Cinemark Holdings Inc.

Greetings and welcome to the Cinemark Holdings first quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Chandra Brashears, Senior Vice President, Investor Relations. Thank you. You may begin.

Good morning, everyone. I would like to welcome you to Cinemark Holding, Inc.' 's first quarter 2023 earnings release conference call, hosted by Sean Gamble, President and Chief Executive Officer, and Melissa Thomas, Chief Financial Officer. Before we begin, I would like to remind everyone that statements or comments made on this conference call may be forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations, or intentions. These matters involve certain risks and uncertainties. The company's actual results may materially differ from forward-looking projections due to a variety of factors. Information concerning the factors that could cause results to differ materially is contained in the company's most recently filed 10-K. Also, today's call may include non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's most recently filed earnings release, 10-Q, and on the company's website at ir.cinemark.com. With that, I'd like to turn the call over to Sean.

Thank you, Chanda. Good morning, everyone. We appreciate you joining us today to discuss our first quarter 2023 results. Over the past year, we've expressed our optimism about the future of theatrical exhibition based on positive sustained trends in consumer moviegoing behavior, an improving volume of wide releases, and forward-looking commentary by our existing and emerging studio partners regarding the value a theatrical release provides their film assets. We've also highlighted the advantage position Cinemark maintains within our industry on account of our stable financial health, resilient operating capabilities, and plentiful opportunities ahead. As we're now four months into 2023, we could not be more encouraged by the ongoing strength of these trends as well as our company's and industry's continued recovery. During the first quarter, North American box office grew by almost 30% versus 2022, propelled by strong carryover from the global sensation Avatar the Way of Water and animated success Puss in Boots to Last Wish, as well as a diverse range of crowd-pleasing hits. Top performing films included Creed III, Scream 6, and John Wick 4, which each broke records, delivering all-time high results for their franchises. Horror film Megan, which far exceeded expectations, generating over $95 million of domestic box office. Action-adventure saga Dungeons & Dragons Honor Among Thieves. The highly successful faith-based film Jesus Revolution. The well-received adult drama A Man Called Otto. Comedy thriller Cocaine Bearer. and Ant-Man and the Wasp Quantumania, which drove over $200 million of domestic box office with close to half a billion dollars worldwide. There truly was something for everyone in the first quarter. And better than anticipated box office performance during 1Q continued right into April, which yielded the third largest result in history for that month. April box office was up almost 55% year over year, and within approximately 5% of 2017 to 2019's pre-pandemic average, which included two of the highest grossing movies of all time with Avengers Endgame and Avengers Infinity War. Along with positive flow through from the first quarter titles, new releases that helped drive April's success included the critically acclaimed Air, which was Amazon's first full-scale wide release under their Amazon Studios label, since they began making a larger push into theatrical exhibition this year. Horror film Evil Dead Rise, a title originally produced for streaming that is now on pace to deliver over $60 million in domestic box office. A wide range of small to mid-tier titles, such as Renfield, The Pope's Exorcist, and The Covenant, which helped drive April's overall content volume to a level consistent with pre-pandemic output. And of course, the record-setting Super Mario Bros., Universal's and Illumination's biggest animated title ever, which has already become the second largest domestic animated film of all time. Year-to-date results continue to validate that consumer enthusiasm to experience movies and varied forms of content in a shared, larger-than-life theatrical setting is as strong as ever. There is simply no better way to amplify excitement and cultural relevance for films than with an exclusive theatrical release. A perfect illustration of this sentiment is the myriad of fans who dressed up like Mario, Luigi, and Princess Peach to come see Super Mario Brothers over the past four weeks. I happened to be touring a range of our theaters during the film's opening and loved not only seeing, but feeling the shared energy of our guests enjoying that moment together, which lifted the entire audience to a heightened level of engagement. A similar energy was present at Caesars Palace in Las Vegas last week during CinemaCon, our industry's annual trade show event when exhibitors, studios, vendors, and various members of the creative community congregate to view highlights of upcoming films as well as discuss pertinent industry matters. The consistent message delivered by studio executives, filmmakers, and movie stars during that convention could not have been clearer. It was one of overwhelming belief in and commitment to theatrical exhibition as the best way to present films, delight fans, and maximize promotional and financial value for movies. Importantly, that belief is now backed by data, analysis, feedback, and financial results. Moreover, there was a collective recognition that a movie theater's immersive communal environment creates a magic and inspiration and meaningful connection to stories that is unlike any other form of content distribution. Personally, I was overwhelmed by the adamant commentary from our studio partners, as well as the overall strength of material that was showcased, which is some of the best collective content I've seen over the past decade at CinemaCon. Across every genre of film, every demographic, every studio, The movies on display for the next year and a half look sensational. In the family category, we were shown spectacular footage from The Little Mermaid and Wish, as well as a full 20 minutes of Pixar's upcoming release, Elemental, which looks fantastic. We also saw stunning scenes from Wonka, Barbie, and Haunted Mansion, as well as exciting early glimpses of Migration, Trolls Band Together, and Teenage Mutant Ninja Turtles, Mutant Mayhem, just to name a few. Superhero films were well represented with compelling first-time reveals for Blue Beetle, Aquaman and the Lost Kingdom, The Marvels, Kraven the Hunter, and Guardians of the Galaxy 3, which opens this weekend at a Cinemark near you. We also got an extended 15-minute preview of Spider-Man Across the Spider-Verse, which