Q4 2023 Cinemark Holdings Inc Earnings Call

Hello, and welcome to the Cinemark Holdings fourth quarter 2023 earnings call and webcast.

Operator: Hello, and welcome to the Cinemark Holdings fourth quarter 2023 earnings call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad.

If anyone should require operator assistance. Please press star zero on your telephone keypad.

Operator: A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Chanda Brashears, Senior Vice President, Investment Relations. Please go ahead.

A question and answer session will follow the formal presentation.

It can be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Chanda Brashears Senior Vice President of Investor Relations. Please go ahead.

Chanda Brashears: Good morning, everyone. I would like to welcome you to Cinemark Holdings Inc.'s fourth quarter and full year 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. Such statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations, or intentions.

Chanda Brashears: Morning, everyone I would like to welcome you to Cinemark Holdings, Inc. Fourth quarter and full year 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.

Chanda Brashears: Looking statements.

Chanda Brashears: 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.

Chanda Brashears: These matters involve certain risks and are uncertain. 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 annual report on Form 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, the 10-K, and on the company's website at ir.cinemark.com. With that, I would now like to turn the call over to Sean Gamble. Thank you, Chanda, and good morning, everyone.

Chanda Brashears: Matters involve certain risks and uncertainties.

Chanda Brashears: 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 annual report on Form 10-K.

Chanda Brashears: 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-K and on the company's website at IR Cinemark dotcom.

Chanda Brashears: With that I would now like to turn the call over to Sean Gamble.

Sean Gamble: Thank you Chanda and good morning, everyone. We appreciate you joining us today for our fourth quarter and full year 2023 earnings call.

Sean Gamble: We appreciate you joining us today for our fourth quarter and full year 2023 earnings. 2023 represented another year of meaningful post-pandemic progression for our industry and our company. And I thought I'd start today's call by providing a summary of the significant achievements we made, advancing our key priorities throughout. First and foremost, we continue to effectively navigate the fluid dynamics of our industry's ongoing recovery, putting an emphasis on near-term revenue and margin generation, strengthening our balance sheet, and actively maneuvering through varied fluctuations in film release volume as well as inflationary cost pressure. Once again, I'm pleased to share that our phenomenal Cinemark team produced sensational results across all of these people.

Sean Gamble: 2023 represented another year of meaningful post pandemic progression for our industry and our company and I thought I'd start today's call by providing a summary of the significant achievements, we made advancing our key priorities throughout the year.

Sean Gamble: First and foremost we continued to effectively navigate the fluid dynamics of our industries ongoing recovery, putting an emphasis on near term revenue and margin generation strengthening our balance sheet and actively maneuvering through varied fluctuations in film release volume as well as inflationary cost pressures.

Sean Gamble: Once again I'm pleased to share that our phenomenal cinemark team produced sensational results across all of these focal points.

Sean Gamble: For the full year 2023, we entertain 210 million guests worldwide and generated $3 $1 billion of revenue that was up 25% year over year and included our highest concession sales of all time, which were 3% higher than 2019.

Sean Gamble: For the full year 2023, we entertained 210 million guests worldwide and generated $3.1 billion of revenue that was up 25% year over year and included our highest concession sales of all time, which were 3% higher than 2019. Our adjusted EBITDA grew 77% from 2022 to $594 million with a 19.4% margin rate that represented 570 basis points of margin. Moreover, during the year, we delivered our second-highest quarterly adjusted EBITDA in the history of our company in 2Q and our highest third-quarter adjusted EBITDA in 3Q.

Sean Gamble: Our adjusted EBITDA grew 77% from 2000 $22 million to $594 million with a 19, 4% margin rate that represented 570 basis points of margin expansion.

Sean Gamble: Moreover, during the year, we delivered our second highest quarterly adjusted EBITDA in the history of our company and <unk> and our highest third quarter adjusted EBITDA in <unk>.

Sean Gamble: In total, our 2023 adjusted EBITDA recovered to within 20% of 2019 on 25% less attendance. A clear sign that our many ongoing strategic growth and productivity initiatives are delivering significant impact. Furthermore, our strong operating results yielded free cash flow of $295 million with positive full-year net cash generation of $175 million after paying down more than $100 million of COVID related debt. In addition to outstanding operational execution and sound financial discipline throughout the year, these tremendous results also benefited from our continued drive to expand content and build audiences through marketing actions, loyalty programs, pursuit of new content sources, and heightened guest service standards. Throughout 2023, we strengthened and We also continue to advance our global loyalty program, increasing membership by nearly 20% in the U.S. and by more than 45% in Latin America. Furthermore, Movie Club, our paid U.S. subscription tier, grew 13% during the year to over 1.2 million members as moviegoers continue to highly value and embrace the meaningful benefits included in this program.

Sean Gamble: In total our 2023 adjusted EBITDA recovered to within 20% of 2019, and 25% less attendance a clear sign that our many ongoing strategic growth and productivity initiatives are delivering significant impact.

Sean Gamble: Furthermore, our strong operating results yielded free cash flow of $295 million with positive full year net cash generation of $175 million after paying down more than $100 million of COVID-19 related debt.

Sean Gamble: In addition to outstanding operational execution and sound financial discipline throughout the year. These tremendous results also benefited from our continued drive to expand content and build audiences through marketing actions loyalty programs pursuit of new content sources.

Sean Gamble: <unk> and heightened guest service standards.

Sean Gamble: Throughout 2023, we strengthened and took full advantage of our extensive marketing and communication reach amassing more than 8 billion media impressions, increasing web and app traffic over 30% doubling audience engagement on social media and growing our global addressable customer base to nearly <unk>.

Sean Gamble: 30 million consumers, while enhancing personalization.

Sean Gamble: We also continue to advance our global loyalty programs, increasing membership by nearly 20% in the U S and by more than 45% in Latin America.

Sean Gamble: Furthermore, movie club, our paid U S subscription tier grew 13% during the year to over one 2 million members as moviegoers continue to highly value and embraced the meaningful benefits included in this program.

Sean Gamble: During the year, Movie Club drove 24% of our domestic box office and our data continues to demonstrate that the program stimulates increased movie-going frequency and food and beverage consumption. In tandem with our marketing and loyalty actions, we continue to actively collaborate with our traditional studio partners to drive the successful releases of their films, while also working closely with Amazon, Apple, and an increasing number of non-traditional content creators to help establish and grow their foothold within theater. To that end, we were thrilled to see North American industry box office grow to $9.1 billion in 2023, driven by a diverse array of studio hits, including Barbie, Super Mario Brothers, Spider-Man Across the Spider-Verse, Guardians of the Galaxy 3, and Oppenheimer, to name just, Furthermore, Amazon and Apple collectively generated almost half a billion dollars of domestic box office last year, which was also a highly encouraging sign considering they are still in the early stages of their theatrical distribution.

Sean Gamble: During the year movie club drove 24% of our domestic box office and our data continues to demonstrate that the program stimulates increased moviegoing frequency and food and beverage consumption.

Sean Gamble: In tandem with our marketing and loyalty actions, we continue to actively collaborate with our traditional studio partners to drive the successful releases of their films. While also working closely with Amazon Apple and an increasing number of non traditional content creators to help establish and grow their foothold within theaters.

Sean Gamble: To that end, we were thrilled to see North American industry box office growth to $9 $1 billion in 2023, driven by a diverse array of studio hits, including Barbie Super Mario Brothers Spiderman across the Spider verse Guardians of the Galaxy three and Oppenheimer to name just a few.

Sean Gamble: Furthermore, Amazon and Apple collectively generated almost half a billion dollars of domestic box office last year, which was also a highly encouraging sign considering they are still in the early stages of their theatrical distribution expansion.

Sean Gamble: Also encouraging was 2023's wide range of record-breaking international, concert, and faith-based films that approached three-quarters of a billion dollars in North American box office and included the remarkable successes of Taylor Swift's The Heiress Tour and Sound of Freedom. For Cinemark, non-traditional content accounted for 14% of our U.S. admissions revenues during the year as we worked aggressively to pursue these supplemental box office opportunities and maximize their overall And, of course, as we focus on growing the number of guests we bring in to our... It's essential that we provide them with an exceptional entertainment experience when they join us.

Also encouraging was 2020 threes wide range of record breaking international concert and faith based films that approached three quarters of $1 billion of North American box office and included the remarkable successes of Taylor Swift, the era's tour and sound of freedom.

Sean Gamble: For cinemark non traditional content accounted for 14% of our U S admissions revenues during the year as we worked aggressively to pursue these supplemental box office opportunities and maximize the overall revenue potential.

Sean Gamble: Of course, as we focus on growing the number of guests we bring into our theaters. It's essential that we provide them an exceptional entertainment experience when they join us.

Sean Gamble: As such, we spent a considerable amount of effort in 2023 further enhancing and executing our guest service protocols, as well as sustaining our industry-leading 99.97% screen up time to avoid viewing disruption. We also continue to advance our company-wide rebranding initiative, modernizing our messaging strategy and overall aesthetics to strengthen the differentiated experience we provide our audience. All together, our collective efforts to delight our guests and grow our audiences earned us guest satisfaction scores over 95%, helped sustain our market share gains that continue to exceed our pre-pandemic results by more than 100 basis points, and delivered box office results that surpassed industry recovery relative to 2019 by 700 basis points domestically and 600 basis points internationally. Combined with the effective navigation of our industry's ongoing recovery and the benefits we gained from our focus on expanding content and building audiences. Another key contributor to our 2023 results is all the work we've pursued over the past few years to evolve Cinemark for future success. This work includes further enhancing the immersive cinematic experiences we provide our guests, growing new and diversified revenue streams, driving productivity gains, and optimizing our search.

Sean Gamble: As such we spent a considerable amount of effort in 2023 further enhancing and executing our guest service protocols as well as sustaining our industry, leading 90, 997% screen uptime to avoid viewing disruptions.

Sean Gamble: We also continued to advance our company wide rebranding initiative modernizing our messaging strategy and overall aesthetics to strengthen the differentiated experience we provide our audiences.

Sean Gamble: Altogether, our collective efforts to delight, our guests and grow our audiences earned us guest satisfaction scores over 95% helped sustain our market share gains that continue to exceed our pre pandemic results by more than 100 basis points and.

Sean Gamble: And delivered box office results that surpassed industry recovery relative to 2019 by 700 basis points domestically and 600 basis points internationally.

Sean Gamble: Combined with the effective navigation of our industry's ongoing recovery and the benefits we gained from our focus on expanding content and building audiences. Another key contributor to our 2023 results is all the work we pursued over the past few years to evolve cinemark for future success.

Sean Gamble: This work includes further enhancing the immersive cinematic experiences we provide our guests growing new and diversified revenue streams driving productivity gains and optimizing our circuit.

