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spk_0: the day and thank you for standing by welcome to send a march third quarter earnings call at this time all participants are and millicent only mode after the speakers presentation there will be a question and answer session to ask a question during the session you need to press star one on your telephone if you require any further assistance press or zero i would now like a hand because harper's over to your speaker today trend or shares senior vice president of investor relations thank you please go ahead
spk_1: thank you stephanie and good morning everyone at this time i would like to welcome you to cinema holding a third quarter two thousand and twenty one earning really conference call hosted by mark the roddy chief executive officer and board director as well as sean gamble president and chief financial officer in accordance with the safe harbor provision of the private security litigation reform act of likely nine eighty five third matters that are just remember that management during the call may constitute forward looking statements but statement are subject to risk uncertainty that other factors that may cause been a marked actual performance three materially different from the performance indicated or implied by that statement but risk factors are set for than the company that the filings the company undertake no obligation to publicly updated or revised any forward looking statements to date call and webcast may include on get financial measures a reconciliation of the don't get measures to most directly comparable got financial measures can be found in today's press release within the company quarterly filing or form three
spk_0: ten q are on the company's website and after thought that a mark dot com i would now like it on the call over to mark the roddy
spk_2: thank you chanda and good morning everyone we appreciate you joining us to discuss or two thousand and twenty one third quarter result i'm very pleased to start off by saying that our industry and our company continue to make significant progress in recovering from the effects of the pandemic were highly encouraged by the country genuine positive trends with increasing consumer demand for the cinematic theatrical experience and growing momentum at the box office this favorable progress was demonstrated in our third quarters sixty one percent growth and worldwide attendance since last quarter in que forty one importantly that growth is handed flowed through to her bottom line results in the third quarter which included positive adjusted ebitda a forty four million dollars or three to results marked a significant milestone for cinemark as it represents or first quarter since the pandemic begin began with positive total company adjusted be but up furthermore every month in three que delivered positive heba dot which tangibly underscores or company resurgence strengthen the domestic box office was empty driver of our third quarter performance at the north america industry delivered one point four billion dollars of gross proceeds on a larger volume of more sizable commercial releases top hits in the quarter included change tree and the legend of the top rings black widow jungle cruz for you guys space jam and the carry over from to pews highly successful relief of fast and furious nine and consistent with last quarter i'm thrilled to report that cinemark once again over index the north america industry box up performance relative to three que nineteen with a substantial outperformance of seven hundred basis points this outperformance helped of capture an approximate fifteen per sent market share of north america box office which significantly exceeded or historic average of just under thirteen percent or fifteen percent market share achievement is particularly meaningful this quarter as the vast majority of theaters in the us and canada had reopened during our last several calls we talked about four key factors that impact theatrical exhibition recovery all of which continued to experience noteworthy progress first the status of the virus driven by vaccine penetration to date as well as impacts from the virus beginning to subside kobe rates of plunge said monday three percent since the delta variant peaked in september vaccination rates continue to rise across the us especially with the reef and approval of inoculation for children five and older moreover vaccination rates are also rapidly progressing throughout latin america the second factor is government restrictions which have largely gone away and the us and at this juncture at this juncture and continue to reduce in latin america thirty consumer sentiment while the delta variant to the curve ball during the third quarter and caused a meaningful dip and consumer comfort regarding the the theaters that sentiment has since recovered to seventy seven percent of us movie goers expressing comfort and going to the theater in the current environment this level the positive responses in line with the peak levels of sentiment we witnessed in early july of seventy eight percent and the final key factor immigrants exhibition recovering is the consistent flow of new film content with broad consumer appeal which clearly is now under way of course these recovery factors not only apply to the us but are also applicable on a global basis and while the domestic market is further along and it's rebound cycle we're also seen positive trend in latin america currently one hundred percent of our theaters have reopened across the region and even though thirty capacity and operating our restrictions persist in central and south america consumer demand to return to the theaters is very strong there is no question that the actual exhibition is meaningfully recovering around the world and fit a mark is extremely well positioned to benefit during this come back on a cow a many operational advancement we made during the pandemic as well as our ongoing efforts to maximize attendance and drive new ancillary revenue opportunities some examples include improved operate in efficiency enhanced marketing programs and capabilities and are recently implemented online food and beverage platform new alternative content possibilities and ongoing impact of our premium amenities in terms of operational efficiency we've made some significant strides over the course of the pandemic for instance where optimizing operating hours and showtime schedules to utilization of enhanced data management analytics we have simplified and streamline numerous theater practices such as ticket ticket issuance inventory procedures and ushering routines to be leaner and mortician and we've refine the degree of staffing that is required to operate our leaders including enhanced planning and management controls we also continue to significantly advance our digital and social marketing capabilities utilizing proven best practices for retail travel and technology industries examples include leveraging iterative ab testing to identify and scale winning concepts simplifying consumer touch point to drive a more frictionless experience and apply advanced analytics against are highly valuable customer database to drive improve targeting accuracy and contextually relevant messaging these actions and capabilities are focused on increasing moviegoing frequency and overall can schumer spend and we believe they will be highly valuable and navigating the competitive landscape ahead and maintaining our increased market share in tandem with our digital and social marketing actions we continue to leverage are unique industry leading transaction bay subscription