Cinemark's earnings top estimates with boost from success of 'Inside Out 2'

By Ciara Linnane

Stock jumps about 4% early Friday

Cinemark Holdings Inc.'s stock rose 3.9% early Friday, after the cinema operator posted second-quarter earnings that beat expectations as cinemagoers flocked to movies including the record-setting "Inside Out 2."

The Plano, Texas-based company had net income of $45.8 million, or 32 cents a share, for the quarter, down from $119.1 million, or 80 cents a share, in the year-earlier period. Revenue fell 22.1% to $734.2 million from $942.3 million a year ago.

The FactSet consensus was for EPS of 8 cents and revenue of $692 million.

"Robust consumer enthusiasm to experience compelling content in a larger-than-life, theatrical setting was evident once again in the second quarter," Chief Executive Sean Gamble said in prepared remarks.

"Numerous films across varied genres delivered solid results, including June's record-breaking release of 'Inside Out 2' - now the biggest animated title of all time - which drove cumulative Q2 box office performance beyond our expectations despite headwinds caused by last year's strikes in Hollywood."

Chief Financial Officer Melissa Thomas said the company managed to de-lever and bolster its balance sheet during the quarter.

Cinemark redeemed the remaining $150 million of 8.75% senior secured notes due 2025 in May at par; it repriced a term loan to reduce the interest rate by 50 basis points, or $3.2 million of interest payments per year; the company issued $500 million of 7.00% unsecured notes due 2032 and carried out a cash tender for a majority of its unsecured notes due 2026.

The company expects to deploy about $150 million in investments in global growth and maintenance in 2024. It ended the quarter with $789 million in cash.

The company delivered domestic-box-office results that exceeded the North American recovery by 400 basis points compared with the second quarter of 2023, up 960 basis points compared with the second quarter of 2019 - before the pandemic broke out.

The company had 5,708 screens across the U.S. as of June 30, and commitments to open 3 new theaters and 33 screens in the next three years.

The stock has gained 64% in the year to date, while the S&P 500 has gained 14%.

-Ciara Linnane

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08-02-24 0715ET

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