10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33401

CINEMARK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-5490327
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3900 Dallas Parkway
Plano, Texas		75093
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (972) 665-1000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $.001 per share	CNK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2022, 120,559,362 shares of common stock were issued and outstanding.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements (unaudited)	9

		Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	9

		Condensed Consolidated Statements of Loss for the three and six months ended June 30, 2022 and 2021	10

		Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2022 and 2021	11

		Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021	12

		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	14

		Notes to Condensed Consolidated Financial Statements	15

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

	Item 4.	Controls and Procedures	48

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	49

	Item 1A.	Risk Factors	49

	Item 6.	Exhibits	50

SIGNATURES			51

Cautionary Statement Regarding Forward-Looking Statements

Certain matters within this Quarterly Report on Form 10Q include “forward–looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The “forward-looking statements” may include our current expectations, assumptions, estimates and projections about our business and our industry. They may include statements relating to:

•

future revenues, expenses and profitability;

•

currency exchange rate and inflationary impacts;

•

the future development and expected growth of our business;

•

projected capital expenditures;

•

access to capital resources;

•

attendance at movies generally or in any of the markets in which we operate;

•

the number or diversity of popular movies releases, the length of exclusive theatrical release windows and our ability to successfully license and exhibit popular films;

•

national and international growth in our industry;

•

competition from other exhibitors, alternative forms of entertainment and content delivery via streaming and other formats;

•

determinations in lawsuits in which we are a party; and

•

the impact of the COVID-19 pandemic on us and the motion picture exhibition industry.

Forward-looking statements can be identified by the use of words such as “may,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future” and “intends” and similar expressions. These statements are neither historical facts nor guarantees of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are, therefore, subject to risks, inherent uncertainties and other factors, some of which are beyond our control and difficult to predict, including, among others, the impacts of the COVID-19 pandemic. Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. For a description of the risk factors, please review the “Risk Factors” section or other sections of, or incorporated by reference to, Cinemark Holdings, Inc.'s Annual Report on Form 10-K filed February 25, 2022. All forward-looking statements are expressly qualified in their entirety by such risk factors. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Unless the context otherwise requires, all references to “we,” “our,” “us,” “the issuer,” “the Company” or “Cinemark” relate to Cinemark Holdings, Inc. and its consolidated subsidiaries. All references to Latin America are to Brazil, Argentina, Chile, Colombia, Peru, Ecuador, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Guatemala, Bolivia, Curacao and Paraguay.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data, unaudited)


	June 30,			December 31,
	2022			2021
Assets
Current assets
Cash and cash equivalents	$	695.1		$	707.3
Inventories		20.3			15.5
Accounts receivable		67.3			68.8
Current income tax receivable		45.0			46.6
Prepaid expenses and other		45.3			36.2
Total current assets		873.0			874.4
Theatre properties and equipment, net of accumulated depreciation of $2,093.8 and $1,985.9		1,296.0			1,382.9
Operating lease right-of-use assets, net		1,180.6			1,230.8
Other assets
Goodwill		1,251.3			1,248.8
Intangible assets, net		309.8			310.8
Investment in NCM		40.2			135.4
Investments in affiliates		25.6			25.2
Deferred charges and other assets, net		27.5			22.3
Total other assets		1,654.4			1,742.5
Total assets	$	5,004.0		$	5,230.6

Liabilities and equity
Current liabilities
Current portion of long-term debt	$	25.7		$	24.3
Current portion of operating lease obligations		219.4			217.1
Current portion of finance lease obligations		14.7			14.6
Current income tax payable		0.2			—
Accounts payable and accrued expenses		465.8			513.1
Total current liabilities		725.8			769.1
Long-term liabilities
Long-term debt, less current portion		2,474.9			2,476.3
Operating lease obligations, less current portion		1,023.2			1,078.3
Finance lease obligations, less current portion		95.3			102.6
Long-term deferred tax liability		41.3			39.8
Long-term liability for uncertain tax positions		46.8			45.9
NCM screen advertising advances		342.8			346.0
Other long-term liabilities		35.2			38.1
Total long-term liabilities		4,059.5			4,127.0
Equity
Cinemark Holdings, Inc.'s stockholders' equity:
Common stock, $0.001 par value: 300.0 shares authorized, 126.07 shares issued and 120.56 shares outstanding at June 30, 2022 and 125.10 shares issued and 119.75 shares outstanding at December 31, 2021		0.1			0.1
Additional paid-in-capital		1,208.9			1,197.8
Treasury stock, 5.52 and 5.35 shares, at cost, at June 30, 2022 and December 31, 2021, respectively		(93.2	)		(91.1	)
Retained deficit		(536.8	)		(389.4	)
Accumulated other comprehensive loss		(371.0	)		(394.5	)
Total Cinemark Holdings, Inc.'s stockholders' equity		208.0			322.9
Noncontrolling interests		10.7			11.6
Total equity		218.7			334.5
Total liabilities and equity	$	5,004.0		$	5,230.6

