Cinemark Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Cinemark's fourth quarter and full year 2021 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. 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 hand the conference over to our speaker today, Chanda Brashears, Senior Vice President of Investor Relations. Please go ahead.

Good morning, everyone. At this time, I would like to welcome you to Cinemark Holding Inc.' 's fourth quarter and full year 2021 earnings release conference call hosted by Sean Gamble, President and Chief Executive Officer, and Melissa Thomas, Chief Financial 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 10-K, or on the company's website, investors.cinemark.com. I would now like to turn the call over to Sean Gamble.

Thank you, Chanda. Good morning, everyone. We appreciate you joining us for our fourth quarter and full year 2021 results. It has been a pleasure getting to know many of you during my time as CFO and COO, and I look forward to our ongoing relationships in my new role. As we announced last quarter, Melissa Thomas joined Cinemark as our new CFO in November, and I would like to formally welcome her to her first Cinemark earnings call. I'd also like to publicly thank and acknowledge Mark Cerati for his thoughtful collaboration in coordinating and supporting such an incredibly smooth leadership transition over the past several months. The theatrical exhibition industry made huge strides in its recovery throughout 2021, culminating in an exceptional fourth quarter, during which North American box office crossed the $2 billion mark for the first time since the onset of the pandemic. New film releases that led the charge included Venom Let There Be Carnage, Eternals, Ghostbusters Afterlife, No Time to Die, and of course, the record-setting Spider-Man No Way Home that now represents the industry's third highest grossing film in history. It's worth noting that all five of these films had an exclusive theatrical window. Cinemark contributed to these box office results in a big way. On the release of Venom, we set a record for the largest October opening weekend ever for a single film, pre and post-pandemic. And while number three for the industry, Spider-Man has now become our number one highest-grossing film of all time, driven by our sustained outperformance on this title. The fourth quarter's box office success underscores enduring consumer appetite and demand to experience great films in an immersive, shared, cinematic environment. Over 48 million guests visited our global Cinemark theaters in the fourth quarter, and that consumer enthusiasm translated into strong results. On a worldwide basis, our fourth quarter attendance grew 57% compared to 3Q21. Once again, Cinemark surpassed North American industry box office recovery this past quarter, over-indexing by more than 700 basis points when comparing 4Q21 box office results against 4Q19. Our Latin American admissions also outperformed their corresponding industry results by a similar degree. These significant global attendance in box office results flowed through to our bottom line. Adjusted EBITDA in the fourth quarter was positive $140 million. And that sizable 4Q result drove positive adjusted EBITDA of $80 million for the whole year. Moreover, exclusive of one-time benefits, we generated positive cash flow during the fourth quarter in both the US and Latin America, another meaningful milestone in our company's recovery from COVID-19. I'd like to commend our incredible global team for their outstanding planning, execution, and dedication. to deliver these tremendous results. Our Cinemark team has faced monumental challenges during the pandemic, and what they have accomplished and what they continue to accomplish through their endless perseverance, resourcefulness, strategic thinking, and optimism is nothing short of astounding. While strong film content was certainly a key component of our fourth quarter success, exceptional operating performance and the ongoing execution of our strategic initiatives were also significant factors. As we look ahead, our overarching focus remains unchanged, and that is to maximize attendance in box office while actively pursuing ancillary revenue opportunities. Over the course of 2021, the world made tremendous progress combating the ongoing effects of the pandemic, although for the time being, the impact of its lingering presence, particularly on our industry and business, still remains. As a result, as we move forward in 2022, our priorities will continue to focus on, first, effectively navigating the ongoing pandemic, second, fully reigniting theatrical exhibition, and third, positioning our company for ongoing success in the evolving media landscape. With regard to our first priority of effectively navigating the pandemic, I'm exceptionally proud of the accomplishments our Cinemark team has achieved over the past two years. These accomplishments include swift and appropriate actions that were taken to preserve cash, minimize expenses, and improve our liquidity profile, as well as refine our operating practices such as streamlining processes, driving new efficiencies, and strengthening