Cinemark Holdings, Inc. (CNK) Q2 2026 Earnings Call Transcript

Greetings, and welcome to Cinemark Holdings Second Quarter 2026 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chanda Brashears, Senior Vice President, Investor Relations. Thank you. Please go ahead.

Good morning, everyone, and thank you for joining us today to discuss our second quarter 2026 results. Our earnings release, executive commentary and 10-Q were issued earlier this morning and are available on our website at ir.cinemark.com. Today's call is being webcast with a replay and transcript available on our website after the call. Before we begin, I would like to remind everyone that during this conference call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to materially differ from those expressed or implied. The factors that could cause results to differ materially are detailed in our most recent annual report on Form 10-K as filed with the SEC and available on our website. Also, today's call will include non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found on the website's most recently filed earnings release, 10-Q and on the company's website at ir.cinemark.com. Joining me this morning are Sean Gamble, President and CEO; and Melissa Thomas, CFO. Consistent with last quarter, Sean will provide some brief introductory remarks, and then we'll turn it over to Q&A. Sean?

Thank you, Chanda, and good morning, everyone. I'd like to take a brief moment to touch on some of our key highlights from the second quarter. You can also find additional information in our executive commentary and 10-Q that were published on our Investor Relations website this morning. We're thrilled to report today that Cinemark delivered a historic quarter in Q2, achieving a multitude of all-time quarterly records throughout our global company. For the first time in our history, our quarterly worldwide revenue exceeded $1 billion, supported by record high results across all key revenue categories. Importantly, through diligent execution and benefits derived from improved operating leverage, we effectively converted that strong top line growth into exceptional bottom line performance. We produced our highest ever quarterly adjusted EBITDA of $294 million with an adjusted EBITDA margin of 27.1%, our second highest quarterly margin in history that trailed our all-time record by only 10 basis points. We also generated nearly $300 million of free cash flow, deployed over $60 million of capital expenditures toward enhancing our business and returned excess capital to shareholders through stock buybacks and our dividend. Our historic results are the byproduct of our ongoing efforts to elevate our consumer offerings, scale revenue opportunities and further optimize our business, combined with a compelling slate of film releases and solid operating rigor. Beyond propelling our aggregate revenue and adjusted EBITDA records, these factors also yielded all-time high quarterly admissions revenue, concession sales and per caps, premium amenity performance and loyalty transactions worldwide. We are incredibly proud of our global team and all they continue to accomplish. We devote significant time and effort to working on strategic initiatives to strengthen our business, and it's especially rewarding to see those actions translate into outstanding results, particularly when amplified by a favorable box office environment. The performance we delivered this quarter is a testament to the dedication, skill and execution of our sensational team and their ability to capitalize on strong film content and positive industry dynamics. As we move ahead, we believe we are exceptionally well positioned for the future. Bolstered by our differentiated financial strength, we stand to continue benefiting from the many targeted investments we have made over the years, the meaningful customer loyalty we have earned and the industry-leading operating capabilities we have developed. Moreover, we are actively advancing a broad set of new opportunities to further enhance our competitive edge and drive incremental growth, and we remain highly encouraged by positive recent industry developments, including expansion in theatrical window exclusivity, increases in young moviegoer frequency and strength in emerging forms of content. In the very near term, we look forward to building further on the robust performance we've achieved through the first half of 2026, particularly with what is shaping up to be a tremendous launch of Spider-Man: Brand New Day this weekend, along with continued momentum from The Odyssey. Operator, that concludes our prepared remarks, and we'd now like to open up the line for questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. Our first question is coming from David Karnovsky of JPMorgan.

Sean, Q2, I think, was the best box office quarter since the pandemic. It was probably reasonable to assume there could have been capacity constraints for Cinemark and yet you gained domestic market share. I know film mix is a factor, but did these results surprise you at all? And then how do they inform your view of potential market share sustainability or gains going forward? Or should the box office kind of run at over $10 billion, for instance?