Sean Gamble: Impact derived from actions in all of these areas provided substantial upside in 2023 and during the year, we continue to advance new and existing initiatives to drive even further growth and market leadership going forward.

Sean Gamble: Impact derived from actions in all of these areas provided substantial upside in 2023, and during the year, we continued to advance new and existing initiatives to drive even further growth and market leadership going forward. While staying disciplined with overall capital management, we leaned further into premium amenities during 2023, which continue to resonate exceptionally well with a growing range of moviegoers. To start, recliners continue to be a significant driver of box office output.

Sean Gamble: While staying disciplined with overall capital management, we lean further into premium amenities during 2023, which continued to resonate exceptionally well with a growing range of moviegoers.

Sean Gamble: To start Recliners continue to be a significant driver of box office outperformance and with nearly 70% of our U S Circuit Reclined, we remain the most penetrated major exhibitor featuring this highly sought after amenity.

Sean Gamble: And with nearly 70% of our U.S. circuit reclined, we remain the most penetrated major exhibitor featuring this highly sought-after... Over the course of the year, we also grew our DBOXX motion seat footprint by 16%, generating all-time high DBOXX admission revenues that were up 87% compared to 2019. Similarly, we delivered record-high XD revenues that increased 13% versus 2019 as XD remains the And, we continue to enhance our unmatched presentation quality, extending Barco laser projectors to nearly 15% of our theaters worldwide as we progress toward converting our entire global circuit to laser technology over time.

Sean Gamble: Over the course of the year. We also grew our D box motion seats footprint by 16% generating all time high D box admission revenues that were up 87% compared to 2019.

Sean Gamble: Similarly, we delivered record high XD revenues that increased 13% versus 2019 as XD remains the number one exhibitor branded premium large format in the world.

Sean Gamble: And we continue to enhance our unmatched presentation quality, extending barco laser projectors to nearly 15% of our theaters worldwide as we progressed toward converting our entire global circuit to laser technology over time.

Sean Gamble: We also continue to drive significant growth and enhancement of our concessions offerings during 2023 as evidenced by our all time high food and beverage sales and per caps.

Sean Gamble: We will also continue to drive significant growth and enhancement of our concessions offerings during 2020, as evidenced by our all-time high food and beverage sales and per capita. In addition to expanding the variety of selections we provide consumers, including new menu options and movie-themed merchandise, we will further improve distribution as well. For example, we introduced new space management layouts across a range of our theaters that increase product assortments and speed of service, driving incremental purchase. We also continue to advance our mobile ordering platform and realize a 32% year-over-year increase in online concession. Furthermore, we became the first major U.S. exhibitor to partner with all three of the largest third-party delivery platforms. DoorDash, Uber Eats, and Grubhub, as we aim to further extend the reach of our concession sales beyond our... Pricing sophistication is another area we continue to actively develop as we aim to maximize attendance, box office, and concession sales while leaving our guests feeling satisfied with the overall value they receive.

Sean Gamble: In addition to expanding the variety of selections, we provide consumers, including new menu options and movie themed merchandise, we further improved distribution as well.

Sean Gamble: For example, we introduced new space management layouts across a range of our theaters that increased product assortments and speed of service driving incremental purchase incidence.

Sean Gamble: We also continue to advance our mobile ordering platform and realized a 32% year over year increase in online concession sales.

Sean Gamble: Furthermore, we became the first major U S exhibitor to partner with all three of the largest third party delivery platforms door Dash Uber eats and Grubhub as we aim to further extend the reach of our concession sales beyond our theaters.

Sean Gamble: Pricing sophistication is another area. We continue to actively develop as we aim to maximize attendance box office and concession sales, while leaving our guests feeling satisfied with the overall value they received.

Sean Gamble: We strive to strengthen our assessment and calibration of consumer elasticity at a feeder-by-feeder level in the midst of evolving macroeconomic and competitive developments. We've been increasing the number of resources, tools, and data-driven insights we... The process improvements we have made to date are already helping us fine-tune our pricing strategies with enhanced results, which we expect will continue ramping up as we further develop these capabilities. Likewise, the continuous improvement productivity-related initiatives we've been pursuing are also yielding sizable bottom-line benefits. Examples include our ongoing actions to enhance operating hour windows, showtime scheduling, training efficiency, procurement strategies, and overall labor practice. For instance, as a direct result of our varied workforce management projects, we managed to hold salaries and wages growth to only 8% in 2023, despite a 22% year-over-year increase in attendance, ongoing wage rate pressures, and staggered fluctuations in volume throughout. Finally, we took a variety of steps during 2023 to further optimize our search.

Sean Gamble: To strengthen our assessment and calibration of consumer elasticity at a theater by theater level in the midst of evolving macroeconomic and competitive developments, we've been increasing the number of resources tools and data driven insights we use.

Sean Gamble: The process improvements we have made to date are already helping us fine tune our pricing strategies with enhanced results, which we expect will continue ramping up as we further develop these capabilities.

Sean Gamble: Likewise, the continuous improvement productivity related initiatives. We've been pursuing are also yielding sizeable bottomline benefits <unk>.

Sean Gamble: Examples include our ongoing actions to enhance operating hour windows, Showtime's scheduling training efficiency procurement strategies and overall labor practices.

Sean Gamble: For instance, as a direct result of our varied workforce management projects, we managed to hold salaries and wages growth to only 8% in 2023, despite a 22% year over year increase in attendance ongoing wage rate pressures and staggered fluctuations in volume throughout the year.

Sean Gamble: Finally, we took a variety of steps during 2023 to further optimize our circuit.

Sean Gamble: In addition to expanding premium amenities, as I previously mentioned, we also added 4 new theaters through a management deal with EPR Properties, our largest landlord. We closed 10 low-performing theaters that will provide bottom-line improvement going forward, and we opportunistically exited our non-strategic business in Ecuador, where we were a distant third player after receiving an attractive unsolicited offer. At the same time, seeing a growing number of opportunities on the horizon, we reactivated our new build development pipeline and added a new Family Entertainment Center concept to our array of theater designs, with plans to open two of these new concepts by the end of May. So, in summary, 2023 was a highly successful year for Cinemark with the significant results we delivered amidst another period of fluid market dynamics.

Sean Gamble: In addition to expanding premium amenities as I previously mentioned, we also added four new theaters through a management deal with EPR properties, our largest landlord. We closed 10 low performing theatres that will provide bottomline improvement going forward and we opportunistically exited our non strategic business in Ecuador, where we were a distant third player.

After receiving an attractive unsolicited offer.

Sean Gamble: At the same time seeing a growing number of opportunities on the horizon, we reactivated our newbuild development pipeline and added a new family Entertainment Center concept to our array of theater designs with plans to open two of these new concepts by the end of this year.

Sean Gamble: So in summary, 2023 was a highly successful year for cinemark with the significant results. We delivered amidst another period of fluid market dynamics. The growth, we derived from expanding new sources of content and building audiences and the further advances we made to position our company for future success.

Sean Gamble: The growth we derive from expanding new sources of content and building an audience, and the further advances we make to position our company for future success. It was also a meaningful year for theatrical exhibition as a whole, as positive indicators pertaining to the key fundamentals that drive our industry, specifically consumer trends and product flow, were further reinforced. Sustained consumer enthusiasm for shared, larger-than-life cinematic experiences was validated again and again throughout 2020. As more films were released, more records were achieved, and North American box office grew 21% year over year. Action, Family, Horror, Spectacle, Adult Drama, Rom-Com, Concerts, Faith-Based Foreign Film, 2023 was propelled by a diverse range of content across all demographics of moviegoers during all times of the year.

Sean Gamble: It was also a meaningful year for theatrical exhibition as a whole as positive indicators pertaining to the key fundamentals that drive our industry, specifically consumer trends and product flow where further reinforced.

Sean Gamble: Sustained consumer enthusiasm for shared larger than life cinematic experiences was validated again and again throughout 2023.

Sean Gamble: As more films were released more records were achieved in North American box office grew 21% year over year.

Sean Gamble: <unk> family.

Sean Gamble: Our spectacle adult drama ROM Com concerts faith based foreign films 2023 was propelled by a diverse range of content across all demographics of moviegoers during all times of the year.

Sean Gamble: In fact, as we've examined our cinemark data, we've observed that audience mix over the past two years film by film as well as overall mirrors pre pandemic patterns.

Sean Gamble: In fact, as we've examined our Cinemark data, we've observed that audience mix over the past two years, film by film, as well as overall, mirrors pre-pandemic patterns. During 2023, film volume grew to 110 wide releases and reached 85% of pre-pandemic levels, up from 65% in 2022. This favorable growth in film product is the result of studio efforts to rebuild their slates back to historic levels of output after having measured and publicly referenced the enhanced benefits that a theatrical release provides for their film assets and their company. These benefits include elevating promotional impact that increases awareness, interest, and recall.

Sean Gamble: During 2023 film volume grew to 110 wide releases and reached 85% of pre pandemic levels up from 65% in 2022.

This favorable growth in film product is the result of studio efforts to rebuild their slates back to historic levels of output after having measured and publicly referenced the enhanced benefits that a theatrical release provides their film assets and their companies.

Sean Gamble: These benefits include elevating promotional impact that increases awareness interest and recall.

Sean Gamble: Strengthening performance on downstream distribution channels, including streaming platforms, boosting overall financial results and library value, and satiating consumer and talent demand to see these films on the big screen. And while six months of work stoppage associated with the Hollywood strikes will likely cause a dip in wide releases to approximately 95 titles in 2024, an estimated 75% of pre-pandemic levels. We expect film volume in 2025 will quickly spring back to the recovery glide path it's been on over the past two years, notching another step closer to pre-pandemic levels based on current production activity and expressed plans at the major studios. This expectation is further supported by Amazon's and Apple's stated ambitions to continue scaling their theatrical film slates, as well as the encouraging trends we've recently witnessed in non-traditional content.

Sean Gamble: Strengthening performance on downstream distribution channels, including streaming platforms.

<unk> overall financial results and library value and Satiating consumer and talent demand to see these films on the big screen.

Sean Gamble: And while six months of work stoppage associated with the Hollywood strikes will likely cause a dip in wide releases to approximately 95 titles in 2020 for an estimated 75% of pre pandemic levels.

Sean Gamble: We expect film volume in 2025 will quickly spring back to the recovery glide path. It's been on over the past two years Notching another step closer to pre pandemic levels based on current production activity and expressed plans at the major studios.

Sean Gamble: This expectation is further supported by Amazon and Apple stated ambitions to continue scaling their theatrical film slates as well as the encouraging trends, we have recently witnessed and non traditional content growth.

Sean Gamble: Yeah.

