Greetings, welcome to the Cinemark Holdings Fourth Quarter and Full Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question- and- answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Chanda Brashears, Senior Vice President of Investor Relations. Thank you. You may begin. Good morning, everyone. I would like to welcome you to Cinemark Holdings, Inc.'s Fourth Quarter 2022 Earnings Release Conference Call hosted by Sean Gamble, President and Chief Executive Officer, and Melissa Thomas, Chief Financial Officer. Before we begin, I would like to remind everyone that the statements or comments made on this conference call may constitute forward-looking statements. Forward-looking statements may include, but are not necessarily limited to, financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may materially differ from forward-looking projections due to a variety of factors. Information concerning the factors that could cause results to differ materially is contained in the company's most recently filed 10-K. Also, today's call may include non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's most recently filed earnings release, 10-K, and on the company's website at ir.cinemark.com. In today's prepared comments regarding comparisons, we will be referring back to the fourth quarter of 2019, unless otherwise indicated. As we typically do, we filed our 10-K this morning in conjunction with our earnings release. Please note that similar to last quarter, the filing represents a combined Cinemark Holdings and Cinemark USA filing. While the differences between the two sets of financials are minimal, I wanted to point out this change once again. With that, I would like to turn the call over to Sean Gamble. Thank you, Chanda. Good morning, everyone. We appreciate you joining us today to discuss our fourth quarter and full year 2022 results. As we recently turned the corner from 2022 to 2023, we thought it would be constructive to share some of our key observations from the past year. First, perhaps most importantly, people still love going to the movies. Sustained consumer enthusiasm for moviegoing was validated time and again throughout 2022 across all genres of films, all segments of audiences, and all periods of the year. Last quarter, I highlighted a wide range of films that outperformed relative to pre-pandemic results, in many cases, setting new all-time records. Some examples include blockbusters like The Batman, Doctor Strange in the Multiverse of Madness, and Top Gun: Maverick. Family films like Sonic the Hedgehog 2 and Minions: The Rise of Gru. Horror titles such as The Black Phone and Smile. Adult-skewing dramas like Elvis and Where the Crawdads Sing. Specialty content such as Everything Everywhere All at Once, the live-captured BTS music concert, Permission to Dance on Stage, and multicultural films like RRR. Consumer passion to experience content in an immersive, larger-than-life theatrical setting has only been reinforced since our last call. Over the past three months, we've seen Black Panther: Wakanda Forever deliver the biggest November domestic box office opening ever with a $181 million launch. Global phenomenon Avatar: The Way of Water crested $2.2 billion worldwide to become the third-largest movie in history. Family film Puss in Boots: The Last Wish is well on its way to over $170 million of domestic box office, which is 14% higher than its first installment. Horror film M3GAN is quickly approaching $100 million of domestic box office. Adult drama A Man Called Otto has eclipsed $60 million following its initial platform release on December 30th. This past weekend, Ant-Man and The Wasp: Quantumania delivered the third-largest February opening ever with its over $100 million domestic debut. We continue to witness strong interest in specialty titles and events such as Pathaan, which just set the largest North American opening of all time for a Bollywood film. The Chosen 3, which generated unprecedented demand from faith-based audiences, selling out auditoriums across the country. Filmed concerts including Billie Eilish Live at the O2 and BTS: Yet to Come in Cinemas, which continue to generate overwhelming enthusiasm from music fans. The impressive performance of this expansive range of titles clearly demonstrates that consumers are as excited as ever to experience compelling movies and events in theaters. If these examples over the past year aren't proof enough, ongoing demand for Cinemark Movie Club, our monthly subscription program, further reinforces the point. After we fully reactivated Movie Club in July of last year, it quickly reverted back to growth and now surpasses 1.1 million members, well in excess of our 950,000 pre-pandemic membership base. Movie Club members drove 22% of our domestic ticket sales in 2022, which is up a sizable 800 basis points compared to 2019. Movie Club's continued growth and positive impact on moviegoing is a testament to the many exceptional attributes of the program, as well as sustained consumer enthusiasm for theatrical moviegoing. That brings me to our second key observation from 2022, which is movies perform better when they are released theatrically, particularly when they have an exclusive window. A theatrical release enhances a film's promotional impact and overall asset value. While this observation is not a new phenomenon, it has been reinforced with growing frequency by all of our traditional studio partners over the past year. Consistent with the relationship that has existed for decades with VHS, DVD, pay TV, and free TV, the movies studios are releasing theatrically with a window are not only generating lucrative box office proceeds, but also providing greater impact for their streaming platforms with regard to subscriber acquisition, retention, and engagement in an increasingly competitive in-home environment. That is because when marketed sufficiently, a theatrical release increases consumer awareness of and interest to see movies and all forms of filmed entertainment by eventizing them and elevating their perceived quality. This perception leads to a greater sustained recognition, remembrance, and longevity of theatrical titles. Furthermore, experiencing films in a shared cinematic environment develops stronger emotional bonds with stories and characters that helps build bigger brands, franchises, and cultural moments. It also satisfies the desires of filmmakers and talent who aspire to see their films on the big screen. Now that theaters are fully operational again and moviegoing has rebounded, our traditional studio partners are expressing intentions of returning to pre-pandemic levels of release volume, with a few indicating they plan to scale up even further. While our industry is still facing a near-term headwind from a reduction in films being released, which was a byproduct of the pandemic's impact on the production cycle of movies, overall volume continues to improve. Last quarter, we mentioned 85 wide releases had been announced for 2023 to date. As of today, that figure now exceeds 95 and is well on its way to reach our expectation of 100-105 wide releases for the full year. Although still short of the approximate 130 titles released annually prior to the pandemic, this improvement represents a meaningful 30% increase from 2022. A noteworthy addition to the 2023 film slate since our last call is Ben Affleck's and Matt Damon's upcoming movie, Air, that Amazon will release exclusively in theaters on April 5th. Over the past year, we've indicated that a significant opportunity for our industry is the prospect of streaming companies releasing their more commercial films theatrically. To help build momentum in that direction, we've been testing limited releases with various streamers for several quarters, and we're thrilled that Amazon has now elected to amplify their theatrical ambitions in a big way with Air, including the captivating ad they ran during the Super Bowl. We believe Amazon's move could represent the start of a more substantive entry into theatrical exhibition by streaming companies. In light of this potential shift, as well as the anticipated ramp-up of film production by our traditional studio partners, we remain highly optimistic about the continued recovery of film volume over the next couple of years. The third key observation from 2022 that we'd like to share is Cinemark remains strong, stable, and resilient as a result of our consistent financial and operating discipline and ongoing focus on continuous improvement. 