Cinemark Narrows Q3 Loss Despite End-of-Summer Slowdown at Box Office
Cinemark powered through a rough third quarter for the box office, as a 50% jump in revenue helped trim its loss for the period, according to the company’s latest earnings report Friday morning.
The theater chain reported $650.4 million in quarterly revenue — down from the second quarter’s $744 million revenue, but a significant gain from the $434.8 million in the year-ago quarter. Cinemark reported an adjusted loss of $24.5 million, or 20 cents per share, compared with a loss of $77.8 million, or 65 cents per share, in the 2021 third quarter.
The Plano, Texas, company’s shares rose 7.5% to $11.40 premarket trading, as revenue topped analyst expectations for $615.56 million. The results were shy of estimates for a loss of 14 cents per share.
The revenue gains came across the board, as admissions rose 44% from last year to $324.6 million. Concession revenue leaped 54% to $253.6 million as attendance shot up to 48.4 million, from 30.7 million in the 2021 period. In the U.S., attendance rose 37% to 29.5 million, while international attendance more than doubled to 18.9 million.
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After the strong opening weekends of “Minions: The Rise of Gru” and “Thor: Love and Thunder” to kick off the third quarter, the summer box office bonanza swiftly came to an end. With no new release earning an opening weekend of more than $30 million, the combined domestic gross totals for August and September only reached $790 million. That’s less than half of the combined $2 billion domestic gross earned in June and July.
During this time, Cinemark’s stock price sank from an annual peak of $19.35 on Aug. 4 to a year-low of $9.15 on Oct. 20, a 53% drop. Cinemark’s stock has rebounded slightly to close at $10.61 on Thursday, as it looks to a revenue infusion thanks to the release of Marvel’s “Black Panther: Wakanda Forever” next weekend. Cinemark shares rose in morning trading, adding 71 cents, or 6.7% to $11.32.
During the call, Gamble pointed to a series of successes that suggest audiences are still drawn to theaters, from “The Batman” in March to what he referred to as “the phenomenon, Top Gun: Maverick” to more adult-skewing films like “Elvis” and “Where the Crawdads Sing.”
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“Compared to other out-of-home options consumers have to choose from, going to the movies remains a very affordable form of local entertainment. Furthermore, it provides an often needed escape from reality during challenged times,” said Cinemark CEO Sean Gamble on the impact of a potential recession during the call.
“Based on consumer behavior over the past year, it is clear that movie going enthusiasm remains strong and vibrant across all categories of films and audiences,” Gamble said. “We’ve now seen this validated quarter after quarter, genre by genre, as longstanding records have been broken, and films have performed at levels comparable to or better than pre-pandemic expectations, even during periods of heightened Covid concerns.”
He added that content availability is the “biggest near term challenge our industry continues to face,” largely due to the lingering impact on production from Covid disruptions, both to production and because of decisions to shift films from theatrical releases to streaming during the pandemic. But answering a question from an analyst, he said he expects theatrical releases to pick up.
“We do see the different studios leaning back more heavily into theatrical,” he said, but acknowledged that “how fast the volume overall recuperates is just the nature of how long it takes to make movies.” He said it will be another few years to get back to pre-pandemic levels.
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“The other thing that we’re optimistic about is not only the traditional studios, but we do believe that in time, and hopefully in fairly short order, that the streaming companies are also going to lean more heavily into theatrical,” Gamble said. “We’re getting that indication from them that the same value that a theatrical release provides to traditional studios is no different for the streaming companies. It just provides greater awareness, greater promotional ability, greater interest when it hits those platforms. So we’re very optimistic.”
Gamble also said he doesn’t think that any potential recession will hurt movie-going. He pointed to theater enhancements and premium options like large format XD and IMAX as big draws for audiences, and noted that concession sales are up 19% versus the 2019 third quarter.
“When guests are visiting our theaters, they are choosing to make the occasion special and indulge,” he said.
Gamble said Cinemark is now benefiting from lessons learned from the pandemic about workforce deployment and inventory management. “As an example, these advances are now enabling us to hone our operating and staffing decisions down to the theater day and hour,” the CEO said. “We are scaling operations up and down based on an ability to generate positive incremental profit dollars, hour by hour.”
Gamble said the company believes that maximizing profit in cash dollars in the current environment is “paramount.” The company is also looking to sources of new revenue growth, including live events, enhanced concessions and a partnership with UberEats and other marketing and loyalty programs to draw audiences.
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