefits have yield pricing continue sustained our

look year we still of rest year, reclined end. forward of our As be we approximately anticipate the will the domestic by to XX% circuit

million the new our to exhibitor worldwide approximately across Cinemark movie-going the quarter, of to revenue global the auditoriums record, screens. immersive Moreover, results branded guests as of remains XX% second sound box ultimate achieved XD upgrade technology. it deliver continues world office number experience XD In with admission XD the XD format premium during provides one generating in also the in outsized more on global platform. X% than large XXX second our generated premium the quarter. sight with and a only XD $XX

this strong guests’ our enhance to to efforts ongoing quarter’s key ingredient and operating comprehensive entertainment our were experience financial Overall, performance.

turn Before take a provide to to additional overall Sean, over exhibition just I’d the context to I call moment like regarding some industry.

all in year second America quite billion results highest than in highest a news $X.X of overlooked quarter Furthermore, have certain industry’s bit office. time lofty year of quarter over-performed box some in time North reason delivered box and What regarding for because the been the may decline stronger expectations, anticipated. to modest of disappointed a from the quarter is the expectation. big grossing with $X.X billion grossing fact all and have while There’s relative on with that delivered the others last office. account seems is of decline box last the films overinflated negativity generated a And XQ QX office results of been to second slight

of boiled phenomenon time individual We’ve each Latin and this of in quarter seen performance down film the experienced this tremendous quarter That that as didn't audiences mix as out Latin well the again After is predominantly played to the timing and clearly growth world, content America. well film. several with across quality second resonate the attendance region. challenging other quarters that places in

similar In highest animated Endgame Avengers: to the all in film the became all Story and the highest grossing America, X Latin of Toy rest time. film globe, of fact, of the time grossing became

economic to or notion Second quarter that box office throughout content underscores America more film the cycles. political than Latin closely correlates growth

lineup. film of remainder we XXXX, the about for enthusiastic remain upcoming the As

with Home, delivered quarter in The King both third $X over Spider-Man: and The Lion Far as kicked bang box global off From billion have office. a

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well part part anticipated We the of America, which benefit content further last Nada attendance Perder results with In perform part one quarter will million expect second a two a title, of also local in in over Latin Hollywood third year, Brazilian for quarter from will two. the Nada generated XX Perder. similar

Joker, Ford A of slate Skywalker, Beautiful in The promising, Ferrari, also looks Neighborhood, rise with a and Frozen Day to to just highlight few. fourth quarter X, the The Star X, Wars: Jumanji v

you holidays, I'd year to remind will Jumanji scheduled be with key Frozen school and released of Instead, consistent for not American historical both they're this January in to advantage release our of XXXX, patterns. like that take territories. X X Latin

misinterpret fourth it helpful that coverage the considering quarters. the quarters, and office we be third picture box to this only specific again, attendance on take year, view second, to when So, That years. to into individually even big drilldown analyzing term it focusing encourage longer office thought you to or the said, films, easy slight provide regarding exasperated media continue weekends, box trends we would the can and a be as when

recent years, recliner is tools. data new has to approximately from its the adoption streaming food services beverage seven a the subscription benefit held advanced excludes of services, industry the full and year, seats, marketing going for patrons mass and North all half investments over-the-top and XXXX. that's that to starting And many in home the the concepts, and back X.X at billion steady in during per past America and industry attendance way realize

our Cinemark financial distinguishing of on and some our consistency strength, overall an value. long-term excels industry. factors, stable our discipline, the investment and shareholder we focus operates within operating And creating key and believe ongoing our this of results

movie-going are generate will which consistent highest loyal the Our frontline memorable results. theater teams deliver dedicated around guests and our home quality patrons the to a to environment, of providing in experience world truly out continue

Sean to Sean? discussion to a That concludes my quarter second over more our now financial turn detailed address performance. remarks. prepared I’ll call the of

Sean Gamble

Thank Good everyone. you, Mark. morning,

Before of that into as diving accounting XXXX. our once lapped results, details place this I’d as remind course standards impacts have ASC revenue we lease January the last beginning quarter’s And the XXXX, financial we of again implemented like fully our recognition year, which XXX, over took to X, quarter, accounting XXX’s accounting. ASC of discussed that transition you to second pronouncement

operating Associated new right operating liability a each. with approximately $X.X the adoption a lease corresponding and use of of ASC of asset XXX, billion recorded we lease

small transition net income. XXX leases according the converted cash standards. has now operating minimal a of on Additionally, subset flow To has impact zero new and to leases on capital been ASC impact net to to

and drag non-operational operating slight a our on create EBITDA cash flow does metrics. adjusted it However,

which ASC Additional information with X-K important earnings May about business fundamentals. not we release. be operating landlords or an can the largely It’s filed to reflect change, our other XXX accounting XXXX underlying It any is in impact the intended XX-Q first all X, cash payments, obligations in the sheet. or obligations on is tandem of purely our does found lease that rent quarter presentation in footnotes on to emphasize balance changes to these or

our to quarter financials. Shifting now second

margin quarter Mark million of reduced Furthermore, changes. As high reached records accounting result XX though adjusted and EBITDA the global our even basis our of XX.X%, $XXX.X total presentation EBITDA was described, during in a it revenues consolidated quarterly million. second of Company generated all-time $XXX.X points the ASC as the by quarter, of adjusted XXX

