Okay, let's get started here. Once again, full disclosure, this is being webcast, so Q&A. The microphones will be passed around later, so please wait for those. Up here now we have Cinemark, one of the largest theater companies in the world, with roughly 500 theaters and almost we'll round up to 6,000 screens in 14 different countries. From the company, we're happy to have here Melissa Thomas, the company's Chief Financial Officer. Thank you for making the trip, Melissa. So before we get into maybe recent results, which I believe were last Friday, maybe share with the audience, for those not as familiar with the assets, a quick overview of the company, maybe your target geographies, and in particular your international markets, which I think differentiate you a little bit from some of your peers and competitors. Great. Thank you for having me here, Michael. Happy, happy to be here. As you mentioned, Cinemark is one of the largest and most influential theatrical exhibition companies in the world. We do operate in 14 countries across the U.S., South, and Central America. We are the third largest exhibitor in the U.S., with about 14% market share, and the first or second largest exhibitor in most of the Latin American countries in which we operate, with 25%-30% market share in our key countries, such as Brazil, Argentina, and Chile. And I think it's worth noting that our recovery has outpaced the industry's recovery, from COVID. Your international assets, are they core to you? And if yes, why? We do view our international assets as core. We've operated in Latin America for 30 years now, and we were the first modern exhibitor to enter the Latin American market. We believe that Latin America provides nice differentiation across our portfolio, and we like the long-term growth potential of Latin America, given that many of the markets remain underpenetrated. We also have, as I mentioned earlier, strong market share in the region. We also have strong, long-tenured teams with deep local knowledge, and each of our countries within Latin America are self-sufficient from a cash standpoint. When you say underpenetrated, can you give us some statistics on why you think that's the case? Are you building? I'm assuming you're building, not buying, there. What, what, what size, type of theater? Yeah. So as we think about builds in general, you know, over the pandemic time frame, we're pretty conservative with our capital, given the box office recovery still coming to fruition, and frankly, the production cycle within our industry takes a couple of years to ramp. So we're really now just reinstating our pipeline. And more broadly, as we think about building new theaters, we apply the same criteria in Latin America as we do in the U.S., where we're looking for opportunities where we can generate a healthy ROI as well as healthy margin profile. How much of a risk or maybe nuisance is FX to you as a CFO? In terms of FX, for Cinemark, our FX is primarily translation-based rather than transaction-oriented, as we transact the vast majority of our operations in local currency. That said, with Argentina, they've recently experienced sharp FX devaluation following some economic measures that have been put in place by the new administration there in the fourth quarter of last year, with further devaluation expected this year. Now, of course, Argentina is a hyperinflationary environment, so we do expect some offset from inflation to those FX headwinds that we're experiencing, but we'll really need to see how that played out or plays out. As I did mention earlier, you know, we have that long-tenured team. They're well-versed in navigating through the different economic and political challenges within the Latin American landscape. And then maybe can we just take a step back and 'cause you hinted at it earlier, the box office, the recovery post-COVID. Where do we stand now versus 2019 box office? We'll start with that 'cause I wanna talk about maybe some consumer behavior changes, so. Okay. So the box office has been on a nice, steady recovery trajectory since the pandemic. As you think about 2023, box office was about $9.1 billion, which is about 80% of 2019 levels. Wide release volume recovered to 85% of 2019 levels. So we have seen a steady recovery on the box office side. Now, we do expect some near-term headwinds in 2024, related to the Hollywood strikes and impacts on production cycle there, but are confident in the industry's continued rebound in 2025 and beyond. Has Cinemark's market share changed at all? It, it has. So since the pandemic time frame, we've been able to gain 100 basis points of market share globally, and that's something that, you know, we attribute to our investment in our circuit, particularly on the premium amenity side, as well as our heightened marketing efforts. But we have seen strength in the market share. Then how do you think about consumer behavior, and maybe the way I think about it? I have teenage kids. And maybe more specific to my son, he just can't focus for more than five minutes anymore with TikTok and everything online. You know, are you seeing a change in the consumer in family tickets at all? 