Sean Gamble: As film volume rebounds, once again cinemark remains in the most advantaged position to capitalize on that upside on account of our solid foundation and the myriad of actions we continue to pursue to further strengthen our company.

Sean Gamble: As film volume rebounds once again, Cinemark remains in the most advantageous position to capitalize on that upside on account of our solid foundation and the myriad of actions we continue to pursue to further strengthen our company. Thus, as we consider the fundamental drivers of our industry, our current market position, and the many opportunities before us, we remain highly optimistic about the future of our industry and, in particular, our company. I'll now turn the call over to Melissa, who will provide additional information on our fourth quarter results. Melissa?

Sean Gamble: So as we consider the fundamental drivers of our industry, our current market position and the many opportunities before us we remain highly optimistic about the future of our industry and particularly our company.

Sean Gamble: I'll now turn the call over to Melissa who will provide additional information on our fourth quarter results Melissa.

Melissa Thomas: Thank you Sean good morning, everyone and thank you for joining the call today, we were thrilled to deliver strong operating and financial results for the fourth quarter and full year, while further strengthening our balance sheet.

Melissa Thomas: Thank you, Sean. Good morning, everyone, and thank you for joining the call today. We were thrilled to deliver strong operating and financial results for the fourth quarter and full year while further strengthening our balance. We are incredibly proud of the focus and execution our global team demonstrated as we capitalized on the box office and remained nimble in this dynamic environment. During the fourth quarter, we served more than 40 million guests globally, an increase of 4% year-over-year, and grew total revenue by 7%.

Melissa Thomas: We are incredibly proud of the focus on execution, our global team exhibited as we capitalized on the box office and remained nimble in this dynamic environment.

Melissa Thomas: During the fourth quarter, we served more than 40 million guests globally, an increase of 4% year over year and grew total revenue, 7% to $638 $9 million.

Melissa Thomas: $638.9 million. With the uptick in attendance, our strong operating discipline, and the ongoing execution of our strategic initiatives, we delivered $79.6 million of adjusted EBITDA in the quarter, up more than 8% year-over-year. And we expanded our adjusted EBITDA margin by 20 basis points to 12.5%. Moving to the results for our domestic segment, we welcomed 26.2 million guests across our U.S. circuit during the fourth quarter, an increase of 4% year-over-year.

Melissa Thomas: With the uptick in attendance are strong operating discipline and the ongoing execution of our strategic initiatives, we delivered $79 $6 million of adjusted EBITDA in the quarter.

Melissa Thomas: More than 8% year over year, and we expanded our adjusted EBITDA margin by 20 basis points to 12, 5%.

Melissa Thomas: Moving to the results for our domestic segment, we welcome $26 2 million guests across our U S circuit during the fourth quarter, an increase of 4% year over year.

Melissa Thomas: We grew our admissions revenue 7% to $267.5 million and surpassed the North American industry's box office growth by 140 basis points, driven by our strong market share in the quarter. Our market share benefited from the higher mix of family and whore, which resonated particularly well in our search.

Melissa Thomas: We grew our admissions revenue 7%.

Melissa Thomas: 267, $5 million and surpassed the North American industry box office growth by 140 basis points, driven by our strong market share in the quarter.

Melissa Thomas: Our market share benefited from the higher mix of family and horror content, which resonated, particularly well in our circuit.

Melissa Thomas: Coupled with the successful execution of our strategic initiatives as Sean discussed.

Melissa Thomas: Combined with the successful execution of our strategic initiative. As Sean discussed, our average ticket price grew 2% year-over-year, reaching an all-time high of $10.21 in the quarter, driven primarily by the elevated ticket prices and box office success of Taylor Swift's The Heir's Tour concert film, in addition to strategic pricing initiatives.

Melissa Thomas: Our average ticket price grew 2% year over year, reaching an all time high of $10 in 'twenty one sets.

Melissa Thomas: In the quarter, driven primarily by the elevated ticket pricing and box office success of Taylor Swift the era's tour concert film.

Melissa Thomas: In addition to strategic pricing initiatives.

Melissa Thomas: Together, these tailwinds were able to overcome the difficult comparison from the fourth quarter of 2022, where ticket prices were bolstered by an outsized 3D format mix from Avatar: The Way of Water. Domestic concession revenue was $200.9 million, an increase of 8% year-over-year. Our concession per cap grew 3% and reached a record high of $7.67 for the quarter, primarily driven by strategic pricing initiatives and product mix, with particular success for merchandise sold for the Taylor Swift The Heiress Tour concert film in the quarter. Our teams continue to find new and innovative ways to drive incidence and improve the monetization of attendance in our theaters. Whether it be through the introduction of new concession and movie-themed merchandise offerings, modifying the flow of concession traffic within our theaters, or promoting mobile ordering, among other initiatives.

Melissa Thomas: Together these tailwind we're able to overcome the difficult comparison from the fourth quarter of 2022, where ticket prices were bolstered by outsized <unk> format mix from avatar the way at the water.

Melissa Thomas: Domestic concession revenue was $209 million, an increase of 8% year over year.

Melissa Thomas: Our concession per cap grew 3% and reached a record high of $7 67 for the quarter, primarily driven by strategic pricing initiatives and product mix with particular success from merchandise sold for the Taylor Swift The Arris tour concert film in the quarter.

Melissa Thomas: Our teams continue to find new and innovative ways to drive incident and improve the monetization of the intendance in our theaters.

Melissa Thomas: Whether it be through the introduction of new concessions and movie themed merchandise offerings modifying the flow of concession traffic within our theaters are promoting mobile ordering among other initiatives.

Melissa Thomas: Other revenue grew 5% year over year to $54 million.

Melissa Thomas: Other revenue grew 5% year-over-year to $50.4 million, largely due to attendance growth during the quarter. Altogether, our domestic segment delivered total revenue of $518.8 million, an increase of 7% year over year, and generated $68.5 million of adjusted EBITDA, an increase of 15% versus the fourth quarter of 2022. Domestically, we expanded our adjusted EBITDA margin by 90 basis points to 13.2%. Turning to our international segment, we entertained 14.4 million guests during the fourth quarter, an increase of 2% year-over-year.

Melissa Thomas: Largely due to the attendance growth during the quarter.

Altogether, our domestic segment delivered total revenue of $518 $8 million, an increase of 7% year over year.

We generated $68 5 million of adjusted EBITDA, an increase of 15% versus the fourth quarter of 2022.

Melissa Thomas: Domestically, we expanded our adjusted EBITDA margin by 90 basis points to 13, 2%.

Melissa Thomas: Turning to our international segment, we entertained $14 4 million guests during the fourth quarter, an increase of 2% year over year.

Melissa Thomas: While the fourth quarter is typically a seasonally low-attended quarter in Latin America, we outpaced the attendance growth for the broader Latin American industry by 600 basis points in the quarter. We delivered $54.9 million of admissions revenue, $42.1 million of concession revenue, and $23.1 million of other revenue. In total, our international revenue increased 5% to $120.1 million, and we delivered $11.1 million of adjusted EBITDA, yielding a 9.2% adjusted EBITDA margin. Our international Adjusted EBITDA margin was impacted by two meaningful headwinds in the fourth quarter, the expiration of pandemic-related temporary rent relief and the sharp devaluation in the Argentinian peso. While inflation has been outpacing FX devaluation over the past few years, that was not the case in the fourth quarter of 2023, given the abruptness and magnitude of Argentina's devaluation following economic measures implemented by their new administration.

Melissa Thomas: While the fourth quarter is typically a seasonally low attended quarter in Latin America, we outpaced the attendance growth for the broader Latin American industry by 600 basis points in the quarter.

Melissa Thomas: We delivered $54 $9 million of admissions revenue $42 $1 million of concession revenue and $23 $1 million of other revenue.

Melissa Thomas: In total our international revenue increased 5% to $121 million and we delivered $11 $1 million of adjusted EBITDA, yielding a nine 2% adjusted EBITDA margin.

Melissa Thomas: Our international adjusted EBITDA margin was impacted by two meaningful headwinds in the fourth quarter.

Melissa Thomas: The exploration of pandemic related temporary rent relief and the sharp devaluation in the Argentinean peso.

Melissa Thomas: While inflation has been outpacing FX devaluation over the past few years.

Melissa Thomas: That was not the case in the fourth quarter of 2023, given the abruptness and magnitude of Argentina's devaluation following economic measures implemented by the New administration.

Melissa Thomas: We expect these factors to continue to be headwinds in 2024. That said, we have long-tenured and highly-experienced local teams that are extremely well-versed in navigating complex economic and political landscapes such as this. Moving to global expense, film rental and advertising expense was 53.6% of admissions revenue, a 330 basis points reduction from 4Q of 2022, predominantly driven by the lower concentration of blockbusters and overall film mix during the quarter. Concession costs as a percent of concession revenue were 19.5% in the fourth quarter, up 160 basis points year over year, primarily due to inflationary pressures, higher shrink, and product mix, particularly elevated merchandise sales in the quarter, which have a higher overall cost associated with them. Strategic price increases partially offset these impacts. Global salaries and wages were $96.9 million, an increase of 1% year over year. As a percent of revenue, salaries and wages declined 80 basis points due to benefits realized from our ongoing focus on our labor productivity, coupled with higher attendance, which drove operating leverage in the quarter.

Melissa Thomas: We expect these factors to continue to be headwinds in 2024.

Melissa Thomas: That said, we have long tenured and highly experienced local teams that are extremely well versed in navigating complex economic and political landscape such as that.

Melissa Thomas: Moving to global expenses.

Melissa Thomas: Film rental and advertising expense was 53, 6% of admissions revenue a.

Melissa Thomas: 330 basis points reduction from <unk> of 2022.

Melissa Thomas: Nominally driven by the lower concentration of blockbusters and overall film film mix during the quarter.

Melissa Thomas: Concession costs as a percent of concession revenue.

Melissa Thomas: 19, 5% in the fourth quarter up 160 basis points year over year, primarily due to inflationary pressures higher shrink and product mix, particularly elevated merchandise sales in the quarter, which have a higher overall costs associated with them.

Melissa Thomas: Strategic price increases partially offset these impacts.

Melissa Thomas: Total salaries and wages were $96 $9 million, an increase of 1% year over year.

As a percent of revenue salaries and wages declined 80 basis points due to benefits realized from our ongoing focus on our labor productivity, coupled with higher attendance, which drove operating leverage in the quarter.

