With that out of the way, my name is Sean Diffley from the Morgan Stanley Media and Entertainment Research Team. Today, we're joined by Sean Gamble, President and CEO of Cinemark. Sean, thanks for being here.
Thank you for having me, having us.
Looking back on the 2025, industry box, I would say it was slightly disappointing versus expectations. What do you think the main drivers of that underperformance were, and what did you learn from how you look at the 2026 outlook?
Well, 2025 was up from 2024, although, as you noted, trailed expectations a bit. As we've broken that down, t here's a few areas that led to that. One, we didn't have a film last year that crested that $1.5 billion mark, which happens from time to time. T hat's rarefied air, so don't read too much into that. Second thing is we didn't have a large animated film in the summer, which we customarily have. I mean, this year we've got Toy Story 5, we've got Minions. There's another live action of Moana, just as an example of 2060 in contrast. I'd say there's a little bit more of a mixed bag of films that really connected with audiences and some of those that didn't altogether, look at that a little bit as the normal ebb and flow of our business.
2024 wound up surpassing expectations. 2025 was a little bit under. I f there had been one big animated film this summer, I think everybody would be looking at the year differently. In totality, I think there was still a lot to celebrate. I mean, for us at Cinemark, it was our biggest year since the pandemic. There were a lot of all-time, record-breaking results that we saw throughout the year. Another great year in growth of younger audiences and a great year of non-traditional content again. Lots of positives.
As we look to 2026, I'm not sure there's a lot to read from 2025 into 2026, but we're just really optimistic about the slate for this year based on what we see.
Excellent. That's a perfect intro. As we think about kind of the higher wide release volume for 2026, maybe you could talk about your current visibility into film supply and current expectations around the cadence of releases by quarter.
Great. It's a great question. Overall volume has continued to recover since the pandemic. Actually, last year in 2025 recovered to about 98% of the number of wide releases that were put out into theaters compared to pre-pandemic levels. Based on what we can see right now, it looks like 2026 will at least match that and could even exceed that, recovering to pre-pandemic levels, maybe even beyond. I think the volume potential is really strong. When we look at the cadence of releases, that's an area that we're still having a lot of discussion with the studios about. If anything, that may have gone backwards a bit. When we look at 2026, we see a bit more congestion in the summer months and at year-end.
It took a long while for everybody to realize that it's a 12-month calendar before the pandemic, and movies can work at any time of year, and that had started to happen. Then ever since, things have kind of ratcheted back to more of the tried and true areas. There's an opportunity there. We saw how well Dune did a couple years ago in March. We'll see how Project Hail Mary does. I mean, that's a good example, but I think there's more opportunity for that to spread. Again, it could just cause a little bit of, you know, compression in those big, big months in the summer.
Got it. Over the last few months, there's been some debate around the impact of shorter and flexible theatrical windows. In the post-COVID days, I think early on you were excited about a flexible 45-day window in terms of de-risking theatrical overall. I'm curious what your current view is on windows.
T here was a lot of change over a very short span of time post-pandemic, with the window, and we've all been evaluating what that would do to consumer behavior. What we're seeing now is, that does appear to be having an adverse effect on just the overall recovery of attendance, particularly with more casual moviegoing audiences and smaller films. It's become a bigger matter of discussion now with the studios, both privately and publicly, that has come out. You're right. W e've still consider a 45-day window to be the optimal timeframe with the ability to flex up and down a bit based on performance.
T he key in that, though, is 45 days or more being the majority of the circumstances with some shifts, not 17 days or 24 days or something considerably lower than that. There have been a couple of studios that have been a bit more aggressive on that, and that's where some of the headwinds have been coming from. It's created some confusion with consumers that everything is that way. There's a bit more a course correction to do on that and where things may have over-indexed a bit. We're looking to pull that back. A great example of that is Disney has experimented with some of that before, and they have gone back to about 60+ days for the majority of their films.
You look, and they continue to be the most successful studio year after year with their overall box office. I think there are good examples to look to of how beneficial that can be.
It helps when Disney is 60.
Absolutely. I think that they've proven that that model works, and it's a, it's a good model for the industry.
