Cinemark Q2 Profits Drop 62% to $45.8 Million, but ‘Inside Out 2’ Helps Avoid a Loss

Shares of Cinemark jumped over 3% in pre-market trading on Friday as the Texas-based multinational chain beat Wall Street expectations for its second quarter of 2024 with better than expected earnings per share and revenue.

Without the usual early summer box office boost, Cinemark saw net income drop 62% year over year to $45.8 million and revenue fall 22.1% year over year to $734.2 million. But the chain managed to stay out of the red, boosted by the success of “Inside Out 2,” as it looks to a rebound in the second half of the year.

Here are the top-line results:

Net income: $45.8 million, a 62% year over year decrease, compared to $119.1 million in the year ago period.

Earnings Per Share: 32 cents per diluted share, compared to an estimated 7 cents per share expected by analysts surveyed by Zacks Investment Research.

Revenue: $734.2 million, a 22.1% year over year decrease, compared to an estimated $693.2 million expected by analysts surveyed by Zacks Investment Research.

Attendance: 50 million patrons during the quarter, a 22.4% year over year decrease.

Admissions revenue: 365.8 million, a year over year drop of 23.5%. The worldwide average ticket price was $7.32 during the quarter.

Concessions Revenue: $292.9 million, down 21.6% year over year. Concession revenue per patron was $5.86 during the quarter.

“Robust consumer enthusiasm to experience compelling content in a larger-than-life, theatrical setting was evident once again in the second quarter. 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,” Cinemark president and CEO Sean Gamble said in a statement. “As strong consumer demand yielded better than expected industry performance, Cinemark delivered outsized results, extending our lengthy track record of outperformance through strong execution by our exceptional team, coupled with the ongoing benefits we are deriving from our strategic actions to build audiences, grow new sources of revenue and further hone our industry-leading operating capabilities.”

Like the rest of the theatrical industry, Cinemark faced a rough first half of 2024, as the release slate was depleted by delays caused by last year’s WGA and SAG-AFTRA strikes. In Q2, combined domestic grosses for April and May reached just $980 million, down 41.5% from the $1.67 million grossed in that period a year prior. The success of “Inside Out 2” in June helped decrease that deficit by the end of the quarter, but only to approximately 27% as the quarter’s box office finished at $1.94 billion.

But the second half of the year should be better, and already has thanks to the $1.17 billion domestic monthly total in July fueled by films like “Inside Out 2,” “Despicable Me 4,” “Twisters” and “Deadpool & Wolverine,” the latter of which has earned $600 million in its opening week and delivered Cinemark’s largest summer opening in the company’s history. Films like “Alien: Romulus” and “Beetlejuice Beetlejuice” should provide more modest support through the end of the quarter, leading into a Q4 that will have sequels to films like “Joker,” “Moana,” “Gladiator” and “Sonic the Hedgehog.”

“We remain highly optimistic about the ongoing rebound of theatrical release volume back toward pre-pandemic levels over the next couple of years, based on our continued discussions with our traditional studio partners, the further expansion into theatrical exhibition of growing studios like Amazon and Apple, and the increasing success of non traditional content,” Gamble said during the company’s earnings call.

Cinemark ended the quarter with a cash balance of $789 million and generated $161 million in free cash flow. It expects to deploy approximately $150 million toward global growth and maintenance in 2024.

In order to help strengthen its balance sheet, the company redeemed its remaining $150 million in 8.75% senior secured notes due in 2025. It also repriced a term loan to reduce its interest rate and save $3.2 million of cash interest annually, issued $500 million in 7% unsecured notes due in 2032 and executed a cash tender for the vast majority of its unsecured notes due in 2026.

As of June 30, the company’s aggregate screen count was 5,708, and the company had commitments to open 3 new theatres and 33 screens over the next three years.

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