X.X%. the by and of million U.S., relatively revenues result only in admissions last record-setting with were $XXX In declined year’s line

declined As to result Mark over box points surpassed North XX.X was attendance, million industry by as office price, already which X.X% in well as basis by and XXX ticket the American $X.XX. driven this outperformance to mentioned, which both X% increased patrons

average family volume films, this strategic price, as While core ticket mix incremental of on came a XD from from increases tickets opportunities heightened as reduced well created of drag recliner prices higher conversions. associated in our child a growth overall and with year’s ATP

consumers. concession XX.X% particularly our well all-time also and and XX% the Collectively, these per ‘XX high incremental to slate other of domestic year, drove decline growth total attendance as grew, This versus and are worked versus a $XXX.X revenues domestic last during modest to Similarly, million. ongoing toward another to be new were to up concession in stimulating result as quarter, the a well that active actions revenues XX.X% concessions income. with increases as up Despite geared patron of most factors that the XQ predominantly attributed promotional consumption of transactional can grew related films promotions $X.XX.

XX.X%. with $XXX.X all-time delivered of adjusted highs both U.S. $XXX total margin in million, our of and Overall, revenues EBITDA of million EBITDA adjusted an circuit

year million, favorable International content XX.X% drivers constant addressed patrons, spurred reported grew to million Internationally, admissions $XXX.X XX.X were versus increased XX.X% and the earlier. by XX.X% attendance that in revenues last as which currency. Mark film

that Our title, Nada last translated from pricing with $X.XX, growth, an well inflationary price Perder. ticket currency price local resulted anomaly year's as lowered as reported that average a to overall of average increase the primarily XX.X% associated of constant a

as were constant reported million, concessions International XX.X% revenues $XX.X XX.X% increased which and currency. in

international and strategic a currency result constant similar had $X.XX results. cap Nada and as concessions on grew that a in per Our patron impact Perder XX.X% as of was our food year's initiatives, inflation, beverage last and a reported per

XX.X% increased in and International advertising growth currency. This were promotional and XX.X% reported screen which million, revenues by was $XX.X favorable increase constant as driven largely in other income.

EBITDA international to million points XXX adjusted was to $XXX.X XX.X% adjusted margin increased basis total $XX.X Overall, EBITDA up grew to revenues as reported, and XX%. XX% million, our

are we second would an our year. foreign expected, second translation on As leading expect mid-single-digit to approximate rates to XX% percentage continue while in headwind headwind current And in fluctuations the the predict, drag range for future financials. currency hold, if difficult remained quarter, of a reported the the currency half to

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

So, currency and exchange transaction-oriented. the is translation-based not of impact predominantly

results. our Shifting consolidated to back worldwide

a increased advertising as slightly basis of percentage costs percentage prior XX in total Second XX.X% and Likewise, quarter as film to rental by costs revenues comparison points a the of admissions year. to concession with XXX associated of from as by basis benefited as merchandise second concessions enhanced predominantly opportunities a offerings as of revenues increased character-driven result quarter’s the that mix points, well product films. expanded food lineup

on these As sizable income. mentioned slight continue offerings newer and revenues concessions to our drive on tend drag in prior concessions a rate, to calls, overall while margin they create growth

revenues hours XXXX, compared Salaries initiatives. slightly predominantly inflation the were points by XX XX.X% driven varied and wages our total support of to incremental and and basis increased by second to quarter wage of concessions

ASC the points revenues quarter Facility and new total XX increased associated due other percentage declined lease presentation G&A. adoption costs Collectively, as basis expenses of year-over-year as a $X.X of million revenues income a change by to a with of points, Conversely, basis $XXX as XXX. primarily did million. total pretax second theaters was percentage by XX utilities and

quarter’s rate and second net income $XXX to diluted $X.XX effective share. Inc. XX.X% attributable or tax Cinemark Our was Holdings, per million was

With $X.X net ended to balance $XXX with of million billion. the the position respect cash our balance a debt We and quarter of sheet.

versus result connected operating prior reclassifying to accounting the year, million capital by of to lease guidelines. obligations certain $XXX Our net obligations lease improved debt a as new a lease

operated and at XX Turning footprint. states theaters attention XXX screens DMAs U.S. to quarter and X,XXX XXX our We end. in

closed acquired screens, we quarter, and screens, theaters and screens. theaters two with and theaters two the XX XX opened two During XX

during and XXXX XX of theaters, screens nine signed We remainder the to screens, open to commitments XXX representing and two subsequent XXXX. theaters have

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

America. XXX X,XXX screens operated Latin XX theaters we and in Internationally, across countries

