Movie theater operator Cinemark Holdings on Wednesday reported higher first-quarter earnings that exceeded Wall Street expectations.
The exhibition giant, which has a major presence in Latin America, reported first-quarter earnings of $79.7 million, up 36.2 percent compared with $58.5 million in the same quarter last year.
Revenue increased 10.6 percent to $779.6 million as admissions revenue rose 9.3 percent and concession revenue jumped 12.8 percent. Attendance increased 2.5 percent, while the average ticket price came in at $6.41, up from $6.01 in the year-ago period, and concession revenue per patron hit $3.61, up from $3.28.
Zoradi during an analyst call put the first quarter earnings beat down to a focus on continuing to install recliner seating in its theaters and ticket price hikes. He said "luxury recliners" are the main reason cinema-goers attend Cinemark multiplexes, beyond the Hollywood movies on offer.
Cinemark is also balancing attendance and ticket price hikes to boost box office revenue, where possible. Analysts were also told that youth and action-skewing Hollywood movies like Beauty and the Beast and Logan played better than expected on Latin American screens during the latest quarter, similar to the traffic seen a year-ago with popular tentpoles like Deadpool and Star Wars: The Force Awakens.
Zoradi also touched on current negotiations by the major studios and theater owners on shortening theatrical windows, or the amount of time films play exclusively in theaters before they are made available for home viewing. The Cinemark boss said the studios were as eager as exhibitors not "to make a mistake," given nearly half of the revenue from a movie release is now coming from worldwide box office.
"So the studios are appropriately cautious about upsetting that apple cart to see any incremental revenue from a VOD window," Zoradi said. Theater owners and studios are for the first time engaged in substantive talks regarding a premium VOD service that would finally shorten the traditional theatrical window of 90 days and allow movies in the home far earlier.
MKM Partners analyst Eric Handler said in a first reaction to the Cinemark earnings: "The outperformance was fueled by stronger-than-expected concessions and other revenue, while admissions finished largely in line with forecasts."
Cinemark's Zoradi added in a statement ahead of the morning analyst call: "We are thrilled to have kicked off the year on such a high note and remain enthusiastic about the upcoming film slate, as well as the execution of our strategic initiatives."
May 3, 8:45 a.m. Updated with comments by CEO Mark Zoradi to analysts during conference call.