Thanks for the question, David. Yes, we were very pleased with the second quarter results, to say the least. It was a big quarter. What we saw over the course of the quarter was that the way the films performed helped with capacity; there were periods where films were a bit bunched week-to-week. You had films like Backrooms and Obsession earlier in the quarter, and they actually played out with less competition. So it turned out that the film timing alleviated some of those capacity constraints that we were expecting would be more significant over the quarter. As we look ahead, we continue to benefit from the many investments we've made to advance our market share. How things will play out will depend on how the overall content mix resonates with our audiences and how capacity constraints evolve. We saw a bit more bunching in the beginning of the third quarter, and we'll see how that plays out over the second half of the year. There are some peak periods on paper right now with a bit more concentrated larger films than we saw during the first half. So we're really watching for that. Those are the types of things that could affect results going forward.

And then you mentioned the 45-day window. I know it's early, but any data or research on your end that indicates the longer time period is helping to reeducate consumers about the need to see the movies in the theater?

It's difficult to say quite yet how significant the long-term impact will be because those changes just took place. Clearly, as you pointed out, it was a record second quarter since the pandemic. If you look at that, one might say things are working better. Probably the most tangible thing we've seen is that theatrical exclusivity did start to increase in the second quarter as studios began to honor those commitments of 45 days. We'll have to see. It's going to take a little more time. We are optimistic about the positive benefits the 45-day window will yield, which we think will continue to be meaningful, but it will take time for that to fully roll out and for consumers to feel the impact.

Our next question is coming from Eric Handler of ROTH Capital.

Sean, you're continuing to get some really good lift from premium. When you look at your theater footprint, how much more capacity do you have to add an IMAX, XD, 4DX, ScreenX, how much can you add there? And also, you're getting a really good lift and a nice surcharge for D-BOX. Where are you with D-BOX and how much more can you add there?

Sure. We still have a healthy runway for incremental additions. There's a balance because while we continue to see growing audience appeal for enhanced amenities, they remain about 15% or so of overall box office. They're great for certain audiences but not for everyone. Regarding runway, we added a series of new premium offerings in 2025. In the first half of 2026, we already added seven new XDs, 12 new ScreenXs, two new IMAXs with three new 70-millimeter projectors activated and 112 new D-BOX auditoriums. We've put in quite a bit and have further runway this year and beyond. Screens tend to be tethered by how big the screen is in an auditorium, which is a governing factor. We have many more opportunities for second premium large formats in theaters where we currently have only one. In new builds, you have more latitude. D-BOX has less limitation because it's a few rows within an auditorium, so those can be added in many locations. We currently have about 350 overall premium large formats globally, including XD, IMAX and ScreenX, and about 660 auditoriums that have D-BOX installed.

Great. And then I wonder if we could just touch on Latin America for a second. Your Latin America margin was an all-time high. Just curious what type of operating leverage you can now achieve in the region?

Eric, I'll take that one on international. Our international team has done a great job navigating a dynamic landscape in Latin America as demonstrated by record-setting adjusted EBITDA and adjusted EBITDA margin. As we look at that business, the predominant drivers of leverage will be attendance and box office. Other factors that have influenced the results include market share gains in international; the team capitalized on the box office that was there. Our average ticket prices and concession per caps continue to be growth catalysts. Also important is our ability to mitigate cost pressures. So, as we think about margins going forward, those are key dynamics. FX movements and inflationary dynamics are clear differences between the U.S. and international. A couple items to keep in mind: local labor laws can restrict staffing flexibility as box office ramps, which can impact labor costs; government-mandated wage rates can exceed inflation, which we've seen in markets. Our team has done a nice job offsetting those impacts where possible. Lease expense in international is also more variable. So there are different dynamics when you look at international; it really comes down to how we're managing those levers. The team is doing a good job pushing the top line to offset some inflationary dynamics on the bottom line.

Our next question is coming from Chad Beynon of Macquarie.

Nice quarter. Just in terms of the use of capital, you finished the quarter in a very strong position from a cash standpoint. You mentioned the interest expense opportunities that you've been able to take advantage of here, reducing that. But as you think about use of cash with regards to return to shareholders, investing back in the portfolio or looking at outside opportunities, has anything changed at this point given your position of strength?