2022 marked a series of important results and milestones for our company that exemplify our outsized recovery relative to our industry and peers, our improved financial stability, and our advantaged market position. For the full year, we generated $336 million of Adjusted EBITDA, which was up more than 320% versus 2021 and had an Adjusted EBITDA margin of 13.7%. We also delivered positive free cash flow of $25 million, even after paying down substantially all of our pandemic-related deferred rent. Achievement of these results required active planning, prioritizing, and flexing throughout the year to effectively navigate a wide range of shifting content, supply chain, labor, and inflationary dynamics. Fortunately, we benefited from a solid operating foundation and the many process improvements we have pursued since the onset of the pandemic with regard to workforce management, showtime planning, and overall cost controls. Those same enhanced operating disciplines, coupled with our sustained focus on guest service, sophisticated marketing capabilities, and varied promotional content and pricing strategies, yielded box office and attendance results that far outperformed industry benchmarks. Compared to 2019, our full-year domestic box office recovery surpassed North American industry results by 500 basis points, with both our domestic and international market share up more than 100 basis points. Part of our box office strength was propelled by the tremendous continued success of Movie Club that I described a moment ago. We also benefited from a significant uptick in consumer demand for premium amenities. Despite the inflationary environment we encountered during 2022, consumers continued to actively upgrade to premium large formats and D-BOX motion seats at levels well above pre-pandemic norms. We leaned into this trend through a series of new XD and D-BOX campaigns that helped grow our 2022 domestic XD revenues by almost 6% versus 2019. Domestic D-BOX revenues by almost 48%. Furthermore, even though PLFs only represent 5% of our screens, they accounted for 13.6% of our global box office, an increase of nearly 400 basis points from 2019. Akin to premium amenities, we also maximize food and beverage opportunities throughout the year, maintaining our significant concession per patron growth trend. Through a range of promotional, pricing, and category management strategies, we achieved an all-time high domestic per cap of $6.98, which was up more than 30% compared to 2019. Our international per cap also grew a sizable 65% in constant currency over the same timeframe. Our outperforming results and industry-leading recovery are a direct result of the positive experiences we provide our guests, our ongoing financial and operating discipline, and the perseverance, dedication, and skill of our extraordinary Cinemark team. I'd be remiss if I didn't take a moment to commend our entire global organization for all of their hard work, commitment, and resourcefulness to deliver these tremendous results and put us in an advantaged position to capitalize on future growth potential as our industry further recovers. That brings us to our final key observation from 2022, which is Cinemark maintains a strong competitive position with an abundance of opportunities ahead. As I just described, the disciplined approach by which we've managed Cinemark over the years, including the way we've prudently invested capital, actively focused on revenue and margin generation, and aggressively pursued process improvements, has provided us with a financial and operating position that is a strategic differentiator for our company. Moving forward, we intend to maintain our discipline as we focus on effectively navigating this fluid period of recovery, expanding our pipeline of content and audiences, and evolving our company to ensure ongoing success within a dynamic media and entertainment landscape. To that end, we are confident in the capabilities we've developed to quickly flex and adapt to shift in the marketplace, and we are highly optimistic about our ability to capture an outsized portion of our industry's recovery and the myriad of growth and productivity opportunities that remain in our purview. Examples include continuing to strengthen the experience and value we provide our guests through premium amenities like XD, D-BOX, and laser projectors, as well as enhanced concession offerings. Increasing moviegoing frequency through our omni-channel marketing platforms, extensive consumer reach, highly impactful loyalty programs, and data-driven promotions. Expanding our strategic relationships with content creators, retail partners, in-home delivery services, and new e-commerce sales channels. Scaling up our recently launched Snacks in a Tap online food and beverage ordering platform, while reducing friction in theater with improved floor designs and planograms. Deriving meaningful additional efficiencies and cost savings through our ongoing workforce management, continuous improvement, and sourcing initiatives. These varied actions will strengthen our core business, grow new sources of revenue, further streamline the way we operate, and enhance our ability to capture maximum box office and attendance upside as compelling content hits our screens. We look forward to doing just that as we consider the promising array of diverse titles that lie ahead in 2023, which are primed to excite all audiences. From action films like Indiana Jones and the Dial of Destiny, Fast X, John Wick: Chapter 4, and Mission: Impossible – Dead Reckoning Part One, to family films like The Little Mermaid, The Super Mario Bros. Movie, and Elemental, to superhero spectacles, including Guardians of the Galaxy Vol. 3, The Flash, Spider-Man: Across the Spider-Verse, and The Marvels, to suspenseful horror films like The Nun II, Evil Dead Rise, and Scream VI, to intriguing adult dramas such as Oppenheimer, Book Club: The Next Chapter, and My Big Fat Greek Wedding 3. The plentiful list of promising titles in 2023 goes on and on and extends across all genres and demographics. To summarize our key observations from 2022, the theatrical exhibition industry continues to follow a positive recovery trajectory with regard to consumer enthusiasm for moviegoing, the value a theatrical release provides studios, and content volume. Within that backdrop, Cinemark is poised to excel on account of our advantaged financial position, sophisticated operating capabilities, and sensational team, and we remain highly optimistic about our many opportunities ahead. Before I turn the call over to Melissa, I'd like to take a moment to personally acknowledge and thank our Founder, Lee Roy Mitchell, who announced his retirement from our Board of Directors last week. Lee Roy has been a cornerstone not only for Cinemark, but the entire theatrical exhibition industry over his influential tenure of nearly four decades. Many of you have had the opportunity to meet Lee Roy over the years at various industry and investor events, and I'm sure you can attest to his captivating energy, engaging personality, and entrepreneurial spirit. He is a pioneer who consistently challenged the status quo, growing Cinemark from only a handful of theaters to the global leader in theatrical exhibition we are today. We are abundantly grateful to Lee Roy for his leadership and the tremendous