Melissa Thomas: This leverage was partially offset by wage rate pressure and the expansion of operating hours. Facility lease expense was $78.8 million, up 2% year-over-year, primarily due to the expiration of pandemic-related temporary relief that benefited the prior year period, partially offset by the theater closures Sean mentioned. As a percent of total revenue, facility lease expense decreased 60 basis points. Utilities and other expenses $113.3 million, up 10% year over year, primarily due to an increase in our variable costs, such as utilities, credit card fees, and repairs and maintenance. This increase was driven by growth in attendance, expanded operating hours, and inflationary pressures. Higher gift card commissions due to stronger gift card sales through third-party channels in the quarter also contributed to the increase.

Melissa Thomas: This leverage was partially offset by wage rate pressure and the expansion of operating hours.

Melissa Thomas: Facility lease expense was $78 8 million up 2% year over year, primarily due to the exploration of pandemic related temporary relief that benefited the prior year period, partially upset by the theater closure as Shawn mentioned.

Melissa Thomas: As a percent of total revenue facility lease expense decreased 60 basis points.

Melissa Thomas: Utilities, and other expenses of $113 $3 million up 10% year over year, primarily due to an increase in our variable costs, such as utilities credit card fees and repairs and maintenance.

Melissa Thomas: By the growth in attendance.

Melissa Thomas: Ended operating hours and inflationary pressures.

Melissa Thomas: How your gift card commissions due to stronger gift card sales through third party channels in the quarter also contributed to the increase.

Melissa Thomas: As a percent of total revenue utilities and other increased 50 basis points.

Melissa Thomas: As a percent of total revenue, utilities and other increased 50 basis points. DNA was $54.1 million, an increase of 24% year-over-year, driven by higher incentive and stock-based compensation, and to a lesser extent, incremental headcount to support business recovery and our strategic initiatives, as well as wage and benefit inflation. Globally, we generated a net loss attributable to Cinemark Holdings Inc. of $18 million in the fourth quarter, resulting in a diluted loss per share of $0.15.

Melissa Thomas: G&A was $54 $1 million, an increase of 24% year over here.

Melissa Thomas: By higher incentive and stock based compensation and to a lesser extent incremental head count to support business recovery and our strategic initiatives as well as wage and benefit inflation.

Melissa Thomas: Globally, we generated a net loss attributable to Cinemark Holdings, Inc of $18 million in the fourth quarter.

Melissa Thomas: <unk> and diluted loss per share of <unk> 15 cents.

Melissa Thomas: For the full year, we generated net income of $188.2 million and diluted earnings per share of $1.34. Turning to the balance sheet, we remain highly focused on strengthening our financial position while continuing to make investments to position the company well for long-term success. We made significant progress in this regard throughout 2023. We generated $295 million of free cash flow during the year.

Melissa Thomas: For the full year, we generated net income of $188 2 million and diluted earnings per share of $1 34.

Melissa Thomas: Turning to the balance sheet, we remain highly focused on strengthening our financial position, while continuing to make investments to position the company well for long term success.

Melissa Thomas: We made significant progress in this regard throughout 2023.

Melissa Thomas: We generated $295 million of free cash flow during the year.

Melissa Thomas: $49 million of which was generated in the fourth quarter. And we ended the year with nearly $850 million of cash on the balance. All the while, we reduced our debt by over $100 million and invested roughly $150 million of capital into our global circuit. $60 million in the fourth quarter alone.

Melissa Thomas: $49 million of which was generated in the fourth quarter and.

Melissa Thomas: And we ended the year with nearly $850 million of cash on the balance sheet.

Melissa Thomas: All the while we reduced our debt by over $100 million and invested roughly $150 million of capital into our global Circuit 60.

Melissa Thomas: $60 million in the fourth quarter alone.

Melissa Thomas: Notably we were pleased to end the year with our net leverage ratio within our target range of two to three times.

Melissa Thomas: Notably, we were pleased to end the year with our net leverage ratio within our target range of 2 to 3. Looking forward to 2024, our capital allocation priorities remained balanced and disciplined as we prioritized addressing our 2025 maturities and investing in the long term while managing through content volume headwinds this year. To that end, we currently intend to redeem the remaining $150 million of 8.75% notes with cash on hand in May of this year when they step down to par. Additionally, we expect to spend approximately $150 million in capital expenditures during 2024.

Melissa Thomas: Looking forward to 2024, our capital allocation priorities remain balanced and disciplined as we prioritize addressing our 2025 maturities and investing in the long term, while managing through content volume headwinds this year.

Melissa Thomas: To that end, we currently intend to redeem the remaining $150 million of 875% notes with cash on hand in may of this year when they step down to par.

Melissa Thomas: Additionally, we expect to spend approximately $150 million in capital expenditures during 2024.

Melissa Thomas: Although film volume and box office are expected to decline year over year due to the Hollywood strikes, we intend to hold our capital expenditures flat given our optimism regarding the industry's recovery and our objective to capitalize on that recovery. That said, in 2024, we expect to prioritize more of our capital deployment towards long-term strategic opportunities, including new bills and other ROI-generating initiatives, mainly premium amenities. In closing, while we expect 2024 to represent a near-term setback in our recovery trajectory, we are highly encouraged regarding the exhibition industry's recovery in 2025 and beyond. We remain laser-focused on further advancing our strategic initiatives.

Melissa Thomas: Film volume in box office are expected to decline year over year due to the Hollywood strikes, we intend to hold our capital expenditures flat given our optimism regarding the industry's recovery and our objective to capitalize on that recovery.

Melissa Thomas: That said in 2024, we expect to prioritize more of our capital deployment towards long term strategic opportunities, including Newbuild and other ROI generating initiatives mainly premium amenities.

Melissa Thomas: In closing, while we expect 2024 to represent a near term setback in our recovery trajectory. We are highly encouraged regarding the exhibition industry is recovery in 2025 and beyond we remain laser focused on further advancing our strategic initiatives and we believe we are well positioned to capitalize on the anticipated.

Operator: And we believe we are well-positioned to capitalize on the anticipated recovery and maximize shareholder value over the long term. Operator, that concludes our prepared remarks, and we would now like to open up the line for questions. Certainly, when I'll be conducting a question and answer session, if you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Melissa Thomas: Coverage and maximize shareholder value over the long term.

Speaker Change: Operator that concludes our prepared remarks, and we would now like to open up the line for questions.

Speaker Change: Certainly what I'll be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Eric O. Handler: You may press star 2 if you'd like to remove your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Eric Handler from RothMKM. Your line is now live. Good morning, and thanks for the question. I wonder if you could talk a little bit about your free cash flow. Your conversion from adjusted EBITDA for the year was 50%, which, going back to 2007, is a record number. Is that a good idea...

Speaker Change: Press Star two if he like to remove your question from the queue.

Speaker Change: One moment, please while we poll for questions. Our first question is coming from Eric handler from Ralph M. Cam. Your line is now live.

Good morning, and thanks for the question.

Eric O. Handler: I Wonder if you could talk a little bit about your free cash flow your conversion from adjusted EBITDA for the year was 50%, which going back to 2017 is a record number.

Eric O. Handler: Is that a good.

Melissa Thomas: Barometer going forward, or was there anything unusual there that sort of elevated that percentage? Hi, Eric. Thanks for the question. We were certainly pleased with our free cash flow conversion rate this year and optimistic about the possibilities over the longer term as our business recovered. But it's important to bear in mind that this year's free cash flow conversion rate was bolstered by moderated capex levels, which we would expect to ramp up as industry box office resumes its recovery, though we do believe our peak capex years are behind us. The other key factors to consider going forward include, of course, our debt levels and corresponding interest payments, as well as any working capital dynamics. And one of the things you mentioned, Sean, in your, in your commentary was, I think, two concepts to open in 2024 for sort of new concepts. What exactly is that?

Eric O. Handler: Barometer going forward or was there anything unusual there that sort of elevated that percentage.

Speaker Change: Hi, Eric Thanks for the question, we were certainly pleased with our free cash flow conversion rate this year and optimistic about the possibilities over the longer term as our business recovered, but it's important to bear in mind that this year's free cash flow conversion rate was bolstered by moderated capex levels, which we would.

Speaker Change: Back to ramp up as industry box office rhythms its recovery.

Speaker Change: We do believe our peak Capex years are behind us at the other key factors to consider going forward and include of course, our debt levels and corresponding interest payments as well as any working capital dynamics.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: One of the things you mentioned, Sean in and your.

Speaker Change: In your commentary was I think two concepts to open in 2024 for.

Speaker Change: Sure.

Speaker Change: New concepts.

Speaker Change: What exactly is that is that within your existing footprint.

Sean Gamble: Is that within your existing footprint? Yes, thanks for the question. That's basically a new format for one of our theaters, at least the way we're looking at it, with the Family Entertainment Center, so an extension of theaters that has a little bit larger scale gaming in it, as well as some bowling concepts and a little bit larger bar and restaurant facility. We've had some really positive experiences with that in a joint venture that we currently have for a single venue, and we've seen how well So we look at that as a really positive opportunity for diversification, for growth, and can also provide opportunities both from a new build perspective, as well as from a remodel of existing theaters where we may have a large theater that doesn't quite need all of the auditoriums that we have. So the two that I referenced include one new build that we have currently underway in El Paso, Texas, as well as a remodel that we have underway at Thank you. Thanks, Eric.

Sean Gamble: Yes, thanks for the question Thats a.

Speaker Change: Basically a new format of one of our theaters that at least the way we're looking at it with our family Entertainment centers. So an extension of theaters that has a little bit larger scale gaming in it as well as some bowling concepts and a little bit larger bar restaurant facility, we've had some really positive.

Speaker Change: With that in a joint venture that we currently have for a single venue and we've seen how well. These types of concepts have performed both during the pandemic and since so we look at that as a really positive opportunity for diversification for growth.

Speaker Change: It can also provide opportunities both from a new build perspective as well as also remodels.

Speaker Change: Remodels of existing theaters, where we may have a large theater that doesn't quite need all of the auditoriums that we have so the two that I referenced include one new build that we have currently underway in El Paso, Texas as well as a remodel that we have underway of our Miriam Kansas City Theater.

Speaker Change: Thank you.

Speaker Change: Thanks, Eric appreciate the questions.

Sean Gamble: I appreciate the questions. Thank you. The next question today is coming from David Karnovsky from J.P. Morgan. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from David Karnofsky from J P. Morgan Your line is now live.

David Karnovsky: Sean, thanks for the view on 24 supply. I know you spoke to 25, and that level is back to the recovery path you had been on.

David Karnofsky: Thank you Sean Thanks for the view on 'twenty four supply I know you spoke to 25 and that level being back to the recovery path you had been on so.

Sean Gamble: So, to be clear, does this mean you expect the 25 wide release volume to be above 23, and maybe you could talk about some of the factors driving that? And then, for Melissa, just wanted to see if you could provide any early expectations on average ticket prices or per cap levels in the coming year. Thanks.