'Cause I know that was obviously a big and your concessions and selling all of that, but am I off on this, or do you guys think about this at all? So from a consumer standpoint, consumer enthusiasm for movie-going remains as strong as ever across all film genres as well as demographics. So we have seen that when quality films are in the theaters, audiences come out to view those. One of the other points that I would mention is, you know, the non-traditional content has been a nice avenue for us also to broaden our audience base and bring in consumers who historically may not have gone into that theatrical experience. Well, one that was a question, so let's just go right to that one. So what, what are you doing on the non-traditional content front, whether it's concert, sports, or corporate, or anything like that? Mm-hmm. Yeah. So on the non-traditional side, 2023 was a record year for us. In particular, it represented about 14% of our domestic box office. Where we saw particular success and where we're excited about as we move forward is on the foreign film side, on the faith-based film side, as well as with respect to concerts. Now, 2023 was unique in the sense that we did have several breakout films across those categories, the Taylor Swift Eras Tour as one example, also Sound of Freedom did very well, just to name a few examples. But as we think about kind of the go-forward, while we do expect Hollywood content to represent the, you know, vast majority of our box office, we do think that non-traditional content can serve to supplement Hollywood content and to broaden audiences. We think that will probably be, I mean, historically, it's been around 2%-ish of box office, kind of pre-pandemic. We think it'll settle out around 5%, most likely. Let's just say that your studio split, just for rounding here, 50%, right? What about for the concert stuff? What's your cost of goods sold for the non-traditional? So we don't speak about kind of film splits across studio partners or content providers, but I think by and large, the way you should think about our film splits is that studios or providers tend to earn a higher film rental based on the relative performance of their films. So film rental arrangements are essentially revenue-sharing agreements. Yep. Yep. is how those work. And they're on a sliding scale. The non-traditional? How does that work? And again, it's gonna be based on film, film performance. Got it. Let's go back to the studio relationships 'cause, well, let's continue with that. Just the box office importance to studios. How do you wanna characterize that and whether it's future monetization of that content over other platforms? I'm sure that's largely it, but anything else you wanna add to that? Yeah. So our studio relationships remain very strong. And as you think about what we've seen on the studio side, studios are committed to theatrical releases. They understand the value of a theatrical release in order to be able to fully monetize their film assets. And we see them putting the marketing campaigns behind their releases as well as giving them exclusive theatrical windows. We've also seen studios actively working to get to those pre-COVID release volume levels. So we feel good on the traditional supplier or traditional content side on that ramping up, understanding, you know, 2024 will be a temporary blip there. Is there any place where you quite don't see eye to eye with the studios these days? I mean, obviously, price and everything, but is there any bigger picture topics? No, I'd say that we're very in sync with the studios, even as we emerged from COVID partnering to reignite movie-going and now, collaborating to maximize attendance and, and box office generated. What are Apple and Amazon thinking about these days with theatrical releases? Yeah. So we are thrilled to see Amazon and Apple start to lean in on the theatrical side. Both have expressed their intent to release their larger, more significant films theatrically, and we saw them start to do that in 2023. We feel good about the direction that that's headed and that there's nice mutual opportunity that we've already started to realize there. Amazon has publicly stated their intent to ramp to 8-12 films, theatrical films per year, and Apple has multiple releases already on the 2024 slate with some top talent. We feel good about the direction that's headed. And, you know, there've been indications out there that both Apple and Amazon are each looking to spend around $1 billion annually in theatrical content. And if they were to do that, that would be comparable essentially to a major studio. And then you mentioned the headwind in 2024 and the strike. And I apologize if you gave numbers before. I was probably reading my next question. But can you quantify that or the number of releases versus, you know, year-over-year or major releases, wide, wide releases? What, what, what can you share with us there? Yeah. So we essentially had six months of work stoppage due to the Hollywood strikes, which impacted the production cycle. As we think about wide releases for 2024, we're expecting about 95 wide releases, so that compares to 110 titles from 2023. So this is obviously gonna put some pressure on the box office. As you look at where consensus is starting to coalesce for North America box office for 2024, it's around the $8 billion mark. So there's a step back that we're expecting of around 10% relative to 2023. That said, I think it's important to reiterate, as I mentioned