value he has provided over the years. We will all continue to work diligently to position the company that he and his wife, Candy, founded for long-term success. With that, Melissa will now provide further information about our fourth quarter results. Thank you, Sean. Good morning, everyone, thank you for joining the call today. The Cinemark team once again demonstrated our ability to effectively flex and adapt in a dynamic environment throughout the fourth quarter. Despite a significant reduction in film volume and softer than expected performance for certain films in the quarter, Cinemark served 39.2 million guests worldwide and delivered solid fourth quarter results. Globally, we generated $599.7 million of revenue and $73.5 million of Adjusted EBITDA, yielding an Adjusted EBITDA margin of 12.3%, which remains healthy, particularly considering the impact of the reduced film volume on our attendance in the quarter and the relatively fixed nature of our cost base. I would like to echo Sean in commending our global team for their hard work, dedication, and focus to deliver these results. Turning to our domestic segment, we welcomed 25.1 million patrons to our theaters during the fourth quarter and generated $251.1 million in admissions revenue. We continue to outperform the North America in the industry box office recovery in the quarter, outpacing the industry by more than 600 basis points versus the fourth quarter of 2019. Furthermore, our market share reached heightened levels in the quarter, increasing over 100 basis points relative to 4Q of 2019. Our outsized market share was primarily driven by our strong performance in alternative content, coupled with our ability to capture a greater share of the market due to the lower film volume. Our average ticket price was $10, up 19% versus pre-pandemic levels, driven by strategic pricing actions and a favorable format mix, with a meaningful uptick in 3D and premium large formats in light of the content released in the quarter. For context, thanks in large part to Avatar and James Cameron's commitment to visual technology, 10% of our tickets sold during the fourth quarter were in 3D, compared with only 3% in the fourth quarter of 2019. With respect to premium large formats, 16% of the domestic box office was generated from XD and IMAX, an increase of over 500 basis points versus 4Q 2019. Our domestic concession revenue was $186.5 million in the quarter, with our concession per cap reaching an all-time high of $7.43, a 39% increase over the fourth quarter of 2019. Higher incidence rates continue to be the primary driver of our per cap growth. Our team did a nice job capitalizing on the film slate in the quarter, with notable success from limited time offers as well as collectible vessels and other merchandise tied to movies and characters. Strategic and inflationary pricing actions also contributed to our per cap growth, albeit to a much lesser extent. Other revenue was $48.1 million and outpaced attendance recovery relative to fourth quarter of 2019 due to an increase in screen advertising revenue, higher transaction fees, and promotional income recovering at a faster rate than attendance. Overall, our domestic segment generated total revenue of $485.7 million and Adjusted EBITDA of $59.5 million, resulting in a 12.3% Adjusted EBITDA margin despite the challenging operating environment. Moving to our international segment, we served 14.1 million patrons. The fourth quarter has historically been our lowest attended quarter in Latin America due to seasonality. In 2022, it was also adversely impacted by the World Cup. That said, relative to fourth quarter 2019, Cinemark continued to outperform the Latin American industry in the fourth quarter and gained market share. Our international segment generated $53.5 million of admission revenue, $39.2 million of concession revenue, and $21.3 million of other revenue in the fourth quarter. Altogether, we delivered $114 million of total international revenue and $14 million of Adjusted EBITDA, yielding a 12.3% Adjusted EBITDA margin. Shifting to global expenses, film rental and advertising expense was 56.9% of admission revenue, up 70 basis points from the fourth quarter of 2019, due primarily to a higher percentage of box office generated from blockbuster films during the quarter, partially offset by modifications in film rental terms. The higher rate also reflects our ongoing marketing efforts to grow our customer base, increase visit frequency, and strengthen loyalty. Our level of marketing investment continues to be guided by our box office expectations and the returns we are seeing. Concession costs as a percent of concession revenue were 17.9%, consistent with the fourth quarter 2019. While we continue to face supply chain constraints and inflationary pressure in some key categories, some of that pressure is now easing. In the fourth quarter, we were successful in offsetting these headwinds through product alternatives, category management, and strategic pricing actions. Our global salaries and wages were $95.7 million and decreased 6% compared with the fourth quarter of 2019, primarily due to lower attendance, operating hours optimization, and labor management efficiencies. These factors were partially offset by higher average hourly wage rates driven by labor market dynamics and government-mandated increases. We continue to leverage tools and data to drive our decisions with an emphasis on maximizing our overall profitability on a per theater, per hour basis. Facility lease expense was $77.1 million in the fourth quarter and declined 7.8% driven by lower attendance, which led to a reduction in percentage rent and common area maintenance costs. Utilities and other expense was $103.4 million and decreased 12% from the fourth quarter of 2019, driven primarily by variable costs that declined with attendance, partially offset by higher utility rates and increased mix of credit card transactions and the expansion of our gift card program. G&A was $43.6 million or 6% lower than 4Q 2019 levels. Excluding the impact of share-based compensation, G&A was down 10%. Our G&A reflects our continued discipline around discretionary spending and staffing, which remain lower than 2019 levels, partially offset by a shift towards cloud-based software, higher professional fees, and wage and benefit inflation. Globally, we generated a net loss attributable to Cinemark Holdings, Inc. of $99.3 million in the fourth quarter, resulting in a loss per share of $0.82. We generated $63 million of free cash flow in the quarter and $25 million for the full year. Turning to the balance sheet. We ended the year with $675 million of cash. We continue to view our balance sheet as a strategic asset and a key differentiator. We executed upon our capital allocation priorities and strengthened our balance sheet during the year, paying down $21 million of international debt and repaying substantially all of our remaining deferred rent obligations incurred over the course of the pandemic. Importantly, we were able to do so while continuing to invest in the long term. For the full year, we invested $111 million in capital expenditures to enhance and maintain our theaters, with some spend initially planned for 2022 shifting into 2023 due to supply chain constraints. As we look to 2023, our capital allocation priorities remain focused on strengthening our balance sheet, which includes delevering and strategically investing to position the company for long-term success. With that, we expect to spend approximately $150 million in capital expenditures this year. This step-up relative to 2022 CapEx levels reflects our expectations around further box office and free cash flow recovery in 2023, as well as our balanced and disciplined approach to capital deployment. In summary, Cinemark remains well-positioned to fully capitalize on the industry's recovery given the strength of our balance sheet, prudent