All right. Thank you very much for people who have stayed around for the last, but definitely not least, final fireside chat of this year's conference. I'm very happy to have here today, with us, Melissa Thomas, Chief Financial Officer of Cinemark. Melissa, welcome.
Thank you, Eric. Happy to be here.
Thanks. Melissa, let's talk the 2026 box office, off to a very good start, better than expected. There's strong buzz for the full year. What gives you confidence in 2026, not only being up year-over-year, but also topping 2023 to reach a post-pandemic high?
Consumer enthusiasm for the theatrical experience remains resilient, and our studio partners continue to affirm their support for and recognition of the value of theatrical releases. As we look at 2026, we are encouraged by box office performance to date, including strong box office from carryover titles, as well as successful new releases, which has led to domestic box office growth of 20% year-over-year when you look at the year-to-date period thus far, and a modest increase over 2023 levels.
To your point, we do believe that box office is off to a positive start, and what we're really excited about is we're seeing nice momentum as we head into, what we believe, is one of the most robust film slates that we've seen in several years. That's something that, you know, we feel good about.
Now, while we're highly optimistic about box office performance, ultimately gonna depend on how those individual films resonate with audiences. Beyond just the film slate, we do believe that there are plenty of opportunities squarely within Cinemark's control to continue to drive incremental value and growth, so that gives us confidence even beyond box office.
Great. You guys have always done very well with family films. How does that lineup look to you know, for 2026, and what other genres do you think are set up well, more so than we've seen in the last couple years?
To your point, our footprint is more suburban, focused in the U.S., so it does lend itself very nicely to family films. As we look at the 2026 slate, we do see a nice lineup on the family side, particularly films like Toy Story 5, w e have Super Mario Galaxy, w e have another installment of the Minions franchise, live-action Moana, and that's just to name a few. Positioned well on the family side.
As we think about other genres where we over-index, we do like the slate from an action and horror perspective. Those are two areas that perform well for us. As we look, at 2026, the slate more broadly, it does have a more diverse set of films, so performance within our circuit will really depend upon how the individuals play out and resonate within our audience base.
I'll just say, the one thing I've noticed on the slate this year, more so than the last several years, it does seem like there are more independent studios with more volume of product that are starting to fill gaps that we haven't seen in quite some time.
Yes. We have long said that this is a momentum business, and the key is to have a consistent cadence of wide releases with diverse consumer appeal. This has been an area where we've seen the smaller studios and independents really fill that, or provide that diverse content. It has been a nice catalyst for us, and it's something that, you know, we continue to see as a benefit.
After years of pushing for shorter exclusive theatrical windows, Universal, who's been the one big holdout on windowing, they recently announced it's expanding that window from 17 days over the next two years to 45 days. What do you think brought about that change?
We can't speak on behalf of our studio partners. However, we do believe that a meaningful theatrical window is important to realize the full potential of a film. It supports promotional impact, builds cultural moments, and maximizes the overall value across the film life cycle. You know, and more importantly, we do believe that the studios realize the foundational value within theatrical distribution and the role that it plays in driving awareness and engagement and, ultimately, downstream performance, and we view steps, you know, that support that model as very constructive.
It does seem like there's a realization that it's more important to maximize profit than maximize marketing dollars.
Yes. We think looking at that full life cycle is very important.
Now, you know, looking at other studios, Netflix, of course, has been an up-and-down relationship with theaters. You know, they did have considerable success last year with KPop Demon Hunters in a short run and Stranger Things. How's your relationship with Netflix, and do you get the sense that their perception of the cinematic window is evolving?
As I mentioned, you know, we strongly believe in the value of the theatrical window, the promotional impact that it provides, and its ability to really maximize the overall value of a film. We also believe it's important to filmmakers as well as consumers to view films theatrically.
With respect to Netflix and their recent public comments have indicated that, based on their review of the performance of Warner Bros. theatrical business, that they have a deeper appreciation for the role and value within theatrical distribution. While those are encouraging signs, we need to see how Netflix actions align with those evolving perspectives.
