Cinemark CEO "Optimistic" for Record Domestic Box Office in 2015
New boss Mark Zoradi also discusses the outlook for M&A, theater repositionings and virtual reality.
Mark Zoradi, the new CEO of movie theater operator Cinemark Holdings, said Thursday he continues to be bullish about the industry and its ability to bring in a record year in domestic box-office revenue.
Speaking on the company's conference call after it reported higher third-quarter financials, he said: "Year-to-date, through September, the North American industry's box office has increased 6.3 percent. We continue to be optimistic for a record-breaking year." He cited such late-year releases as Spectre, the final Hunger Games film, Star Wars: The Force Awakens and Disney/Pixar's The Good Dinosaur, among others.
The domestic box office is currently around $9 billion for the year. The full-year 2014 reached $10.36 billion, while the current full-year record, set in 2013, stands at $10.92 billion.
On Thursday's call, Zoradi also said Cinemark would continue looking for possible acquisitions, saying "we are constantly evaluating opportunities for accretive M&A, both domestically and internationally."
But he also emphasized that organic growth is a core focus for management. "We believe reinvesting capital back into the company is the best way to create long-term shareholder value," he said, citing a focus on "enhanced concepts to further differentiate our theatrical experience from the in-home market," saying each theater's amenities are being adapted to its specific region and its needs. After all, "more than anything, we are competing for patrons' time," he explained.
Through the end of September, the company had 220 screens with recliners through new builds and theater repositionings, and that number will rise to nearly 400 by the end of the year, he said. About 850 total Cinemark screens are targeted by the end of next year.
Management said reseatings boost concession business and allow the company to slightly raise ticket prices after a while at the same time as providing patrons with a better experience.
Is Cinemark looking at virtual reality? "Yes, absolutely, we are looking at that," Zoradi also said on the call. "Do I see it as a big strategic initiative for us in the near future? No, I don’t. Are we looking at the technology? Absolutely yes."
He added: "That technology will certainly find its first growth engine in the gaming world and we’re staying on top of it. And we will start to experiment with it where we see it having potential."