Makes sense. I wanted to ask about marketing intensity from the studios. Have you noticed a meaningful change since the pandemic, and how does that impact your own decision around marketing?
I nterestingly, marketing is a little bit tougher to get a handle on in terms of the overall spend. U nlike box office, which is reported every week, and you got really good public data on that, there's not a good source to get your arms around how much is being spent. When we talk to the studios, they generally tell us that they're continuing to spend as much as they have historically to release their movies. If anything, I think what's changed is just the fragmentation of audiences in terms of their viewing habits and what they're spending time on in the home. You know, it used to be a much more efficient model to get at consumers through linear television. Now, because time is scattered across the board, it's become more complicated.
It's not unique to the theatrical space. I mean, really, that's for all consumer-facing industries. We're working with the studios on that and trying to work on strategies to make those campaigns as effective as they can be. We augment your question on what we do. We augment what the studio campaigns are doing with a whole series of things. I mean, we have direct access to 33 million addressable consumers globally, 27 million within our loyalty programs. We've got a really direct channel of communication to moviegoers, and we're using emails and social and digital channels to really amplify that messaging, spread awareness, help drive more interest, and importantly, drive that to Cinemark in that process.
That's kind of a big part of what we're doing to help support the marketing efforts of the studios.
I'm curious, as you talk about the grab for attention and the fragmentation of viewing across media, where do you think kind of cinema-going and, you know, movie theater-going fits into all of that? Do you think there's any kind of reversion back to kind of getting away from the AI slop, or how do you think about how consumers perceive going to the theater?
Well, you know, it's interesting. I mean, the perception and the interest remains really strong. I think we've been looking at different segments of audiences. Highly frequent moviegoers, what we've seen is as more movie, the volume has corrected itself, the amount of attendance of those moviegoers has come back. Great signs there. We're continuing to do surveys about interest, which remains very high. I think probably one of the most positive signs we're seeing is younger moviegoers are growing in their frequency of attendance. We were concerned at one point, at least I was concerned at one point, that because younger audiences are so tethered to their devices, that going to the theaters and then being asked to put them away would actually be alienating, and it's proven to be the exact opposite. It's more differentiated.
I think with what you hear about mental health issues and things like that, the social experience of that is actually a positive. We saw 25% growth in Gen Alpha attendees last year. In surveys, the younger audiences value the moviegoing experience more than any other generation. We think that's just a real positive in terms of, you know, the moviegoers of tomorrow.
That's fascinating. What movies is that across? I remember Minecraft was like very popular on socials, but is it in horror? I would imagine that's also the case.
It's across the board. W e see it in all categories. I think this drive to more experiences and event-type things, which really caters to those types of audiences, we fit in with that really well. You're looking to get out of house and do something fun, enjoying, we see it. It cuts across all genres.
Right. I wanted to ask, the big, the big news in the media industry is obviously Paramount, Warner, Netflix bowing out of the process there. I wanted to ask what your thoughts are on the implications for the theatrical space. Obviously, that deal would need to get approved, but I think the market generally perceived this outcome as better for your company and the industry.
Look, both Paramount and Warner Brothers have been longstanding supporters of theatrical exhibition, great partners of Cinemark for decades, right? I think, based on their actions over many, many years, I think that's a real positive. And there clearly has been a lean of those organizations to ramp more into the space. We see that as a positive. I mean, I'd say speaking to that particular deal, consolidation in the industry in general, anything that leads to sustained or increased levels of investment in the number and scale of releases theatrically, that continue to have a robust theatrical window and comprehensive marketing campaigns is viewed as a positive for the industry. W e're hearing all the right things.
There's still a lot of details still to work through that still needs to take place to make sure there's really kind of firm commitments in that regard. I think, we're gonna be working through that process over the coming months. I think one interesting thing about that, I would say, is on the Netflix front. There are a lot of public comments made about having had the chance to see the Warner Bros. financials and see how lucrative that part of the business was and the intent to continue that business in that same structure, would lead me to believe, well, if that was in truly the case, and that was the perception as stated why not get more into that space as an opportunity.
We've seen that opportunity sitting there that hasn't been pursued for years, and maybe this will actually unlock that potential more going forward, which would be a real positive for their company and for our industry.
