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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 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 handbook harper's over to your speaker today gender 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 of lola sean gamble president and chief financial officer in accordance with the safe harbor provision of the private securities litigation reform act of likely nine any five third mattered that are just remember that management during this call may constitute forward looking statements such statements are subject to risk and thirty the that other factors that may called been a marked actual performance three materially different from the performance indicated or implied by that statement that risk factors that for than the company that pc filings the company undertake no obligation to publicly update or revise any forward looking statements to date call and webcast may include don't get financial measures a reconciliation of a non get measures to most directly comparable got financial measures can be found in today's press release within the company quarterly filing reform to
spk_0: ten q are on the company's website and after that for the 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 just go for two thousand and twenty one third quarter results 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 continuing positive trends with increase in 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 in worldwide attendance since last quarter in que forty one importantly that growth and 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 built up furthermore every month in three que delivered positive people dot which tangibly underscores or company resurgence strengthen the domestic box office without the driver of our third quarter performance at the north american 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 ci 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 his performance relative to three que nineteen with a substantial outperformance of seven hundred basis points this outperformance helped to 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 continue 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 coded rates of plunge said twenty three percent since the delta variant peaked in september vaccination rates continue to rise across the us especially with the recent 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 had largely gone away in the us and at this juncture at this juncture and continue to reduce in latin america third it's consumer sentiment while the delta variant through the curve ball during the third quarter and caused the meaningful dip and consumer comfort regarding the the theaters that sentiment has since recovered to seventy seven percent of us moviegoers expressing comfort in going to the theater in the current environment this level with 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 that while the domestic market is further along and it's rebound cycle we're also seeing positive trend in latin america currently one hundred percent of our theaters have reopened across the region and even though certain can path for the 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 phenom mark is extremely well positioned to benefit during this come back on account of many operational advancements 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 more efficient and we've refine the degree of staffing that is required to operate our theaters 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 points to drive a more frictionless experience and apply advanced analytics against are highly valuable ca customer data base to drive improve targeting accuracy and contextually relevant messaging these actions and capabilities are focused on increasing moviegoing frequency and overall consumer 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 experienced 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 peer 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 incentivize 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 gifts to skip the line and have their confessions ready for pickup upon arrival or delay over to 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 pill 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 agreements 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 with regard to consumer interest and both spectator and participatory gaming events additionally were continued to explore other alternative content offering and of thing similar positive result from events such as professional wrestling with a w and gave you w e boxing with thriller fight club movie premieres special like q and a sessions with talent and concert it's 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 perjury loud years 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 sees which are synchronized with the onscreen action and finally finney arctic laser projectors and lined 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 our corner so cornerstone of our strategy and we're thrilled to have open fix new theaters and sixty seven screens already this year all of which were committed to prior to the onset of coded 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 to date we've opened three locations in the u s kirkland washington just outside of seattle jacksonville florida waco texas and three and latin america water mala chile and peru we also have one more theater open to open later this year in roseville california just outside of fact rimando based on everything i've just shared i hope it's 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 while 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 coated notably are cash generation during the month of october was significant enough to more than cover all of our variable and all of our picks cause 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 milan recently i've been a significant proponent of the longevity of the theatrical exhibition industry and especially for cinemark 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 shine at the end of this year it has been an honor serving as ceo and leaving the incredible people of cinema 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 term and is getting too 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 up exo 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 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 will have the
spk_3: the opportunity to maintain a continued working relationship with you through your ongoing seat and our board of directors
spk_2: unrelated note three weeks ago we announced melissa thomas will be joining cinemark mark as or next cfl melissa was most recently the cfl for groupon and has a strong and impressive leadership in financial background
spk_3: we believe she'll be a great cultural fit for cinemark and an excellent compliment to our leadership team and finance organization
spk_2: melissa will officially start this coming monday nov eight and we look forward to formally introducing her in the near future
spk_3: as mark already highlighted the resurgence of theatrical moviegoing is in full swing and cinemark delivered another quarter a meaningful financial improvement
spk_2: during three q are 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 communicated 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
spk_3: 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