program movie club to drive attendance during the third quarter we completed billion reactivation on all movie club accounts that were pro actively pause for the past year and a half during the pandemic in doing so we have been extremely pleased by the minimal amount of churn we've experience which represented only a modest six percent dip in our pre pandemic membership base that was largely driven by credit card that expired during that time frame this dip was better than expected due to our member first approach a were already seen new net positive movie club additions as we actively work to retain those expired members as well as attract new ones we've also continue to further enhanced movie club and recently introduced movie club platinum and earned premium tear that provides or most frequent movie goers with even bigger incentive we expected heightened tier will serve to further increase loyalty of our most active customers as well as stimulate incremental transactions since we announced the launch of movie club platinum just over a month ago sixty four percent of movie club members familiar with the program stated that they have been incentivized to achieve platinum status this year another foray into simplifying and enhancing our customer experience while driving ancillary revenues if snacks and a tap or recently launched online food and beverage ordering platform this platform enables guess to skip the line and have their concessions ready for pickup upon arrival or delay verge of their seats for a nominal fee the added convenience and time savings provided by snacks netapp have been extremely well received by a movie goers and we look forward to continuing to grow the programs awareness and utilization in the months ahead we're also continuing our reintroduction of select expanded food and beverage options as a more consistent relief cadence a stronger film content takes hold and moviegoer attendance increases they're exciting new business venture that we announced last week is our heightened focus on gaming initiatives including our plan to hire a new vice president to forge strategic relationships and pursue content and life in the agreement in the gaming round gaming is the latest evolution in our ongoing focus to secure alternative content further utilizing our auditoriums to supplement hollywood film content and we have seen several promising indicators were with regard to consumer interest in both spectator and participatory gaming events additionally were continuing to explore other alternative content offering and of thing similar positive result from events such as professional wrestling with a w and debuted w e boxing with thriller fight club movie premieres special lied q and a sessions with talent and concert all in addition to ongoing events provided by fathom entertainment we're also continuing to reap benefits from investments we've made in premium amenities that enrich the movie going experience which movie fans continue to seek out including reclining seats with approximately sixty five percent of our entire domestic circuit featuring perched very loud years be the highest rick kleiner penetration among the major theater operators premium large format auditoriums led by our xd are proprietary brand which ranked number one in the world which delivered twelve percent of our box office in the third quarter alone on only four percent of our screens and an increase in the box motion seats which are synchronized with the onscreen action and finally funny arctic laser projectors in line with our previously announced a partnership we're featuring laser laser projections crystal clear picture and all of our new build theaters and continue to upgrade our existing theaters with later laser technology which last longer and operate more efficiently we're happy to share that in addition to other locations across the us we have completely converted all of our dallas fort worth theaters and screens or home city delivering consistently bright colorful and sharp images on laser speaking of new theaters strategic new build or quarter soaked cornerstone of our strategy and we're thrilled to have open to fix new theaters and sixty seven screens already this year all of which were committed to prior to the onset of coven these new build theaters are all and high growth there areas with significant opportunities to capture movie go in attendance while it's still early days were highly encouraged by the result today we've opened three locations in the us kirkland washington just outside of seattle jacksonville florida waco texas and three and latin america water mala chile and per peru we also have one more theater open to open later this year in roseville california just outside of sacramento based on everything i've just shared i hope it clear that we are pleased with our performance trend in the third quarter and the advancements we made to continue to make our business more vibrant to business development well we're cognizant there's still a long road ahead over the course of the coming months we continue to expect an ongoing ramp up in a box office and overall financial results the fourth quarter has already started out strong as october delivered our best monthly box offers as a result since the onset of coded notably our cash generation during the month of october with significant up to more than cover all of our variable and all of our picks costs looking ahead upcoming film content for the bouncer the year include highly anticipated blockbusters appealing to families and adults alike such as a turtles which opened with previews laugh night to outstanding results ghostbusters after live in kanto house of gucci west side story spiderman no way home matrix resurrection and thing to to highlight just a few and the fleet next year looks absolutely tremendous with broad range of highly promising filmed for all moviegoing audiences importantly these films were made to be experience in a cinematic out of home entertainment environment that only a movie theater can provide were also optimistic about the future of exclusive theatrical windows as it's such a meaningful contributor to the overall media landscape as we've witnessed with the positive box office results generated million recently i've been a significant proponent of the longevity of the theatrical exhibition industry and especially for so and i'm mark as the company is uniquely positioned and poised for long term success before i turn it over to show this morning i'd like to take a brief moment to comment on the upcoming executive transition as previously announcing this is my last earnings call as field cinemark before i hand over the reins to shot at the end of the shared it has been an honor serving as ceo and leaving the incredible people have a marked the past six and a half year and i would like to first think the global team for their hard work camaraderie willingness to change and evolve and for their industry leading result i would also like to thank the investment community it has been tremendous getting to though so many of you over the years and we appreciate your ongoing support i along with the rest of the board and highly confident in sean and his ability to lead cinema going forward is operational background and strategic mindset along with is keen eye for efficiencies and business opportunities will be especially advantageous as cinemark continues to emerge from the effects of the pandemic i look forward to watching the company thrive under his direction as i continue in a strategic capacity to my position on the board with that had now like to turn the call over to sean
