Cinemark Holdings Inc.

you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to turn the conference over to your speaker today, Chanda Brashears, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, Natalia. Good morning, everyone. At this time, I would like to welcome you to Cinemark Holding, Inc.' 's fourth quarter and full year 2020 earnings release conference call, hosted by Mark Cerati, 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 applied 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 on today's press release, within the company's quarterly filing on Form 10-K, or on the company's website, investors.cinemark.com. I would now like to turn the call over to Mark Zarate.

Thank you, Chanda, and good morning, everyone. We hope you and your families are healthy and well during this very challenging time. We appreciate you joining us to discuss our 2020 fourth quarter results. The format of our call this morning will be similar to that of previous calls this year. I'll kick things off with a high-level overview of the current state of our company and industry, and then Sean will provide commentary on our liquidity position and and fourth quarter financial results before turning the call back over to me for a further update on our strategic focus and reopening status. We will then open up the line for our customary Q&A. It's almost unfathomable that one year ago we were reporting Cinemark's fifth consecutive year of record results with the North America industry touting the second highest grossing box office of all time. Our earnings Call this time last year reflected an incredibly strong company with a history of discipline and consistency, operating in a stable and mature industry. It goes without saying that our environment has drastically changed. COVID-19 has caused significant distress in multiple industries, including the exhibition industry, and tested the strength and resiliency of our company over the course of the past 11 months. I'm immensely proud to say that Cinemark is still a strong company operating with balance, discipline, and consistency while adapting to our current circumstances. This past year has only reinforced that Cinemark has tenacity, perseverance, and pure grit, not to mention an ability and a willingness to think quickly and move nimbly as we evolve and persevere this unpredictable and ever-changing environment. While we have provided updates throughout the year that underscore how Cinemark has continued to adapt, we thought it worthwhile to outline the key actions that have enabled us to reactivate our theaters and generate positive variable cash flow. Our Project Phoenix relaunch initiative, with its structure, rigor, and organization, has been truly exceptional. Initially tasked with researching and defining our cleaning and safety protocols, and then coordinating the relaunch of nearly 350 theaters in the U.S., and more than 200 in Central and South America. our team implemented a robust test and learn process and methodical phased rollout. It is because of this meticulous planning and preparation that Cinemark was one of the first exhibitors to reopen and has largely been able to remain open, government restrictions notwithstanding. At the end of the year, approximately 75% of our U.S. circuit was reopened, relative to just 45% of North America industry. Similarly, in Latin America, we had approximately 65% of our theaters operating. In both regions, we remain open where allowed and efficiently close and reopen as government restrictions change with the fluctuating COVID status. With our foundation of disciplined processes and constant evaluation, the Cinemark team has become quite adept at quickly reacting to changes in regulations. While there were many factors driving our successful reopening, our theater general managers were crucial in every aspect. We kept our GMs on staff throughout the pandemic to maintain our theaters while they were closed, which was no easy feat, and then prepare them for reopening. And because our GMs consistently live one of our core values, passion for people, they maintained a strong rapport with their hourly theater employees that had been laid off during the shutdown. As such, a vast majority of team members hired as we began reopening were previous Cinemark employees. It goes without saying how much time and money this saved our company in training, education, background checks, etc., And our theater teams have been proficient in the execution of the Cinemark standard and protecting the health and safety of our employees, guests, and communities. Since we began reopening in June, we've consistently received 96% guest satisfaction scores on Cinemark protecting their health and safety. This simply could not be achieved without the meticulous research and planning by the Project Phoenix team and the impeccable execution of our theater staff. And as we prepare for a steady stream of new film content, our film and marketing teams have been creative and resolute in securing relevant and varied library content and developing promotional campaigns to keep our guests engaged and entertained, including promotions around Halloween, Thanksgiving, Christmas, New Year's Eve, to name just a few. Cinemark has also excelled in directly reaching our consumers, notifying them that we're open, highlighting films they can see, showcasing food and beverage promotions, and, of course, emphasizing our clean and safety protocols. We have been aggressive in every communication channel, including digital, email, social, public relations, to inform consumers and entice them to visit our theaters. Our private watch parties have been a key element of those promotional campaigns and continue to grow in popularity. To date, we have hosted more than 150,000 private watch parties. As the average number of attendees is 13 people, this represents more than 2 million moviegoers that have experienced the Cinemark standard for themselves just with PWPs. During the fourth quarter alone, the private watch parties represented 24% of our attendance and box office. And one interesting fact here, more than half of the private watch parties during the fourth quarter were driven by library content, led by family favorite comedy, Elf. This library content could be watched for free at home on the sofa. But instead, consumers chose to pay $99 to see it in a theater. This reinforces what we have consistently stated. People are yearning for normality, escape, and a fun, out-of-home opportunity. Movie theaters provide all that and more in a safe and clean environment. And something else that you can get only in the theater is that craveable movie theater popcorn. Our food and beverage team has been actively engaged in initiatives to sell more fan-favorite popcorn, refreshing soda, and a wide variety and assortment of candy. In fact, our 4Q 2020 per cap of $5.42 was on par with our 4Q19, driven by increased incidence rates in these core categories, despite fewer, more streamlined concession offerings and strategically discounted welcome back pricing on selected items. Another exciting initiative we've started rolling out and that shows considerable early promise is Snacks in a Tap, our mobile and online concession ordering service, which enables moviegoers to order their food and beverages in advance and either pick them up at the counter upon arrival or have them delivered directly to their seat for a nominal fee. About 70% of our domestic service of our domestic circuit already features snacks in a tap functionality, and we've been highly encouraged by the initial results. We look forward to utilizing our key learnings from the initial rollout process to bring this platform to moviegoers across our domestic circuit during the first half of this year. And to assure that we are maximizing attendance, revenue, and cash flow, we've refined our processes to be more efficient and accelerated productivity measures to further streamline our business. We remain laser-focused on fine-tuning operations and protocols, such as right-sizing our operating hours and staffing to align with film content and consumer demand. And all these strategies combined have led to some remarkable results in consideration of the headwinds we are facing. Notably, we are continuing to more than cover our incremental variable costs associated with being open, and we are burning less cash open than we would relative to being closed. This requires an immense amount of focus and analysis by our service center in conjunction with incredible execution by our theater teams. Furthermore, we're seeing the impact of these actions in our box office results. During the fourth quarter of 2019, Cinemark theaters represented 7% of the North America industry screens and generated 13% of the overall box office. Fast forward to the fourth quarter of 2020, Cinemark constituted 11% of the industry screens with over 20% of the domestic box office. While we fully recognize that a portion of this market share growth is due to some competitors remaining closed, we will be aggressive in our attempts to retain a meaningful amount of this share shift on a go-forward basis. And again, we feel well-poised to do so given our consistent historic investments to maintain a high-quality experience with upscale amenities. We have the highest recliner penetration among the major players, with 64% of our auditoriums featuring luxury loungers. 75% of our circuit is equipped with expanded food and beverage capabilities. Our XD brand is the number one exhibitor premium large format brand with 278 screens across our global platform. We also have a solid reputation of top-notch guest service. And our movie club, our unique transactional-based subscription program, has more than 950,000 members. Before I turn the call over to Sean, I would like to share that in my 30 plus years in the entertainment industry, I have never been more proud or impressed by my colleagues than I am with the CentiMark team. We are all working relentlessly toward common goals. navigating the pandemic and setting ourselves up to once again thrive and excel in a post-COVID environment. With every crisis, there's an opportunity, and this team has done all they can to seize that opportunity. Sean will now walk you through our liquidity position and 4Q results before turning it back over to me to cover our reopening status.