earlier, that we view this as a temporary setback in volume and box office just given the strike. As we think about 2025, we are expecting further recovery in the industry, and we're expecting wide release volume to exceed 2023 volume. Notable film titles for 2024? Anything you wanna point out? For 2024, well, we have Dune 2 opening this weekend, and then we have the next installments of Kung Fu Panda and Ghostbusters coming. And there's also, you know, after, and that's this quarter. But after that, there's a very diverse set of films, really for all audiences. On the family side, we have Inside Out 2, Despicable Me 4, we have Mufasa, as well as Moana 2. And then for the action-oriented audiences, we have Deadpool 3, Furiosa, and Venom 3, and then a number of films outside of that, but all capped by Wicked coming in at the end of the year. Any pre-look for us about potential blockbusters for 2025? Yes. For 2025, we there's an exciting slate of blockbuster titles that I think folks should be familiar with. So we've got Wicked 2, Avatar 3, Captain America: Brave New World, we have Fantastic Four, and Moana live action. So we've got quite a few films that we're excited about in 2025. You sure Avatar 3 is gonna come out on time? Anyway. We'll see. Sorry. I'll take the over. Okay. So can we talk about maybe, more specifically, Cinemark's recent results? So, I'll leave this open to you if you wanna talk about the fourth quarter, if you wanna talk about 2023, and maybe in the context of versus 2019, of course. So, whatever, wherever you wanna take it. Okay. So with respect to our performance, 2023 was a strong year for the company, and it certainly gives us, with our 2023 performance as well as the strategic initiatives that we're executing against, gives us optimism around the potential of the business as the industry recovery further stabilizes. As you look at what we delivered in 2023, we had Adjusted EBITDA of nearly $600 million, which is within 20% of 2019 levels on 25% less attendance. So I think that demonstrates some of the success that we've seen on strategic growth and productivity initiatives that we've been executing on. And our Adjusted EBITDA margin was over 19%. We generated free cash flow of $295 million, and we ended the year with a strong cash position of $850 million. And that's even after paying down $100 million of debt that we had taken out during the COVID timeframe. So feel really good about where we ended the year and prospects going forward. Concessions and per caps are still a bright spot, I'm assuming? They yes. What are you doing there to continue to grow those? Yeah. So on the concession side, in 2023, we actually reached our all-time high concession revenue. So our concession revenue was 3% higher than 2019, again, despite 25% less attendance. So we've seen tremendous success there. Our per caps domestically are 40% higher than 2019. And I think it's important to note that the vast majority of that is driven by incidence rather than price. So a lot of initiatives that we have in place to continue to grow our concession per caps, as we think about some of the key areas, we continue to lean into creating that frictionless experience for our customers, creating self-serve opportunities. In addition to that, proactive category management, so introducing new product offerings. We also are pushing movie-themed merchandise sales. We think that's an interesting opportunity. We saw success with that in 2023 that we wanna ultimately build on. Then one of the other areas that I would call out is third-party delivery. That's an area that we've begun to scale and are excited about the opportunity. Do you give Adjusted EBITDA on free cash flow guidance? We do not give guidance. I can give kind of some broad strokes perspective. Sure. If that'd be helpful. So as we think about 2024 expectations for Adjusted EBITDA, margins, and free cash flow, the single biggest driver of those three is going to be the attendance and box office that's generated in the year, which, as we've said, we expect to face some headwinds due to the reduced content volume from the Hollywood strikes. It's worth noting that in 2022, on a $7.5 billion box office that was only $7.5 billion, we delivered just under 14% Adjusted EBITDA margin, and we were free cash flow positive. As you think of other factors to consider when thinking about our EBITDA and margin potential, some of the key drivers outside of attendance and box would be our ability to maintain our market share gains and grow our concession per caps and average ticket prices, as well as offset inflationary pressures that may arise. And then in the case of international, some of the FX headwinds, navigating through those that we mentioned. Do you give CapEx guidance? We do. Yes. What's that for the year? Yeah. So we have guided to $150 million of capital expenditures for 2024. The one thing I would note there is, is that's, that's consistent with 2023 levels despite the box office expected to, pull back a bit in 2024. And the reason for that is that, as I mentioned, we do believe that the industry is going to rebound in 2025, and we wanna make sure that we're well-positioned as a company to capitalize on that recovery. So even as you think about how we're deploying that $150 million, we're allocating a higher percentage of that towards