spk_3: good morning everyone and thank you mark for your kind words you've been a tremendous leader for a company and our industry over the past six and a half years and to say you'll be missed from our day to day operations is clearly an understatement we all wish you the very best in your next chapter and we're thankful that one have the opportunity to maintain a continued working relationship with you through your ongoing seat and our board of directors
spk_2: on a related note three weeks ago we announced melissa thomas will be joining in a mark as or next cfl melissa was most recently the cfl for groupon and has a strong and impressive leadership in financial background we believe she'll be a great cultural fit for cinemark and an excellent compliment to our leadership team and finance organization melissa will officially start this coming monday nov eight and we look forward to formally introducing her in the near future as mark already highlighted the resurgence of theatrical moviegoing is in full swing and cinemark delivered another quarter a meaningful financial improvement during three q or average monthly cash burn reduced to approximately eleven million dollars after normalizing for working capital timing
spk_3: this rate was in line with the expectation of a ten to fifteen million dollar monthly cash burn that we communicate it on our last earnings call
spk_2: as of today's current operating environment we have now flipped to modestly positive average monthly cash flow and we expect this rate will continue to improve as our industry further rebounds at the end of the third quarter we had a global cash balance of five hundred and forty three million dollars as of october thirty first that balance had increased to approximately five hundred and ninety five million dollars during by the strong box office results of venom let there be carnage no time to die halloween kills and do as well as working capital timing associated with corresponding film rental payments based on our current and improving cash will position we continue to believe we had ample liquidity and will not require any additional financing that said multiple financing opportunities still remain available to us including drawing on our one hundred million dollar revolving credit line capping incremental term loan borrowing capacity within our credit facility executing sale leaseback arrangements on unencumbered properties we own and issuing equity
spk_3: also as we describe last quarter following our recent refinancing transactions or revolver maturity now sits at november of twenty twenty four and all other significant debt maturities extend through march of twenty twenty five and beyond
spk_2: turning now to our third quarter results we like to remind you that are reported financials follow a cruel based accounting and therefore do not necessarily correlate directly to the timing of our cashflows furthermore as we have indicated in previous quarter since the onset of the pandemic our traditional metrics continue to be somewhat distorted in the current environment
spk_3: considering our theaters we're only beginning to reopen with limited new film content in the third quarter of twenty twenty we will compare or most recent quarters results to to cute twenty one and three to nineteen in select instances
spk_2: during the course of the third quarter we continued to further expand operating hours in response to increasing consumer demand for a growing volume of new commercial film releases the second quarter or third quarter domestic operating hours expanded by nearly forty percent although still remained approximately twenty five percent below three que nineteen
spk_3: expanded hours and increase moviegoing lead to quarter over quarter domestic attendance growth of forty two point four percent to twenty one and a half million patrons domestic emissions revenues were one hundred and ninety five point three million dollars with an average ticket price nine dollars and eight cents
spk_2: our average ticket price increased fourteen point one percent versus three que nineteen primarily as a result of price increases and ticket type mix largely on account of fewer matinee and weekdays geisha times
spk_3: the met the concessions revenues were one hundred and forty two point six million dollars and yielded another all time high food and beverage per cap a six dollars and sixty three cents
spk_2: our third quarter per cat was roughly flat with to queue of grew twenty seven percent compared to three que nineteen as penta moviegoing demand continue to drive a heightened indulgence in food and beverage consumption across our core concession categories and operating hours remain concentrated in time frames that are more conducive to
spk_3: concession purchases
spk_2: or third quarter results also benefited from ongoing strategic promotions and pricing initiatives the reintroduction of various enhanced food offerings and recognition of previously deferred revenues associated with the issuance of loyalty points domestic other revenues also continue to rebound during the quarter and grew twenty eight point three percent to thirty seven point six million dollars driven by volume related increases in screen ads transaction fees and promotional income altogether third quarter total domestic revenues were three hundred and seventy five point five million dollars with positive adjusted ebitda of forty four point eight million dollars internationally we also continue to see material recovery in latin american box office in operating results during the third quarter by the end of three que we had reopened one hundred percent of our international peters while certain restrictions on operating hours and capacity remain in place as mark indicated during his prepared remarks
spk_3: during by expanded peter openings and increased the veil the delivery of new film new commercial film content or third quarter international attendance grew one hundred and twenty eight percent versus two key twenty one and nine point two million patrons which generated thirty point two million dollars of admissions revenues and twenty one point six million dollars in concession revenues total international revenues were fifty nine point three million dollars and yielded adjusted ebitda that was just shy of breaking even for the quarter
spk_2: globally film rental in advertising expenses were fifty one point nine percent of admissions revenues which increased two hundred basis points compared to two que twenty one this increase was expected and resulted from a higher concentration of a larger more successful new film releases that said compared to the third quarter of two thousand and nineteen or film rental rate was still down four hundred and twenty basis points predominately due to reduced film grosses sq lower on our film rental skills confession cost were seventeen point two percent of concessions revenues and were in line with both our second quarter results and pre cove it averages third quarter global salaries and wages were sixty seven point six million dollars an increase thirty four point one percent versus to queue twenty one this increase was driven by additional peter a openings extended operating hours to accommodate growing consumer demand and the reintroduction of select the enhanced food and beverage options that require more labor facility lease expenses were sixty eight point eight million dollars and while largely fixed experienced a modest uptick from the second quarter due to a slight increase in percentage rent in common area means as volumes increased worldwide utilities and other expenses were eighty one point eight million dollars and increase thirty three point seven percent quarter over quarter driven by variable cost that grew in line with volume such as credit card fees janitorial expenses and commission's paid the third party ticket sellers utility expenses also increased as we expanded operating hours while other costs within this category such as property taxes and property and liability insurance remained predominantly fixed finally gene a for the quarter was thirty eight point six million dollars and remain considerably lower than pre pandemic levels as a result of the restructuring actions we pursued in the second quarter of twenty twenty and are ongoing efforts to minimize non essential operating expenditures