Thanks for the question, Chad. From a capital allocation standpoint, we continue to have three pillars to our strategy: maintaining the strength of our balance sheet, investing in accretive opportunities, including M&A that position the company for long-term success, and returning excess capital to shareholders. We remain balanced and disciplined in our approach and prioritize the strength of our balance sheet and growth opportunities first, followed by shareholder returns. As we think about ranking between new builds, theater enhancements and M&A, that comes down to return profiles and strategic importance. With respect to shareholder returns, that will be governed by factors like our leverage ratio, cash position, overall liquidity and alternative uses of cash at any given time, among other factors. Overarchingly, our strategy aims to maintain sufficient flexibility so we can take advantage of future value-creating opportunities while mitigating risks.

Okay. Great, thanks. And then, Sean, just going back to the strength of the quarter and the breadth of different movies that really hit. I know you mentioned 50% is coming from your direct channel. But in terms of just new audiences, do you think there was significant growth in younger moviegoers or people who hadn't come back for a while that came in the second quarter? And moviegoing begets moviegoing — do you think that could portend well for the back half of the year and into 2027?

Sure. Part of the reason we like nontraditional content is that it often brings new audiences into our theaters, and we've seen a nice uptick in that over the years. Our data, similar to broader industry studies, shows healthy growth of younger audiences. Films like Obsession and Backrooms, which are based on creator content, have embedded younger audiences and are helping to bring them in. The momentum business is real; attendees see other things of interest when they're here and wind up coming back, creating a positive cycle. We're seeing healthy signs of new attendees and sustained and growing frequency from existing audiences. There's a lot of great momentum. This year has been very positive for the industry and for our company regarding moviegoing in general, and we're pleased with the trends we're seeing with both new and existing members.

Our next question is coming from Mike Hickey of StoneX.

Hey, Sean, Melissa, Chanda, great job, incredible quarter, guys. Congratulations. First question, Melissa, mirroring the international margin question but thinking domestic: your domestic EBITDA margin here over 27% was significant. When you think about the elements of margin improvement here, what do you view as sustainable or durable as attendance continues to recover? And where do you see the largest remaining opportunities to improve productivity? I have a follow-up.

Thanks for the question, Mike. On the domestic side, attendance and box office are the primary drivers. Key levers highlighted in the second quarter underscore the strength and operating leverage of our business model when supported by content that resonates. You saw that in market share strength, a steady cadence of releases and a strong overall box office environment. Beyond box office and attendance, average ticket prices and per cap have runway. We've benefited from strategic pricing actions and premium format penetration. In food and beverage and concessions, we believe we have further runway, as shown by merchandise sales records in the quarter. Top line initiatives remain a focus. These metrics will fluctuate quarter-to-quarter, but over the long term they support margin strength. On the expense side, there is operating leverage: roughly 40% of our cost structure is fixed, so we get leverage on items like facility lease expense in the U.S., some G&A, property insurance and real estate taxes. Other semi-variable costs, like labor, increase with attendance but not to the same extent, creating additional margin opportunities. We also face inflationary factors, but we focus on controlling what we can and maximizing profitability and margin potential.

Thanks, Melissa. And Sean, as a follow-up: creator-led films — the success of Backrooms, Obsession and earlier Iron Lung — these seem strategically important. When you think about their success and low budgets, does that suggest Internet-native creators could be a meaningful source of new theatrical film supply for you in the future? Hollywood is starting to chase a lot of this IP. Also, you talked about bunching up on the calendar. Do you think these lower-budget creator-led films could help fill gaps in the release calendar?

Yes. On the bunching of the calendar, we are hopeful that some traditional larger Hollywood films will spread out more. That took time historically, but it happened, and we could see it happen again. In the meantime, nontraditional films — creator content, anime, faith-based, foreign — can help fill gaps. We are seeing significant success stories. Prior to Iron Lung, Obsession and Backrooms, we had Sam and Colby, Critical Role and other examples. The challenge historically has been predicting what will work; some concepts that seemed promising didn't, and some big successes were surprises. There's clear recognition now, from studios and producers, of the potential. Creators have strong, connected fan bases, and with compelling programming and positioning, strong word of mouth can generate significant momentum and crossover into mainstream, which we're starting to see. We expect this to be an area of opportunity and are excited to see how it evolves.

The next question is coming from Robert Fishman of MoffettNathanson.

Two for you, one longer term and one shorter term. First, you talked about the excitement around Spider-Man and clearly Avengers at the end of the year. When you think about the 2027 slate, are there lessons you've learned from the first half box office that you can apply to think about the mix of content, expectations around franchise and non-franchise movies for 2027 and beyond?