those ROI-generating projects, kind of long-term strategic opportunities, new builds included in that as well. That $150 million CapEx, is that a gross CapEx number? Mm-hmm. Okay. Yes. How many new theaters are we expecting to build in 2024? So in 2024, there's, you know, we while we do have some theaters coming online, as I mentioned earlier, we are continuing to ramp the pipeline, as we've been, you know, pretty conservative with our capital deployments as we've started to recover from the pandemic. I can tell you one thing we're really excited about on the new build front in 2024 is the introduction of our first FEC, or so that's a family entertainment center that we expect to have online later this year, as well as the conversion of an existing theater into a family entertainment center. And what about just other OpEx line items, thinking just wage pressures and maybe I'm a year or two late on this, but minimum wage, is that an issue, or other inflationary items? Can you talk about that a little bit? So on the wage rate side, at this point, we are expecting wage rate increases to be more in line with what we saw prior to the pandemic, and most of them are related to government-mandated increases in wages. Now, we are in parallel continuing to drive and pursue labor productivity initiatives, to drive you know some cost savings to offset what we see on the wage rate side. And what we're doing is we're really leveraging data and analytics to look at the profitability of our theaters and adjust our operating hours and staffing levels on a kind of per theater by per hour basis. Utility is an issue for you? Utilities, you know, will vary depending upon operating hours. I would say probably the bigger, kind of cost pressure outside of wages that we see is more so related actually to our costs of goods. Yeah. And what we've seen there is pressure on the commodity side as well as transportation and packaging. And while we've started to see some relief on corn and canola oil pricing, sugar and cocoa pricing is at all-time highs given weather conditions impacting crops. So, we continue to look for ways to offset that pressure. However, I would say that's the other category where we're seeing inflation. Yes. All right. So we're at a credit conference. We gotta talk about the balance sheet a little bit, debt levels, you mentioned cash earlier, which was a lot, $850 million, I thought. So, you know, how do you think about the balance sheet? How do you think about leverage? Where it is? Is it lease adjusted? Gross net? That's what how do you think about it? Yeah. From a balance sheet perspective, we have just over $2.4 billion of debt on the balance sheet, and as we talked about earlier, $850 million of cash. Net debt of around $1.6 billion. When we think about leverage, we look at our leverage ratio on a net leverage ratio basis. We have a target leverage ratio, and that target leverage ratio is to be within 2-3 x. Historically, prior to the pandemic, we were in the, call it, 2-2.5 range is where we typically operate in, but we ultimately are looking to be within that 2-3 x range. For or as of year-end, I think it's important to note we were within that range. We were at about a 2.7 x ratio. Now, as we look to 2024, there could be some kind of near-term pressure given box office implications. However, we feel really good about the leverage position that we're in right now. I apologize for not knowing this one, but do you own all your assets? Do you lease some of your assets? A mix of both. We lease the majority of our assets. We have about 40 fee-owned properties. Got it. And then do you have a preferred mix of secured versus unsecured debt or fixed versus floating? Anything there? So in terms of secured versus unsecured, right now, we're around a third secured, two-thirds unsecured. And even prior to the pandemic, we weren't far off of that mix, so I think it's fair to say that that's a mix, that we, we'd like to be in going forward. But as we think about that, another key consideration for us is always what that cost of capital looks like as we view our capital structure. And then when you mention on the fixed versus floating side, so we have over 90% of our debt is fixed-rate debt, and we, we like that in the current interest rate environment. Sure. Sure. And And you do still have some 25 maturities. I guess they're just converts now. How should we expect you to deal with those? Okay. So we have two pieces of debt outstanding that mature in 2025. We have $150 million of 8.75% senior secured notes as well as $460 million of convertible notes outstanding. Now, we did announce that we intend to repay $150 the remaining $150 of 8.75% notes in May when they step down to par, and using cash on hand to do so. So that would leave just the convertible notes remaining. As we think about the convertible notes, those mature in August of 2025. So we have ample time there and a number of alternatives available to us in order to address the converts. So we'll look to be opportunistic yet prudent in our approach. Our approach to addressing the converts is going to be, contingent upon, box office recovery and free cash flow generation, but we're regularly monitoring the capital markets as well as looking at our stock price not only today but in the future, as well as the trading prices of, the