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS

(in millions, except per share data, unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenue
Admissions	$	381.9		$	153.5		$	617.7		$	209.6
Concession		286.0			109.8			459.0			149.3
Other		76.2			31.3			127.9			50.1
Total revenue		744.1			294.6			1,204.6			409.0
Cost of operations
Film rentals and advertising		222.6			76.6			350.2			99.8
Concession supplies		52.5			18.8			82.5			26.0
Salaries and wages		100.2			50.4			180.0			81.6
Facility lease expense		80.3			67.2			154.0			132.0
Utilities and other		106.5			61.2			193.4			110.3
General and administrative expense		48.2			37.3			88.9			73.2
Depreciation and amortization		61.0			66.9			122.7			135.1
Impairment of long-lived and other assets		92.3			—			92.3			—
Restructuring costs		(0.2	)		(0.7	)		(0.2	)		(0.9	)
(Gain) loss on disposal of assets and other		(0.7	)		2.3			(7.6	)		6.8
Total cost of operations		762.7			380.0			1,256.2			663.9
Operating loss		(18.6	)		(85.4	)		(51.6	)		(254.9	)
Other income (expense)
Interest expense		(38.1	)		(37.0	)		(76.2	)		(73.6	)
Interest income		3.1			3.9			4.7			4.5
Loss on extinguishment of debt		—			(3.9	)		—			(6.5	)
Foreign currency exchange gain (loss)		(3.1	)		2.3			0.1			(0.7	)
Distributions from NCM		—			—			—			0.1
Interest expense - NCM		(5.9	)		(6.0	)		(11.7	)		(11.8	)
Equity in loss of affiliates		(5.5	)		(8.1	)		(7.7	)		(14.9	)
Total other expense		(49.5	)		(48.8	)		(90.8	)		(102.9	)
Loss before income taxes		(68.1	)		(134.2	)		(142.4	)		(357.8	)
Income tax expense (benefit)		4.7			8.0			2.9			(6.7	)
Net loss	$	(72.8	)	$	(142.2	)	$	(145.3	)	$	(351.1	)
Less: Net income (loss) attributable to noncontrolling interests		0.6			0.2			2.1			(0.4	)
Net loss attributable to Cinemark Holdings, Inc.	$	(73.4	)	$	(142.4	)	$	(147.4	)	$	(350.7	)

Weighted average shares outstanding
Basic		118.2			117.2			118.0			117.2
Diluted		118.2			117.2			118.0			117.2
Income (loss) per share attributable to Cinemark Holdings, Inc.'s common stockholders
Basic	$	(0.61	)	$	(1.19	)	$	(1.23	)	$	(2.94	)
Diluted	$	(0.61	)	$	(1.19	)	$	(1.23	)	$	(2.94	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in millions, unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net loss	$	(72.8	)	$	(142.2	)	$	(145.3	)	$	(351.1	)
Other comprehensive income (loss), net of tax
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements		4.2			0.8			22.6			6.5
Foreign currency translation adjustments		(15.7	)		8.3			(1.3	)		(1.2	)
Total other comprehensive income (loss), net of tax		(11.5	)		9.1		$	21.3		$	5.3
Total comprehensive loss, net of tax		(84.3	)		(133.1	)		(124.0	)		(345.8	)
Comprehensive (income) loss attributable to noncontrolling interests		(0.6	)		(0.2	)		(2.1	)		0.4
Comprehensive loss attributable to Cinemark Holdings, Inc.	$	(84.9	)	$	(133.3	)	$	(126.1	)	$	(345.4	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

CINEMARK HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in millions, unaudited)


	Common Stock		Treasury Stock			Additional Paid-In-Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Loss			Total Cinemark Holdings, Inc. Stockholders’ Equity			Noncontrolling Interests		Total Equity
Balance at January 1, 2022	$	0.1	$	(91.1	)	$	1,197.8	$	(389.4	)	$	(394.5	)	$	322.9		$	11.6	$	334.5
Issuance of share based awards and share based awards compensation expense	—		—				5.1		—			—			5.1			—		5.1
Stock withholdings related to share based awards that vested during the three months ended March 31, 2022	—			(1.6	)		—		—			—			(1.6	)		—		(1.6	)
Net income (loss)	—		—				—		(74.0	)		—			(74.0	)		1.5		(72.5	)
Unrealized gain due to fair value adjustments on interest rate swap agreements, net of taxes and settlements	—		—				—		—			18.4			18.4			—		18.4
Amortization of accumulated losses for amended swap agreements	—		—				—		—			1.1			1.1			—		1.1
Foreign currency translation adjustments	—		—				—		—			14.4			14.4