spk_3: collectively are worldwide adjusted ebitda for the third quarter with positive forty four point three million dollars as mark previously described this result represents a significant milestone for a company as it was our first quarter a positive total company adjusted ebitda
spk_2: since the onset of the pandemic and our second consecutive quarter of material adjusted ebitda recovery our net loss also materially improvement three que to seventy seven point eight million dollars reducing by sixty four point seven million dollars quarter over quarter
spk_3: we like to congratulate or studio partners on the success their films achieved in the quarter and we like to commend are hard working teams on the relentless execution and drive to deliver these results
spk_2: capital expenditures during the quarter were twenty four point four million dollars of which thirteen point six million dollars was associated with new build projects that had been committed prior to the coven nineteen pandemic and ten point eight million dollars is driven by investments and maintenance in our existing theaters
spk_3: are consistent investment in pro actively maintaining and enhancing are theaters over the years has enabled us to scale back capital expenditures in the near term without hindering are as the quality or get satisfaction as such we continue to anticipate spending a highly reduce level of cap x in twenty twenty one relative to pre pandemic ranges which we previously estimated at approximately one hundred million dollars
spk_2: however due to buried supply chain constraints that has started impacting the delivery timing of certain equipment and supplies we now anticipate kept x make coming slightly below one hundred million dollars for the full year
spk_3: that said we do not expect these delays will have any adverse impact on our daily operations in closing we are thrilled with the positive momentum we continue to experience regarding the rebound of theatrical exhibition and our company's financial results and we are optimistic about the robust relief calendar that lies ahead in the fourth quarter and beyond as well as further improve mintz in consumer moviegoing enthusiasm as the pandemic of sides
spk_2: we are proud of the advancements our team has already made to set up in a mark for success in a post pandemic environment and we look forward to the impact or strategic initiatives will continue to have on further enhancing the cinematic entertainment experience with provide our guests and delivering long term shareholder value daphne that concludes are prepared remarks and we would now like to open up the lines for question
spk_0: at this time if you would like to ask a question please press start than the number one under telephone keypad again that a star than the number one to ask a question our first question comes from the line of like quite ronnie for jp morgan
spk_4: i think much and congratulations martha to block i had a couple questions the first one on their commentary game about their recovery but him to be broad the across latin american combat you are but if you drill into the latin america recovery and them and look at sort of where they are birth to you wow can you can perspective in terms of you now and were in the seven coming they might be in the fourth of be trying to get a sense of relatively how much behind them how my too much how much behind your back an operation barbers in the us recovery
spk_2: thankyou alexia or like your baseball analogy but i think all i think i'll go to a more of a a number of days and month if i could we've been very encouraged with the amount of vaccinate and progress has taken place in latin america just over the last ninety days i mean basically now and argentina and brazil and in chile and and others have arms the territories down there the rate of vaccination as a percentage of total population is very similar to the us if caught up quite significantly in the last ninety days that fit the business overall is still somewhere between sixty two hundred and twenty pay a behind the us in regards to recovery so as you as you i'm sure noted the even die in latin america was just slightly negative if quarter and but with but it made a significant improvement from the quarter behind that so to answer your question specifically i'd say somewhere between sixteen one hundred and twenty days by the us but you very much on it a trend that were positive about
spk_4: perfect and then just a quick followed the by may on the on the film played and and production delayed that we've been led with with some of the studio's like marvel which pushed out in the the film i'm in a into two thousand and two a you are the of the backlog of all digital age from twenty one to looks like an amazing weight is there any reason to be concerned though that you know if you look further out because things are getting delayed with staff shortages are difficult he sort of getting things done on time it becomes a bigger issue down the road or do you think we have enough time to kind of sort that out given the flight near term as is so chock full
spk_2: you know a gym at the very interesting question or sean i had the opportunity to go out of just two weeks ago and do that with every one of our content providers in los angeles and of they are extremely positive about the twenty two slate of as am i you know i've been i've been looking at this business for forty years now the twenty two sleep might be as good a slate of any that i can remember over this time and also as we look to twenty three of they are all active in putting together release schedules and so i mean really from the small studio all away up to the the most part a prolific studio everybody is working on their twenty three content of there's not a specific line up at this point that we're ready to share with you but it's starting to come together and we we see it is very positive as well it the other thing i would add to his simulators labor shortages that the are going on within the retail sector and other industries at least we're not aware of that affecting the movie production
spk_3: and cycle at this point in time so i'm at nor nor does it appear that the current state of the pandemic is having a material effect on that at this point production is is largely back into full swing yeah actually on that to sean just just you know there was a there was a threat of a labour stoppage in and they were all very day
spk_2: very pleased that didn't take place so it looks like we're in good shape
spk_5: can you hear a peep thank you that's like that
spk_0: your next question comes on the line at eric handler with mk em partners
spk_6: good morning and thank you for the question i'm to push country and and first one being you know october us or domestic revenue the box office was down one percent but given the market share the that you've seen given the cost efficiencies that euro that you're producing i'm i'm curious how close are you to getting back to twenty nineteen profitability or margin levels