spk_2: based on our current and improving casual position we continue to believe we had ample liquidity and will not require any additional financing
spk_3: that said multiple financing opportunities still remain available to us including drawing on our one hundred million dollar revolving credit line tapping incremental term loan borrowing capacity within our credit facility executing sell these leaseback arrangements on unencumbered properties we own and issuing equity 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 cash
spk_3: 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 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 pew twenty one and three que 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
spk_3: paired to second quarter or third quarter domestic operating hours expanded by nearly forty percent although still remained approximately twenty five percent below three que ninety expanded hours and increased 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 weekday showtime's
spk_3: domestic 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 or 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 concession purchases 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
spk_2: altogether third quarter total domestic revenues were three hundred and seventy five point five million dollars with positive adjusted ebitda a forty four point eight million dollars internationally we also continue to see material recovery in line 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 are certain restrictions on operating hours and capacity remain in place as mark indicated during his prepared remarks
spk_3: driven by expanded peter openings and increased the veil the eddie of new film new commercial film content or third quarter international attendance grew one hundred and twenty eight percent versus to 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 globally film rental and advertising expenses were fifty one point nine percent of admissions revenues which increased two hundred basis points compared to two que twenty one
spk_2: it's increase was expected and resulted from a higher concentration of larger more successful new film releases that said compared to the third quarter of two thousand and nineteen or film rent or rate was still down four hundred and twenty basis points predominately due to reduced film grosses sq lower on our film rental skills
spk_3: 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 cute twenty one this increase was driven by additional peter a openings extended operating hours to accommodate growing consumer demand and the reintroduction of select enhanced food and beverage options that require more labor distillery least 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 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 since the onset of the pandemic and our second consecutive quarter of material adjusted ebitda recovery our net loss also materially improved in three q to seventy seven point eight million dollars reducing by sixty four point seven million dollars quarter over quarter we like to congratulate or studio partners on the success their films achieved in the quarter and we like to commend are hardworking teams on the relentless execution and drive to deliver these results 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 are consistent investment in pro actively maintaining and enhancing our theaters over the years has enabled us to scale back capital expenditures in the near term without hindering are as equality or get satisfaction as such we continue to anticipate spending a highly reduce level of catholics in twenty twenty one relative to pre pandemic ranges which we previously estimated at approximately one hundred million dollars however due to varied supply chain constraints that has started impacting the delivery timing of certain equipment and supplies we now anticipate cap x make coming slightly below one hundred million dollars for the full year 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 improvements in consumer moviegoing enthusiasm as the pandemic of sides we are proud of the advancements our team has already made to set up 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 we provide our guests and delivering long term shareholder value that many that concludes are prepared remarks and we would now like to open up plans for question
spk_0: at this time if you would like to ask a question please press start in the number one your telephone keypad again that a star than the number one to ask a question our first question comes from the line of like acquired ronnie for jp morgan
spk_4: i'm thinking i much and congratulations mark back to block from i had a couple questions for swan on their commentary game about their no recovery but him to be bribed they've your crops latin american combat mean you are but if you drill into the latin america recovery and them and look at sort of where they are burke you are can you can perspective in terms of you now and were in the seven coming they might be and the fourth the be get sense of rally currently how much behind them how my too much how much behind your back an operation barber since the us recovery
spk_2: thank you 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 vaccination progress has taken place in latin america just over the last ninety days i mean basically now in argentina and brazil and in chile and in a others have aren't the territories down there the rate of vaccination as a percentage of total population is very similar to the you o s it's caught up quite significantly in the last ninety days that fed the business overall is still somewhere between sixty two hundred and twenty eight 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 it's 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: amanda just a quick fall the by may on the on the film played and and production delayed that we've been led to a with some of the studio's like margot which pushed out them with the film i'm in a in 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 written and 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 the 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 or 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 slate 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 a release schedules and so i mean really from the small studio all away way 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 products
spk_3: rinse 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 labor stoppage in and they were all very
spk_2: very pleased that didn't take place so
spk_5: it looks like we're in good shape
spk_6: can you hear okay thank you that's like that
spk_0: your next question comes on the line at eric handler with mk m partners
spk_7: more than the and thank you for the question i'm to push country and and first one being you know october us more domestic revenue for 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 producing i'm i'm curious how close are you to getting back to twenty nineteen
spk_8: profitability or margin levels
spk_2: why are you referring to twenty percent relative to to two dozen i do particular to the dead a ninety on under yeah gotcha well we're certainly are improving on that trajectory as he as we indicated in the prepared remarks
spk_3: we have lip currently to positive cash flow generation and you get hurt our cash had increased from the end of the third quarter in october already on account of the improvements in a box office and just the overall state of of moviegoing