Right. Ted talks about KPop Demon Hunters coming into the theater, I mean.
It was huge. I mean, that and the Stranger Things event, but I think even some of the mainstream films doing it with more of a traditional theatrical. It's not a difficult business to enter in terms of distribution. I think it can provide a lot of value for that company, and I think hopefully in having seen that it can unlock a new channel for them.
That makes a lot of sense. I wanted to ask about the Hollywood Guilds contracts coming up again in 2026. Obviously the last round was a major headache for the industry broadly. I wanted to ask, what are the key signposts that you're watching for, and how do you plan around a potential disruption? I would say most people think, you know, this round should be less disruptive than the last one, but how are you guys thinking about it?
Well, look, we're certainly hopeful that after all the hardships that were endured After the last strikes, which seemed to lead to some, you know, pretty detrimental consequences across the board, that level heads will prevail and we'll avoid another situation like that. Don't have any real inside baseball on what's going on there other than because things appear to have progressed quietly. I think everybody views that as a good sign. There's not a lot of saber-rattling publicly, which is a positive. N ot much to necessarily speculate on or prepare for at this stage other than it looks like, at least so far, all signs are positive in terms of how things are progressing.
Great. I wanted to shift to Cinemark specifically. You've obviously seen a lot of market share gains since the pre-pandemic. Much of that, I think, has been driven by premium and higher quality experiences versus your peers. What do you think are the two or three biggest drivers of that that makes you most defensible versus competitors in the market?
Well, we've been really pleased with what we've been able to achieve in our market share advances, it really is the result of a whole series of initiatives. If I were gonna call out two or three, I'd say I think it starts number one with just the consistent investments we've made in our physical theater assets over the years to maintain a high quality, high quality assets that are in good shape. We see that. Also have a high degree of the types of amenities consumers look for. 72% of our U.S. circuit has recliner seats. We've got the largest premium large format, private label premium large format network in the world, the most D-BOX motion seats.
A lot of those types of things that really keep people coming back. Second is just the efforts we've pursued over the years to create a fantastic experience within those assets. You know, in particular, our efforts around guest service. We've really worked to hone that in cleanliness. We consistently get high satisfaction scores from 95% of our guests regarding the types of experiences they have, and that lends to them coming back more. Finally, probably the third thing I'd say is just the work that we've done to improve the way we run the company in specifically in terms of building audiences. Our showtime optimization efforts from a programming standpoint, marketing efforts, pricing, all those things collectively have really played into...
I'd say across the board, all those things are initiatives that we've been pursuing for years and have been investing in for years, so specific to competitive edge. T hey're hard to replicate in any kind of short order. It's been a lot of time and dedicated focus to get them to where they are, and we're continuing to pursue a series of additional initiatives to take all those areas even further.
That's great. I wanted to ask about Movie Club. I think you're up to 1.5 million members there, which generate close to 30% of your domestic box. How are you thinking about the next phase of this growth as the program matures, and how do you think about long-term targets?
Well, we continue to be thrilled with the performance of Movie Club and especially the value that our consumers continue to find. As you mentioned, we've got now, we last reported a little over 1.45 million members in Movie Club, and they account for roughly 30% of our box office. We never thought it would be that high, which is tremendous. I think, you know, the core benefits of the program continue to resonate exceptionally well with our members, we are also constantly working on adding new things to increase that value. Because of that, one of the things we find is, even our newest subscribers, we see their level of consumption of movies, their frequency grow to levels of our early adopters.
There's a real value of getting people in the program, 'cause what they find from it leads to more moviegoing. We're continuing to lean into it, continuing to innovate around ways to make things better and keep consumers engaged, churn low. I don't know, 50% may be a high watermark to get to. I think if even we can sustain about a 1/3 of our box room, there's huge benefits that come from that.
That's great. I wanted to ask about per cap. Food and beverage and merch per-cap spending continues to set records. You break down what you view as the sustainable drivers on that from a film mix volatility standpoint. W e used to joke the profits and the popcorn, what's driving these per caps higher over time?