spk_2: why are you referring to twenty percent relative to to to doesn't like you said agreement to the debt as an ideology yeah gotcha
spk_3: well we're certainly are improving on that trajectory as he as we indicated in the prepared remarks we have flip currently to positive cash flow generation and you heard how our cash had increased from the end of the third quarter in october already on account of the improvements in a box office in just the overall state of of movie go
spk_2: and one one stat that we didn't provide but may give you some directional sense are over occupancy levels for the third quarter were about thirteen percent
spk_3: in all of two thousand and nineteen the full year and creep endemic terms are occupancy was about nineteen percent so we're continue to notch closer to that obviously profitability is affected both by that as well as the extent of operating hours which are still about twenty five percent below what they
spk_2: we're in two thousand and nineteen so they're still is a ways to go but we're definitely moving in a positive direction we flipped the positive even in the third quarter we expect that the continued to grow and improve as we move forward
spk_7: getting a way back if you that the nineteen obviously that's still is dependent on the ongoing improvement in the pandemic and just some of these other evolutionary factors that continue to take place within our our industry
spk_6: but things like are improved market share and some the other revenue generating opportunities were pursuing i think those have a good ability to get as close to where we were previously and if not better over time but it like give and in looking at your contests and perk up numbers would continue to climb quite nicely
spk_2: curious how much of the is a function of volume vs pricing you know eric we we have not have pushed pricing and i'm in a real significant way in in fact when we first came back online fully we did welcome back pricing read now without brought pricing back up to approximately not the hallway but approximately two thousand and nineteen so we still have an ability if we so
spk_8: choose to to push prices bit most of it has been has been in terms of increased increased volume and increase spending on a per cat basis and i think sean's prepared remarks pointed also that
spk_0: you know since we have a little bit less operating hours we focus that operate hours more on timeframe for people are buying greater and greater amount of of of confessions
spk_9: thank you very much exert your next question comes from meghan durkin with credit suisse
spk_2: hi good morning i'll add new devoted to little more color on your market share again maybe some of the markets where you are outperforming on attendance what you think is driving that and maybe who the fair could be coming from and then unmanly the projector a do you have any idea or detail on how many in theater or have this type of humanity and you know how you expected to impact your hair over time the you know it should be a pretty interesting a manatee other don't have that type of upgrade in their auditorium i'm just looking for any color you can get their and i'll take the first party or question and sean will take the second or regarding market share this is something that we have focused a tremendous amount of effort on because we we just knew that how how important it was in a pre pandemic world we are market share was approximately twelve point seven five percent and we have been operating of recent in the fifteen percent market share basis and that we with all the other theaters opened in canada open done so that's a meaningful increase to go from twelve point seven five to fifteen percent we focus tremendously on our marketing efforts in order to help achieve that and and you asked about some specific market the dallas has been dallas and houston have been very important in that mix of san francisco sacramento salt lake city these are are our us cities and the amazing which we have very high penetration cleveland ohio and we think that it's it's a combination of a lot of things the marketing effort at one to is the way that we were we've approached our customer service from an operational standpoint movie club is it is is another one movie called has been tremendously important our food and beverage initiatives along with that so market share is the combination of all the various elements of of our business film and our ability to to get not only the big blockbusters but also the smaller midsize movies the can actually perform very significantly and so it's been a combination of things we feel like the market share growth has been substantial and that i noted it's gone from about four point seven five to fifteen percent and with regard to your question on laser projectors immediately preceding that endemic actually we announced a a tenure exclusive agreement with city on actually to roll out there barca laser projectors over a ten year time frame
spk_10: and in as you pointed out megan not only do those projectors helped elevate the movie going experience and take are already fantastic cinematic experience to new levels are they also provide meaningful productivity benefits in terms of improved operating expenditures with regard to warranties and maintenance and electricity and parts
spk_3: right now we installed about about seven percent of our screens have laser projectors including the entire dfw marketplace we have not yet started to heavily promote that in those locations but that is part of our our marketing intent as we move forward it's just another premium amenity in the collective of ours of our theaters that we have to help both differentiate ourselves from
spk_2: other forms of both in home and out of home entertainment as well as competition in the marketplace or we're really excited about this additional amenity in addition to our our reclining seats and are enhance food and just varied other aspects of the movie going experience that we built into theaters and the potential as for future attendance
spk_11: and are you actually pricing those ground at a premium for the other room that have not been upgraded we have not we have not which it's almost akin to we have not yet i should say oh it's akin to when we did recliners when we go in to a theater were generally putting lasers in the entire the
spk_0: and then it gives us an ability to market the entirety of that theater in the marketplace so with that and that for their differentiation it will give us pricing power over time but it's not something like
spk_3: a recliner which we might increase the price immediately
spk_12: it's something that just helps with us to to helps with the market share aspect of the first party or question
spk_2: great thanks guys mega project thank you your next question concerns thieving k hall with wells fargo good morning maybe first one for me it looks like the of navy for the next year so we're gonna be pretty heavily you to some really big ten polls probably more premium format experiences so how do you think about the financial trends in the business if we do start to see the box op really you do those big releases well first even would like would like to welcome you to the to to our investor group and and great to be here plan to have your question you know for a long time there's been some some area of question regarding concentration of large temple movies and i don't think twenty two is going to be anything it's overly overly different than what we've seen in previous years that's been going on for quite some time our business is clearly driven by the big out of home cinematic experience kind of movie and twenty two is shocker block with that you know