Thanks, Robert. We're still getting line of sight to 2027, and it's a bit early, but initial views are very positive based on what has been announced. The volume of releases announced thus far is even a tick up from the norm, and there are many highly anticipated films — another Avengers: Secret Wars, Frozen 3, a Sonic, another Spider-Man animated film, Minecraft, and more. To anticipate the mix and impact is hard because you never fully know what will resonate. You use comps and make the best forecasts, but surprises occur on both sides. Backrooms and Obsession were out-of-nowhere hits, and other films underperform. It comes down to the concept on paper versus the film's quality, marketing effectiveness and how it performs throughout the year, and how spread out that performance is. We're optimistic about 2027 based on what we know, but ultimately it's contingent on content quality, marketing and scheduling.

Makes sense. And then on the shorter-term trends — given the record concession revenues you saw — are you noticing anything into July about consumer spending patterns reacting to higher gas prices or other macro pressures on the consumer?

Thanks, Robert. The health of the consumer continues to follow the historical trend: we're more dependent on the strength of the film slate than economic cycles. We've seen that play out over the last couple of years and continue to see it today for upgrades to premium formats, concession purchases and merchandise. We closely monitor behavior and have a number of initiatives designed to grow food and beverage consumption and merchandise sales and premium format penetration while delivering value for guests. We are not seeing indications that moviegoing has been impacted by recent macro pressures.

The next question is coming from Andrew Crum of B. Riley Securities.

Sean, I want to go back to your commentary around what seems to be an energized Gen Z audience. Can you remind us of your competitive positioning with a younger cohort, and understanding you're beholden to studios for content, is there anything from a planning perspective you can or are doing to advantage Cinemark for that next Obsession or Backrooms breakout hit?

Our positioning tends to be somewhat more suburban versus urban, but that's not necessarily a major difference in attracting younger audiences. We work extensively with studios on joint partnerships for promotion and marketing of titles. Our marketing team leverages social and digital channels and influencer networks to be where younger audiences are and to drive awareness and ticket sales to Cinemark. Our new brand campaign launched at the end of last year, 'Showtime,' was designed with energy to resonate with younger audiences. We invest in these areas and work in tandem with studios as well as with our own promotions.

Got it. And then my next question is on the variance between Latin America and the U.S. in terms of year-on-year rate of change. Was it comp related? Was it mix? Specifically, it doesn't look like the World Cup had an impact on Latin America's performance. Any observations there, and did you notice anything in July with Argentina's success in the tournament?

In Q2, the year-over-year attendance differential between international and the U.S. was more comp than anything. If you look at recovery relative to 2019, recovery rates are tracking closely between U.S. and international. So we don't make much of the differential seen in the quarter.

We tried to tease out the impact of the World Cup. With how strong interest was, both in the U.S. and overseas, there may have been some impact, probably less so in the second quarter. We're seeing a little more of that in the third quarter as the tournament advanced to the knockout rounds, especially with some of the Latin American teams that advanced. So there was a bit of impact there, but nothing materially affecting the numbers based on what we can tell.

The next question is coming from Omar Mejias of Wells Fargo.

Sean, you've now reached 40 million addressable customers worldwide. Can you talk about that figure? How much has that expanded over the past year? And where are you seeing the clearest payoff from personalization and direct marketing efforts?

We think that addressable customer figure is helping support growth and market share advances. It ties to the younger audience trends I mentioned earlier: it's a way to access a broader range of consumers. When new consumers come through our circuit, we establish a communication channel to drive repeat business. Our marketing team focuses heavily on this domestically and internationally, using new tools and capabilities to personalize and customize promotions — both mass market promotions like Spider-Man as well as individual behavior-driven outreach. This connectivity is complementary and helpful to our performance, and we're leaning more into it.

That's great. And my follow-up would be on release cadence of films. You talked about progress on 45-day windows and studio commitments, but another thing limiting potential box office could be the release cadence and studios crowding summer holiday periods. Can you talk about the importance of spread and whether you are having conversations with studios about spreading release cadence across the year to maximize box office?

