Cinemark Holdings Inc.

Good day and thank you for standing by. Welcome to CenterMark's second quarter earnings call. At this time, all participants 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. If you require any further assistance, press star 0. I would now like to hand the conference over to your speaker today, Chanda Brashears, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Stephanie, and good morning, everyone. At this time, I would like to welcome you to Cinema Holding, Inc.' 's second quarter 2021 earnings release conference call, hosted by Mark Zarate, 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 Securities Litigation Reform Act of 1995, certain matters that are addressed 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 filing. 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 10-Q 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 remain healthy and well. We appreciate you joining us to discuss our 2021 second quarter results. I'm pleased to report that following the start of the ramp-up of our industry and business in the first quarter, the recovery has progressed significantly at a faster rate than we expected during 2Q. In fact, our recovery improved so significantly during the quarter that our domestic operations delivered positive adjusted EBITDA for the first time since our theaters were forced to temporarily shut down last year, well ahead of the pace we were anticipating, even when we met last May. Our domestic adjusted EBITDA recovery was propelled by a resurgence in our attendance that grew by almost 200% compared to the first quarter results as COVID cases became more contained, a wider array of commercial film content became available, and we reopened the entirety of our domestic circuit. Furthermore, we continue to see our domestic average ticket price and food and beverage per caps again reach new all-time highs. Both of these results benefited from significant pent-up demand as our moviegoers eagerly indulged in concessions and premium formats upon returning to our theaters. They were also boosted by our ongoing innovation and strategic initiatives that aim to simplify the buying process, as well as capitalize on upselling opportunities, such as our recently rolled out Snacks in a Tap online ordering platform. Additionally, we have resumed our pre-COVID outperformance trend and substantially over-indexed the North America Industry Box Office. Despite representing only 12% of the total industry screens, Cinemark's second quarter North America Industry Box Office market share was 17%, again, significantly surpassing our average of slightly less than 13%. While we expect our market share will continue to become more normalized in the third quarter as Canada fully reopens, we will remain aggressive in our tactics to maintain a meaningful portion of our market share growth. One of our strategies to maintain market share growth is our unique industry-leading transaction-based subscription program, Movie Club. We have now reactivated billing with two-thirds of Movie Club accounts without a significant impact on our overall membership base, which remains at more than 950,000 members and is consistent with the figures we reported prior to the pandemic. Turning attention to our international footprint for a moment, while Latin America continues to lag the U.S. by two to three months considering the status of the virus, we also started to see our international operations turn the corner during the second quarter as COVID cases started falling across the region with vaccinations becoming more widely available. By the end of the second quarter, Over 75% of our international screens were open and operating, and that figure now exceeds 95% as of today. Furthermore, all data points and financial metrics are trending in the right direction, with all countries nearing positive adjusted EBITDA results, even in the midst of reduced capacities and restricted operating hours. To that end, like the U.S., we actually generated positive adjusted EBITDA in selected countries during the quarter. And on a global basis, we continue to more than cover our incremental variable costs associated with being open, as we have consistently done since we began reopening more than a year ago. Importantly, we are approaching positive cash flow generation, which we expect to achieve before the end of the year, based on the second quarter's trajectory. That said, we've consistently stated The rebound of this theatrical exhibition is contingent upon four key global considerations. One, the status of the virus and vaccinations. Two, government restrictions. Three, consumer sentiment. And four, availability of new film content. While we are closely monitoring the status of the Delta variant and rising COVID infection rates, we remain confident in the resurgence of the theatrical exhibition business as the virus is contained. We have witnessed that phenomenon in other parts of the world and have now experienced it firsthand in our second quarter results here in the United States. Beyond these near-term recovery drivers, we believe numerous factors bode well for the long-term health and stability of theatrical exhibition. To start, Theatrical Movie Goey provides a premium out-of-home entertainment experience that people simply love. We repeatedly receive that feedback from our guests particularly as they return to Cinemark theaters for the first or second time since the pandemic. It is simply the best way to view content. Watching a movie on our big screens, fully immersed without distraction and with a heightened sight and sound technology creates a shared cinematic experience and emotional connection with content that cannot be matched anywhere. And the blockbuster content coming during the balance of