spk_12: and the list lifting them out would only take too long because there's there's so many of them but that does not mean if the more mid range and smaller independent specialize movies
spk_6: are necessarily not can have an opportunity to perform as well so we're very very happy to have those big blockbuster films we think are circuit is really well positioned for that because of the concentration that we have with the number of xd auditorium which we get a three dollar up charge not only in the united states but also throughout latin america so we're very well positioned for those and i don't think it's gonna be an overly large share it's going to
spk_2: be detrimental to our business break and then you know he talked about the decline income renters is where you are and twenty nine yeah he talk about being now now i did recently though as you're talking to the studio they know there's a very dynamic discussion going on around window and are you seeing any abatement in the way they're perceiving future rents in the industry kind of make this transition
spk_3: you know stephen it's it's interesting the the way in which we're continuing debate go round really is not adapted and change it to scale basis so the higher the box office for larger on the scale it it is there's been no significant renegotiation of those scale so in the one hand
spk_2: you don't like to pay our film rental on the other hand it's really really good news when you do because that means that you have it a giant box office smash hit and you pay the higher film rental and and you get food and beverage along the way so no big change in the way that the deals are being done it did on a scale basis higher the box office a higher scale one paid the the only thing i would i would add to that stephen is week which we said in the past you know we had previously created that we've received you can dammit consideration commensurate with the degree of window modification subsequent release structure that has taken place in addition to scales have largely remained in place but we have received that type of economic considerations and we continue to expect similarly a line considerations with regard to your any future
spk_12: changes in structure that take place going forward
spk_2: at and and and and as i think probably one of the key point there is shot and i had these discussions were pretty darn confident we're going to see exclusive theatrical windows on the vast majority of the release of coming next year whether that's a forty five day window for a thirty day window but that's it in extremely important
spk_3: confirmation that we got across the board with all of our major content suppliers
spk_0: yeah
spk_13: and then maybe to laugh for me talked about the financing options available to you off with that you have ample liquidity so you know capital market pretty healthy right now you have an interest in raising any capital or that just to note that you know if things take a turn for the worse he got lot of options it's more the ladder to the extent yeah place to protect their for louis or opportunity new opportunities present themselves that we think our strategic to yell at the long term for organization right now we're we're more focused on the leverage as well as investing in building the company if anything are are more near term focus will be on trying to refinance some of the the more recent debt we've taken on at higher terms in order to have some savings within their going forward
spk_2: thank you actually would appreciate questions your next question is from robert fish may with moffat nathan's and the morning a couple of big picture questions for you guys mark you've had a part wrote the a lot of changes in the movie industry on both sides of the table with your career disney and announced that a mark what have been they can deprive the jump to mind either in general are specifically related to the relationship between the studio and exhibitors and then shot wet with your own experience that universal now leading than a mark going forward how do you expect to shape the future of than a mark and the exhibition industry including working with the studio than when doing strategies and maybe other at back to the relationship like leveraging your loyalty program movie plot data robert thank you that's the those are interesting questions let me let me start know like shot taker the the bigger bigger picture going forward you know as you know to i've been doing that for long time and i've seen the windows change dramatically over the years and one thing that was always a concern to exhibition was you know as windows decrease is box for our box office going to decline you know that that hasn't really happened that hasn't turned out to be the case you know windows used to be as you know six months and then they were five month and four month and out looking more like forty five days and it least what we've experienced that spark and twenty one forty five day window is likely going to be long enough for us to be able to get the vast majority of the theatrical box office potential so that's been with call it a pleasant surprise and you'd never know that until you actually experiment and do it and i don't think that necessarily would have happened as quickly as it did if there hadn't been the pandemic to kind of the oh really shake things up and cause people to not be willing to leave their home for a period of time so i think that's been actually a positive change and it it shown the studios bit of the theatrical business is very very employ shortened to help launch the big franchise movies and so that's probably been the single biggest thing as i have i look back over the over the course of it too i think this is just a confirmation
spk_3: and that is that people very much want to get out of their house and experience a movie in a big darkened environment with a group of people and be completely concentrated on it so the theatrical movie going experience have been going on for a one hundred plus years to every piece of technology rg many of which i had an opportunity to be involved with some the for me you know going back to television and then and then i jumped into this business in the vhs and beta business didn't decline dvd didn't decline cable now streaming we still have an extremely vibrant business the article is the
spk_2: locomotive that brings the that the movie up to the up to the top and then everything else is able to benefit from that theatrical experience and robert your question as far as your my thoughts on shaping the teachers and market mean first curly first and foremost is fully getting beyond the pandemic and back to more of a dedicated focus on pure execution and evolution and growth of moviegoing and and our business and back to our industrial eating results
spk_3: the you know we've we've clearly been been focusing with in that regard on what is the next one of the next key initiatives to enhance the movie going experience on continue to make that a premium offer that consumers seek out along with that building audiences through
spk_2: marketing and additional types of experiential opportunities and then generating more incremental revenue
spk_3: as far as collaborating with the studios the the way and the windows evolution i guess the way i look at it as we we've been working on that for quite some time even before the pandemic we were having proactive conversations that we initiated about of more flexible window and and obviously is marx said that has accelerated throughout the pandemic