David Karnofsky: To be clear. This is being you expect kind of a 25 wide release volume to be above 23, and maybe you could talk to some of the factors driving that and then for Melissa just wanted to see if you could provide any early expectations on average ticket prices or per cap levels in the coming year. Thanks.

Melissa Thomas: Sure, thanks for the question, David. Yes, I mean, just to quickly answer your question on 25, we do anticipate, based on the information we have at hand right now, that it would notch further forward from 2023's volume level, approaching pre-pandemic levels. We saw a nice trajectory of progress from 22 to 23. As mentioned, unfortunately, that was disrupted by a disruption in the supply chain of production due to the Hollywood strikes. But based on all of our conversations with our studio partners with regard to what they have currently in the process of production, as well as their ongoing plans, coupled with what we know is happening at Apple and Amazon, as well as with some of this additional nontraditional content, we remain positive and optimistic about that springback into recovery. So that's really the driver of why we think 25 will just quickly bounce back to that recovery path we've been on.

Melissa Thomas: Sure. Thanks for the question David Yes, I mean, just to quickly answer your question on 25, we do anticipate based on the information we have at hand, right now that it would notch further forward from 2020 threes volume level approaching pre pandemic levels.

Speaker Change: We saw a nice trajectory of progress from 'twenty two to 'twenty three as.

Speaker Change: As mentioned unfortunately that was disrupted by a disruption in supply chain production due to the Hollywood strikes, but based on all of our conversations with our studio partners with regard to what they have currently in process from production as well as their ongoing plans.

Speaker Change: Coupled with what we know is happening at Apple and Amazon as well as with some of this additional non traditional content, we remain positive and optimistic about that spring back in recovery. So that's really the drivers of why we we think 'twenty five we'll just quickly bounce back to that recovery path we've been on.

Speaker Change: And then David in terms of your question around expectations on ATP and per cap.

Melissa Thomas: Then, David, in terms of your question around expectations for ATP and per cap, on the average ticket price side, we do anticipate modest growth in our domestic average ticket prices for full year 2024, though that may fluctuate quarter to quarter based on film mix. Just a couple points on some of the key catalysts we see for that. We do think there's still additional opportunity on the strategic pricing front as we continue to leverage data and analytics to find that optimal price point that maximizes our overall attendance at the box office. Of course, film mix also does play a role in our ticket prices going forward, but net net, we do think modest growth there. The one thing I would keep in mind, just from a modeling perspective, is that Q1 and Q4 of 2023 are certainly going to be tougher comparisons, given the outsized 3D mix through the carryover of Avatar, The Way of Water from Q1 of 2023, and then Taylor Swift era's concert film in Q4 of last year.

Speaker Change: On the average ticket price side, we do anticipate modest growth in our domestic average ticket prices for full year 2024, though that may fluctuate quarter to quarter to quarter based on film it.

Speaker Change: A couple of points on some of the key catalysts, we see for that we do think there's still additional opportunity on the strategic pricing front as we continue to leverage data and analytics to find that optimal price point that maximizes our overall attendance and box office.

Speaker Change: Film mix also does play a role in our ticket prices going forward, but net net we do think modest growth. There. The one thing I would keep in mind I'm just from a modeling perspective is that Q1 and Q4 of 2023 are certainly going to be tougher comparisons given the outsized <unk> due to the carryover.

Speaker Change: Or of Avatar, the words water from Q1 of 2023, and then Taylor Swift to Erez to a concert film in Q4.

Speaker Change: Last year, and then on the F&B per cap side, there, we do expect to see moderate growth on per caps year over year.

Melissa Thomas: And then on the F&B per cap side, there we do expect to see moderate growth on per caps year over year. Some of the key drivers there, we do intend to continue to lean into various initiatives that we have to maximize food and beverage incidence. So that includes creating a frictionless experience through mobile ordering platforms or self-serve capabilities, as well as modifying the flow of concession traffic.

Speaker Change: The key drivers there, we do intend to continue to lean into various.

Speaker Change: Initiatives that we have to maximize food and beverage incident to that includes creating a frictionless experience through mobile ordering platform are self serve capabilities as well as modifying the flow of concession traffic and we also expect.

Benjamin Daniel Swinburne: We also expect proactive category management, as well as leaning into movie-themed merchandise and scaling third-party delivery, to be potential growth drivers for us. And then, certainly on the pricing side, we continue to evaluate opportunities there to make sure that we're finding that right balance to maximize that per cap opportunity while at the same time sustaining our historically high incidence rate. Thank you. Thanks, David. Thank you. The next question today is coming from Ben Swinburne from Morgan Stanley. Your line is now live. Thanks. Good morning.

Speaker Change: Proactive category management as well as leaning into movie themed merchandise and scaling third party delivery to be potential growth drivers for us and then certainly on the pricing side, we continue to evaluate opportunities there to make sure that we're finding that right.

Speaker Change: To maximize that per cap opportunity, while at the same time sustaining our historically high incidence rate.

Speaker Change: Thank you.

Speaker Change: Thanks, David.

Speaker Change: Thank you. Your next question today is coming from Ben Swinburne from Morgan Stanley. Your line is now live.

Benjamin Daniel Swinburne: Thanks, Good morning.

Sean Gamble: Sean, just back on your 95 film expectation for 24, I'm just curious if you're assuming more are added between now and the end of the year. We've seen, at least we've noticed, a number of films, still smaller films, but a number of films added to the slate even in the last month. So I'm just curious what you're assuming in that 95 if you don't mind sharing. Sure. Well, I think it's a great observation that you have made.

Benjamin Daniel Swinburne: Sean just back on your 95 film expectation for 24, I'm just curious if youre assuming more added between now and the end of the year, we've seen at least we've noticed a number of films.

Benjamin Daniel Swinburne: Still smaller films, but number of homes added to the slate even in the last month. So I'm just curious what you're assuming in that 95, if you don't mind sharing sure well I think it's a great observation that you have we do tend to see a film.

Sean Gamble: We do tend to see films continue to be added through the year. In some ways, that actually was a bit elevated in the fourth quarter when several films moved out as a result of the Hollywood strikes. We saw a number of smaller films get dated that previously weren't, some weren't even on the radar prior to that. So as we sit right now, we have line of sight to about 90 titles.

Sean Gamble: Films continue to be added through the year in some ways that actually was a bit elevated in the fourth quarter. When several films moved out as a result of the Hollywood strikes. We saw a number of smaller films get dated that previously weren't our some of them weren't even on the radar prior to that so as we sit right now we have lineup.

Sean Gamble: Site to about 90 titles. So we're assuming another five or so get added above and beyond that.

Sean Gamble: So we're assuming another five or so get added above and beyond that. So that's kind of generally in line with what we've seen in the past that may be tempered a little bit in 2024, just simply because of the effect of the Hollywood strikes on the production cycle. The only other thing that I would flag is the way this year the calendar is lined up; there is definitely a concentration of larger films toward the end of the year, again, a byproduct of the strikes on production. So there is a chance, I'm just saying; we have no line of sight to any risk right at this moment of anything fluctuating. But in the normal course of making movies, if something doesn't come together, there's a situation where something could slide out. So I'm just flagging that because it's a little bit more heavily loaded at year end than we've seen over the last couple of years. But there's the potential for additional films to pop up, like we saw in 23. And that's where we sit right now.

Sean Gamble: So that's kind of generally in line with what we've seen in the past that may be tempered a little bit in 2024, just simply because of the effect of the Hollywood strikes on.

Sean Gamble: <unk> cycle, the only other thing that I would flag is the way. This year is the calendar is lined up there is definitely a concentration of larger films toward the end of the year again, a byproduct of the strikes on production. So there is a chance I'm just saying there is that we have no line of sight to.

Sean Gamble: Any risk right at this moment of anything fluctuating, but if the normal course of making movies, if something doesn't come together there is a situation where something could slide out. So I'm just flagging that because it's a little bit more heavily loaded at year end than we've seen over the last couple of years, but there is the potential for additional films to pop in like we saw in 'twenty three.

Sean Gamble: And that's where we sit right now.

Speaker Change: That makes sense and where do you guys.

Melissa Thomas: Okay, that makes sense. And what are you guys looking for to resume the dividend? I know it's a board decision, but as we track the business this year, and we have a lot of cash on the balance sheet, you know, can you just talk about the things you are waiting to see to bring that back? I'll take that one, Ben.

Speaker Change: Looking for to resume the dividend I know, it's a board decision but.

Speaker Change: As we track the business this year got a lot of cash on the balance sheet can you just talk about the things that you are waiting to see to bring that back.

Speaker Change: I'll take that one Ben so with respect to the dividend reinstating the dividend does remain a key consideration for both management and the board. However, the timing of any reinstatement is predicated upon our ability to sustain our net leverage ratio within our target range of two to three times.

Melissa Thomas: So with respect to the dividend, reinstating the dividend does remain a key consideration for both management and the board. However, the timing of any reinstatement is predicated upon our ability to sustain our net leverage ratio within our target range of two to three times. Keep in mind that our leverage ratio is highly dependent upon box office and our free cash flow generation, which are both expected to face headwinds from reduced content volume. So that may put some near-term pressure on our net leverage ratio. We do, though, remain in active conversations with our board regarding our capital allocation priorities, and that includes the potential timing of reinstating the dividend. Okay, and then I just want to ask Melissa, I don't know if there's any way to size Argentina for us since you called it out as something for us to think about in 24.

Speaker Change: Keep in mind that our leverage ratio is highly dependent upon the box office and our free cash flow generation, which are both expected to face headwinds from reduced constant volume. This year. So that may put some near term pressure on our net leverage ratio, we do though remain in active conversations with our board regarding our capital allocation.

Speaker Change: Patient priorities and that includes potential timing of reinstating the dividend.

Speaker Change: Okay, and then I just want to ask Melissa I don't know if there's any way to size Argentina for us since you called it out as something for us to think about in 'twenty four.

Melissa Thomas: Yeah, So I mean, Argentina front, I mean, theres, certainly contending with sharp devaluation following the economic measures implemented in December with further devaluation projected this year.

Melissa Thomas: Yeah, so on the Argentina front, I mean, they're certainly contending with sharp devaluation following the economic measures implemented in December, with further devaluation projected this year. You know, if we look at kind of what bank projections are saying in terms of FX devaluation for Argentina, it could be as high as 80% year over year. That said, we've got to keep in mind that Argentina is a highly inflationary environment.

Melissa Thomas: If we look at kind of what.

Bank projections are saying in terms of FX devaluation for Argentina could be.

Melissa Thomas: Hi is 80% year over year.

That said, we've got to keep in mind that Argentina is a highly inflationary environment. So we do expect that inflation could provide an offset to that FX devaluation in the country.