As We of for subsequent XX commitments to to and during XX open XX the of and XXXX. approximately screens quarter million CapEx end, remainder these screens. have representing we $XX XXXX, spending XXX theaters in screens theaters eight anticipate signed

on Consistent to opportunity. XX continue year international we anticipate growth near to term. as average adding screens And Latin XX with America long-term we our comments, in view prior a the per

overall on in and million recliner and $XX.X investments. with second Regarding $XX.X $XX.X revenue-generating predominantly conversions the quarter spent existing million associated million we CapEx, builds that theaters including other new was on

full million for certain including to core balanced that the thresholds. spending For requirements initiatives $XXX and conversions, and and regulatory between third remaining to include satisfy builds, investment continue and anticipate is that of year, we is cash expenditures million the of third food luxury is designated budgeted CapEx additional internationally, generating $XXX for approximately another domestically one-third new our meet beverage to maintenance varied which varied and flow projects theater lounger for disciplined both

and XXXX to with $XXX by expenditures million annual remain to incremental associated continue at in the growth with line We offset amortization of capital expect million depreciation as ASC $XXX approximately XXX. will largely roughly new impact is

are sustained deliver In our film for thrilled remain generated to Company. that while this results ourselves closing, of continued success the of shareholder of high health content by many second we maintaining the prudent during promising quarter. all-time investments progress with the record highly value we strategic deliver encouraged Furthermore, pipeline financial on ahead. position with along are We we making the helped record to long-term the performance initiatives and ongoing focused our

lines Shelby, to like we our open questions. prepared that remarks. concludes the up And now for would

Operator

Your question Eric comes Handler Instructions] Partners. first MKM from [Operator of

Eric Handler

much, and you, Two good very guys. morning. you for Thank questions

couple can now go the percentage sales. alcohol And have sell next years? where What I'll to follow-up theaters a after. with over your of First, alcohol? that of And

Mark Zoradi

and about beer, XX%, wine and We'll year-end, full about under not grow theaters we're offering by to continue frozen, for at thanks that. Eric, the going with and of there's our It's bar. be not now, some others to of -- -- very XX% Eric, to places a the addition like Other question. alcohol, just likely of XX% where steep won't there's add not the because of certain Utah, Idaho operate that real alcohol, where policies to we’ll have won't. in country example, we that in the most parts Washington. alcohol we parts we restrictive of for state we’ll

prohibitively the licenses states. some for East example, Some Coast alcohol of are places, just expensive,

So, grow the continue and of going by way, end we'll forward. we'll XX% to modest be the that a in year at

Eric Handler

growth and customers, tier Great. the And increasing your Movie you're now good -- free that of got you Fan there.

You're up initiatives you're of Club. that's now and changing marketing what with couple big talk Can doing push years, to subs the how and for been through XXX,XXX you some your about Movie over capable last going data? of

Mark Zoradi

continue Well, let has think, We me we relaunched quarters number we'll that loyalty start X,X see with about grow with since format. Movie opportunity, America. you asked our throughout Latin got over first. we as next as Fan, new the we'll tremendous Movie Fan, really just programs to well domestically, continue significantly, add X, growth which this to think

now. them, countries some right don't Some have

aggressive From in subs our promotions, with our have Company Costco. a walled Movie of everyone beyond from standpoint, Club with we members program, marketing, to been our existing garden to AT&T our to also reaching acquiring but in a loyalty very lot Amazon from Coca-Cola

a But, States if you're some your audience. a there's go that Club. beginning a XX general group designed dedicated was to marketing appeal that's moviegoers that -- year. we audience to very, at will somewhere times is a all. moviegoer, the market to Movie in loyalty moviegoers. and who there X Club our The go the in Movie Obviously, strong people broad the United very continue of that's to between Most big So, team way on don't

value. really go viable to we And economically make growth Club, those think consistent a that’s the a And this we so, able still why and Club seen to to we for people, we’ve them that. I in quite think very be attract it Movie Movie best have and on designed runway

Operator

Your next comes from question Alexia Morgan. of Quadrani JP

Alexia Quadrani

much. so Two Thank you questions.

type you And around overall the of initiatives concerns you’re just went the box located? located, you First, question, played by then, theaters how performance. where I better, for the any that may the the office outperformance the strategic gave driven that of the second the industry in was to just have quarter the looking you really thank sort quarter, given are through where commentary the second of health your much sense and wanted just film versus around at

some just to on staying Just if really love comedy many hear just about work? people hard you very, that some sequels maybe are truth, very to and topic, that I’d is saying too make think maybe there

Sean Gamble

I’ll Thanks and take the for the question Mark will the questions, Alexia. This second. do Sean. first is

our would performance. and Obviously, to look saw from I for some came can on recliner the say, reclined higher hard we -- was doing. tell to outperformance, But much If our we’re how theaters it’s each industry outperformance derived we whole. action to pricing reclined Regarding see segregate at you from certainly our the that our recliner we precisely our continuing than theaters, relative be those benefit ticket industry recently a sizable definitely also theaters. I

got content, content which lot there. stimulating some of continue family then, the lift had favorable benefits in movie-going. we also circuit. also remarks, prepared of The we Movie we his mix well And across our to mentioned see Club So, There’s help does as us. did which Mark definitely a

of to to of reclining reclining we mode. thing last into say, are this it a we is the as and driving benefit what in only fewer were year had small for closed from those year what relative drill look derived the led some our of we active when at more ticket So, that I we would forces we kind screens other outperformance.