this year and next is truly outstanding with something for everyone. For families, we have Sing To, Hotel Transylvania, and Disney's Encanto. For superhero fans, we have Marvel's Eternal and Spider-Man New Way Home. And for action seekers, we have James Bond in No Time to Die, Ghostbusters, Matrix 4, and the long-awaited return of Tom Cruise in Top Gun Maverick. And the films I just named are all in this year's fourth quarter. The film slate in 2022 includes is full of blockbuster titles with broad consumer appeal. I recently listened to a podcast in which renowned film producer and director J.J. Abrams made a statement that really resonated with me, and I thought it worthwhile to share with you today. He said, and I quote, you can see a movie at home, but you can only experience it in a movie theater. He went on to add that there is power and a memory that has been made in a movie theater that you just don't get when you're sitting at home. We cannot agree more. This statement embodies the premium out-of-home entertainment experience that is unique to the cinema and has not changed even as in-home delivery technologies have advanced over the years. Beyond the premium consumer experience, theatrical releases also remain a key contributor in differentiating content, building brands, and maximizing profitability for the studios over the long haul. Historically, theatrical exhibition has delivered approximately half of a film's worldwide revenue on major releases. Furthermore, as a significant portion of customers who view movies in theaters subsequently consume them again at home, the content owners receive multiple bites of the apple with a windowed release pattern, which maximizes their profitability. And because the theatrical release provides a stamp of quality and truly eventizes a movie, all additional distribution channels down the line are lifted. These relationships and results have remained consistent again and again over time as new evolutions of technology and distribution have been introduced into the home. A successful theatrical release is complementary and additive to the overall content owner's revenue pie and elevates the perceived value of the movie in subsequent release channels. I continue to firmly believe an exclusive theatrical window is critically important to the overall media landscape and remain confident regarding the long-term prospects for our company and the overall industry. I'm proud of the Cinemark team and all they've accomplished both during the second quarter and throughout the pandemic. Their agility, innovation, and perseverance enabled us to be opportunistic in a most challenging environment and continues to position us for ongoing success. Before I turn it over to Sean, I'd like to take a brief moment to comment on the executive transition announcement we made last week. After the most amazing six years of my career, I will be retiring from Cinemark's management team, effective at the end of this year. and will continue to serve on our board of directors. After committing more than four decades to this industry, I'm ready to shift gears a little. I'd like to devote more time to my personal interests, and I'm looking forward to focusing my attention less on the daily operations and more at the strategic level, particularly through the six boards I serve on, two of which are public companies, one private, and three philanthropic. My initial commitment was to serve as Cinemark's CEO for three years. and I have more than doubled that and enjoyed every moment. Truth be told, I initially planned to retire during 2020, but when COVID hit, I couldn't possibly leave in the midst of a pandemic. Clearly, we had no idea of how long it would last or the lingering impact it would have on our industry and our company. As theatrical moviegoing has shown signs of resurging, and Cinemark has consistently demonstrated its ability to flex and adapt in an ever-involving, environment now felt like an appropriate time to formally begin this transition. While I don't think retiring from day to day is ever easy, what makes this decision especially difficult is the passion I have for this industry and our company, as well as my optimism regarding the resurgence and long-term prospects of theatrical moviegoing. I will also greatly miss the frequency of interactions with industry relationships I forged across the globe. The Cinemark Board of Directors takes succession planning very seriously, and we conducted a diligent and thorough process and ultimately determined that there was no one better to help guide and steer the company than our very own Sean Gamble, who you all know as our Chief Financial Officer and Chief Operating Officer. Sean was promoted to President last week and will be named CEO and President effective January 1, 2022, following my retirement. Sean has been my right hand and an amazing partner throughout my six plus years at Cinemark. His background as the CFO of Universal Studios has been a tremendous asset to our company. In addition, his significant tenure at the General Electric Company with his proven track record of strategic thinking, vision setting, leading change, improving processes, and driving efficiencies has proven invaluable to Cinemark over the course of the past several years. but especially during COVID. As part of the succession planning, I've been working with Sean and helping to prepare him for quite some time now in anticipation of this announcement and to ensure a seamless transition. We'll continue to work side by side over the course of the next five months. Beyond that, I'll continue to serve as a member of Cinemark's board of directors. I would now like to turn the call over to Sean and he will walk you through our liquidity position, and two Q results. Sean?