Melissa Thomas: So we do expect that inflation could provide some offset to that FX devaluation in the country. It's just unclear to what extent at this time and whether our pricing can keep up with the rate of inflation. But, you know, what I would say there is it's a highly fluid situation. Our teams continue to closely monitor it and, www.cinemark.com, Thank you. The next question is coming from Mike Hickey from Benchmark. Your line is now live. Ishan, Melissa, and Chanda, congratulations guys!

Melissa Thomas: It's unclear to what extent at this time and whether our pricing can keep up with the rate of inflation, but what I would say there is it's a highly fluid situation and our teams continue to closely monitor it and.

I mean hard to kind of navigate through some of this we have some long tenured.

Melissa Thomas: Teammate are team members that are.

Melissa Thomas: As you know in our international country. So we feel good about our position there, but it's really highly affluent it's hard to pinpoint at this stage.

Melissa Thomas: Stage.

Melissa Thomas: Thank you. Your next question is coming from Mike Hickey from benchmark. Your line is now live.

Mike Hickey: Hey, Sean Melissa Shanda congratulations guys.

Mike Hickey: 2023 and your fourth quarter. Great job. Just curious, Sean, on the product volume question on 25 getting back here to sort of pre-pandemic levels. Just curious what sort of boost you're thinking getting from 24 films that were delayed because of the labor strikes on the 25. I guess the question being, do you feel like your studio partners at this point structurally?

Mike Hickey: 2023.

Mike Hickey: Fourth quarter great job.

Mike Hickey: Just curious Sean on the.

Product volume question.

Mike Hickey: 25, getting back here to sort of.

Mike Hickey: Pre pandemic levels, just curious what sort of boost you didn't get your name from 24 films.

Mike Hickey: That were delayed because of the labor strikes into 'twenty slide I guess the question being do you feel like your studio partners at this point structurally.

Sean Gamble: are sort of ready to provide you with the volume of terms that they had pre-pandemic. And then, on 25, are you including... incremental films from streamers? Obviously, that business looks like it's scaling, and I guess you would think over time streaming plus your traditional studio partners will give you a volume of product that was above pre-pandemic. Curious when we hit that in the collection point, Sean.

Mike Hickey: Or sort of range provides you the volume of films that they had pre pandemic.

Mike Hickey: And then on 25 are you including.

Mike Hickey: Incremental sales from streamers, obviously that business looks like it's scaling and I guess, you would think over time.

Mike Hickey: Streaming plus your traditional studio partners, who can give you.

Mike Hickey: I am a product that was above pre pandemic I'm curious when we hit that inflection point Sean.

Sean Gamble: And then the second question would be on your domestic network. It looks like your theater account has contracted about 10% versus where you were pre-pandemic, and it looks like most of that is just sort of thoughtful optimization from you and your team, so obviously that would be accretive, but as we move forward here, do you think you're going to be getting in a better position to sort of base and build your domestic network? And I understand the new concepts you're toying with. That looks interesting.

Speaker Change: And then the second question would be on Europe.

Speaker Change: Domestic.

That work it looks like your <unk>.

Speaker Change: Theater account has.

Speaker Change: Contracted about 10% versus where you were pre pandemic and it looks like most of that is.

Speaker Change: Just sort of thoughtful optimization from you.

Speaker Change: <unk>, so obviously that would be accretive as we move forward here do you. Thank you. Thank.

Speaker Change: Getting in a better position to sort of base and build <unk>.

Speaker Change: Mastic network.

Speaker Change: Get it.

The new concepts, you're talking with that looks interesting curious also if that's an M&A opportunities.

Sean Gamble: Curious also if that's an M&A opportunity if you're successful there. Thanks, guys. All right. Thanks, Mike. Let me start with the first question.

Speaker Change: We're successful there and thanks guys.

Alright, Thanks, Mike Let me start with the first first question.

Sean Gamble: So just touching a little bit more on 2025 estimates. For volume, prior to the strikes, you know, we, the whole industry, was still in the recovery mode, rebuilding the whole production pipeline of films that was affected by COVID. And at that time, we were anticipating, you know, perhaps in 25, 26 would be the time that we could see things get back to pre-pandemic levels again, based on how things were progressing at that point. As a result of the strikes, clearly, that created over six months of work stoppage and delayed things.

So just touching a little bit more on 2025.

Speaker Change: Estimated for volume.

Speaker Change: Prior to the strikes we the whole industry was still in the recovery mode rebuilding the whole production pipeline of films that was affected by Covid.

Mike Hickey: And at that time, we were anticipating youll, perhaps in 'twenty five 'twenty six would be the time that we could see things get back to pre pandemic levels.

Mike Hickey: Again based on how things were progressing at that point as a result of the strikes clearly that created over six months of work stoppage and delayed things there were some movements out of 2004 into 25% as we sit here today and what we're going on is just largely the discussions the ongoing conversations we're having.

Sean Gamble: There were some movements out of 24 into 25. As we sit here today, and what we're going on is just largely the discussions, the ongoing conversations we're having with our studio partners. 2025, while there's certainly the potential it could get back there to pre-pandemic levels, I'd say we're probably looking at that maybe more of a 2026 phenomenon.

Mike Hickey: Having with our studio partners.

<unk> 2025, while there's certainly the potential it could get back there to pre pandemic levels I'd say, we're probably looking at that may be more of a 2026 phenomenon.

Sean Gamble: Apple and Amazon are certainly building. To your question on that, they've been adding. We know that Amazon has publicly stated that they're working towards a slate of 8 to 12 films a year. They may get there in 2025. I think we'll have to see how that just comes together, but I know that's a directional target that we understand at least that they're working towards and Apple's building as well. So I can't fully call it now.

Mike Hickey: Apple and Amazon are certainly building a to your question on that they've been adding we know that Amazon has publicly stated that they are working towards a slate of eight to 12 films ear. They may get there in 2025, I think we'll have to see how that just comes together, but I know that's a directional target that.

Mike Hickey: We understand at least that are.

Mike Hickey: They are working towards an Apple is building as well so.

Mike Hickey: Can't fully call. It now it's kind of why we've tried to give a sense, where we see things coming in somewhere between 2023, and 2020 and pre pandemic levels as we sit here today, but we're optimistic again things are moving in the right direction.

Sean Gamble: It's kind of why we've tried to give the sense that we see things coming in somewhere between 2023 and 2020 and pre-pandemic levels as we sit here today, but we're optimistic. Again, things are moving in the right direction, and we're thrilled to see that the studios, despite what happened with the strikes, haven't had any change in strategy with regard to their intentions to continue rebuilding their pipeline of films. If anything, it's been reinforced by just the ongoing results that these films are providing those companies. Transitioning to your question on our circuit, you're right, we certainly have had a higher number of closures of theaters domestically over the last couple years than we have had new builds and additions. As you mentioned, those theaters, while we've always had a process of optimizing our circuit and closing lower-performing theaters and older theaters and repopulating them with newer opportunities.

Mike Hickey: And we're thrilled to see that the studios despite what happened with the strikes there hasnt been any change in the strategy with regard to studios intentions to continue rebuilding their pipeline of films with the Idose if anything it's been reinforced by just the ongoing results that these films are providing those companies.

Mike Hickey: Transitioning to your question on our circuit and you're right. We've had certainly a higher number of closures of theaters domestically over the last couple of years than we have had newbuild additions as you mentioned those theaters.

Mike Hickey: <unk> always had a process of optimizing our circuit and closing lower performing theaters in older theaters and re populating that with newer opportunities.

Sean Gamble: There have been more of those that have been on the cusp that we've exited, which net net do provide a bit of a bottom line lift for our company going forward. So from a just pure EBITDA perspective, it's actually a net positive. We have added, at the same time, about 16 new theaters over the last few years, and we've seen that the results of those theaters have been very strong. In fact, in the majority of those cases, our actual results have exceeded our pre-pandemic pro forma targets that we had in mind based on significantly higher volume levels.

Mike Hickey: There have been more of those that had been on the cost that we've exited.

Mike Hickey: Exited which net net do provide a bit of bottom line lift for our company going forward. So from a just pure EBITDA perspective, it's actually a net positive.

Mike Hickey: We have added at the same time about 16, new theaters over the last few years and we've seen that the results of those theaters had been very strong in fact in the majority of those cases are our actual results have exceeded our pre pandemic pro forma targets that we had in mind.

Mike Hickey: Based on significantly higher volume level. So it definitely gives us a sense that there are clearly those market opportunities still and as I mentioned in prepared remarks, we've reactivated that development pipeline now as we've seen that and certainly as we just continue to build further in our recovery. So as we look for.

Sean Gamble: So it definitely gives us a sense that there are clearly those market opportunities still, and as I mentioned in prepared remarks, we've reactivated that development pipeline now, as we've seen, and certainly as we just continue to build further in our recovery. So as we look forward, I think, yes, we do anticipate that we will start to see a greater amount of activity in real estate, new construction, to supplement and offset some of the closures that we had. It doesn't mean we won't have some more of those types of closures that happen as we're just trimming some of the lower performing older assets in our company, but we do expect that we'll be adding more than we have over the past few years. Clearly, that's going to be moderated a bit just based on our continued cash flow generation coming out of this year in 2024 as we continue to recover and balance that with some of the debt actions that Melissa mentioned. Thanks, Mike.

Speaker Change: I think yes, we do anticipate that we will start to see a greater amount of activity.

Speaker Change: Of.

Speaker Change: Real estate Newbuild to supplement and offset some of the closures that we had it doesn't mean, we won't have some more of those types of closures that that happened is we're just trimming some of the lower performing older assets in our company, but we do expect that we will be adding more than we have over the past few years, clearly that's going to be moderated a bit.

Speaker Change: Based on our continued cash flow generation coming out of.

Speaker Change: This year in 2024.

As we continue to recover and balancing that with some of the debt actions that Melissa mentioned.

Speaker Change: Thank you.

Speaker Change: Mike.

Sean Gamble: Thank you. As a reminder, if you'd like to be placed in the question queue, please press star 1 on your telephone keypad. Our next question is coming from Jim Goss from Barrington Research. Your line is now live.

Thank you as a reminder, if you'd like to be placed in the question queue. Please press star one on your telephone keypad.

Speaker Change: Next question is coming from Jim Goss from Barrington Research. Your line is now live.

Jim Goss: Okay, thank you. Um, I wanted to talk a little more about the relationship with streamers that you've alluded to. I'm wondering if it's going to match the traditional studio partner patterns, or are you creating some new mutually beneficial working models in terms of the number and variety of releases and expectations in terms of theatrical windows. For example, are they looking at it as a way to directly create new, launch new series, and it might tie in that way, or certainly it goes directly into their product. So anything, it seems like the early stage is the best time to shape plans and expectations, and I'm just wondering if you have any commentary on that. Sure, Jim.