We continue to believe that there is significant mutual opportunity within theatrical for Netflix, but it hasn't been an area that they've fully pursued. We do think that a consistent strategic participation within the channel could create meaningful upside.
For now, it's really just a one-off type of situation for them, and they'll continue to see how things evolve, and they were never gonna be into sports until they were into sports, and they were never gonna have an advertising tier until they got an advertising tier. So hopefully-
That's our hope.
... we can get to theatrical releases for them. As far as premium experiences, consumers are clearly opting more for consumer experiences, premium experiences post-COVID. How's Cinemark doing to sort of evolve with the premium market?
That is a clear trend that we've seen post-pandemic, that when consumers are coming to our theaters, they are wanting to take advantage of that full experience. Whether it be reclined seating, whether it be expanded food and beverage offerings, or enhanced formats like our Cinemark XD, ScreenX, IMAX, D-BOX, we are seeing them really capitalize or take advantage of those offerings within our circuit, and that was evidenced by, we had records on premium format revenue as well as concession sales in 2025.
Given the opportunity that we are seeing there, that is an area that we continue to lean in on, and we're looking to capitalize on the momentum there. As we look to 2026, we have, as part of our CapEx investments, we are allocating a portion of our CapEx dollars towards increasingly premium amenities, and that is both on the food and beverage side, as well as on enhanced formats.
Two calls I'd make in particular would be XD and D-BOX motion seats. We'll continue to lean into the customer trends and drive sustainable growth there. The one point that I would highlight that I think is important is, while we do view that as a growth lever for the company, what we are trying to do is ultimately make our moviegoing experience premium across our theater, no matter which auditorium that a consumer chooses.
By premium, you just mean the quality of the experience. It doesn't necessarily have to be something you charge an extra dollar for because the seat is reclining or that. Just the overall.
Exactly. Whether it be a reclined seat, whether it be enhanced food and beverage, so think pizzas, sandwiches, alcohol, guest experience, really, the cleanliness of the theater. Really wrapping in that entire experience. It doesn't have to be a consumer paying more for an XD or D-BOX to have a premium visit. We want every visit, a customer walk away feeling like they had value in their experience, and it is differentiated from the home.
Yep. In the last couple years, I mean, with your Movie Club subscription service, you've been getting a lot closer to your customers. You know, I think now it's what? About 30% of admissions revenue?
Yeah.
What are you learning from the customers now that you have all this data, and what can you do with it?
Movie Club, our Movie Club subscription program, has been a great success for us. As you mentioned, we've gained nice traction there. We have 1.45 million members, drives 30% of our box office. What we find is that not only does it drive a substantial portion of the box office, but these consumers are actually upgrading more frequently to our premium formats. They tend to spend more on food and beverage.
There's significant value in not only increasing our penetration on Movie Club and attracting new members, but also in retaining our existing member base. There's a key focus of ours to really drive deeper engagement within our Movie Club program. That is an area that we leverage insights and learnings to look at how we can evolve and enhance the program.
For example, we launched our Platinum tier for our most frequent moviegoers. We recently launched a premium screen upgrade add-on for those Movie Club members who want the most immersive experience. We've also launched badges that create social conversations, which is important these days. We'll do kind of unique perks, like early access screening. We do believe Movie Club is a great value proposition for our consumers, and we continue to see traction in terms of growth and runway there.
I don't wanna get you in trouble with Chanda, but you used to give out some statistics about the number of times a Movie Club member goes versus a non-Movie Club member. Chanda, we got the nod from Chanda.
Yeah.
Can we talk about what it means when you actually get someone to be a part of the membership?
From a membership perspective, the frequency of a Movie Club member is exponentially higher than the average moviegoer. While I can't provide that number, it's not a number that we do disclose. I can say even when we convert non-subscribers to be subscribers, we see a meaningful lift kind of pre/post in their moviegoing behavior. We do see that kind of time and time again, but they are our highest frequency customers, which is why we spend a lot of time there.