spk_2: we're going to continue to worked actively with with the studios on that to try to figure out the best collective solution the way we look at it is trying to be collaborative partners our goal is to work with the studios to grow the pie and be supportive partners and i know i firmly believe that much like theatrical has always done it provides a phenomenal way to you
spk_0: the ties and elevate content brand content differentiate content which is going to continue to be highly important as the content providers aim to promote their films promote their streaming platforms and be more in the
spk_14: the cultural discussion so i think there is that the outrigger will continue to play a meaningful part in that equation
spk_6: i'm from a marketing standpoint we been using will be club actively with the studios as a way to help increase the frequency of movie going
spk_2: i think that any reason why that will change posts pandemic in fact i think that our continued to to grown build and we've continued to his as mark mentioned is prepared march we continue to enhance the sophistication of our digital and social marketing capabilities with in tandem with the studios which provides for a more or par good way of of attracting consumers to our theaters and to moviegoing and it all just intertwined back with that concept of helping them be supportive of promoting their content and having a win win for both both sides thank you both and mark wish you all the that bank robber or project your next question comes from gym golf club barrington research thanks you mentioned earlier about the game initiative i was wondering if this see the moment in the sun for alternative content considerations and if you plan to do this primarily through fail them and are there other things involved or searches maybe negotiating sports rights you can do sporting events in theaters also
spk_15: janitor very timely question thank you as as you know we made an announcement earlier this actually late last week
spk_16: regarding gaming and we we've been we have been experimenting with a variety of gaming initiatives boat from a spectator standpoint and also from a participatory standpoint
spk_14: we're going to double down on that we're going to create a unique department we're going to put a senior level executive in charge of that department to help set up strategic partnerships content life and and agreements are we done some very interesting test one of the reef more recent ones that we talked about was we did a
spk_2: yeah we did at twenty five city tests with critical role and and the dungeons and dragons to out the ending results i mean be the there was a tremendous fan base that wanted to go and and does that are theaters we literally a sold that out we've also done testing would league of legends with would come with competitions with the game awards from a participatory standpoint we've had private gaming parties in our theaters now for month or we participated with super league game in which of affectively put one city against another city and kids can play against each other in a gaming environment in our theaters we've done a deal with mission control we are clearly looking at east sport and sporting events
spk_3: this is on top of what we're doing with other a alternative content suppliers like fathom it's not in here it's not in exchange of it on top but we think there's tremendous opportunity to leverage are brick and mortar assets with both alternative can't
spk_2: head and gaming any sports and
spk_6: separately on the t in theater opening said you've talked about are performing the industry but it's been uneven opening are there any other additional larger markets that have yet to fully reopen that kid push this little further
spk_14: are you very cute additional theaters are going to open gym i'm sorry i'm sorry no i mean i am no new york was lagging for a while a little i get another really on the areas where you might drive hunt you down where where they might be smart impetus for our performance
spk_17: no i don't think so and you know all the market for now opened across the board so
spk_2: you know what what we look for them everywhere as we're always looking for you know is there a spot to add a new theatre in a marketplace that either that we're not in or that needs additional servicing but at this point we don't anticipate any significant changes in our market share based only upon newmarket open he's good everything is open at this point that i would add been open for multiple months it is going to okay at canada my back candidates fully back up you know for for for a while of eastern canada was an open to everybody company okay and finally congratulations mark one thing one final time here they haven't yet either anything in your history or most the proud of you'd like to draw attention to and in this final you know that that's a that's a very interesting question gm so i actually didn't fully anticipated so i'll i'll give you my thought in a candid way you know looking back over the past six and a half years you know i i was very fortunate to walk into a really good company so the company was not broken in any way when i walked in but maybe i i had an opportunity to walk in with a a renewed sense of urgency but but when you walk into a company leroy mitchell and all the people that preceded me built financially strong like we were it did made the job a lot a lot simpler in some ways because we had a good company but along the way we we develop movie club it was the very first exhibitor subscription program that has been highly successful we could we continue to talk about it and then i think we recognized early and our our team recognized early dept
spk_0: one of the most important amenities that consumers were asking for were reclined feet and so we really doubled down on reviewing our theaters not just the seat but also other way the snack bars looked in the way or theaters looked and so we invested very heavily as you know in two thousand and sixteen seventeen eighteen
spk_18: team and nineteen in order to to grow the amount of them recliner thief that we've had
spk_6: and then i think i'm also you know i want to throw nod to what happened internationally we've had a very difficult macro economic environment down there and our teams have have have not only
spk_19: survived but have thrived to a very difficult time frame and were well positioned to come out of the marketplace and i guess maybe that the final thing is just that the team members that really supported the effort here because this is a big time team sport and we've got thousands and thousands of people around the around the country are general managers and assistant managers and hourly workers have just gonna yeoman's job of through this whole pandemic can be unable to open our theaters back up early and be the be some of the first one to stay open and then you know tent you ask me question that i wasn't that i wasn't fully prepared from going to add one more thing because it
spk_20: it popped up in my head and that is in the midst of the pandemic when everything was was just opening up and people were concerned about coming back our team it certainly would not me our team came up with the idea of the private watch parties and and we really forge new ground there and literally brought