spk_2: 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 in all of two thousand nine teen the full year and prepare them 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
spk_3: they were in two thousand and nine teams to there 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_2: i'm getting although back if you that the nineteen obviously that 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_7: but things like are improved market share and some of 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 put it going to and in looking at your contests and up numbers with continue to climb quite nicely i'm curious how much of that is a function of
spk_2: volume vs pricing you know eric we we not pushed pricing and of in a real significant way and 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 choose to to push prices but 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_9: you know since we have a little bit less operating hours we focus that operate hours more on timeframe for people are buying greater greater amount of of them of confessions
spk_0: thank you very much
spk_10: exert your next question comes from meghan durkin with credit suisse hi good morning as a commuter both 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 unrelated the projector a do you have any idea i or detail on how many and peter
spk_2: have this type of humanity and you know how you expected to impact your hair over time the 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 megan 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 when our 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 way 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 and these are our our cities and dnase in which we have very high penetration cleveland ohio
spk_11: and we think that it's it's a combination of a lot of things that marketing effort at one to with the way that we weaver
spk_2: 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 the combination of all the various elements of of our business film and our ability to to get i'm not only the big blockbusters but also the smaller mid 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 fifteen percent
spk_3: 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 at barca laser projectors over a ten year time frame
spk_2: and in as you pointed out meghan 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 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
spk_12: just another premium amenity in the collective of ours of our feeders that we have to help both differentiate ourselves from 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
spk_10: our our reclining seats and are and hands food and just varied other aspects of the movie going experience that we built into theaters in the potential as for future
spk_2: attendance and are you actually pricing those ground at a premium to the other room that have not been upgraded the have not we have not which it's almost akin to we have not yet i should say we can to when we did recliners when we go in to a theater were generally putting lasers in the entire feeder and then that gives us inability 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_13: a recliner which we might increase the price immediately
spk_0: 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 jamaican project and you
spk_14: your next question concerns thieving k hall with wells fargo
spk_2: good morning many first one for me it look like the back of maybe for the next year or so we're going gonna be pretty heavily you to some really big ten polls probably more premium format experiences so how do you think about the financial trend in the business if we do start to see the back couples really you to those big releases well first even would like would like to welcome you to the to to our investor group and are anchored to be here plan to have your question of you know for a long time there's been some some area of question regarding concentration of large temple movies i don't think twenty two is going to be anything that'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 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 specialized movies are necessarily not can have an opportunity to perform as well so we're very very happy to have those big block
spk_14: buster films we think are circuit is really well positioned for that because of the concentration that we have with the number of xd the auditorium
spk_7: in 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 going to be an overly large share it's going to be a detrimental to our business
spk_2: break and then you know he talked about the decline in film renters is where you are and twenty nineteen yeah the you talk about being out now i just 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 are perceiving future rents in the industry kind of make this transition you know stephen it's it's interesting the the way in which were continued to paco rental really is not adapted and change it to scale basis so the higher the box office the larger on the scale it is there's been no significant renegotiation of those scale so in the one hand you don't like to pay our film rental
spk_3: 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 the time scale basis higher the box office a higher scale one paid the
spk_2: the only thing i would i would add that stephen is week which we said in the past you know we had previously created it we've received economic consideration commensurate with the degree of window modification a subsequent release structure that has taken place in addition to scales have largely remained in place but we have received that type of our economic consideration and we continue to expect similarly a line considerations with regard to your any future changes in structure that take place going forward at and and and and if i think probably one of the key point there is shot and i had these discussions were pretty darn confident
spk_14: we're going to see exclusive theatrical windows on the vast majority of the release of coming next year weather data forty five day window for a thirty day window but that's it in extremely important
spk_2: confirmation that we got across the board with all of our major content suppliers
spk_3: yeah and then maybe you laugh and for he talked about the financing options available to you op is 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 you know that you know if his second term for the worst you've got lot of options it's more the ladder to the extent yeah for you to protect their progress or opportunity new opportunities present themselves that we think our strategic to
spk_0: at the long term for organization
spk_15: right now 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 that we've taken on at higher terms in order to have some savings within their going forward
spk_16: thank you actually would appreciate questions your next question as from robert fish may will moffatt nathan's and
spk_2: the morning a big picture questions for you guys mark you've had a pot wrote the a lot of changes in the movie industry on both of the table with your career disney and announced that a mark
spk_17: what have been taken deprive the jumped to mind either in general or that difficulty related to the relationship between the studio and exhibitors and then shot with with your own experience that universal now leading than a mark going forward