Mark Zoradi

on think Alexia, sequels, say the too relative there’s sequels. question don’t many office box I I and to no, would your

was their there and to quarter, second a Clearly, had massive pay $XX but of goes were of dominating $XX an pleaser, as there want the they’re I mix also in to audience those And box to success Story think with that. their that second and you to fresh highly was not office get new the satisfying home X. go And $XX movie go well. Avengers Story probably same really see. performed Toy critical what only the which X. and matter then, whether a the But, movies. was it’s and a And Toy really of yesterday does audience willing quarter and was a out the success Avengers very

Upon the And Time then in from as we’re the quarter come is looking and that good course and in now, a has CGI a out start. Once done which at Lion sequel Hollywood, a audience which to original of hit the satisfying. right follow-up we’re have has you really And had King -- ‘XXs, again, extremely

the out. I people the whether see and think, to or try movie it's really and don't So, a to they to they're do that's generate go our what sequel, leave look studios to say new desire matters. think I are and whether and is And that what providing. the what willing a go are home And wanting trying that's what to

If sequels of Frozen, into Beautiful couple with along you've A of look Day you the couple a the a the new fourth got of in boy, sequels. so v quarter, Neighborhood, Ferrari, and Ford

Operator

next Your Wold, Eric from comes question B. Riley.

Eric Wold

Thank asking avoid on is you. know morning. all you industry going nowhere. the any questions domestic Good as I'll

as well might elsewhere. go So,

Mark Zoradi

Eric, way, the you've By and appreciate we what your comments, written.

Eric Wold

couple on a America. questions So, Latin of

Last quarter. Brazil in weakness for trucker attendance the in some had the year, obviously World Cup, you second the there You've time. and had strike

to would that actually in trends indicate than one on see and an anything was to attendance the more you it starting comp there want dwell starting that quarter QX or see to region? Are a well. in extremely much I easy spending patterns in doing too pivot strong towards So, just down don’t

Mark Zoradi

mean, think it's had Eric, things, that trucker as you said. clearly, we I last the I year. both strike

was more relative just was the But, product. And all you the it thing of only what? that in all live know biggest time the strong good movie up in America. Argentina, in But, the biggest movies animated Story the animated. time, Latin of of was animated or family-based content the not well well. biggest States. lined action movie It Toy did There comparison. to incredibly that is So, important a United was movie,

the thing there So, the line up well course, you did people, and And when well, you with have of did Avengers well. movies really desires of of very very that's Aladdin then, the well the get. that kind as

So, really the had well. you we're that's had action into third going quarter content. strong as seeing adventure, And what and family you

So, I it's the office in Latin think very America. drove box content-driven much that

Sean Gamble

the some played said. And I’ll Mark in Those just this of years, of we've of came add dug categories When prior to we've those really softness back family audiences core clearly Latin kind to the and seen some that what horror. year. into in

Whereas non-Latin audience. just mix the were -- they kind The the and disconnect that office the that of more with didn't kind they just thing too, drive very seen helped of were particular, created Latin other last year, the box that Latin They it. films with U.S.-oriented, And audiences. propelled U.S. a to this in or audiences, lot just of resonate we've oriented. speaks of types of that really

So, in content We got of third second the just of year. of playability and year. saw local of what heavily of benefit reinforce Perder coming And then, in there's too to we that film boils down the the market. flows last it the content said, to the back that Mark quarter where this a the Nada ebbs quarter in

So really also going something that's up be help that's region into to quarter. turn to this going prop as the we

Eric Wold

that in. work then, in or it’s like you given kind there, think of And would you're operating loyalty some program? what something Club offering that variety Is region? Movie But the of are difficult know in down there thoughts your heightened I countries down Okay. on

Mark Zoradi

actually a Movie very are we looking up have of Movie territories well. a of it. major in ago the version learned I to in time Eric, Club down offer a lot we subscription actively at And currently and that international doing a ways right program it’s our there's a business long other is One Clubs there. doing thing do of running Argentina, in forms

So, to it to for Brazil own it we're Argentina, Movie little right will take well. going is version Brazil adapt and and of Argentina a Club, which right for concept it, as the created bit make their of

in running and Argentina, and up far is and behind. active not already we’re So, Brazil

Operator

Goss next Your Research. with comes from Barrington question Jim

Jim Goss

Good morning.

