Cinemark came back to life in the fourth quarter, surging past Wall Street estimates to post its first quarterly profit since before the coronavirus pandemic.
Revenue shot up to $666.7 million from just $98.2 million, far ahead of analysts’ consensus forecast for $601.3 million.
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Earnings per share came in at 5 cents on a diluted basis, a vast improvement from a loss of $2.03 in the year-ago quarter and well ahead of analysts’ expectation for a loss of 13 cents. Free cash flow also turned positive in the period, reaching $248 million.
Comparisons with the quarter ending December 31 were bound to be favorable. The fourth quarter of 2020 was about as bleak as imaginable, with few new film releases, no vaccines and a deep uncertainty about large gatherings like concerts, sporting events and movies.
Even relative to the field, though, the No. 3 US exhibitor performed well relative to the field. Cinemark said it surpassed North American industry box office performance by more than 700 basis points compared with the fourth quarter of 2019. Large-format releases also improved on 2019 by 400 basis points, accounting for 15% of the company revenue in the quarter.
Like other theater owners, Cinemark benefited from the return of genuine blockbusters in the quarter, notably Spider-Man: No Way Home. The sequel is now officially the top-grossing film ever released by Cinemark.
CEO Sean Gamble said even the onset of the Omicron variant during the quarter didn’t offset rising consumer confidence given the protections afforded by vaccines and boosters. “We are highly encouraging by recent favorable developments in the virus, government restrictions and associated consumer sentiment regarding moviegoing,” he said in the earnings release.
Along with this week’s results by Imax, the Cinemark numbers signal the exit of the exhibition sector from the worst of the pandemic, though the road is long. AMC Entertainment, the world’s No. 1 theater circuit, will report its quarterly numbers on March 1.
“This outperformance marks another positive step in the box office recovery process,” analyst Eric Handler of MKM Partners wrote in a note to clients. “That said, we remain concerned about the overall box office recovery, specifically with the industry’s lack of meaningful depth, which is why a rebound is occurring at a slower than anticipated rate.”
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