investments, and operational excellence. We will continue to focus on strategic initiatives that will benefit the company and our industry over the long term while aiming to maximize shareholder value. Operator, that concludes our prepared remarks, and we would now like to open up the line for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for your questions. Our first question has come from the line of David Karnovsky with JP Morgan. Please proceed with your question. Hi, thank you. Sean, I guess first on your market share, you noted some of your, you know, growth there was from alternative content, and we've seen strong continued contribution from programming, you know, like BTS or Pathaan or The Chosen. Just wondering if you think your share gains you made in the quarter are sustainable or whether, you know, that might normalize out by Q2 as sort of the film supply picks up? Thanks for the question, David. Certainly some of the influence of alternative content will fluctuate just based on the volume of content that's out there. It's an area that we've particularly leaned into. We have, I'd say some of the best technology in the business, particularly when it comes to live events. Some of the live concerts, we have the ability to broadcast that across our entire circuit, which gives us an edge and also boosts our share on things like some of the live events like the Coldplay concert and the BTS concert earlier in 2022. Certainly has the potential to give us a piece. I would say any aggregate alternative content is still relatively small as a total percentage of box office. We still think there's Growth potential, we're hopeful that as more and more of these events find really solid success, it'll lead to an increase in the volume of that. It certainly can adjust. I think part of what we saw in the fourth quarter with alternative content in terms of why it really gave us a boost to our market share was, unfortunately, just a limited overall volume of content. We expect that that's gonna continue to round out over the course of 2023, and because of that, alternative content will likely have a smaller influence in the total, the total, you know, our total share, as well as just the total box office. Okay. You know, we've seen supply come over from streaming, but in some cases that's not always getting a wide release or full marketing push. You know, wondering if you think those are isolated cases or whether they're sort of a new class of films that's gonna kinda earn some revenue in theatrical with limited P&A before moving over to streaming. Would just be interested to get your view on Puss in Boots. I think it's earned around $50 million post its home release. You know, do you see that mainly as a function of it being a family film, or do you think other genres can kind of do similar after it's out on EST? Thanks. Sure. Well, look, with regard to content from the streaming companies, as mentioned in the prepared marks, we've for a long while felt like that is a really sizable opportunity for the industry. With all the benefits that we continue to hear from our traditional partners about how movies they're releasing theatrically are providing greater benefits to their streaming platforms. You know, we've thought for a while that it's only a matter of time before the streaming companies get into theatrical in a much more significant way. Fortunately, we're seeing, you know, Amazon continue to do that with their MGM product that they recently purchased, and we're seeing it now with Air, their own homegrown film. We know in our discussions with Apple, they're giving us similar types of commentary about intentions to do the same. We do see that moving forward in a positive direction. Clearly some of the learnings we've had, testing releases in a smaller way, they just don't drive the same level of value overall in terms of promotion, in terms of lift on the streaming platforms, and just in terms of financial impact. I see that probably being lessened over time. Then, second, I'm sorry, what was the second -- Puss in Boots. Puss in Boots. Puss in Boots. I think, you know, we've been really pleased with the holds on Puss in Boots. It's been a fantastic run. Our view of, you know, some of the main drivers of that is just really right now, it's the lack of family content in the marketplace. We think there's been a big opportunity in January and February. If you're a family and you wanted to go to the theater, that's really the only, you know, show in town for young audiences. We think that part of the value, I mean, number one, the reviews have been very positive, so that helps as well. You know, it's a quality film, on top of that, the fact that there's a limited amount of alternatives and limited amount of choice has really helped to drive some of the success of Puss in Boots. Thank you. Thanks, David. Thank you. Our next question has come from the line of Ben Swinburne with Morgan Stanley. Please proceed with your questions. Good morning, everyone. Sean, could you come back to the wide release outlook? I know, you know, it's not really your role to forecast that over time per se, since it's the studios, anyone who's been on media earnings calls this month has heard about the sort of return of theatrical as a priority. Do you think... I guess the question is, do you think the 100- 105 for this year, is there upside to that? Maybe if not, 'cause we're sort of, you know, we're pretty far into 2023 now, where do you think that goes over the, you know, 2024, 2025? Like, can we get back to 130? Could we exceed 130? I'd love to get your thoughts just 'cause you obviously have, you know, more conversations in depth with distribution at the studio side than we do. I did have a follow-up for Melissa. Sure. Thanks for the question, Ben. Let me start with the second part of your question there. I definitely think over time, there is the potential to get back to the 130+ range of films we were seeing prior to the pandemic. Both because of the indications we're hearing from our traditional studio partners as well as what I was just speaking to a moment ago, the potential for streaming companies to get more significantly into the theatrical space. There's also the potential for new entrants. You know, there's new studios coming into play. Beyond just the value that theatrical is providing to their streaming platforms and other distribution channels, we've said this on prior calls, the more dynamic, flexible window I actually think helps because it creates a better model for many of those mid-tier films that were starting to disappear prior to the pandemic. You know, we've seen Mm-hmm. Many of those films work and generate some terrific results during the course of 2022. With the studios having the knowledge that if for whatever reason they go for it and it doesn't work, they can get into the home faster and still recoup any of their downside, that bodes well for them taking more swings and putting more films out. We look at all that as really positive in terms of where things go. The governor on all that and ramp up back to that level is really just the production cycle, right? Yeah. It takes two-three plus years to make movies. That was disrupted by the pandemic. All the studios are having to kinda get back up to those levels, and it just takes some time. So... It, you know, it's not a perfect assembly line process. There's an art to it. We'll just have to see how that goes. Specific to 2023, we do think there is the potential to have some upside to that. We know that, as, you know, you mentioned it yourself on some of the public calls, studios are looking at some of the other films that they had originally been contemplating for streaming platforms and considering if those could be released theatrically instead. There's the potential for that to grow higher. I think we'll have to see. A lot of times too, in addition to films that get slated late in the