of were I I the First, the not dealing but per do this very four from the the average stimulating of wondering ask moviegoers with. questions itself? in one year Movie incremental people, thought often, especially but head attendance would terms the you your with you think And I headwinds you I my you’re audience fairly about capturing get think XX. And tends the to think far challenging X comps to you’re FX be along think a for But, since impressive little to attendance, X three those you say to XX Club and of where experience like results, to that said of you try can the in had. -- you addressed I'm you’ve context more

Mark Zoradi

Jim, second the I’ll first. question part take of the

we’re probably middle think, the the at most, innings. in very I

audience and really moviegoers at we’ve with to a we and mean each I think grow, long broad the to see Movie strength the to so. with and and American of ways aimed continue have I we still we Club. And do every every week Club. literally to to each go big opportunities of got significant marketing continue have and concept Movie month promotional

So, to we I still think go. a way have

was… And your question first

Sean Gamble

moviegoers… average The

Mark Zoradi

Yes.

And upwards of non-Movie Movie the Club are are telling mean, grow think, can that also often us we’re members Movie going I Club do member. they Club the I we over times more it. that X to we’re regular in that seeing than members. are we and more since members Movie becoming research Club going continue seeing research, over movies to again, a

them, they they that if they time Movie credits every with get get -- just somebody prepaid and tickets get can it member, and we up a they friend’s online fees can So, can has phone XX% their and no bring on their that Club the we’ve a audience. and there not we get friend and for discount, member frictionless they with made a can for

Club think incrementality more and we’re going sales they in that additional between the members are that specifically we members reporting ticket Movie So, since non-members, and fact members. of seeing becoming

Jim Goss

the of also a key XX% And And the are the gains bit, U.S. Club, per and you’ve talk wondering about that Movie international? these what patron Okay. I'm impact concession little drivers, the metrics? made, discount just and on

Sean Gamble

per When even least but That merchandise. what instance directionally per I’ll take XX% this that we’re in of look this we to at quarter’s talked that, I’d came from of about initiatives lot with look initiatives A from at of and pursuing, of Jim. kind of mix lot mix the earlier at techniques, just driving I’ll came speak lift categories distribution cap domestic, buying, the new based growth really to you basically it, volume apart break new the the particularly volume, we If was and on I’ll from of that. concession quarter, regard helped came concentrate about same, cap, of it’s a half from growth to played the we price. by support about about around and those was content. say well some XX% kind really,

that able So, into we to lean were heavily.

just quarter out. particularly how are we've is the seen, been We per have boosted cap those you've pretty of growth. track a But, the well that think record domestically, by this things laid that So, driving both growing had as long of internationally. content kind that

that been has probably to that, range. in while generally tough that's the hurdle, think X% And, to cagr of a like that's bit a more X% Our range. growth we sustainable it's a something

Jim Goss

screen Okay. in And America. lastly, advertising Latin

own wonder able by judging number of what relationships that, you in talked that where I screens? involve in you're degree to the or to you of competitors You about in program. that the And made. stand numbers terms past just comments are developing you of your

Mark Zoradi

Jim, been We're chains affiliates. our It Flix. successful. independent Latin very add is has theaters, called America continuing as screen advertising company in to actually

we the are of from in obviously. down operate Mexico screen South don't company because one We advertising Mexico number

of a gained affiliate southern an in some as Cinépolis our have countries. continent also We

have not So, Chile, America. advertising the and we we fact Cinemark Argentina affiliates, few in the strong we've screen dominant Latin only that a Brazil very are company the and so number that added where we're quite also in exhibitor one in

Sean Gamble

those to growth add, constant of driver just in that network about, into revenue for international that effective other XX% that what about was the that Flix line. the currency third Mark reported is a talked just would in I gets parties bringing big of

Operator

Gould question next comes Loop Alan from of Capital. Your

Alan Gould

taking a I've for question. few. the you got Thank

CapEx CapEx flow backend implies is just that half was as to down year which loaded year. second not this confirm free guidance is the free half cash that the of first XX% CapEx. on want of what -- last I implies. yet First it close year, sort is that the the to changed, and CapEx as

Sean Gamble

the new are our we CapEx heavy still some CapEx, those On think which that the of is -- case consumers. builds is

time is of of to time -- for optimistic a But end the a on But, lower scale, shifted. we going at look at something fall lower. the those look that for drift at. There definitely range of are just Some at to moment. that of towards of the continue it's the perhaps that It's that things, still kind possibility yes, low we're being, most of end drifting have the when to the bit kind those in we year.

