Cinemark Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to Cinemark's second quarter earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference call is being recorded. If you require further assistance, please press star 0 on your telephone. And I would now like to hand the conference over today to Chanda Brashears, Vice President of Investor Relations. Please go ahead.

Thank you, Carmen, and good morning, everyone. At this time, I would like to welcome you to Cinemark Holding, Inc.' 's second quarter 2020 earnings release conference call hosted by Mark Zarate, Chief Executive Officer, and Sean Gamble, Chief Financial Officer and Chief Operating Officer. In accordance with the safe harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters that are discussed by members of management during this call may constitute forward-looking statements. Such statements are subject to risks, uncertainties, and other factors that may cause Cinemark's actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are set forth in the company's SEC filings. The company undertakes no obligation to publicly update or revise any forward-looking statements. Today's call and webcast may include non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures can be found in today's press release, within the company's quarterly filing on Form 10Q, or on the company's website, investors.sunmark.com. I would now like to turn the call over to Mark Zarate.

Thank you, Chanda, and good morning, everyone. We appreciate you joining us to discuss our 2020 second quarter results. We hope that you all are all safe at this time and healthy. The format of our call this morning will be similar to that of the first quarter. I will kick off with high-level comments on our second quarter. Sean will then provide commentary on our liquidity position and financial results before turning it back over to me to discuss strategy and reopening plans, followed by our customary Q&A. This has certainly been a second quarter unlike any our company has industry, nation, or world has experienced in recent history. Our priorities over the past several months have been cash management and the heightened safety measures as we focus on liquidity, refortifying our balance sheet, and safely operating in the current health environment. With this, we've restructured our teams, established new cleaning and safety protocols, and enhanced our technology, just to name a few. all to ensure that when we once again welcome back moviegoers to our theaters, that we'll continue to provide them with extraordinary entertainment and experience that they expect from Cinemark with heightened peace of mind regarding their health and well-being. On our last earnings call, I shared with you a high-level look at how we've been preparing to operate in this new health environment. We have since announced the Cinemark standard, our greatly enhanced cleanliness, sanitizing, and safety measures, which are embedded in every aspect of the movie-going experience. These include following stringent disinfecting and sanitizing protocols, which will be overseen by a designated chief clean and safety monitor each theater shift, implementing social distancing measures, including staggered show times, installation of plexiglass, and seat buffering technology that automatically blocks adjacent seats to a party from once tickets are purchased to ensure social distancing within the auditorium, requiring face masks for all employees and guests, substantially raising fresh air rates of our building's HVAC systems by adding purge cycles and constantly using supply fans to increase the total volume of fresh outside air flowing into our theater. using vacuums equipped with new HEPA filters that trap at least 99.97% of microscopic particles, including COVID-19, and screening the health and well-being of our employees before every shift. With these comprehensive health and safety protocols in place, we believe we can safely operate our theaters while prioritizing the health of our employees, guests, and communities. We will continue to evolve these protocols based on current recommendations by the CDC and local government mandates, as well as key learnings from our test and learn theaters that we started reopening at the end of the second quarter. These test and learn theaters have been instrumental in defining the training, communication, and implementation and execution of the Cinemark standard. They offer us a firsthand customer and employee feedback to ensure that our protocols make practical sense for our teams, and the experience we offer is one that provides confidence and peace of mind for moviegoers. This feedback is critical in our more robust phased reopening plans. As such, this past weekend, we expanded our test from five to 15 theaters to deepen the refinement of our new protocols and enhance our ability to translate them across different markets. A heartfelt thank you to the managers and the individual teams of these test and learn locations for all they're doing to not only put these protocols into action, but for their insight and prompt key learnings, which is shaping how we prepare to welcome back moviegoers to Cinemark. As for the financial results of these 15 test and learn theaters, we have been very pleased, particularly given that we're only open on weekends with limited operating hours and showing library content or what we refer to as comeback classics, with welcome back pricing, $5 for adults and $3 for children and seniors. Attendance at our initial five test and learn theaters has grown by over 20% over the past three weeks alone, with essentially the same library content. And this past weekend, there were more than 500 theaters operating across the U.S., excluding drive-ins, Cinemark had 15 of these theaters open, representing 3% of the total theaters operating, and we generated 20% of the total nationwide box office. Impressively, Cinemark represented the top five grossing theaters during the weekend across the country. Moreover, we're also seeing impressive food and beverage trends in our test and learn theaters. Despite headwinds of welcome back discount pricing and limited offerings with essentially popcorn, soda, and candy available, we are consistently generating food and beverage per cap in excess of $5. Noteworthy, these test and learn theaters are more than covering our incremental variable costs relative to being shut down. These strong results are an outcome of meticulous planning and execution. that includes defining and successfully conveying the various aspects of the Cinemark standard to provide guests peace of mind in returning to our theaters, maintaining close contact with our addressable customer base of more than 12 million guests, providing exclusive promotion for our movie club members, developing highly effective digital and social marketing campaigns, enhancing our website and app with new functionality, securing substantial national and local media coverage, scheduling library film content with strong appeal to moviegoers, and creating food and beverage campaigns, to name just a few. Additionally, we've been able to link heavily on our highly successful Movie Club subscription program, which continues to provide a direct channel of communication and significant value to our most loyal moviegoers. This value is demonstrated by the fact that we have retained the vast majority of our movie club members while our theaters were closed for multiple months. Remarkably, our membership base of approximately 950,000 is in line with the figure we communicated in February prior to the pandemic. And our movie club members are already contributing to our results, representing approximately 25% of our attendance with our tests and learn theaters. Before I turn it over to Sean, Cinemark's discipline and consistency have been integral to our performance and success over the years, and that is especially true in today's environment. We have been thoughtful and thorough in defining our clean and safety protocols, pragmatic and nimble in determining the phased reopening of our theaters, and proactive and conservative financial strategy has provided us the wherewithal to sustain the prolonged closure of our global theaters associated with this pandemic. With that, I remain confident in Cinemark's ability to evolve and emerge stronger in this new post-COVID operating environment, particularly with the caliber of our field and service center teams who have worked relentlessly and persevered in the face of adversity. I'm proud of the team's resilience and tenacity, and I'm impressed by their ability to constantly adapt in this ever-changing environment. Sean will now walk you through our liquidity position and second quarter results before turning it back over to me to cover our reopening plans. Sean?