game, there are those platform releases that you just don't know if they really connect, like in Everything Everywhere All at Once, you know, there's several examples where A Man Called Otto, like, they can grow to be wide releases in success. If there's more of those with quality, it could certainly lead to something in excess of 100- 105. Makes sense. Then, Melissa, just as we think about our 2023 forecast, and the expectation of a, of a larger box office, a broader slate, hopefully a broader, you know, sort of audience coming back to the theaters, what would you highlight we think about either on expenses, and sort of U.S. margins, ATPs or per caps as we think 23 is hopefully, you know, another step toward the normal year, on the box office front, just to make sure we're thinking about some of the major swing factors in your mind, if anything? Thanks for the question, Ben. I'd start off by saying, as it relates to 2023, we do anticipate margin expansion relative to 2022 as the box office further recovers and we gain more leverage over our fixed cost base. Big picture on the revenue side, I think the key call-out there would be, we do believe we can modestly grow both our average ticket prices as well as concession per caps relative to full year 2022 levels, albeit those growth rates may be tempered a bit from what we saw in 2022 and will vary quarter-to-quarter based on our film mix. On the expense side, you know, our expenses are comprised, as you know, of both fixed and variable components. As you think about the box scaling, our biggest variable expenses are going to be film rental and advertising, salaries and wages, concession supplies, and then to some extent, facility lease expense. That's particularly related to international. It's reasonable to assume that those expenses will scale up as attendance in box office continues to rebound, though that won't necessarily be at the same rate. Overarchingly, we do expect to remain diligent in our cost control, and we'll continue to pursue productivity initiatives with a mindful eye towards profitability and of course, free cash flow generation. Great. Thank you both. Thanks, Ben. Thank you. Our next question has come from the line of Robert Fishman with SVB MoffettNathanson. Please proceed with your questions. Good morning. Two questions, please. First, Sean, I appreciate your comments around the return of the movie supply. I'm wondering if you can share learnings about the frequency of moviegoers and how that's maybe changed compared to the pre-pandemic from maybe your Movie Club members or just the broader moviegoing audience. Are there certain movie genres where you think streaming or windowing has had a bigger impact on theater attendance, like family or dramas? Maybe is this an opportunity for growth given the pendulum shift on the streaming strategies that you're talking about from the Hollywood studios? Thanks. Thanks, Robert. Great, great questions. You know, we have been looking at frequency of moviegoing behavior, both in general and of our Movie Club members. I'd say the one challenge we have just in looking at that in a comparable way is, you know, with volume down in 2022, almost 40% to where we were prior to the pandemic, it's just, it's hard to compare that directly because with more limited choice, there, you know, naturally will be more limited frequency. I would say we're very encouraged by what we're seeing in terms of Movie Club going behavior. I mentioned, you know, on the call we continue to see overall subscribership grow, which we see as a real positive in terms of interest and sustained demand. However, frequency is down just a small tinge, but based on what we've seen, it's down less than volume is down. You know, if anything, based on the volume of opportunities people have to select from, their I would say their overall frequency is up a touch, even if in the aggregate frequency is down a little bit. Again, it comes back to fewer films being available to them. Specific to any impact on any type of particular genre, perhaps the one area we kind of call out that we're watching would just, if nothing else, be more animated content. We have seen perhaps a little bit of consumer confusion just based on some of the releasing strategies specific to animation that took place over the course of the pandemic. Even that is a little hard to fully say 'cause there have been so few of those movies released in 2022 compared to pre-pandemic times. That part of that could also just be a response to less opportunity to go see those movies and people not being as much in the habit as a result of it. On the flip side, we've seen some great examples of solid results. I mean, you had Sonic the Hedgehog 2, although that wasn't fully animated. The Bad Guys did really well. Minions: The Rise of Gru had a record July opening. We just talked about Puss in Boots on the call. There's been a series of those. We've also seen how families on just overall non-animated films, their behavior has been more consistent with pre-pandemic levels. We'll have to see how 2023 plays out. I mean, we're very encouraged about the lineup of animated films over the course of the year. We'll have to see, engage that over the course of the year. We think that could change the course of things based on a more sustained momentum of options. That's great. Thanks, Sean. Melissa, any additional color you can provide to us about the CapEx levels beyond 2023? Like, how should we think about normalized levels from here with the return of movie supply? Sure. From a CapEx perspective, it's important to note that we do believe our CapEx years are behind us, and that we continue to benefit from our history of proactively maintaining and investing in our theaters prior to the pandemic. As you mentioned, for 2023, we are targeting $150 million of capital expenditures, certainly a step up from the $111 million in 2022. As we think about long term, I mean, naturally, as the box office continues to recover in 2024 and beyond, it's reasonable to expect us to continue to step up our capital expenditures. Again, we don't expect to get back to those peak CapEx years. Great. Thank you both. Thanks, Robert. Thank you. Our next question has come from the line of Eric Handler with ROTH MKM. Please proceed with your questions. Good morning. Thanks for the question. Sean, given the success that you're having with premium amenities, I'm curious, as you think about your CapEx investments that are going on, why not add another XD screen to existing theaters or accelerate the D-BOX rollout? I'm just curious how you're thinking about that. It's a great observation, Eric. Actually, we have been doing exactly that. We, you know, in all our new builds, we're putting in XDs, and in many cases, we're putting in two directly. We've been going back, and that's been one of the areas of growth for XD over the course of 2022. Even to a certain degree during the pandemic, we went back and we're looking at where we could add second XDs just based on the profile of our auditoriums. You know, part of the only limiter there is, obviously there's an ROI assessment that we do, but also just the scale of the auditoriums. We need to make sure that there's an auditorium that has the appropriate size and scale for an XD. We've been doing that. Likewise with D-Box seats, we've found some great success in some of the different ways we're installing D-Box, and we've been adding those considerably over the course of 2022, and we plan to continue to do so in 2023, just given the demand. Great. as a follow-up. with Movie Club, correct me if I'm wrong, I mean, you started Movie Club in 2017 at $8.99 a month. I believe now it's $9.99. Have you thought about price as maybe a lever with Movie Club just to keep up with inflationary pressures? Absolutely. It's something that we routinely look at. One of the things that we try to maintain is just the appropriate parity between our