Cinemark Reports $99 Million Loss Despite ‘Avatar 2’ Box Office Success

A lack of strong Thanksgiving releases and the Christmas deep freeze contributed to a 10% drop in fourth-quarter revenue and a loss larger than Wall Street forecasts

Cinemark Earnings
Photo illustration by TheWrap

While the box office climbed out of its August-September slump during the final quarter of 2022, Cinemark still reported a quarterly loss of $99.3 million, or 82 cents per share, amid a sluggish Thanksgiving holiday and a Christmas hampered by winter storms throughout much of the U.S.

Cinemark reported revenue of $599.7 million for the fourth quarter of 2022, a 10% drop from last year’s $666.7 million, and well below the prior quarter’s $650 million. The results came in ahead of the average Wall Street estimate for $568.5 million in revenue, according to Zacks Investment Research.

Revenue for the quarter broke down to $304.6 million for admissions, an 11% jump over the 2021 fourth quarter, and $225.7 in concessions, a 9% drop from the prior year. The admissions gains came despite a 19% decline in worldwide attendance during the quarter from last year, to 39.2 million. In the U.S., attendance also dropped 19%, to 25.1 million. The company reported an 82 cents loss per share, much steeper than the 34 cents per share loss projected by Wall Street, largely attributable to an increase in impairment charges.

Plano, Texas-based Cinemark said average ticket price was $7.77 globally and $10 in the U.S., up from $6.71 globally in the third quarter. Average concession revenue per patron was $5.76 globally and $7.43 in the U.S., a slight bump from the third quarter’s $5.24 global average.

The last three months of 2022 saw the release of two of the biggest box office hits of the post-shutdown era with “Black Panther: Wakanda Forever” and “Avatar: The Way of Water,” both of which grossed over $400 million in North America during the quarter. But outside of those films, the only other movie to gross over $100 million domestic in the quarter was Warner Bros.’ “Black Adam” with $168 million, while Paramount’s “Smile” came close with $97 million. Universal’s “Ticket to Paradise” was a distant fifth with $68.2 million.

Worsening matters were a series of harsh winter storms during Christmas weekend, diminishing turnout during what is a critical holiday period for movie theaters. Because of this and a lower number of tentpole hits, the fourth quarter of 2022 saw domestic box office reach just $1.77 billion, down 14% from last year, when pandemic delayed titles like “Venom: Let There Be Carnage,” “No Time to Die” and the wildly popular “Spider-Man: No Way Home” pushed quarterly totals past the $2 billion mark.

In the third quarter, Cinemark took an impairment charge related to its investment in National CineMedia, a cinema advertising company, as well as smaller charges related to the value of its theater properties. National CineMedia’s stock has continued to slump in recent months. Cinemark did not provide details on its fourth-quarter impairment expense.

Despite the weaker-than-expected results, Cinemark CEO Sean Gamble saw some positives to the year.

“People still love going to the movies,” Gamble said during the company’s conference call to discuss results. “Sustained consumer enthusiasm for movie going was validated time and again throughout 2022 across all genres of films, all segments of audiences and all periods of the year.”

He listed the success of many of 2022’s top titles, and said the “impressive” performance of these events “clearly demonstrates that consumers are as excited as ever to experience compelling movies and events in theaters.”

Live events like concerts by Coldplay, Billie Eilish and K-Pop phenoms BTS are also drawing crowds, Gamble said. While “alternative content” is still a small portion of total box office, he said that the space has growth potential. “And we’re hopeful that as more and more of these events find really solid success, it’ll lead to an increase in the volume.”

The CEO also pointed to the growth of its Movie Club membership program, which it reactivated in July and has grown to 1.1 million members, above the pre-pandemic 950,000 base. Movie Club members drove 22% of domestic ticket sales in 2022, up 800 basis points from 2019, Gamble said, though frequency has not fully recovered.

Gamble said one key lesson for 2022 was “movies performed better when they are released theatrically, particularly when they have an exclusive window.” He maintained that a theatrical release enhances a film’s promotional impact and overall asset value by increasing consumer awareness and interest. “While this observation is not a new phenomenon, it has been reinforced with growing frequencies by all of our traditional studio partners over the past year.”

“Furthermore, experiencing films in a shared cinematic environment, develop stronger emotional bonds with stories and characters that helps build bigger brands, franchises and cultural moments,” Gamble said. “It also satisfies the desires of filmmakers and talent who aspire to see their films on the big screen.”

Like other exhibitors, Cinemark is banking on stronger turnout in 2023 to boost revenue as the number of films released grows. Gamble noted that while there are still some pandemic-related delays, more films are headed to theaters in the coming months, up to 95 from 85 announced at the end of the last quarter. “Although still short of the approximate 130 titles released annually prior to the pandemic this improvement represents a meaningful 30% increase for 2022,” Gamble said.

He pointed in particular to the latest Ben Affleck-Matt Damon effort “Air,” which will debut exclusively in theaters on April 5. He praised Amazon Studios for the decision to release it in theaters and said he expected other streaming-first services like Apple TV+ would follow with more releases.

Midway through the first quarter of the year, domestic grosses are 45% ahead of last year’s pace with $946 million grossed and several March blockbusters like “Shazam! Fury of the Gods” and “John Wick: Chapter 4” still to come.

Another draw for consumers are upgrades like premium large formats, D-Box motion seats and enhanced concession offerings, Gamble said. Cinemark saw a “significant uptick in consumer demand for premium amenities” during the quarter, he said.

“We haven’t seen any impact from inflation over the course of ’22 on sales,” Gamble said. “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.”

That demand for upgrades and premium perks echoed the results Imax reported Wednesday.

For all of 2022, Cinemark reported revenue of $2.45 billion, a 63% spike from $1.51 billion in 2021. The company posted a loss of $271.2 million, or $2.26 per share for the year, compared with a loss of $422.2 million, or $3.55 per share, for 2021.

CFO Melissa Thomas said on the call the company paid down $21 million in debt during the year, and repaid “substantially all” of the company’s remaining deferred rent obligations incurred during the pandemic.

Cinemark is the third-largest theater operator in the U.S., with 318 venues and 4,399 screens in the U.S. It also operates 200 theaters and 1,448 screens across 15 countries in Latin America. That’s three fewer theaters in the U.S. and one fewer in Latin America and a combined reduction of 21 screens over the year.

Cinemark shares slid 56 cents, or 4.3%, to $12.53 in morning trading. The stock closed Thursday at $13.09, its highest level in months, though down considerably from its 2022 peak of $19.35 in early August. The stock reached a two-year low of $8.35 at the end of December.