Well, I guess I would start with some of the per-cap growth. I think we've focused on initiatives predominantly that drive more consumption. When we look over the past few years since the pandemic, about 2/3 of our growth has largely come from incidence growth and about 1/3 from price. Last year, a little bit more of that was from price. We're very focused on making sure consumers can continue to see a lot of value in what we're selling. One of the benefits of more expansive menus actually lends to that. The price points on enhanced food is comparable to what you'd find elsewhere. By genre, we do see a bit more of certain types of audiences.
Younger, male, action-oriented type of audiences tend to consume a bit more of food and beverage, especially merchandise as well. Whereas types of specialty older adult types of audiences consume less. We haven't really broken that out. We just do see some skewing based on that. I would say overall, we've had a pretty good track record of delivering mid-single-digit growth for over a decade now, 5%-6% annual growth rates. I know that's certainly our target going forward. We're working on a whole series of additional initiatives with new innovations, new floor designs, menu concepts, localized flavors and things of that sort to just sustain that growth as we go forward.
It sounds like you're not seeing any GLP-1 impacts in the business there.
It's interesting. No, the short answer is no, we're not. We do carry a range of healthier options. You know, if you think of like fruit juices and waters and, we'll even pop popcorn without oil and things of that sort . What we tend to find is, as we introduce those types of concepts, there's not a lot of uptake. When people elect to come to the theaters, it's a moment to splurge, and the varied fun event type of, offerings that we have in the food and beverage area tend to be the things that over-index. No, not seeing any kind of impact from that or any other type of, you know, health consciousness efforts.
You discussed the ongoing advancements in showtime optimization and analytics and automation. What are you seeing as the biggest payoffs around those efforts today?
Well, a range of things. I mean, it ranges from, you know, the guest satisfaction results that we've seen, when we talk about enhancing the experiences that gets into how we're delighting and servicing our guests, building audiences. If we've got programs, more accessibility of shows that are programmed at the right time, it lends itself to more consumers coming into our theaters, you know, back to that market share comment you raised. S ome of that does get skewed by product mix and capacity constraints, but in general, it's one of the things that has lent itself to that. The wide range productivity advances internally.
It all has worked towards improved top-line growth as well as just overall profitability as we're dealing with various headwinds and tailwinds in the marketplace.
As of the end of last year, I think over 20% of your auditoriums were converted to laser projectors. What's the timeline to reach the majority of penetration there, and what do you think are the key benefits that you're underwriting to?
Well, I'd love to talk to benefits. I'll start there and come back. A ll projectors need to be replaced at some point. A part of that is just planning forward to when we're gonna have to replace our existing fleet of digital projectors. I think the great news is we have a phenomenal tech team and some of the best technology and presentation in the industry. We're in a position of being able to drive that at a pace that works for us. Our Barco Xenon projection capability is like the light levels and the presentation. I mean, it's not dramatically different from laser. We do get some added benefits in laser with a slight uptick in presentation, and there's some OpEx savings with maintenance, spare parts, energy consumption.
We're kind of working a balancing act of a timeline over several years to just replace theaters as they're or replace projectors as they're coming to maturity, trying to capitalize on some of the marketing and consumer benefits that lasers provide, and then balancing that with some of the other investments we're making of our capital, so we can just you know, diligently manage the overall spend we're deploying. The good news is, us relative to some others out there, is we can operate that on a timeline that works 'cause we don't have any burning issues just based on how solid our existing fleet of projectors are and the high quality that they already provide.
Right. As we think about attendance hopefully recovering in 2026 and 2027, how should we think about operating leverage to show up most clearly?
Our business, generally our cost structure, about 40% of our costs, I would say, are fixed. Things like our lease expenses, property taxes, certain degree of our G&A, and even kind of base level of labor that we need to run our theaters. We do see some nice increases in operating leverage over those fixed costs when attendance increases. Our revenues tend to scale at a faster clip than our costs do to service the added patrons we need. I think we, you know, expect to see some lift in terms of profitability on account of that. Obviously, there's other cost headwinds we continue to deal with, like everybody else, inflationary things on wage rates, minimum wage increases by, you know, various states, utilities and things of that sort.