It's definitely a topic of discussion we have, and there's broad recognition of opportunity there. There are many factors that go into dating: finding the right slots for an individual studio's slate, working with filmmakers, assessing competitive profiles. Those influences sometimes prevent an optimal aggregate spread. That said, it's recognized as an opportunity, and we're discussing it with partners. Over time we'll likely see improvements. Often someone takes a risk on a new date and has success, which shifts future dating — historically the release window has expanded as movies have proven they can do strong business at different times of year.

The next question is coming from Stephen Laszczyk of Goldman Sachs.

Sean, I was curious on a follow-up for capital allocation. I would love your latest thoughts on the opportunity set and appetite for new builds and M&A as part of that framework, whether any of that has evolved over the course of this year, in the U.S. or in international markets?

When we think about evolving the business and positioning for ongoing success, growth through new builds and M&A is part of the equation. We are disciplined: we target quality assets where we have confidence in delivering solid returns over time. The same discipline applies to new builds — we make sure decisions are smart because these are long-term considerations. We'll continue to be disciplined with our capital. As Melissa said earlier, it's a balancing act: investments in future growth, maintaining a strong balance sheet and distributing excess capital to shareholders. We constantly project cash generation and look for the right opportunities, and we plan to remain disciplined because that approach has worked well for us.

That's helpful. And then Melissa, on expense lines like utilities and other, can you unpack trends through the first half of the year? Many have mentioned electricity prices and deferred maintenance. What are you seeing and your thoughts into the back half of the year and early 2027?

From the utilities and other line, the increase we've seen is primarily driven by higher attendance because many of those costs are variable or semi-variable — credit card fees, electricity, repairs and maintenance, janitorial. We've also seen higher gift card sales, which increase gift card commissions and fees. Those dynamics played through in the second quarter and first half. On electricity, unrelated to volume, we're seeing rising market rates translating into increased costs. Two of our key markets had meaningful increases, and we've seen some of that in the first half; more will come through in the second half. So I still expect some year-over-year impact on that line due to energy markets. This isn't unique to us, but we have a heavy presence in markets like Texas where increased data center demand can translate to higher costs. Regarding deferred maintenance, we started that program last year; it hasn't had a meaningful incremental year-over-year impact because we're working through it. As you think about full-year comps, we will continue to address deferred maintenance in the second half, but I don't expect the year-over-year impact to be as meaningful as last year's comparisons.

The next question is coming from Patrick Sholl of Barrington Research.

Maybe just following up on your commentary on younger demographics. Could you provide a little more detail on frequency of various demographics and the share of each demo going to theaters versus historical trends?

I'll do my best. I don't have all the detailed segmentation on hand, but audiences under 25 have increased frequency by something like 20% year-over-year, maybe a touch higher, as more types of films have resonated with that audience. That's the direction we've seen over the past year. We're continuing to study this, but we expect it to continue. One interesting observation: these younger generations grew up with devices, and there was a question whether being asked to disconnect would alienate them. The opposite is happening — they're valuing the theatrical experience more because it's differentiated: a communal experience with a different level of energy and connectivity. That's proving to be a positive, which is encouraging.

Okay. And on the concession side, where would you say you are with merchandise as a driver of growing concession revenue? How far can that run as a continued contributor?

From merchandise, we feel good about our ability to grow. We reached a record $25 million in merchandise sales in the quarter, reflecting the strength of the film slate, robust demand and execution of merchandise initiatives. We've focused on curating a compelling assortment, targeted product allocations across our circuit and enhancing inventory optimization; we've seen nice benefits in sell-through rates, driving meaningful merchandise growth. We believe we still have runway on merchandise. Importantly, movie-themed merchandise not only generates sales but enhances title awareness and audience engagement given its social media reach. As we think about catalysts for future per cap growth, merchandise is one of many tools we're leaning into for sustainable long-term growth.

Thank you. At this time, I would like to turn the floor back over to Mr. Gamble for closing comments.

Okay. Thank you, Donna, and thank you, everyone, for joining us this morning. I really appreciate all the questions, and we look forward to reconnecting in a few months to share and discuss our third quarter 2026 results. Hope you all have a great rest of the summer. Take care.

Ladies and gentlemen, this concludes today's teleconference. We thank you for your interest in Cinemark Holdings. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.