spk_2: back in addition to three million people most of them hadn't been to a movie theater and six eight months and they came back because he had the opportunity to a private watch party and we kept the lights on and and and kept covering our our variable cost to private watch parties during this time so we innovated during the most difficult time you know there's a saying never lose the opportunity of a good crisis and i think our teams did that and then during the pandemic as well the whole snacks the tap edition of came to life so it was it was really really a positive thing thank thank you for the question sorry for the extended answer no breathing through the best wishes thank you your next question and from allen gold with loop capital
spk_6: they've taken the question i have a few for you to follow up on him questions about alternative a programming on a duke i have right to either in market or out of market nfl game you put that in your ears sunday monday thursday night
spk_3: and you to and a little on the wrestling right that your are the potential wrestling right the nfl games
spk_6: right now are not available for in city of showing in other words were in dallas or were located here in dallas and the nfl right our to show games only outside of doubt i don't think that proven to be a highly successful at such time that those might become available and we could get the right in san francisco to to have the forty niners or you know or in or in dallas fort worth jab the cowboys been that could really become a big business we are lucky at them at college sports is whether whether not in the future we can get we can get right to the big local teams and local games we think that the the critical part and relative to wrestling look we're we're just trying to experiment there and get a big high profile wrestling event and then be able to charge a premium interrupt
spk_2: there's an active very active fan base that wants to come together and enjoy that big time rathlin and are theaters so we we've we've put our foot in the water we'd had six path and we plan to continue that and expand that into twenty two okay and sure i'm you you crew cab by fifty two million dollars in october how much of that was from working full time and person to score operations that's probably about half and half i don't have the number right in front of me but have a big chunk of that was all the collections that we we we again up for the films that down at launched towards the end of the month that obviously will pay that film out over the subsequent month timeframe so just ballpark as show would say it's probably about fifty fifty in terms of the vomits first the working capital it okay to mark one final windows question we'll have to the studio socket keep talking about flexibility another conference call clear with the big films have to go to the theater give anything on whether the know what how much the champion keto be in the number of why probably to you you're getting from studio
spk_6: you opiate let's let's look at them
spk_21: you know live wicked give me for example who's who's been the most prolific i mean i when i was there we cut the line up from twenty theater twenty major pictures down to about ten or twelve and they're continuing to do that today most of those tend to be the big a wide release movie or warner brothers was making as many as twenty pictures are they
spk_2: they they've indicated that they're gonna continue to make ten to twelve which they would call it the big a high profile temple movies and then maybe they're going to make eight to ten that a get to be more oriented more for a television a h b o max released so i think it's going to be a combination the big movies will hold onto the longer window
spk_22: as the smaller movies
spk_0: with to perhaps could have a short and window with a with a lower film rental percentage so we think it's going to continue to be a good a good mix along the way without a significant reduction in the biggest high profile movies which really drive the business
spk_23: it would just add while there have been some talk show some smaller films shifting to streaming platforms interestingly those same companies have also talked about content being made for the platforms potentially being released theatrically when it has the right right scale i think we've also feel there's the potential for some some segments of of types of type of films like room the comedy these mid tier films that at them more challenge creep endemic because of the more rigid window that those may have a new life host pandemic with a more flexible window because they're more financially viable for the studios and at it as we've talked about i'm past cause you were also in addition to the alternative content discussion we have were us also in conversations with
spk_3: new content providers like the netflix is in amazon's of the world which could also provide sources of content to fill whatever gaps we might have a smaller films from the traditional studio providers
spk_24: interesting our market different and it's been applied you're getting to know you got one last question for you he give us your final publica non blockbuster film pick
spk_2: by a pretext for next year
spk_3: our war with out there right now but out there right now you know that kind of like that kind of like asking a parent to say which one of their children they liked the best and that's always a mistake believe me from from a veteran parents and a grandparent at this point you never do that so i'm going i'm going to pass on now and because you can only be
spk_2: make one person happy and a lot of people unhappy
spk_25: that nine with
spk_2: once again if you would like to ask a question please press star the number one on your telephone keypad that star one your next question as from benjamin swinburn with morgan stanley this is daniel for bam
spk_3: where the current deflationary environmental we've been seeing and the strong consumer are you think it's above average cap spending a sustainable at some level and you kind of touch and this already but the use the a you can raise ticket prices and twenty two and beyond above your head
spk_2: circle rate thank you sure thanks for the question and yeah you know there are per caps of we definitely been pleased obviously with with the heightened per cap results and and like we said
spk_26: a good portion of that we do believe we will continue to receive going forward on account of the promotions and initiatives were perform were pursuing the the new online platform we have or though perhaps a third or so might normalize which is related more to that near term
spk_24: heightened consumption is consumers come back as well as some of the benefit were seeing just from selling more of the food and beverage in hire purchase windows you know the we've reduced our operating hours in some of the earlier times of day and weekday periods in those tend to be periods that don't drive as much per capita we're getting a little bit of a mic
spk_0: i lived on that
spk_2: so majority we believe will we will continue to retain going forward and they'll be a portion of that which will which will normalize as far as pricing going goes on i believe it was ticket pricing we've certainly think that they will continue to be opportunities with regard to both are based ticket prices as well as or to endeavors prices were also starting to pursue more act a variety of new pricing tactics and we think dynamic pricing will be something that will present an opportunity over time at the moment
spk_0: where in the midst of a series of tests to ascertain how elasticity have evolved during the course of the pandemic and how they're going to continue to evolve as we continue to emerge from it
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