We're also working on productivity efforts to try to offset a good portion of that. Good news is, you know, that's the biggest driver of our operating leverage is attendance. Big increases in that, it lends itself to better profitability.
Got it. I wanted to ask, what expense categories do you worry could remain structurally higher than they were pre-pandemic?
S o much has changed versus pandemic. I'm not sure it's even directly comparable. I'm not sure I would consider it structural per se, but I guess you could. Some of those inflationary areas is probably more what I would point to. You know, wage rates tend to only go in one direction, so there was a little bit of a spike in that for a period that's rationalized a bit. It's not necessarily going backwards. I'd say that's structurally maintaining work. Again, working on things to offset. Same thing in the utility camp. We've seen some increases in utilities that we think will be ongoing. Those are, two of the things that I would point to structurally.
I wanted to shift to international Latin America. I think attendance disappointed a bit last year. What do you think were the biggest drivers of the variance in LATAM demand versus the U.S. and are you more optimistic as we look into '26 from the Latin American attendance front?
Well, interestingly, Latin America on the whole has recovered even more so than the U.S.. Even in the midst of some of the extreme economic and political dynamics that take place in that market. I mean, I look at Argentina. Argentina, with 200+% inflation, has had attendance recover beyond 2019, right? 2025 specifically was really it just boils down to the product mix. Certain types of films resonate better with Latin audiences than others. In particular, horror, family films, and live-action types of films really work well. Sci-fi and fantasy and more US nostalgia, U.S. comedy type of films under index, and it was more a factor that.
When we look at 2026, it feels like a more balanced slate in terms of what will really connect with audiences more so than '25. I mean, there are films like Dune and Mandalorian and even The Odyssey that we think will probably underperform relative to the U.S. Other films like Minions and Mario Brothers and Moana and Spider-Man, which is a huge character in that market, that we think will really over-index. I think it's a much more balanced slate.
Right. Turning to the balance sheet. Now that the convertible notes and related warrants are behind you, congratulations on that. I know. A big area of focus for a while. Near-term maturities are pushed out. How do you think about the right balance between reinvestment and capital returns?
Yes, we're thrilled to have refortified our balance sheet over the past few years, extinguishing all of our COVID-related debt. When we think about capital allocation, our first two priorities are, one, maintaining the strength of that balance sheet, which we continue to view as a strategic asset. Two, investing in high-confidence ROI-generating initiatives to set the company up for long-term success. Continue to believe those two pursuits are in the best interest of generating long-term shareholder value, and that followed by, three, returning excess capital to shareholders. We continue to look at that in the context of leverage, liquidity, our cash balance projections, and the range of strategic initiatives we have to pursue to drive value.
I think we feel really good about the strength of our free cash flow over the past year that has really enabled us to execute across all three of those objectives. Pursuing the first two, and then also, you know, evidenced by reactivating our dividend, subsequently increasing it and repurchasing $275 million worth of shares last year. I think certainly our aim is to continue to execute in all three of those areas as we move forward.
Excellent. You outlined CapEx expectations for $250 million for 2026. Maybe you could walk through the major buckets, maintenance versus ROI projects and new builds? Where do you expect to get the biggest payback?
When we look at that $250, we expect a little over half of that will go towards maintaining a high-quality circuit, as well as pursuing some of the laser conversions that we were talking about a moment ago. That's a little bit up from what our norm would be of around $100 million, just based on some of the deferred maintenance we're pursuing over the next couple of years. The remainder of that would go towards high confidence accretive types of investments. You mentioned new builds is one of them, and that has a little bit of a longer lead time in terms of payback, in terms of the new builds just because they're longer projects. That would be one area.
Continuing to pursue more premium types of amenities, like more XD screens, more motion seats and things of that sort, which are definitely resonating with audiences. Additional food and beverage innovations. Those usually have really quick turnaround in terms of introducing as we continue to test with what types of things work well with our audiences and can be additive toward consumptions. Oftentimes, that requires more equipment. Those are just some of the types of examples of things that we're leaning into to drive incremental growth.
That's great. Maybe hitting on M&A, what types of assets could you be most interested in in terms of, you know, geography or quality of asset? How should we think about that?