general admission levels and our Movie Club levels to make sure that the right, you know, the right variance is there. It's something that we're gonna continue to watch. I'd say in general, the way we have approached pricing as we've been working through the pandemic and reigniting theatrical moviegoing is we've aimed to be a bit more moderated there. You know, as we have been trying to attract people back to our theaters in a more significant way, one of the things we've been cautious about is not, you know, overdoing it with price, so their experience when they come back to the theaters is one of feeling like they're not getting an appropriate value. Something we use data to drive our decision-making, and we're very careful about how we do that. We do that with overall pricing, and we certainly do it with Movie Club as well. It's something that we're going to continue to pay close attention to as we go forward. Thank you very much. Thanks, Eric. Thank you. Our next question has come from the line of Eric Wold with B. Riley Securities. Please proceed with your question. Thanks. Good morning. Two questions, I guess. First one, kind of a follow-up on an earlier question around, kind of expenses and kind of outlook. Kind of taking it a little further, if we do in the, in the coming years get back to, you know, comparable number of releases in that 1/30th range, get back to a comparable level of attendance, how do we think about the push and pull or the kind of the offsets between the stronger guest monetization, assuming kind of per caps stay elevated, along with an expectation that expenses are probably gonna stay elevated? Can we get back to that 24% global Adjusted EBITDA margin that you saw pre-pandemic at some point in the coming years on that kind of comparable level of attendance? Thanks, Eric. Clearly our goal over the longer term is to get back to pre-pandemic Adjusted EBITDA margin levels, but our ability to do so is going to depend upon a number of variables. The primary driver, as you know, is going to be the extent to which attendance and box office recover to historical levels. Which is going to be a function of volume and the quality of films that are released. The other key variables at play are evolve on the expense side and to what extent dividend income returns. Those are really the key factors to keep in mind there. It's really too early. It's difficult to quantify at what box office levels we could potentially, whether we could potentially return to pre-pandemic Adjusted EBITDA margins. I think there's too much in flux at this stage, but clearly our goal. Got it. Appreciate that. The second question on Latin America, maybe talk about the current state of kind of the new build environment, kind of, you know, what you're seeing with the pipeline firming up of discussions. I guess, same kind of thought process. I mean, can we get back to that goal of 75-100 screens per year? Is that still the opportunity in your mind down in that region in the coming years? Has that maybe changed one way or another based on kind of what you're seeing? You know, it's interesting. We still, when we look at the entire region, we still see plenty of opportunity for growth, as many of the markets are still highly under-penetrated with regard to the number of theaters that exist compared to the overall volume of people who reside there. We do think there is some potential for incremental new build activity over time. I'm not sure we would get back to a level of, you know, 75- 100 screens like we had been operating at, you know, about five plus years ago in the near term. Certainly just because of the overall expansion of malls and just the current, I would just say the current, you know, market environment right now, which is still recovering. We do have some new builds that were committed prior to the pandemic that we are continuing to move forward on. We're gonna continue to monitor the environment. As you might recall, all of our theaters in the marketplace are connected to malls because that tends to be where people aggregate for activities on the weekends, and there's easier mass transit, and they're safer. Some of that overall expansion will be affected just by how much mall development there is also in the coming years. I think, you know, we're just gonna have to see. I would say in the short run, it's probably unlikely that we'll get back to those levels over the next, you know, three-four years. Helpful. Thank you both. Thanks. Thank you. Our next question has come from the line of Chad Beynon with Macquarie. Please proceed with your questions. Hi, good morning. Thanks for taking my question. wanted to go back to Movie Club. you mentioned memberships over 1 million subscribers or people. Just given the ongoing evolution of loyalty, are there other ways to monetize this group, whether it's partnerships with other consumer brands, branded credit cards, or other things like that? Thanks. It's a great question, Chad. The short answer is yes, those are things that we're looking at. I mean, it depends on what we do. One of the ways we're doing that is certainly working with our studio partners, right? It's a great channel to promote films, particularly when people have credits that they've amassed that they haven't used, and we have better familiarity with the types of movies that they like, being very targeted in terms of showcasing what's upcoming to them. Looking at third-party partnerships and things like that in terms of how we can do connections and things. We've done certain things with, like, Costco as an example, just new sales channels and ways to do that. We do a lot of things where companies may have different programs, employee-based rewards programs, where they become good consumer acquisition opportunities, where you may, you know, give away a free month of Movie Club to try to get some kind of access and sign-up. There's a range of different ways that we can look to the program, for broader opportunity, whether it be accessing new customers or just finding shared mutual benefits with a third party in terms of that. It's an area that our team is continuing to work on, and we think there's upside. That's great. Thanks, Sean. Just given your outlook on the industry and your healthy balance sheet, obviously it's a unique time with the position you're in and potentially some assets that are for sale or could be converted. Can you just kind of update us in terms of your appetite for looking outside your organic portfolio for assets that have been or could come up for sale? Absolutely. Look, we keep a close watch on the marketplace and the different opportunities that may be out there or may ultimately become accessible. I'd say our general philosophy on that is still consistent, where we tend to target high-quality assets that we have confidence can deliver solid assured returns over time. We're kind of looking at everything through that lens. We're not necessarily just looking to grow for growth's sake. We tend to be pretty disciplined with regard to how we deploy our capital and seeking, you know, as we seek financially accretive investments. I'd say probably, you know, the only limiting factor to that is we think we're in a position of advantage as we go forward, there may very well be some good opportunities. We're gonna be mindful of not straining our balance sheet, you know, as certainly as we're working to reinforce that coming out of the pandemic further. The only other thing I would flag when it comes to any type of M&A is clearly where we are still as our industry recovery. There's a little bit of complexity when it comes to fully assessing margins and appropriate multiples and things of that sort. Trying to get reconciliation of expectations between parties just adds an additional layer of difficulty in trying to close deals. Not to say that we don't think there could be some potential that comes our way. Great. Thank you very