Alan Gould

that opened now club to secondly, you? about movie you in impact open on a Do And or has the Okay. Regal has think U.S. is a big

Mark Zoradi

program and look, is since anytime exhibitor subscription a which to mean, it first had of some in for much many head program Club we've -- in in to Regal program. The competitor, Regal the with XXXX, more I the are Movie does. to is good marketplace and AMC Movie And as head it compete similar as the there December was we line AMC sponsored there's not Club. than is Regal, markets

four program; think and mega, on a it’s don’t centered really a big with month. out different it’s anytime to it’s come reasons. the to But, are a going three going heavy little two marketing competitor of you you it’s going have a dramatic affect a be for times moviegoer, that plan, One, bit. those So, course, the I

more on X XX general frequent a who times moviegoers year. focused goes We’re to the

have big in impact couple a So, have with. a markets compete think we’ll course, I slight don’t of we that will it but impact us, on a of

Alan Gould

the -- I'm impact like and comments, has OTT the of I have looks what appreciate strong a lineup. release like Okay. some Netflix’s And looks you it the its the your service But, industry you quarter films the Disney last of larger fourth XQ XQ? launching think and on the will in industry of the my Mark. strong I know question, just wondering, do what

Mark Zoradi

watch Alan, home, again and a people over streaming over the one the it’s lot those that or television, enjoy the television leave whether home who also house out entertainment and at network actually that most. thing of seen of are we have is people people who

think clearly Disney+ in It’s the So, see can Disney to their research. complementary what us. be we that we doing

useful this a got a profile But butter year. couple is And is and as high really They’ve Netflix so Netflix. bread for serialized from business standpoint, this films more of Netflix television.

day the that see not because people in and environment get enjoy out to at so, a And we’re which of the their to concerned end of social house movies. want about

seen it very we’ve consistently. And

mentioned, streaming that’s happened the was years, had five, the seven business. whether relatively of in Hulu, over it all overall amount attendance As during consistent a Amazon, Netflix, the last six, we’ve

operate into movie-going So, year. Star and Disney be continue be stable consistent supplier theatrical to announced the going with Avatar we’ve we’re to Disney They continuing that I they’re made the have couple or think and And a certainly think is been to There live partner continue Pixars, we we experience, to in a they continue It to XXXX-‘XX, as promote all a have to in improving the in to made to going years is an for each experience. relatively improvements of us that forward actually look that Wars going the tell good the be to competitors future. corresponding action. there’s most that’s going that movie-going they’ve business. going certainly our is going in us to have

the I as direct-to-home now much they’re well. theatrical Disney and business think So, to very business is very, the committed getting into

Operator

from Credit of comes question Meghan next Durkin Suisse. Your

Meghan Durkin

Disney talk from appreciate that time? investors Regal’s CEOs could could maybe new the in the seem a is Fox releasing to fewer have morning. their I launched reduce subscriber ‘XX? others in impact movies cutting bit when I maybe two Can remind on trends think I plan. And you Movie on over comments Mark. can what the saw output that just you be questions your Good XQ see and about little output. you worried long-term business then, you for Hi. Club AMC us

So, do the visibility have where many any that and time there and will will XXXX, you how over market, be in go? on films

Mark Zoradi

And goes that back that let X to a are designed on really when data The for we me shows for the to Unlimited one continue A-List go audience. month. a think, times to one segment audience. XX grow a moviegoer through introduction it Meghan, Movie reasons to Club mega relative different it the right relatively I go came like take Okay. designed the X of A-List. I is wants effect who out. people, first the that's of of of small A-List every that year. the why movie-going to or said, times and majority X.X And specifically to each Actually,

downturn did A-List in came growth our pattern when see we so, And not up. a

Regal's tells planned it as So, going that don't with we're we us see to that I well. -- think

game. Relative XX XX these but strategy movies, And really the at multiple when to It different and was all been Alan of the a the we fortune the to Iger’s profile number I of had Horn were of that. and is we've numbers what making numbers all cut I movies year Disney team really that forward. movies we a on movies. are made. making Iger good big not able -- This labels. put Disney high And down seeing have was to cut concentrate across and

not This So, that. game. numbers this is And we a see a is to quantity game. quality continue

two think at from Onward Bros. and to But, good out And Disney's to call It's Prey. look come and next office movies, Warner we this plus to with then, a Universal strong Eternal. and from Marvel’s Minions point. lineup. XXXX, Gun Pixar’s animation. it three and as Birds Universal Soul. Furious announced we Black hard movies the a really and strong put Top Wonder next you and it's and Widow And the live Fast and untitled and Disney of big coming Bond Conjuring from action got Woman have and box

relatively optimistic. here and So, XXXX sitting in we're are early

it $XXX big that the have Sitting know none Panther even the anyone know nor was, that you to Woman breakout going never to was. our what Wonder you hit thing have breakout and it is called to called of just that hit never or would chair, be would Black that be million, in do The us breakout is be. It one to

pretty we that ones good others have we're a or It into about insight optimistic And surprises. coming. just So, are movie the is there's one always business. two the because

Operator

MoffettNathanson. of Fishman Robert from comes question next Your

Robert Fishman

implementing Good are dynamic one thoughts moment? just Mark, on and Mark solely ticket the variable you Sean. I or Club morning. have any Movie or on the updated your for focused at for at one initiatives theaters pricing