spk_2: how do you expect to shape the future of america and the expedition industry including working with the studio than when doing strategies and maybe other at back to the relationship like leveraging your loyalty program or movie club data robert thank you to the those are interesting questions let me let me start know let shot take that the the bigger bigger picture going forward you know as you know to have been doing it 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 or our box office going to decline you know that that hasn't really happened that hasn't turned out to be the case in a windows used to be as you no six months and then there 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 of 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 shoppers potential so that's been with call it a pleasant surprise and you 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 homes 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 important 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 to i think is this is just a confirmation 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 that the article movie going experience has been going on for a one hundred plus years to every piece of tech now
spk_3: allergy 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 declined dvd didn't decline cable now streaming we still have an extremely vibrant business the article is the a locomotive that brings the that the movie up to the up to the top and then everything else is able to benefit from that the article experience
spk_2: and robert your question as far as my thoughts on shaping the future said mark i mean first curly person for most is fully getting beyond the pandemic back to more of a dedicated focus on pure execution and evolution and growth of moviegoing and in our business and back to our industry leading results 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 i'm continue to make that a premium offer that consumers seek out along with that building audiences
spk_3: remarketing and additional types of experiential opportunities and and generating more incremental revenue as far as collaborating with the studios the the way and the windows evolution
spk_2: i guess the way get 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 advocacy is marx said that has accelerated throughout the pandemic
spk_3: we're going to continue to worked actively with with the studios on that to try to figure out the best collective solution
spk_2: way we look at it is trying to be collaborative partners in 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_3: 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_16: the cultural discussion so i think they're that the africa will continue to play a meaningful part in that equation
spk_0: from a marketing standpoint we've been using movie club actively with the studios as a way to help increase the frequency of moviegoing i think that out any reason why that will change posts pandemic in fact i think that our continued to to grow build and we've continued to is is mark mentioned is prepared marks who continue
spk_18: you to enhance the sophistication of our digital and social marketing capabilities with in tandem with the studios which provides for a more power 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
spk_3: promoting their content and having a win win for both both sides
spk_2: thank you both and mark wish you all the that bank robber or project your next question comes from gem golf with barrington research thanks you mentioned earlier about the gaming initiatives i was wondering if this is the moment in the sun for alternative current and considerations and if you plan to do this primarily through fail them and are there other things and wow the searches may be negotiating sports rights you can do sporting events in theaters also janitor very timely question thank you as the as you know we made an announcement earlier this actually late last week regarding gaming and we we've been we have been experimenting with a variety of gaming initiatives boot from a spectator standpoint and also from a participatory standpoint 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 we talked about was we did a
spk_19: yeah we did it twenty five city tests with critical role and and a dungeons and dragons to out the the results i mean the the there was a tremendous fan base that wanted to go and and is that are teetered we literally a sold that out we've also done
spk_18: 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 months or we participated with super league game in which of affectively put one city against another city and
spk_2: kids can play against each other in a gaming environment in our theater we've done a deal with mission control we are clearly looking at a sport and sporting events this is on top of what we're doing with other a alternative content suppliers like fathom it's not in yeah 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 ca content and gaming any sports
spk_3: and and
spk_2: separately on the t in theater opening said you've talked about are performing the industry but it's better than even opening are there any other additional larger markets that have yet to fully reopen that kid push this a little further or you're very cute additional theaters are going to open gym i'm sorry i'm sorry no i mean i know no new york was lagging for a while although i get another really on the areas where you might drive hunt you down where where there might be smart impetus for our performance
spk_7: no i don't think so and you know all the market for now opened across the board so
spk_18: you know what what we look for them everywhere is 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 survey thing but it at this point we don't anticipate any significant changes in our market share based only upon newmarket openings good everything is open at this point
spk_20: that i would add been open for multiple months a going to
spk_21: okay of canada my back candidates fully back up you know for
spk_2: for a while of eastern canada wasn't open to everybody opener okay and finally congratulations mark one thing and one final time here and you have either and thing one in your history or most the proud of you'd like to draw attention to and in this final you know that better that's a very interesting question gem so i actually didn't fully anticipated so i'll i'll give you my thought of in a candid wait you're 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 the a renewed sense of urgency but but when you walk into a company that leeway 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 one of the most important amenities that consumers were asking for were replying 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 eighteen and nineteen in order to to grow the amount of them recliner seats that we've had and then i think i'm also you know i want to throw a 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_7: survived but have thrived to a very difficult time frame and were well petition to come out of the marketplace and i guess maybe that the final thing is just that the team members that really supportive the effort here because this is a big time team sport and we've got thousands and thousands of people around the around