much. Appreciate it. Thanks. Thank you. Our next question is coming from the line of Jim Goss with Barrington Research. Please proceed with your question. All right, thank you. You have a slide of 2023 notable titles with a pretty significant gap in late August, September and October with the absence of such. I'm wondering if, given the discussion you had about alternative content and some of, you know, some of the options you might have, if this, sort of advanced warning of a challenge creates opportunities to plan, and if there might be some things you might share with us in that regard? Certainly, Jim. You're right. You know, when we look at the overall profile of the year, at least on paper now, it has some similarities to 2022. More volume, clearly, but there is a little bit of a lull when you get into that, like, late summer, early fall period. Not to say that's too indifferent from pre-pandemic times. I mean, that's always a softer period of the year with kids going back to school in terms of the way studios program their films. At the same time, what we've seen is, you know, movies do really well in that period. There's opportunity there. What we suspect might happen is, you know, recognizing studios will see that. I mean, we recognize it, and there certainly is the potential for some shifting around of dates. If a studio wants to have a clear run of a title, they can put it in there, and there will just be less competition. We, we may wind up seeing some of the films right now, that are in the summer, spring, spread out a little bit more and take advantage of that period. We could also still see, like you pointed out, some new films. If you're thinking about where to date your title and you haven't done that yet, be it alternative content or just a traditional film, I mean, there's a great opportunity within that window to do so right now. I think, my guess is we'll start to see some of that fill out a bit more as the year progresses. Okay. Thank you. You had a comment, an interesting comment about the dynamic window, if you will, for helping mid-tier films. I'm wondering how much variability you're seeing right now in the sort of normalized 30 to 45-day window. Also how that might impact, say, this Amazon release or some of the other ones you might get from streamers, where maybe you can get them to extend the window a little bit so you have more of an impact to the extent you want it over time. Sure. Well, I mean, obviously, there's been a lot of experimentation with the window and different types of releases throughout the course of the pandemic. For the most part, it seems like things are gelling around a 45-day window now, certainly for the more commercial films. I think part of that reason is, I think what everybody's been finding is you need a certain amount of runtime to generate the full benefits that a theatrical release can provide a film. That's right around that kind of sweet spot as of a starting place, because it gives you enough time to get the value out of theatrical without losing that momentum as it goes into the home. Now, that can shift a bit depending on how well a film is performing. I mean, you look at a film like Top Gun: Maverick as an example, as well as many of these, you know, Marvel films, Avatar, right? Like, those films have done exceptionally well, and they've run quite a bit longer than 45 days before going into the home. You even saw that with Elvis as an example, where it ran quite a bit longer. In success, that's where some of that dynamic behavior comes into play. It can run longer. If something doesn't work, there's that opportunity to get into the home faster and minimize downside. I think, you know, this is my take. It seems like that's kind of that sweet spot is where everybody starts off, and then it could skew a little bit from that. I think that's the same for the streaming companies. I mean, with Air, Amazon, I don't think it's public, and I'm not sure it's even been fully decided on the window. We know directionally, that's kind of the general place that they're starting. I think some of that, too, will be dependent on, you know, how well the film continues to hold, how well it opens. There's obviously other dating decisions that get made in terms of some of the downstream targets for release. That seems to be the direction that they're heading with that film, and it's certainly what they're indicating with regard to what they're telling us, as well as what we're hearing from, you know, some of the other streamers, you know, like an Apple. Okay, thanks. One last one. The concession per cap, getting to a record level, you noted was driven by higher incident rates primarily. I'm wondering if you might comment on the implication for the mix of offerings now and in the future, and whether the supply chain constraints might have had any impact on that. Just in terms of our per cap performance in the quarter, Jim? Yes, and how that's trending. Sure. As we think about per caps and what we saw in the quarter, we certainly saw a benefit both from higher incidence rates as well as strategic pricing. On the incidence rate side, a few things that I would call out there. First, favorable film mix in the quarter certainly benefited us, coupled with the success of the initiatives that we had in place tied to the fourth quarter film slate. That was the merchandise and collectibles vessels I mentioned. In addition, supply chain constraints easing did improve our ability to meet customer demand with fewer out of stock. We certainly did see a tailwind there. Then third, I would call out some activations of expanded hot foods and alcohol in certain locations leading into the quarter. Those are some of the key factors. As you think about the per caps going forward for concession, as I mentioned earlier, we do believe that we can continue to grow concession per cap in 2023 relative to full year 2022 levels. That growth rate may be more tempered than what we saw in 2022. Tailwind certainly on supply chain starting to ease there. Okay. Thank you very much. Thanks, Jim. Thank you. Our next question has come from the line. Mike Hickey with The Benchmark Company. Please proceed with your question. Hey, Sean, Melissa, Chanda. Good morning, guys. Thanks for taking my questions. Just two questions from me. On the first question on the first quarter, looks like the domestic market here, if you look at sort of just the top 10 grossing films, which is obviously the majority of the market, looks like quarter- to- date, domestic's tracking up 42% compared to 2022. Obviously a lot of puts and takes on films and virus impact. Just curious, the momentum here you're seeing in your business, if it's within your expectations or if it's exceeding your expectations? Obviously, we still have Creed and John Wick here to close out the quarter. Also, wondering if you're seeing similar strength in concessions despite the pinch on consumer? I have a follow-up. Sure. Hi, Mike. Yeah, you know, it's interesting. 