Mark Zoradi

that. plans can't on at at Right it. variable I you tell have we're looking very we're depends pricing. pricing And -- now, give for any model. it. But, you looking you all a can't Robert, we that I define dynamic steep how it

on on and bump price go of night, you through a off in would the Wednesday. Friday been if Sunday that night there's little Saturday So usually Friday have Saturday what and

of senior obviously give doing. form the give then, some discounts, we So, could on you we’re that student citizen discounts. lower call during currently we we And pricing dynamic Tuesdays, also price week,

come who pricing or variable continue a to in forward, go And ability get movie those pricing. price order to directly in Friday see more not little get a bit But, Tuesday we forthcoming. So, to to conscious, dynamic the the to we in either want to premium. paying announce the as a or and or are in Saturday talk if at currently, night, a And look anything mode there is earlier on a pretty you steep you’re of already I'm will position about day.

Robert Fishman

can any enough. Brazil seeing development Sean, in on you’re whether about fair specifically? Okay, new the And screen talk you for improvements

Sean Gamble

clarify said you on what development? Could screen you Rob, just

Robert Fishman

Sorry.

backdrop the the of terms economic improving. in how pipeline just development Brazil potentially and is So, in

Sean Gamble

to have we tied healthy you Sure. backlog projects. again, still I all And a would know, are as malls. say, those of

the in development mall what’s of it’s backlog really the region. So,

I significantly. far, So, projects of thus terms to by a that we’ve change still exists. ramp seen wouldn’t meaningful up in driven economy starting say the those

out. of there’s kind waiting see how in ultimately just plays think, of a health I of economy developers degree to So, the still mode the

are I’d projects the development, in the of within just particularly but say there, So, it’s terms somewhat stalled still Brazil.

Operator

of Morgan question next from Your Stanley. Swinburne comes Ben

Ben Swinburne

in at maybe the system? it’s would wondering of track member Mark. share. cohort since to wondering, the can or have if first was Club overall highest sort those In I'm interested the Hey, done, just other months of impact of trend, mean, I to do data grow? at it analysis continuing some like want morning. that you sure we but on, guys words, you these and XX on incremental what share -- of insights with could like the that better focus marketing, kind you’ve the as go any Movie join KPIs incremental of size when as share this attendance or there I'm it. at people lift, come who anything of the propensity that sort just basket trend look Good if attendance more per you look at guys your bias over any visits if have, in those be opposite you you Thanks. I better you’re launched is anything you selection because you look getting on this I in and you lines

Mark Zoradi

Ben. Hey,

Movie the real lose number the me you I standouts one benefit Let specific of this think you the about Club, One, but give I rollover because you ask do never aspect say, it. and not things. it’s of where two I didn’t a do and I'm going really think to of want to for

up. So, if a build they for or you it month two, don’t use

has lower for than very high low what this churn been expect with would of program. sustainability kind very, a rate, our you So, very

disclosing exact side. it’s not amount, can on that low take We’re significantly that but the it just you

researched XX%, -- that's XX%, needle a we Relative because a want XX%. the don't researched very join really important we people discounts. And at want when the is some I variety some XX%, when them. whole to but the fees, in think it XX%, people of a people people is when the because that's became pay to because became people online And metric for that concept Club, it ticket they to important reasons, they the Movie concession mover, rollover, some also and club of

what we is did. We were about Movie Club knew versus Club risk. a the basket is a a we found of what But size we the taking same. member that's So, member non-Movie that

that Club of are concession thing So, off getting to XX% people going pay a has by number then, more, the increased. they're is that stand Movie made means because members are that's the definition, that And really spending it discount. the XX%

with a Movie incident higher members. rate we So, have Club

food out bev net-net, turned be not a well. turned be discount positive positive, XX% it a has but out only on as net-net, So, to attendance is on and to

about things a future really in So, I come why that in well. looking what think critical are were couple those kind of and of the we're success enthusiastic the can for so are you as the

Ben Swinburne

makes Irishmen And any this any since Thank but of to week profile John then, you. to I I'm That have some wanted just XX I also an insights their taking willing at you’d a change couldn't do. CEO. been game, that's year. ask sounded at later film industry potentially a following we a sense. Stankey to but Fox, more you comments. not But, talks to Mark, a than with I your do there? some year been films distribution? he a you if know about distribute you notice Warner's if it's mentioned, up that output just familiar Disney And you interview know as plans about I’d and with curious where on be Bros. lot actually who there's a plans about high everyone's talking have to share that. potentially shrinking didn't obviously, least if that The big this new have Warner said be know and up you numbers help I I appreciate curious,

Mark Zoradi

Warner insight speak any I I really can't there. about have Bros.’s don't because strategy particular

Disney the thing them. They have lot they got doing outlets content Warner the increase actually and content to they're channels. may XX to of Disney+, videos only way, additional to Bros. theatrical, the XX said output is DVDs and is I is of It’s they've Disney titles said the their outlets making same or or various among output. that on their by be or increasing be going think, the to way focusing multiple XX just important a same direct to that channel. Disney but thing. only to Disney's And do and going that that for because to direct XX direct their that and outlets used for

that's think in ways, how some I just that add consistent. It's it you So, how you up.