We look at everything. I mean, we're open to exploring everything. That said, we do tend to favor higher-quality assets that have really assured returns and would be accretive to the company. We do explore other markets, although we tend to prefer going deeper in the markets we're already in, where we've got great knowledge, great relationships, in terms of operating in those spaces. We continue to see opportunities out there. I would say we obviously also consider, you know, what type of, you know, strategic impact there is, what type of competitive influences there might be, things of that sort. We're not looking to just grow for growth's sake. W e're very finicky buyers and again, we wanna make sure there's a strong path to accretion when it comes to M&A.
Again, it's one of the areas that we look to as a prospective area of growth for the company, so we're constantly out there kind of evaluating what types of opportunities there are and just a question more or less of when they unlock and become actionable.
Okay. I wanna see if we had any questions in the crowd.
Sean, you guys have talked about, among other things, I think sort of redesigning the lobby and utilizing that space better. I was curious 'cause you also talked about merch, which is a business that I just see booming like everywhere, which is, you know, almost like the most like low tech, you know, old school business ever. Is there an opportunity to do more on the merch side and particularly utilize the lobby space in ways that you haven't in the past?
Absolutely. That doesn't sound like much of a studio question, but maybe it is.
We'll take that offline.
A bsolutely. We've been leaning into merch. What's great about merchandise, in addition to it being a sales opportunity, is it just adds to the experience and the event of going to cinema. These movie-themed concepts have really connected. Talent in the films have gotten into promoting them, so it's just added to the fun of the movie experience. Yes, from a space, we've been adding dedicated space and racks for more merch in theaters. We've actually now really expanded our e-commerce channel too to be able to distribute more of that. If we run out in our theaters, That's one channel we can direct people to.
Obviously, there's a lot more shelf space we can pursue there than we can actually physically do in our theaters, so we can carry a wider array of options. It's something we're leaning into, based on the demand of doing more, and we definitely see it as a further area of growth opportunity to sustain that 5%-6% growth rate I was talking about when it comes to our per caps going forward.
I wanted to ask, obviously, AI is a big theme in this conference. I wanted to ask how you think about AI impacting the movie business and your business in particular?
Well, we look at AI as a, you know, big area of opportunity. We've been using AI and machine-based learning in a wide range of our tools and processes for a long time. You know, some of those areas we've talked about are our showtime planning, our pricing, things like that. We're now incorporating, you know, GenAI as that continues to evolve into those practices and look at that as a way to grow revenue, find additional productivity opportunities and things like that. We've got a lot of people who are evaluating that, looking for what are the tangible types of things that can really provide value to us within Cinemark. Beyond that, I'd say, you know, we looked at it as really something that has a lot of potential on the content creation space too.
I mean, clearly, the right types of IP and copyright protections have to be in place to do that responsibly. With that kind of structure set, I mean, the ability to gain efficiencies in how movies get made, unlock new visual effects capabilities. I mean, I think it can lead to a greater volume of movies being created with interesting new ways, interesting new visuals that we haven't seen before, which all bodes well to the content pipeline for our theaters. We just look at it as there's a tremendous amount of potential as this expands.
Great. I wanted to close out, put on your prediction hat, and if you had to pick one or two films or franchises in 2026 that you think would drive the biggest upside surprise to the domestic box office. We hit on some of them earlier, but if I pin you down to one or two, what would they be?
Biggest upside surprise. Well, t here's gonna be the movies like the Spider-Mans and the Avengers and the Moanas and Minions and Super Mario Brothers that are all gonna do big business. I think actually for me, probably, I wouldn't call it a sleeper hit necessarily, but I think one of the ones that could really surprise in the magnitude of upside is The Devil Wears Prada 2. I think the amount of heat on that movie is huge. It's not really considered necessarily a tent pole but it has the ability to do that level of business just based on the interest that's out there. I think that one could really. Hopefully, we'll see something similar from Project Hail Mary in a couple weeks as well. I think that would be Devil Wears Prada 2.
My wife's excited for it too, so. All right, we'll wrap it there. Thanks so much, Sean.
All right. Thank you, Sean. Appreciate it. Thank you, everyone.