operating hours management. We defined, implemented, and have consistently executed a wide range of new health and safety protocols to protect our guests, communities, and employees. Additionally, we effectively reopened our entire global circuit and remained open while dealing with frequent fluctuations in content supply and government restrictions. Our team also continues to skillfully manage through the challenging labor and supply chain dynamics, just to name a few. We have provided examples of the meaningful impact these actions have had throughout the pandemic during prior calls, and their benefits clearly continued in the fourth quarter as demonstrated by our sustained market share advances compared to 2019, guest satisfaction scores averaging 90%, and as I mentioned a moment ago, positive adjusted EBITDA and cash flow. That said, our work navigating the pandemic is not done yet. At the end of 2021 and throughout most of the first quarter to date, our industry, alongside many others, was affected by another surging COVID headwind brought upon by the Omicron variant. Fortunately, however, we are encouraged by the recent decline in new cases around the world, as well as commentary by a growing number of health experts who believe the virus may be transitioning from a pandemic to an endemic. Signs that disruption from the virus on our day-to-day lives may finally be subsiding are evident in easing government restrictions, which are now fairly minimal across the U.S. with regard to moviegoing, as well as consumer sentiment, which has improved to 75% of moviegoers indicating they are comfortable returning to theaters today and over 80% within the next month. Theatrical exhibitions' ongoing recovery remains highly contingent on the state of the virus, government restrictions, and consumer sentiment, and all of these factors are now moving in a favorable direction. At the same time we have been navigating through the challenges of the pandemic, we have also been actively working to reignite theatrical moviegoing, our second key priority. First and foremost, this effort has included actively collaborating with our studio partners to bring new, compelling first-run film content back into our theaters on a steadier release cadence. While health concerns and availability of content have clearly been two of the largest challenges during the pandemic, so too has been the inconsistent film calendar with large gaps between commercial releases. While Omicron caused another blip in the return to a more normalized release pattern, we are highly optimistic about the film slate for the rest of the year. New releases this past weekend, Uncharted and Dog, both exceeded projections, and we expect industry box office will continue to ramp and accelerate with the release of The Batman next week, followed by a long list of additional highly anticipated titles throughout the year, including Doctor Strange Into the Multiverse of Madness, Top Gun Maverick, Jurassic World Dominion, Lightyear, Minions, The Rise of Gru, Thor, Love and Thunder, Black Adam, Aquaman and the Last Kingdom, Black Panther, Wakanda Forever, and the long-awaited next installment of Avatar. And these are just a handful of examples of the franchise films that are lined up for 2022. not to mention the broad range of additional family, drama, comedy, and other genre films that are interspersed throughout the year, providing varied offerings for all audiences. Furthermore, I'm pleased to report that the majority of films being released theatrically this year will include an exclusive window, with most larger and commercial titles maintaining a 45-day window. Demonstrated yet again in the fourth quarter of 2021, And this past weekend, a theatrical window continues to produce bigger events, larger cultural moments, and increased box office results with reduced piracy. It also continues to provide a platform that establishes stronger emotional connections with content, unlike any other distribution channel. And those connections lead to more sizable brands, franchises, and promotional value for all other windows. Great films are an essential part of reigniting theatrical moviegoing, and so too is compelling marketing that increases consumer awareness, sentiment, and ticket sales. To that end, we will continue to lean heavily into a myriad of digital, social, onscreen, and loyalty strategies throughout 2022 to target a wider range of consumers, increase moviegoing frequency, and grow our Cinemark audiences. Over the past few years, we have significantly enhanced the scale of our digital marketing capabilities and reach. We are now directly connected to more than 20 million addressable guests across our global circuit. And by way of these connections and the comprehensive omnichannel network we have built, we are consistently delivering billions of impressions each month via social media engagement, personalized emails, and earned media stories showcasing the benefits of the Cinemark moviegoing experience. These marketing actions have not only been helping to revive moviegoing, but have also increased loyalty, which we've witnessed in the ongoing strength of our market share