spk_0: the country are general managers and assistant managers and hourly workers have just gonna yeomans job through this whole pandemic and be unable to open our theaters back up early and be to be some of the first one to stay open and then you know didn't you ask me question that i wasn't there wasn't fully prepared from going to add one more thing because it it popped up in my head and that is in the midst of the pandemic when everything was was joe
spk_7: 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 these private watch party and and we really forge new ground there and literally brought back in addition to three million people most of them had been to a movie theater and six eight months and they can 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 times 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
spk_22: snacks the tap and 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
spk_2: no upgrading through the best wishes thank you your next question and from allen gold with loop capital they taking the question of a few for you to follow up on him questions about alternative for programming on you guys have right to either in market or out of market nfl game you put that in your ears sunday monday thursday night
spk_7: and can you can the little on the wrestling right so you are the potential wrestling right
spk_2: the nfl games
spk_3: right now are not available for in city of show in 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's 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 chad the cowboys then that could really become a big business we are look that damn at college sports as well or whether or 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 work we're just trying to experiment there and get a big high profile wrestling event and then be able to charge a premium interrupt the peters there was a active very active fan base that wants to come together and enjoy the big time rathlin and or theaters so we we've we've put our foot in the water we've had success and we plan to continue that and expand that into twenty two
spk_7: okay and sure on 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 yeah
spk_23: a big chunk of that was all the collections that we
spk_2: we we again for the film that down at launched towards the end of the month
spk_23: and that obviously will pay the film out over the subsequent month timeframe so just ballpark a show it say it's probably about fifty fifty in terms of the the performance first of the working capital it
spk_2: okay to mark one final windows question
spk_3: we look into the studio socket keep talking about flexibility another conference call clear with be films have to go to the theater you have any comment on whether the know what how much the champions league will be in the number of probably we're getting from studio you know opiate let's let's look at them you know liphook it gives me for example good who's been the most prolific i mean i when i was there we cut the line up from twenty theater pointing me pictures down to about ten or twelve and they're continuing to do that today most of those tend to be the pigs a wide release movies or warner brothers was making as many as twenty pictures are they
spk_7: they they've indicated that they're gonna continue to make ten to twelve which they would call it that big a high profile temple movies and then maybe they're going to make eight to ten that are good be more oriented more for a television h b o max released so i think it's going to be a combination the big movies will hold onto the longer windows the smaller movies
spk_24: 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 next along the way without a significant reduction in the biggest high profile movies which really drive the business
spk_25: and i would just add while they're in some talks have 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
spk_2: romantic comedy these mid tier films that at the more challenge creep endemic because of the more rigid window that those may have a new life hosts pandemic with a more flexible window because that more financially viable for the studios and then it as we talk about impasse cause you were also in addition to the alternative content discussion we have work or us also in conversations with
spk_26: 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_0: interesting
spk_27: our market just want to add it's been applied you're getting to know you got one even a question for you you give with your final publica non blockbuster film pick by have been tough for next year our war with out there right now
spk_2: but out the right now you know that kind of like that kind of like asking a parent to say which one of their children they like the best and that's always a mistake believe me to come from a veteran parents and a grandparent at this point you never do that so i'm going to i'm going to pass on now and because you can only make one person happy and a lot of people unhappy
spk_3: about that nine good
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 is from benjamin swinburn with morgan stanley
spk_3: this is daniel for ben where the current inflationary environment with been seeing and the strong consumer if you think this above average cap spending a sustainable at some level and you kind of touch and this already but the you the a you can raise ticket prices in twenty two and beyond above your hysterical rate thank you sure they for the question and yell you know our per cast of we'd definitely been pleased obviously with with the heightened per cap results and and like we said 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 although perhaps a third or so might normalize which is related more to that near term
spk_2: in consumption is consumers come back as well as some of the benefit we're seeing just from selling more of the food and beverage in hire purchase windows you know the and we've reduced our operating hours and of 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 mix lived on that so majority we believe will we will continue to
spk_3: 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 his ticket pricing
spk_28: we've certainly think that there will continue to be opportunities with regard to both are based ticket prices as well as our food beverage prices
spk_3: and we're also are starting to pursue more act a variety of new pricing tactics and we think dynamic pricing will be something that will present and opportunity over time at the moment where in the midst of a series of tests to ascertain how elastic cities have evolved during the course of the pandemic and how they're going to continue to evolve as we continue to
spk_0: merge from it
spk_2: which will help us to further optimize our based pricing levels of those now those test results might suggest that we have the ability to take prices up or in may suggest that it makes more sense to lower prices in certain instances all that being said i would say when it comes to the pricing in general we're going to continue to be careful with the pricing actions we have certainly as we're aiming to reef stimulate movie going because we want to make sure that we're not doing anything that could have a and adverse consumer perception
spk_0: we gotta look at it in light of all the inflation that's happening in the marketplace but we don't want to give the impression that that going to the movies is expensive so that approach has been really successful for us over time we're going to be opportunistic with pricing but we're going to continue to be careful
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