Cinema giant Cinemark Holdings reported a swing to a profit in the fourth quarter, marking its first profitable quarter since the start of the coronavirus pandemic despite the omicron variant having caused renewed headaches for businesses. The company on Friday also touted “significant advances in pandemic recovery.”
The company, led by CEO Sean Gamble who succeeded Mark Zoradi on Jan. 1, posted a quarterly profit of $5.7 million. That compared with a loss of $239.3 million in the same period of 2020. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the latest three months swung to $139.4 million, compared with a year-ago loss of $97.5 million. Revenue jumped 579 percent to $666.7 million from $98.2 million in the year-ago period.
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“The theatrical exhibition industry, and our company, made huge strides recovering from the ongoing effects of the pandemic throughout 2021, culminating in an exceptional fourth quarter,” said Gamble, who most recently served as the exhibitor’s COO and CFO, in a statement that accompanied the release of the latest financial results. “During the quarter, Cinemark surpassed North American industry box office performance…when comparing results against the fourth quarter of 2019. Our Latin American admissions also over-indexed their corresponding industry benchmarks.”
He highlighted that a “rebound in attendance generated positive results in cash flow from operations, net income and adjusted EBITDA across our entire global organization for the first time since the onset of COVID-19 — all significant milestones in our recovery.”
During a morning analyst call, Gamble, recalling a disrupted theatrical release calendar for top Hollywood movies owing to theater shutdowns during the pandemic, looked ahead to a more consistent rollout schedule for movie titles with strict theatrical windows.
That includes studios sending big mainstream titles with star power to streaming platforms after theatrical runs begin. Gamble echoed other exhibitors in arguing exclusive runs in cinemas for tentpoles will draw fans back to the multiplex and drive better long tail profitability for studios beyond theaters.
“A theatrical window continues to produce bigger events… and increase box office with reduced piracy,” Gamble told analysts. And in discussing an ongoing conversation with the Hollywood studios around theatrical windows, the Cinemark boss argued 45 days appears to be the new length of cinema runs of big movie titles before they go to streaming.
“The positive news in the outlook is most releases will have some form of an exclusive window and it seems like the largest films are gravitating towards a 45 day window,” Gamble said. He pointed to Paramount and Warner Bros. having formally backed a 45-day window, Universal continuing to release most of its movies with a 45-day window and Sony remaining a “big advocate” of a theatrical window.
“Disney has been taking more of ‘we’ll wait and see how things progress with the course of the pandemic,'” he added of the key studio giant so far not officially disclosing its hand on theatrical windows. As he portrayed Cinemark adjusting to a dramatically changed theatrical marketplace as the pandemic wanes, Gamble pointed to promising 2022 box office from upcoming Hollywood studio titles like The Batman, Doctor Strange In the Multiverse of Madness, Top Gun: Maverick, Thor: Love and Thunder, Avatar and Black Panther: Wakanda Forever.
The company did warn investors that the first quarter of 2022 will include a headwind from the impact of the recent omicron variant wave on moviegoing. And Cinemark CFO Melissa Thomas discussed the company using data and analytics to adopt more dynamic pricing, based on time of day and day of the week, rather than introduce blanket price increases.
“We’re testing and learning. For example, we’re in the midst of a series of tests to better understand how elasticities have evolved during the pandemic, to further optimize our base pricing levels going forward. That could mean increases or decreases in pricing, depending upon the theater market, the time of day and week and various other factors,” Thomas said.