convertible notes as we evaluate those, those options. As CFO, do you view the converts as debt or equity or equity? So right now, they've been functioning as debt for us. The conversion price is $14.35. It's important to note that we're protected through a hedge and warrant structure up to $22 up to the stock price moving to $22.08, and we do have the ability to settle the convert in cash shares or a combination thereof. Got it. And what about returning capital to shareholders? What are you doing currently? Or what have you done in the past? Let's go back to pre-COVID. Mm-hmm. What are you doing now, and, and what should we expect you to do in the future there? Okay. So prior to the pandemic, we had a very balanced and disciplined approach to capital allocation. It included, you know, strengthening the balance sheet, investing in the long-term growth of the company as well as returning capital to shareholders through a dividend. As we look at our current capital allocation priorities, they're centered around strengthening the balance sheet, including delevering, as well as making the right investments to position the company for long-term growth. Now, you know, as it pertains to dividends, that's certainly a key consideration and an item that we discuss regularly with our board. But reinstatement of the dividend is predicated upon our ability to sustain our target or our net leverage ratio within our target range, which we think may come under pressure in 2024 given the impact of reduced content volume to the Hollywood strikes. Got it. I'm gonna open the room up for questions so if we can get a microphone, and while that gets walked around, what about on the M&A front? And I'm guessing it's gonna be something similar to, you know, maybe not right now, but whether it's domestically or internationally, how do you think about inorganic opportunities? Yep. So a key area for a focus for us as we look to position ourselves for success in the evolving media and entertainment landscape is optimizing our footprint. So that includes growing, recalibrating, and strengthening our circuit as appropriate. Now, when we think about M&A specifically, we certainly, you know, do evaluate all potential opportunities that arise. We target high-quality assets with solid returns. And ultimately, you know, I think it'd be fair to say we're not a company that chases growth for the sake of growth. We take a pretty disciplined approach in this regard, but we will go after, you know, investments that we believe are financially accretive and don't overly strain our balance sheet. That's good. Any questions from the audience? We have time for a few, I'm sure. Hi. I was just gonna ask what level of cash you'd like to carry on the balance sheet. I believe you've been carrying a little bit more liquidity given the uncertainty with the pandemic, but now sorry. Can you hear me? Go ahead. I'm just wondering how much. Thank you. How much cash you would like to keep on the balance sheet to operate the business. I think the cash levels have been elevated through the pandemic. We look like we're through the back end of that. You're gonna call the [audio distortion], and still, I think even though box office down year-over-year, still generate a healthy amount of free cash flow. So just curious, yeah, on where cash kinda be going forward. Yeah. While we haven't provided a minimum cash view per se, I think one of the things I would highlight is where we were prior to the pandemic. So previously, you know, we had been running at around $450 million of cash on the balance sheet. Today, we're at around $150 million, but as you mentioned, we intend to repay some debt using cash on hand. But as you think about our philosophy around cash, we ultimately wanna make sure that we have sufficient cash to run our operations but also so that we can be opportunistic to the extent that opportunities such as M&A arise and not having, you know, finance being a constraint for moving quickly. So take a balanced approach to that, but we have been more conservative with cash on hand just in light of the ebbs and flows that we've seen in the box office. Can you hear me? There we go. Mm-hmm. If I could ask the dividend question a different way, without restating everything that you've already said, i.e., the box office is having a little trouble now, but it's expected to rebound. There's clearly no change in behavior on the part of any number of demographics. It's purely a function of supply, and we think supply is coming back online over the course of the year and into next year. You operated exceedingly well in a depressed domestic box. Everything's going well. You're doing well, and you're sitting on an amount of cash that, relative to similarly sized market cap companies, is extremely large. Are you being overly conservative? Is it fair to say you're being overly conservative? Because I think, as you are well aware, there are any number of investors that are, let's say, clamoring for a reinstatement of the dividend. Do you feel like you're being overly conservative? You know, we feel like we're being prudent with our balance sheet, acknowledging upcoming maturities we have as well as the dynamic environment that we're operating in. Anything else? If not, we are out of time. Thank you very much, Melissa, for making the trip. Thank you.