Cinemark Fourth-Quarter Earnings Top Estimates, Boosts Dividend
CEO Mark Zoradi touts "new records in each key performance metric" as management also discusses Latin American trends and Netflix's upcoming 'Crouching Tiger, Hidden Dragon: Sword of Destiny.'
Movie theater operator Cinemark Holdings on Wednesday reported better-than-expected fourth-quarter earnings amid record U.S. box office led by Star Wars: The Force Awakens and touted full-year company records in key financial, attendance and other metrics.
The exhibition giant also raised its dividend 8 percent to 27 cents per share on a quarterly basis and $1.08 on an annualized basis.
Cinemark, which has a major presence in Latin America, reported quarterly earnings of $57.8 million, up 22.2 percent compared with $47.3 million in the same quarter last year. The fourth-quarter figure amounted to earnings per share of 50 cents, compared to Wall Street's expectation of 47 cents per share. Quarterly revenue rose 7.2 percent to $707.2 million.
Said Cinemark CEO Mark Zoradi, the Walt Disney and DreamWorks Animation veteran who took over at the company last summer: "It was a record-breaking year for the North American industry box office, as well as for each of the countries in which we operate throughout South and Central America. Cinemark is extremely pleased with our worldwide fourth-quarter and full-year 2015 results that created new records in each key performance metric, including attendance, admissions and concession revenues, average ticket price, concession per patron, adjusted EBITDA and net income.”
On Wednesday's earnings conference call, Zoradi said the "rampant success" of The Force Awakens was a boon in the U.S. in the latest quarter, but management acknowledged that the film didn't perform as well across Latin America as domestically. In the U.S., it accounted for 22 percent of the company's box office in the fourth quarter.
Looking at 2016's film release slate, Zoradi touted such titles as Captain America: Civil War, Harry Potter spinoff Fantastic Beasts and Where to Find Them, Star Wars stand-alone pic Rogue One and Batman v Superman: Dawn of Justice as looking strong. Studios' lineups also look "tremendous" beyond 2016, he added, highlighting that rarely has the industry seen so much transparency in terms of future releases.
Management predicted more films in the $150 million-$250 million U.S. box-office range this year, which should help spread out audiences across different films and help film rental costs for exhibitors. But as was the case with Deadpool, there are always big surprise hits that come out of nowhere, said Zoradi.
Asked about Netflix's release of Crouching Tiger, Hidden Dragon: Sword of Destiny on Friday and whether it would affect the box office, Zoradi said, "We don’t have any concern there."
He explained: "Netflix is a great service, is a great in-home service ... Netflix is very much a television network. .... They have some original product that goes out there. It's not playing in the theaters … we hope they have great success with it. But I don't see it as an issue relative to the theatrical business."
Cinemark's admissions revenue in the latest quarter rose 6.2 percent to $429.7 million, while attendance increased 1.8 percent to 66.9 million as a 3.0 percent domestic gain was partially offset by a 0.5 percent drop in international markets. Concession revenue grew 8.4 percent to $232.8 million.
The company said its average ticket price came in at $6.42 for the fourth quarter, up 4.2 percent from $6.16 in the year-ago period.
Asked about Latin America, Zoradi said while there are economic challenges, "thousands and thousands of people are going to the movies," and reading news just from the U.S. makes things seem “more dire” than they are. "Movies continue to be a relatively affordable piece of entertainment," he said. "The business is continuing to grow there."
Cinemark did say, though, it expects to open fewer screens in 2017 in Latin America than in 2016, with management particularly citing a slower pipeline in Brazil amid caution on the part of local developers.
This year's Summer Olympics in Rio de Janeiro aren't expected to have any major positive or negative effect on box-office trends, the company said.