1Q, you know, as I mentioned, kind of the profile for the year earlier is another similar scenario to 2022 in that the year gets off to or is getting off to a little bit slower start from a total volume perspective. Fortunately, though, as you called out, the actual box office results have been quite favorable, with significant growth year-over-year, despite the limited volume. Your question on expectations, it's certainly exceeded our expectations thus far in terms of the results with, you know, things, the strong play through of Avatar, the continued run of Puss in Boots. M3GAN performed exceptionally well. You know, A Man Called Otto is doing great. Ant-Man opened to a great start. As you pointed out, now we're really starting to get into more of a steady stream of releases week to week. We're very encouraged about what we see looking ahead. So far, the year is off to we think off to a better than expected start for sure. As far as food and beverage sales go, similarly, I know it's interesting, as we haven't seen any impact from inflation over the course of 22 on sales. It hasn't deterred people upgrading to premium amenities, and it certainly hasn't deterred people's consumption of food and beverage, which continues to be going in a really strong direction. That's continued on through the first quarter- to- date. You know, it's something that we've been, you know, we've often wondered and just debated internally like, will we see a bit more of a normalization at some stage just in terms of overall-whelming consumer consumption in the marketplace post-pandemic. To date, it seems like that has yet to slow within our space. Nice. Thanks, Sean. The second question here, kind of wide-ranging, you gave sort of your qualitative perspective on the box on 2023. I'm curious if you can any way to quantify that. I know that can be a challenge, obviously. I guess within that question, when you look at 2022 and sort of the relationship of wide releases to where they're at in 19 as a percentage, that sort of came in pretty close to what the box office did versus 2019. When you look at 2023, thinking about sort of 80% wide releases versus 2019, that was sort of an implied box office of sort of +$9 billion, which I think is above most people's expectations for the year. Just curious, one, if you can kinda quantify your expectations for 2023, if you think there's any substance to sort of the correlation of wide releases versus 2019 to the ultimate box office. A last one, just curious, your view on dynamic ticket pricing, Sean, if that can be incrementally positive to your ATP in 2023. Thank you. Sure. You know, as far as 2023 goes, obviously we don't, we don't give guidance on box office, but we are certainly encouraged. Our estimates suggest 2023 would be higher than 2022. Clearly, as you pointed out, just the relationship between volume and box office compared to 2019, saw that in 2022. I think most consensus has box office around $8.5 billion for the year. At least when we look at volume getting somewhere between 75%-80% of 2019 levels or pre-pandemic levels, it would seem to support that. Clearly, with the first quarter getting off to a better-than-expected start like we talked about, we're hopeful there could be some upside on that over the course of the year. Clearly, a big part of that will depend on just the overall quality of the titles that get released. On paper, there's a lot of promise in terms of the movies that are coming up, and hopefully it'll flow through in terms of just the overall quality at the end of the day. Pricing-wise, you know, dynamic pricing, it's an interesting thought. I'd say, we clearly have a wide range of varied price points across our days, across our weeks. You know, we try to make sure we've got lots of accessible pricing options to make ourselves available to a wide range of consumers. Flexing things, you know, we got a little bit of that going on here and there. It's something we're gonna be careful about. Just, you know, all the moves we make, we use a lot of data to try to drive our decision-making on that and look at the responses of consumers. Something that we're gonna continue to explore. We'll do it gingerly because we are very sensitive to adverse reaction from consumers, especially as we're trying to continue to encourage them to come back to the movies with greater frequency. Thank you. Go ahead. We do think there's opportunity over time in that space for sure. Nice. Thanks, Sean. Thanks, Mike. Thank you. Our next question has come from the line of Omar Mejias with Wells Fargo. Please proceed with your question. Good morning, guys. Thank you for taking my questions. Maybe Sean first, with regards to Latin America, and the recovery continues to lag the U.S. there. Can you give us an update on Latin American trends and if you expect sort of that gap to narrow in 2023 as things stabilize down there? I have a follow-up. Thanks. Sure. thanks for the question, Omar. Actually, you know, when we look at the data for LatAm, there was a while, you know, there's a decent period of time where Latin America was lagging the U.S. in box office performance and reopenings of theaters. At this point, what we're seeing is things have pretty well caught up, in terms of, you know, vaccination rates. In many countries, they exceed the U.S. Moviegoing in general has been really strong. Some of that you gotta consider mix. You know, certain titles, as they always historically have, will fare a little bit better or worse there. Action, horror, family tends to overperform in the region relative to the U.S., where things like sci-fi tend to skew a bit below. That can influence things. In the fourth quarter, the fourth quarter historically in LatAm has been it's the winter there, that historically has been the slowest period of the year. In the fourth quarter of this year, in particular, there was also the World Cup, which is always a big, a big focal point for folks there. You know, weekend events in the World Cup can affect moviegoing, and a lot of times studios will also manage their release times around that. That dampened things a bit in the quarter. When we look at the full year, on the whole, we look at the results of LatAm being quite comparable to North American moviegoing. We've got plenty of phenomenal examples in the region of great success. Avatar, for instance, Avatar: The Way of Water, it's the sixth biggest film ever in the region, and it's significantly higher than the first installment. We look at LatAm as being, you know, in a, in a, in a relatively comparable place to the U.S. now. That was helpful color. Thank you. Melissa, maybe, with all the work you guys have been doing around improving operational efficiencies and lowering your cost structure and also the work you guys have been doing with dynamic pricing and per caps, maybe can you unpack how are those actions sort of benefiting your margin structure and maybe update us on any new initiatives you guys are working on for 2023? Thanks. Sure. The key items I would call out there, Omar, one of the biggest would be on our theater labor. The team has done a lot of work on optimizing our operating hours as well as driving efficiencies within our labor hours. That has been benefiting our cost structure. Now, that said, that's been overshadowed by the wage rate pressure that we've experienced. While we expect some ongoing wage rate pressure, we don't expect it to be at the same extent that we've seen over the past couple of years. I would say theater labor is one of the biggest areas where we've seen some benefits on the cost side, and it's an area where, as we go forward, similar to as we do across all our expense line items, that we're continuing to look and pursue additional productivity initiatives on to try to offset some of the pressures that we've been facing. Again, strategic pricing is another area that helps offset some of those inflationary pressures, but project productivity improvements are certainly an area that we're focused on. I think the other item that I would mention is just our ongoing discipline on G&A. Again, that one's been overshadowed a bit by some of the dynamics with wage rate inflation as well as our shift to cloud-based software. We've been controlling pretty tightly our discretionary spending and our staffing levels being below 2019. We continue to look to run the company in a very disciplined way from a cost structure standpoint. Thank you. Thanks, Omar. Thank you. There are no further questions at this time. I would now like to hand the call back over to Sean Gamble for any closing remarks. All right. Well, thank you all for joining the call this morning. We appreciate you taking the time to meet with us, and we look forward to speaking with you again following our first quarter of 2023 results. Have a great day. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.