Okay. We've talked about premium concessions. Have there been any notable changes with trends and product offerings over the last several years with concession sales? Is it still non-cannibalistic of the most important concession item, popcorn and soda?
We've been really encouraged in the trends that we've seen on the food and beverage side. Similar to how we talked about earlier consumers coming and seeking that full experience, what we've seen in a post-pandemic environment is really strong growth in incidence rates.
When we look at our per cap in 2025 relative to 2019, it's up over 50%, and a considerable portion of that growth is driven by higher incidence rates. Consumers are essentially buying more when they're coming to our theaters. We've had a very conservative effort and initiatives around driving those incidence rates. To name a few, we've focused on expanding our food and beverage offerings. We've also focused on increasing the throughput of our concession stands, implementing queue lines, for example-
Kids love your queue lines.
Yes. It certainly creates impulse buys with products, like candy have done particularly well as we've leaned in there. Taking advantage of new product offerings, flavor trends, capitalizing there. We've also been leaning into mobile ordering and third-party delivery.
Another notable area that I would highlight on the concession side for us is merchandise. That has been a nice growth catalyst for us. Not only has it boosted concession per caps, but we do believe that it's encouraging consumers to purchase something that they otherwise would not have purchased or to trade up to a larger size. In addition to the benefits on the food and beverage side, because of the viral nature of merchandise, it is amplifying box office, so the benefit is twofold.
You know, it's funny, we talked about this on the last panel, but I know my daughter has discovered the Prada purse popcorn bucket for The Devil Wears Prada 2, and that seems like it's creating some good viral buzz for the movie itself.
Yes, it certainly has. We see that where, you know-- Scream 7 was a great example as well of where, you know, you can take a film that is a kind of more mid-sized film has an outsized impact on merchandise because it resonates so well, the merchandise does with consumers, goes viral and takes off. We really like the potential there, and we continue to lean in.
Okay. It wouldn't be a fireside chat at any of these conferences these days without mentioning AI. It's the big bingo buzzword. You know, fears of AI disruption have been a big focus on the broader stock market. How's AI creating efficiencies for Cinemark, and are there areas of concern with AI?
On the AI front, we have been leveraging AI, particularly machine learning, to enhance our pricing capabilities, showtime optimization capabilities, as well as to execute our marketing strategies, including audience targeting, as well as optimizing our spend and channel mix. There we have been leveraging AI to efficiently scale our efforts in these regards.
As we look specific to generative AI, we view that as an opportunity to accelerate our progress in these areas, as well as unlock potential additional opportunities. While we do continue to pursue productivity and efficiency-related benefits from AI, we actually think the biggest unlock for Cinemark with respect to AI is progressing top-line initiatives. That's something that we continue to pursue.
In terms of, more broadly across the industry, we do believe that AI has the opportunity to provide some benefits, particularly for efficiencies, that it can potentially provide across the production process, which could mean more films are made, which would be, you know, a positive for theatrical. Now, clearly, there are some risks that need to be ironed out around IP and copyright infringement, but we do believe with appropriate safeguards in place that hopefully the industry can really harness the potential there.
Okay. Now, as far as, you know, your financials are concerned, the best way to expand margins is increasing attendance. You've got a really good content slate this year and next year. How high, you know, can margins expand? Can we ever get back to pre-pandemic levels? I know there were some unique things years ago with National CineMedia, but, you know, where can margins get to?
To your point, pre-pandemic, our margins did include cash dividends from NCM and DCIP that we don't expect to recur, which was about 200 basis points of margin. Our aim is to get back to pre-pandemic margins, excluding NCM and DCIP dividends.
As the box office and attendance rebounds, and we stand to gain more leverage over our fixed costs, and we continue to execute against our strategic initiatives, the timing or extent to which that occurs is going to largely be attendance and box office driven, and then on top of that, there are other variables such as market share, our per caps and average ticket prices. Also, our ability to capture value from our strategic initiatives and mitigate potential cost pressure that may occur.