Jim Goss: Okay. Thank you.

Jim Goss: I wanted to talk a little more about the relationship with streamers.

Jim Goss: Alluded to.

Jim Goss: I'm wondering if it's going to.

Jim Goss: Matched the traditional studio partner patterns or are you, creating some.

Jim Goss: So the new mutually beneficial working models in terms of the number and variety of releases.

Jim Goss: Expectations in terms of theatrical windows for.

Jim Goss: For example are they looking at it as a way to directly create new launch new series and it may tie them that way or certainly it goes directly into their product. So anything it seems like early stages is the best time to shape plans and expectations and I'm. Just wondering if you have any commentary around that.

Sure Jim Let me.

Speaker Change: Let me answer that and then if need be I can elaborate further.

Sean Gamble: Let me answer that, and then, if need be, I can elaborate further. The current direction is, I'd say, more akin to traditional studios. I think what everybody's data has shown is these films that are being released theatrically are performing better on streaming platforms, delivering a greater amount of value in terms of consumer interest. So acquisition, and retention, those are the films that tend to be viewed to a higher extent. So, I mean, what we're seeing right now from the streamers is they're leaning into similar types of traditional films and looking to launch them in similar ways to derive that same type of lift on their platforms when they hit those platforms. By the way, with comparable types of windows, which are starting to gel around that 45 days, give or take some.

Speaker Change: The current direction his.

Speaker Change: I'd say more akin to a traditional.

Speaker Change: <unk> Studios I think.

Speaker Change: What everybody's data has shown is.

Speaker Change: These films that are being released theatrically are performing better on streaming platforms and they're delivering.

Speaker Change: The amount of value in terms of consumer interest. So acquisition retention those are the films that tend to be viewed to a higher extent.

Speaker Change: So I mean, what we're seeing right now from the streamers as theyre leaning into similar types of traditional films and looking to launch them in similar ways to derive that same type of lift on their platforms. When they hit those platforms by the way with comparable types of windows, which are starting to gel around that 45 days give or take.

Speaker Change: Some.

Sean Gamble: By the way, we also continue to see the opportunity for additional types of programming, as you mentioned, where it doesn't have to be limited to films. We've seen phenomenal consumer enthusiasm and response for premieres of series, episodes, and even bringing back episodes that have previously been shown on these platforms that are really well received by fans. They just love, again, as we know, the most active streamers are our most active moviegoers. These are people who just love to view this content in an elevated format, and they also view it loudly at home.

Speaker Change: By the way that also we also continue to see the opportunity for additional types of programming as you mentioned, where it doesn't have to be limited to films, we've seen phenomenal consumer enthusiasm response for premiers of series episodes.

Speaker Change: Even bringing back episodes that have previously been shown.

Speaker Change: On these platforms that are really well received by fans and they just they love again as we know the most active streamers are our most active moviegoers. These are people, who just love to view this content in an elevated format and they also view it amply at home so.

Sean Gamble: So this is just a great way to give fans an elevated event and a grant of late opportunity. So they're leaning into it in similar ways, and we see the opportunities there to be sizable, both for films as well as other episodic types of programming. Okay, thanks. There is just one other thing. I'm wondering, in discussing how you're leaning into merchandise, if you're taking any inventory risk on this? Do you have to determine how much you think you can sell? Or will they take it totally back, and you're an extension of them?

Speaker Change: This is just a great way to give fans an elevated event into granulate opportunity. So they're leaning into in similar ways and we just we see the opportunities there to be sizable both for films as well as other episodic type of programming.

Speaker Change: Okay. Thanks, just one other thing I am wondering.

Speaker Change: Discussing how are you.

Speaker Change: Leaning into merchandise I'm wondering if you're taking any inventory risk on this.

Speaker Change: Do you have to deter.

Speaker Change: Determined how much do you think you can sell or is it will they it takes totally back and you're an extension of them. So there's really no.

Melissa Thomas: So there's really no added risk to try to manage that getting into the concessions mix portfolio. But the deals definitely vary based on who carries the inventory risk. So it is something that we remain highly focused on as we pursue merchandise. There are many examples where we do take on that risk, and we're careful about how much we're purchasing as a result of that. And then, like I said, there are other models where the supplier is carrying that risk.

Speaker Change: Added risk to try to managing that getting.

Speaker Change: Getting into the concessions mix portfolio.

Speaker Change: The deals definitely vary based on who carries the inventory risk. So it is something that we remain highly focused on as we pursue merchandise. So there are many examples where we do take on that risk and we're careful about how much we're purchasing as a result of that and then like I said there is there are other model.

Speaker Change: Those were the supplier is carrying that risk we are leaning more into e-commerce opportunities with merchandise. In addition to what we have in our theaters.

Melissa Thomas: We are leaning more into e-commerce opportunities with merchandise in addition to what we have in our theaters. We've seen a great appetite for that from consumers. And obviously, there's greater self-space and greater opportunity to host more SKUs that way. And those types of models lend themselves more to a model where there's more risk for the actual supplier than by us. But it's a great question.

Speaker Change: We've seen a great appetite for that for consumers and obviously theres greater shelf space and greater opportunity to post more skus that way and those types of models lend themselves more to.

Speaker Change: <unk> model, where there is more risk score by the the actual supplier then by us, but it's a great question and something that we are particularly focused on especially as we're ramping that part of our business more.

Sean Gamble: It's something that we are particularly focused on, especially as we're ramping that part of our business. Okay, just follow up. So you could probably put kiosks in your theaters or something like that, and then it becomes sort of a catalog of merchandise online when the consumer is very interested in it at that moment. When you mention a kiosk, are you referring to just kind of a pop-up stand, or are you talking about...

Speaker Change: Okay.

Speaker Change: A follow up.

Speaker Change: So you could probably put kiosks in your theaters or something like that and then it becomes sort of a catalog merchandise online when the consumer is very interested in that.

Speaker Change: At that moment.

Speaker Change: When you mentioned our kiosks are you referring to just like kind of a pop up stand or are you talking about.

Sean Gamble: Yes, something of that nature, just some direct access. I know you can go to your phone and do it that way too, but... That's right. I mean... We have shelf space and stands in the majority of our theaters already where we put merchandise. You know, sometimes that's limited by the size and space in our lobbies, but we do that already today. And what the online channel provides is an opportunity not only for that same merchandise but for other SKUs. I mean, a perfect example is what we saw earlier in 2023 when we had Scream popcorn tubs that all of a sudden became this huge phenomenon with fans. And we sold out of them almost instantly in our theaters, and we were able then to extend that to an online offering and direct consumers to go purchase them online because they were no longer available in our theaters.

Speaker Change: Something of that nature, just some direct access I know you can go to your phone and do it that way too, but that's right I mean, we have shelf space and stands in the majority of our theaters already where we put.

Merchandise, sometimes that's limited by the size and space in our our lobbies, but we do that already today and what the the online channel provides is it is an opportunity not only for that same merchandise, but other skus I mean, a perfect example is what we saw earlier.

Speaker Change: 2023, when we had scream popcorn tubs that all of a sudden became this huge phenomenon with fans and we sold out of them almost instantly in our theaters and we were able then to extend that to an online offering and direct consumers to go purchase.

Speaker Change: Online because they were no longer available in our theaters and we sold a ton of those online as well. So it's a great way to just extend that in certain cases as well as gain greater shelf space that we may not have available in our theater, while carrying lower inventory risks.

Sean Gamble: And we sold a ton of those online as well. So it's a great way to just extend that in certain cases as well as gain greater shelf space that we may not have available in our theater while carrying a lower inventory. All right, thanks very much.

Speaker Change: Alright, thanks, very much I appreciate it.

Operator: I appreciate it. Thanks, Jim. Thank you. Next question is coming from Omar Mahas from Wells Fargo. Your line is now live.

Speaker Change: Thanks, Jim.

Speaker Change: Thank you next question is coming from Omar <unk> from Wells Fargo. Your line of her life.

Omar Mahas: Good morning, and thank you for the question. Sean, you mentioned that nontraditional content was 14% of total North American box office revenue in 23. Can you maybe give us an update on what your plans are for nontraditional content this year and if you expect that number to continue to grow as a percentage of box office? And just my second question, can you guys unpack the impact of the Taylor Swift concert film on average ticket price and concessions per cap? Thank you. Sure, thanks for the questions, Omar.

Omar: Good morning, and thank you for the question.

Omar: Sean you mentioned that nontraditional content was 14% of total North America box office employees.

Omar: Maybe you can give us an update on what are your plans for non traditional content. This year and if you expect that number to continue to grow as a percentage of our box office.

Omar: And just my second question just on U S on.

Omar: In fact, the impact from the Taylor Swift.

Omar: From film on average ticket pricing concessions per cap. Thank you.

Speaker Change: Sure. Thanks for the questions Omar.

Sean Gamble: Well, first, just to clarify, the 14% is specific to Cinemark. So that was a percentage that nontraditional represented of our box office results. So it was certainly a large part of the industry as well, but we tend to over-index on that type of content. So it would be a touch lower for the industry as a whole. In terms of future expectations, look, we remain optimistic about the growth in this area. Historically, pre-pandemic, we saw, we always believed there was a lot of potential in alternative content, and it was just something that never, never really seemed to meet that potential.

Speaker Change: Well first just to clarify the 14% is specific to cinemark so that was.

Speaker Change: Our our percentage that non traditional represented.

Speaker Change: Of our box office results. So it was certainly a large part of the industry as well, but we tend to over index on that type of content. So it would be a touch lower for the industry as a whole in terms of future expectations look we remain optimistic about the growth in this area.

Speaker Change: Historically <unk>.

Speaker Change: Pre pandemic, we were seeing we always believed there was a lot of potential in alternative content and it was just something that never never really seemed to meet that potential it generally hovered around 2% or so of box office each year.

Sean Gamble: It generally hovered around 2% or so of the box office each year, despite what we saw as upside. And it's been great to see now that that's been playing through, certainly in the areas of foreign films, faith-based films, concert films. Like, those all of a sudden have been taking off.

Speaker Change: What we saw it as upside and it's been great to see now that that's been playing through certainly in the areas of foreign films Faith based films concert films like those all of a sudden had been taking off.

Sean Gamble: When we look at 2023 specifically, I would say that the results were inflated a bit by some real outliers. I mean, obviously, you had Taylor Swift, the Erez Tour concert film, which did over $180 million in box office domestically. You had Sound of Freedom, which did about $185 million. Like, those are phenomenons, which, look, we're hopeful to see some of those repeat, but it's hard to bank on that. But even if you were to strip that out for us, non-traditional content still represented about 9% or so of our full-year box office results. So when you consider that and where we were last year, look, we're enthused about it. We think that as Hollywood content fully recovers, this could still be 5 percent or so of box office, and there's more potential there. So I think, you know, if you're a musician, you should see what Taylor Swift and Beyonce just did. I don't know how you wouldn't lean into that more.