looks absolutely tremendous, and we had the opportunity to screen The Flash in its entirety. While we've been asked not to provide any specifics about that film, I can tell you that studio commentary suggesting The Flash is by far the best DC movie to date is very well justified. Action audiences are also sure to be thrilled based on the extended sequences we saw of Indiana Jones and the Dial of Destiny and Mission Impossible Dead Reckoning Part 1, which suggest these franchises have been taken to an entirely new level. Likewise, new trailers for Fast X, Transformers Rise of the Beasts, Hunger Games The Ballad of Songbirds and Snakes, Gran Turismo, and The Equalizer 3 appear set to fully captivate moviegoers. Along those lines, suspense and horror fans are bound to be clinging to their luxury loungers based on the terrifying reels we were shown for The Nun 2, The Exorcist, and A Haunting in Venice, as well as the full screening that was presented of The Boogeyman which received rave reviews for the intensity of its scare factor. And the list doesn't end there. We saw a diverse range of riveting footage from high-scale spectacle films, including Christopher Nolan's Oppenheimer, Denis Villeneuve's Dune II, and two epic sagas from Apple Films, which include Martin Scorsese's Killers of the Flower Mood, starring Leonardo DiCaprio, and Ridley Scott's Napoleon, starring Joaquin Phoenix. R-rated comedies are back with Joyride, No Hard Feelings, and Strays, starring Will Ferrell and Jamie Foxx. There's a new sequel to My Big Fat Greek Wedding Coming, ample specialty films, inspirational stories, and a phenomenal-looking musical adaptation of The Color Purple that was presented by Oprah Winfrey. And what's truly remarkable is all of the films I just described are releasing this year in 2023. I haven't even touched on the wealth of material that was shared for 2024, which was equally as promising. Our entire team walked away from CinemaCon as encouraged as we've ever been about the pipeline of films that lies ahead. In addition to the positive news coming out of Las Vegas last week, as well as this year's solid box office results that have been exceeding expectations, we're also pleased to report that that 2023's total volume of film releases is tracking better than anticipated. Our previous estimate of 100 to 105 wide releases for the full year has already been surpassed with 110 titles now dated and second quarter volume resembling pre-pandemic levels. While film volume in the third and fourth quarter is still down approximately 15 to 20%, that gap has also narrowed thanks to support from the recently dated Apple films I mentioned a moment ago, as well as multiple new additions from various studios. Based on indications we continue to receive from our traditional studio partners regarding their targeted levels of production, as well as Amazon's expressed intention to ramp to 10 to 12 films per year, and Apple's growing theatrical aspirations, we remain highly optimistic about film volume recovering close to or better than pre-pandemic levels over the next couple of years. Our enthusiasm regarding our industry's ongoing rebound also holds true for Cinemark, and our first quarter results certainly reinforce that perspective. We entertained 43 million moviegoers worldwide in one queue, which was up 30% year over year. We generated total revenue growth of 33% and a sizable increase in adjusted EBITDA of over 240% to $86 million with an adjusted EBITDA margin of 14.1%. Furthermore, we continue to be the only major U.S. exhibitor to have achieved and maintained a meaningful increase in market share since reopening, which remains up approximately 100 basis points compared to our pre-pandemic average. As a result of our improving financial strength, our strong first quarter results, and our positive outlook regarding the remainder of 2023 and beyond, we are pleased to report that on Monday, we paid down a further $100 million of the incremental debt we secured during the pandemic. Our solid first quarter results and subsequent retirement of debt this quarter is a direct byproduct of the continued improvement our industry is making in its recovery, combined with the positive impact we are deriving from our strategic actions to maximize attendance in box office, drive overall top line growth, and improve our productivity while delivering top notch entertainment for our guests. These actions include a wide range of initiatives, beginning with enhancing various experiential aspects of our business, such as making further advances in our guest services practices, simplifying the transactional ease of ticket and food and beverage purchases, and expanding our premium offerings like luxury seating, large format auditoriums, and elevated sight and sound technologies. Our strategic actions also include efforts to expand our audiences, which range from utilizing sophisticated targeted marketing techniques to leveraging highly valued and engaging loyalty strategies like our industry-leading movie club program. to identifying and growing new sources of content that capture a broader base of consumer interests, to further strengthening our utilization of data analytics as we optimize our pricing and showtime planning decisions. We also continue to place a significant emphasis on growing new and existing channels of revenue. Examples include further scaling up our online food and beverage ordering platform, optimizing the range and assortment of products we offer, growing merchandise sales in theater and online, developing new third-party distribution partnerships, and increasing monetization of unused physical spaces in our theaters. And while we are pursuing all of these varied revenue generating opportunities, we are also actively working on productivity measures to do more with less. Initiatives in this regard include further enhancing our workforce management tools and processes, simplifying and strengthening inventory management, expanding our continuous improvement and automation projects more extensively across our organization, and leveraging more advanced sourcing and procurement strategies. We are already realizing material benefits from these wide-ranging initiatives, and we are highly enthusiastic about the positive incremental impact they will provide going forward. Furthermore, as a result of these enhancements, and the disciplined way we have operated our company and managed and invested capital over the years, Cinemark remains situated to capture an outsized portion of our industry's ongoing recovery. This advantage position would not be possible without the resourcefulness, skill, determination, and diligence of our remarkable global team that is second to none in this business. With that, I'll turn the call over to Melissa, who will provide further information about our first quarter results.