Naturally, on the international side, inflationary dynamics as well as FX are also factors. We continue to look to maximize our adjusted EBITDA and margin potential as the box office recovers.
It's not unrealistic to think that Cinemark has, the box office does what we think it could do over the next two years to get back to being the one cinema operator operating above a 20% adjusted EBITDA margin.
Well-
That would-
Our aim is to continue to expand our margins, and that's something that we are certainly focused on.
You guys have always looked at, you know, various theater innovations. You're now rolling out a handful of Gamescape concepts. You know, as you think about the returns of the business, you know, if the box office is $9 billion, a lot of pre-pandemic leases, maybe the economics, you know, you need something more. Does adding a family entertainment concept to a theater help create better ROIs for your business?
We have been exploring on the family entertainment side. We think it's a nice complement to our core theatrical exhibition business. As you look at that space, what we like about it is the diversification and synergistic opportunities allows us to leverage our operational capabilities as well as drive strong returns and attractive margins.
It is what we view as another format within the toolkit as we look at potential new build opportunities across the landscape. That's been, you know, how we've approached it. Now, naturally, it's very market specific on whether we would ultimately pursue an FEC in a market or a traditional theater.
One thing that I would highlight is that we've actually had a joint venture in the FEC space with Strike + Reel for a number of years now. That's allowed us to gain some learnings around FECs, and we launched last February our first wholly owned FEC in El Paso.W e continue to gain learnings and insights that are informing our broader strategy. We're optimistic there, but I would very much say that we're still in early days R&D phases. Ultimately, what we're looking to do is pursue accretive investments that position the company well for the long term.
Okay. Latin America still remains a consequential part of the Cinemark portfolio. Can you talk a little bit about some of the dynamics that are going on in Latin America with the recovery that we've been seeing there?
On the Latin America front, we've been really pleased with performance and attendance resiliency across that region over the past several years since the pandemic. It is a very social, family-friendly environment, and culturally, moviegoing fits in very well within the region. We are optimistic about our prospects there. Looking at 2026, we believe the film slate will resonate much better for Latin America than the 2025 film slate did. When you look at genres that perform well in international, family titles in particular play very well. When we look at the lineup, i t certainly caters to that. Also, action, horror, so we're optimistic.
As we think about how we're approaching Latin America, we're applying a lot of the same strategies that we're applying in the U.S., obviously tailoring them for local market dynamics. It's, you know, the keys are continuing to invest in premium amenities there and in maintaining our circuits. We are pursuing new build opportunities on the international front, and we're leaning in on marketing loyalty and really trying to drive engagement across the consumer base.
We've seen nice success. When you look at our market share since the pandemic, it's increased 180 basis points in Latin America. We've seen some nice momentum, and we think the slate bodes well for 2026.
Okay. Can't let you go without talking about capital allocation. Cinemark has brought back its dividend. Last year, for the first time ever, you've started buying back some stock. How are you thinking about your capital allocation process and where excess capital will be deployed?
There are three key pillars to our capital allocation strategy, maintaining the strength of our balance sheet, investing in accretive opportunities to position the company for long-term success, and returning excess capital to shareholders. As we look at kind of priorities, first and foremost, maintaining the strength of our balance sheet and investing in growth opportunities are our key priorities.
Now, we are fortunate that we have a strong free cash flow profile that allows us to prioritize those two areas but also return capital to shareholders. You saw us demonstrate that last year with the reinstatement and increase in our dividend as well as our share repurchases that we executed during the year.
We'd expect to continue to apply a balanced and disciplined approach to capital allocation with our overarching strategy, ensuring that we have the flexibility to pursue opportunities that may arise while also mitigating risks, and the goal of obviously maximizing long-term value for shareholders.
All right. Very strong performance to end the conference here. Thank you so much. We appreciate it.
Thank you, Eric. We appreciate you.