Speaker Change: When we look at 2023, specifically I would say that was in the results were inflated a bit by some real outliers I mean, obviously you had a taylor swift the arrows to our concert film, which did over $180 million of box office domestically, you had sounded freedom, which.

You did about $185 million like those are Phenomenons, which look where we're hopeful to see some of those repeat but it's hard to bank on that but even if you were to strip that out for us.

Speaker Change: Non traditional content still represented about 9% or so of our full year box office results. So when you consider that we considered where we were last year look we're we're enthused about it we think that as Hollywood content fully recovers this could still be five plus percent or so of box office and there is more potential there. So.

Speaker Change: I think yes.

Speaker Change: If you're a musician youre seeing what with Taylor Swift and beyond say just did I don't know how you wouldn't lean into that more so that's a channel of opportunity. When you look we know already there in the faith based category Theres traditional studios like Lionsgate and Sony getting more into it. There is Angel studios now has all of a sudden really ramped up production.

Sean Gamble: So that's a channel of opportunity. When you look, we already know they're in the faith-based category. There are traditional studios like Lionsgate and Sony getting more into that, and there's Angel Studios, which has all of a sudden really ramped up production. They've already announced five films this year, and they're the ones who brought us Sound of Freedom in 2023. And certainly, foreign films have continued to rise. I mean, Indian films, Chinese films, these movies are doing phenomenal business in the U.S. now.

Speaker Change: They've already announced five films this year than they were the ones who brought us sound of freedom in 2023, and certainly the foreign films have continued to scale I mean Indian films Chinese films. These movies are doing phenomenal business in the U S. Now so we're really optimistic about where this goes and again, we see this being potentially 5% or so of box office going forward if not greater.

Melissa Thomas: But we're really optimistic about where this goes. And again, we see this being potentially 5 percent or so of box office going forward, if not greater. Omar, with respect to your question around the impact of Taylor Swift and the heiress tour on ATPs and per cap, the impact on our average ticket price was a benefit of 50 cents in the fourth quarter, and the benefit on our concession per cap, particularly in the form of improved product mix, was about 14 cents, and the majority that was predominantly driven by that.

Speaker Change: Omar with respect to your question around impact of Taylor Swift the era's tour on ATP and per cap the impact on our average ticket price was a benefit of 50 cents in the fourth quarter and the benefit on our concession per cap.

Speaker Change: <unk> in the form of.

Omar: Improved product mix was about 14 cents and the majority.

Omar: That was predominantly driven by that.

Omar:

Melissa Thomas: That's very helpful, Paula. Thank you, guys. Thanks, Omar.

Speaker Change: That's very helpful color. Thank you guys. Thanks.

Thanks Omar.

Operator: Thank you. The next question is coming from Steven Lazacek from Goldman Sachs. Your line is now live. Hey, Greg.

Speaker Change: Thank you. Your next question is coming from Stephen laws kicked.

Jim Goss: Goldman Sachs. Your line is now live.

Steven Lazacek: Good morning. First on margins, perhaps for Sean, you mentioned the efficiency of the variable workforce. I was wondering if you could perhaps talk a little bit more about what you learned on that front in 2023 and how much more room you think there is to operate the business more efficiently from a structural perspective as we look into 24 and then as the slate normalizes in 25. And then, on CapEx for Melissa, you talked about your expectations for CapEx increasing as the box office recovers, but not back to peak levels. I think you're at 150 for this past year, but CapEx was north of 350 at its peak. That's a fairly wide range. Is there any framework you could offer us in terms of thinking about how CapEx could trend as the box recovers in 25 and 26? That'd be helpful.

Jim Goss: Hey, great. Good morning, first one on margins, perhaps for Sean you mentioned the efficiency from the variable workforce I was wondering if you could perhaps talk a little bit more about what you've learned on that front in 2023, and how much more room. You think there is to operate the business more efficiently from a structural perspective.

Jim Goss: As we look into 'twenty four and then as the fleet normalizes in 'twenty five and then one on Capex for Melissa you talked about your expectations for Capex, increasing as the box office recovers.

Melissa Thomas: But not back to peak levels. I think you were at 150 for this past year Capex is north of $3 50, SP. That's a fairly wide range is there any framework you could offer us in terms of thinking about how capex could trend as the Berkshire covers in 'twenty five 'twenty six that'd be helpful. Thank you.

Sean Gamble: Sure, I'll start with the margins, and I'll let Melissa delve into that further, as well as your second question, Stephen. This is, when we talk specifically about labor management, this is an area that we've been working on for some time, you know, obviously predating the pandemic. We've seen a lot of opportunity just in the workforce management realm. We've, you know, put in, and done all kinds of time studies around what it takes to perform different activities in our theaters.

Jim Goss: Sure.

Speaker Change: I'll start on margins and I'll, let Melissa delve into that further as well as your second question Steven.

Speaker Change: This is when we talk specifically about labor management. This is an area that we've been working on for some time, obviously predates the dynamic we've seen a lot of opportunity just in the workforce management realm.

Speaker Change: Put in then all kinds of time studies around what it takes to perform different activities in our theaters, we become more adept certainly with lower volumes of attendance in determining what things, we should turn on or off based on expectations of demand. It's an area that we've got a range of initiatives that we're continuing to lean into.

Sean Gamble: We've become more adept, certainly with lower volumes of attendance, in determining what things we should turn on or off based on expectations of demand. It's an area that we've got a range of initiatives that we're continuing to lean into to drive that further. Obviously, the deeper we go into that, the more complicated those efforts become, because you're getting into reengineering processes more significantly in order to capture more productivity and do more with less. We've got a range of initiatives going forward, and I'll let Melissa speak to just that, you know, margin expectations. Yeah,

Speaker Change: To drive that further obviously.

Speaker Change: The deeper we go into that the more complicated those those efforts become because youre getting into reengineering processes more significantly in order to capture more productivity and do more with less but we've got a range of initiatives going forward and I'll, let Melissa speak to just the margin expectations, Yes, as you think about.

Melissa Thomas: As you think about salaries and wages, you know, in 2024, while we continue to drive and pursue further productivity initiatives, as Sean mentioned, I think the big thing to keep in mind for 2024 is that we may be more impacted by minimum staffing levels, given the expected reduction in content and box office potential. So that's something to keep in mind as you think about how that line item moves. And then, in addition to that, wage rate pressure, which we expect will be more in line with what we've seen. The Center for Autonomous Viewing, on the labor front.

Speaker Change: Al.

Salaries and wages.

Melissa Thomas: In 2024, while we continue to drive and pursue further productivity initiatives as Sean mentioned I think the big thing to keep in mind for 2024 is that we may be more impacted by minimum staffing levels given the expected reduction in content and box office potential so that's something to keep in.

Melissa Thomas: And as you think about how.

Melissa Thomas: How that line item moves and then in addition to that wage wage rate pressure, which we expect will be more in line with what we've seen historically on on the labor front.

Melissa Thomas: And then with respect to your question on capital expenditures. You know, as we think about our CapEx expectations, as you mentioned, we do believe our peak CapEx years are behind us. And, you know, we are continuing to benefit from those investments that we've made in our circuit historically, which we think is actually a key differentiator for our company. As we look forward, we do expect to continue to ramp up our capital expenditures as the industry recovers in 2025 and continues in 2026. What I would say, just from a normalized perspective, there are a couple things to keep in mind.

Speaker Change: And then with respect to your question.

Speaker Change: On capital expenditures.

Speaker Change: As we think about our Capex expectations. As you mentioned, we do believe our peak Capex years are behind us and we are continuing to benefit from those investments that we've made in our circuit historically, which we think is actually a key differentiator for our company.

Speaker Change: As you look forward, we do expect to continue to.

Speaker Change: Ramp up our capital expenditures as the industry rebounds in 'twenty five and continues in 2026.

Speaker Change: What I would say just from a normalized perspective, there's a couple of things to keep in mind.

Melissa Thomas: From a maintenance CapEx perspective, we do think it's reasonable to assume that over the longer term, our normalized run rate there will be within that 80 to 100 million range, which is where we've historically run in pre-pandemic times. Outside of that, it's pretty hard to predict because the remainder of that is going to be largely focused on ROI-generating opportunities, which include new builds, as well as the family entertainment centers that Sean mentioned, and then premium amenities. That is really going to depend on the nature and scale of opportunities that arise.

Speaker Change:

Speaker Change: Maintenance Capex perspective, we do think it's reasonable to assume that over the longer term our normalized run rate there will be within that $80 million to $100 million range, which is where we've historically run in pre pandemic time.

Speaker Change: Outside of that.

Speaker Change: Pretty hard to predict because the remainder of that is going to be largely focused on ROI generating opportunities, which includes new builds as well as the family Entertainment centers that Sean mentioned.

Speaker Change: Premium amenities and Thats really going to depend on the nature and scale of opportunities that arise and then outside of that the other key consideration would be we continue to progress through our multiyear conversion of our projector.

Melissa Thomas: Then, outside of that, the other key consideration would be that we continue to progress through our multi-year conversion of our projectors to Laser Projection. Great, thank you. I've been a Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to Sean Gamble for any further closing comments.

Speaker Change: Two laser projectors.

Speaker Change: Great. Thank you.

Speaker Change: David.

David Karnofsky: Thank you we reached end of our question and answer session I would like to turn the floor back over to Sean Gamble for any further closing comments.

Sean Gamble: Thank you, and thank you all again for joining us this morning. I'd just like to say once again that we're incredibly proud of the results our tremendous Cinemark team was able to deliver in 2023 and highly encouraged by what those results suggest regarding the potential of our company in the future. While 2024 will be pressured somewhat by the strike-induced volume headwinds that we've discussed, the fundamentals that drive our industry remain intact, and we continue to be highly enthusiastic about the future of theatrical exhibition and, certainly, of Cinemark.

Sean Gamble: Thank you and thank you all again for joining us. This morning, I'd just like to say once again that we're incredibly proud of the results are tremendous cinemark team was able to deliver in 2023 and highly encouraged by what those results suggest regarding the potential of our company ahead, while 2024 will be pressured somewhat by the strike.

Sean Gamble: <unk> volume headwinds that we've discussed the fundamentals that drive our industry remain intact and we continue to be highly enthusiastic about the future of theatrical exhibition and certainly of Cinemark and we look forward to speaking with you all again following our first quarter 2024 results. Thank you.

Operator: We look forward to speaking with you all again following our first quarter 2024 results. Thank you. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.