results and Movie Club program. After proactively pausing Movie Club memberships at the onset of the pandemic, we fully reactivated the program in the second half of 2021. and we are thrilled to report that we have already returned to new monthly membership gains. During the fourth quarter, we added 40,000 new Movie Club members, bringing our membership base to within 1% of its pre-pandemic level at approximately 940,000 members. We continue to receive tremendous feedback about our unique transaction-based subscription program that allows members to roll over unused monthly credits, share credits with friends and family and receive a meaningful 20 discount on concessions member feedback has also been resoundingly positive with regard to movie club platinum a new earned premium tier that we launched in september by the end of the year more than 100 000 members achieved this heightened status which they will enjoy throughout the entirety of 2022. And that brings us to our third key priority, which is positioning our company for ongoing success in the evolving media landscape. We are fortunate to already have a head start with regard to positioning ourselves for the future, thanks in part to the financial discipline we have consistently exercised for years and the sustained investments we have made in premium amenities, maintaining our circuit, marketing capabilities, and operating excellence. Examples include our luxury lounge or recliner seats in over 65% of our U.S. footprint, nearly 300 premium large format XD and IMAX auditoriums worldwide, immersive D-box motion seating across 250 of our theaters, the best sight and sound technology in the industry, and enhanced food and beverage offerings throughout 75% of our global circuit. Furthermore, we continue to simplify and enhance our transactional processes for tickets and concessions, including our recently deployed Snacks in a Tap online ordering platform that allows guests to purchase food and beverage ahead of time and simply pick up their order upon arrival to our theaters or have it delivered directly to their seats. These amenities, innovations, and capabilities provide us considerable tailwind as we sort through evolving opportunities and implications driven by the pandemic and near-term shifts in the distribution landscape. As we concentrate on positioning Cinemark for ongoing success within this dynamic environment, we are focused on five primary strategies. First is providing our guests an extraordinary experience. Doing so is fundamental to our business and Cinemark has a solid reputation and long history of delivering this objective. That said, we are investing time, energy, and resources to take the experience we provide our guests to the next level. Our goal is to be top of mind when consumers think about world-class guest service, quality, value, ease, and a premium entertainment destination. Second is building audiences with an increased focus on attracting a wider range of consumers by expanding the variety of content we offer, as well as utilizing our industry leading marketing capabilities to drive consumer demand and conversion as described a moment ago. Third is growing sources of revenue by creating incremental sales opportunities, such as continuing to expand food and beverage offerings, honing recently implemented e-commerce and theater design initiatives, optimizing pricing, testing new experiential entertainment concepts, and enhancing Cinemark partnerships and brand tie-ins. Fourth is streamlining processes, which essentially means executing the aforementioned strategies as efficiently as possible and includes initiatives such as workforce management, continuous improvement, and utilizing advanced tools, practices, and platforms to free up time spent on administrative tasks and increase focus on our guests, teams, and productivity. And fifth is optimizing our footprint. This strategy involves actively assessing our circuit, as well as domestic and international markets, to determine where it is most advantageous to grow, recalibrate, and strengthen our circuit to deliver sustained long-term returns. We believe these areas of focus are best suited to steer us through expected ongoing fluctuations within the media landscape in the near term and position us for continued success over the long haul. In summary, while our recovery from the pandemic is still ongoing, we are highly encouraged by recent improvements in the state of the virus and associated consumer sentiment. Fourth quarter attendance demonstrated that consumer enthusiasm for the shared, immersive, theatrical moviegoing experience remains strong, and films maintain the ability to become larger than life and generate significant box office results, even in the current environment. As we look ahead, we remain optimistic about the future of theatrical moviegoing and cinema. We are working diligently to position ourselves for ongoing success in the evolving media landscape and to deliver long-term value for our shareholders, guests, communities, and employees. With that, I will now pass the call to Melissa, who will provide further information about our fourth quarter financial results. Melissa?