Cinemark Holdings Inc., a cinema operator based in Plano, Texas, experienced volatile trading on Friday following a larger-than-expected loss in the fourth quarter. Despite this setback, the company managed to surpass revenue expectations. Cinemark reported a net loss of $18 million, or 15 cents a share, for the quarter compared to a loss of $99.3 million, or 82 cents a share, in the same period the previous year. However, revenue rose by 6.5% to reach $638.9 million, exceeding the FactSet consensus of $620 million.
Cinemark currently operates 5,719 screens across the United States and has plans to open five new theaters and add 43 screens within the next two years. Chief Executive Sean Gamble expressed optimism about the industry’s recovery from the pandemic slump, stating that the company expects to benefit from this ongoing recovery. Gamble emphasized the importance of near-term revenue and margin generation, strengthening their balance sheet, and adapting to fluctuations in film release volume and cost pressures.
In 2023, Cinemark saw a boost in box office revenue due to the success of various blockbusters, including “Barbie,” “Oppenheimer,” “Super Mario Brothers,” “Spider-Man: Across the Spiderverse,” and “Guardians of the Galaxy 3.” Director Greta Gerwig made history as the first female director to helm a movie that grossed over $1 billion with “Barbie.” Additionally, Taylor Swift’s Eras Tour concert movie and the theatrical releases of Apple Inc. and Amazon.com Inc. contributed to the overall success of the North American box office, which reached $9.1 billion.
Despite a 25% decrease in attendance, Cinemark achieved record-high per capita food and beverage sales for the year. Admissions revenue rose by 5.8% to $322.4 million in the quarter, while concession revenue increased by 7.7% to $243 million. The company also improved its balance sheet by generating free cash flow of $295 million and reducing pandemic-related debt by $100 million.
Cinemark’s loyalty program experienced significant growth, with membership increasing by nearly 20% in the U.S. and over 45% in Latin America. The company attributed some of this success to the enhancements it has made to the moviegoing experience, such as reclining seats and D-Box motion seats. The D-Box motion seats, equipped with speakers and motion actuators, provide an immersive experience that has driven box-office outperformance and increased admissions revenue by 87% compared to 2019.
Looking ahead to 2024, Cinemark anticipates a reduction in wide releases due to the Hollywood writers and actors strikes that occurred in the previous year. However, the company remains optimistic that film volume will rebound in 2025 and continue on the recovery path it has been following for the past two years.
Despite the volatile trading experienced following the larger-than-expected loss, Cinemark’s stock has performed well over the last 12 months, gaining 41%. This outperforms the S&P 500, which has gained 23%.
Overall, Cinemark remains optimistic about the future of the cinema industry and its ability to navigate the challenges faced during the pandemic. With a focus on revenue generation, enhancing the moviegoing experience, and strategic planning for the recovery of film releases, Cinemark is poised to continue its success in the coming years.