way, we to multiple As stated that it times very is to comes that to pictures. to The And relates Netflix The down potential welcome one Netflix. motion theatrical supplier only of in Irishmen, would issue The we've Irishmen. congenial play

AT&T only whether the consistent Comcast, with ask Bros., that from major our they Disney thing Warner so, be play a or And is we suppliers, window that standpoint or Universal.

to So that, we our to in they're do of extent the that willing theaters. welcome them all

Operator

next from Macquarie. of Chad Beynon Your Instructions] [Operator comes question

Chad Beynon

results industry loyalty given leading, the today is your touched to be Thanks continue a you you’ve really on as here morning. that strategy question. Good taking for Sean, well. my quarterly clearly basis disclose program to your on and appears Mark, working

just on Thanks. sheet, some given harder this think make uplift other some the can initiatives, your about to have streams you might been your roll the provide that have won’t given out the DNA? you haven’t capital current is theaters boxes able original performance, have, strategic or potential and in that you like to does that M&A U.S., So, balance differently your which

Mark Zoradi

literally very open M&A. are to relative been month Historically, disciplined we Chad, to every buyers we have M&A.

on the multiple. And before it current up at purchased we ever see above obviously willing circuit than be or willing family of came the that so, that we we’re more people it. and come to do market, is they we’re in to on don’t value to can rolling these to strategic a price pay the market, just extent price that a we’re a to if But pay, to our have at contact

small it, want open done I something in being to add our think going but change very-disciplined in States only acquisitions. to you United value is Sean, the the on So, of to it. relative strategy some not also Latin buyers to America. to don’t relative that? we’re But, we’ve may And very

Sean Gamble

same other only was Mark thing about. is the I The lines talking would along as add

of business. there those apply We our huge kind distressed than of and prefer can of to a to challenge tend portion become know rather they quality that how deep it, a asset never to also the We the taking the some is stuff and assets. go to get you find like you larger trying distraction problems

we when go generally fit; So, got it’s to for we be be it’s got financially that to after good strategic And looking are a things assets. M&A, are accretive.

So, I that. we of But say changing quarter, If we it. are we continue anything past the small extent those add of because a on will to to M&A we this benefit view added just look our to do, types think did some, apply that and some to materially for like wouldn’t do we’ll we tuck-in these programs. it to

Chad Beynon

readily know then, that’s in for out follow-up purchasing? believe Perder advanced the Can Nada that available potential to quarter, third drill market. coming And I a don’t the see just which my into term. two more ticket I wanted is in you here. any if weeks from short impact I

pressure the in kind line and pressure there on third quarter and Just pressure number well. definitely believe margins potentially in went to the other XQ there were was a going of as but international and pricing understand trying on of into margin because the massive Thanks. the things on that ‘XX, pricing I down on for

Mark Zoradi

church Sean purchased opportunity tickets, the and by for actually in big great may purchases. doing some these in is details us. many along up, buying This But, this they’re opportunity, And their that pick them it. I’ll with members. of so, bulk to a for are add entity great group them

of bought high as that because So, caps big those people then, when quantities. per we’ve in many lowering price per there of being of the some come, is quite moviegoers. such weren’t of as caps seen also, normal And

the XX Argentina. the know be to it’s one admissions I this especially successful in So, do and lowering be we admissions, average don’t well, million although one those think and There all did will be will Brazil XX ticket previous as people. million but if expect very we price on also of it very some successful, going to

Sean Gamble

just patron, thing current negative, as -- in we see. content though I could film will stronger film, this be is last price the to that give just concession obviously we that levels and driven a when believe I was year, look potential. perform And the some year the we say, constant just year-over-year to help context, by think saw other has this offset at versus we'll last Nada. similar -- prior currency, saw modest at would We per year, largely it Hollywood we

very of a a amount to And we clearly So, from the steep of margin beneficial the as year up propped is may tremendous keep a adds in not drag mind it as by it the a of which a margins too, be the the while while standpoint, overall metrics, attendance creates drag like will on mix, bit and because Nada last of on certain Company. Hollywood pricing create into those it content. concessions, overall metrics, performance

Mark Zoradi

lineup X. for & King, The America Shaw, is Hobbs the Latin third strong, It Lion quarter for Spider-Man,

So, about third the in optimistic Latin quarter America. we're

Chad Beynon

congrats Okay. great very a Thank quarter here. on you much, and

Mark Zoradi

Thank you.

Operator

other We have speaker to like questions over in no queue. the the I'd closing turn to back call remarks. for

Mark Zoradi

much again. to all earnings us during joining our speaking with call. quarter Thank this very we for you again third Thanks And you morning. look forward

Operator

conference today's concludes This call.

You disconnect. may now

Cinemark (CNK) 2 Aug 192019 Q2 Earnings call transcript