Cinemark Holdings, Inc.
Q4 2023 Earnings Call Transcript

Published: 16 Feb 2024

[Operator:]

Hello, and welcome to the Cinemark Holdings Fourth Quarter 2023 Earnings Call and Webcast. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Chanda Brashears, Senior Vice President, Investor Relations. Please go ahead.

[Chanda Brashears:]

Good morning, everyone. I would like to welcome you to Cinemark Holdings, Inc.'s fourth quarter and full year 2023 earnings release conference call, hosted by Sean Gamble, President and Chief Executive Officer, and Melissa Thomas, Chief Financial Officer. Before we begin, I would like to remind everyone that statements or comments made on this conference call may be forward-looking statements. 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. These matters involve certain risks and uncertainties. The company's actual results may materially differ from forward-looking projections due to a variety of factors. Information concerning the factors that could cause results to differ materially is contained in the company's most recently filed annual report on Form 10-K. Also, today's call may include non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the company's most recently filed earnings release, 10-K and on the company's website at ir.cinemark.com. With that, I would now like to turn the call over to Sean Gamble.

[Sean Gamble:]

Thank you, Chanda, and good morning, everyone. We appreciate you joining us today for our fourth quarter and full year 2023 earnings call. 2023 represented another year of meaningful post-pandemic progression for our industry and our company. And I thought I'd start today's call by providing a summary of the significant achievements we made advancing our key priorities throughout the year. First and foremost, we continued to effectively navigate the fluid dynamics of our industry's ongoing recovery, putting an emphasis on near-term revenue and margin generation, strengthening our balance sheet, and actively maneuvering through varied fluctuations in film release volume as well as inflationary cost pressures. Once again, I'm pleased to share that our phenomenal Cinemark team produced sensational results across all of these focal points. For the full year 2023, we entertained 210 million guests worldwide and generated $3.1 billion of revenue, that was up 25% year-over-year and included our highest concession sales of all time, which were 3% higher than 2019. Our adjusted EBITDA grew 77% from 2022 to $594 million, with a 19.4% margin rate that represented 570 basis points of margin expansion. Moreover, during the year, we delivered our second highest quarterly adjusted EBITDA in the history of our company in 2Q, and our highest third quarter adjusted EBITDA in 3Q. In total, our 2023 adjusted EBITDA recovered to within 20% of 2019 on 25% less attendance, a clear sign that our many ongoing strategic growth and productivity initiatives are delivering significant impact. Furthermore, our strong operating results yielded free cash flow of $295 million, with positive full year net cash generation of $175 million after paying down more than $100 million of COVID-related debt. In addition to outstanding operational execution and sound financial discipline throughout the year, these tremendous results also benefited from our continued drive to expand content and build audiences through marketing actions, loyalty programs, pursuit of new content sources, and heightened guest service standards. Throughout 2023, we strengthened and took full advantage of our extensive marketing and communication reach, amassing more than 8 billion media impressions, increasing web and app traffic over 30%, doubling audience engagement on social media, and growing our global addressable customer base to nearly 30 million consumers, while enhancing personalization. We also continued to advance our global loyalty programs, increasing membership by nearly 20% in the U.S. and by more than 45% in Latin America. Furthermore, Movie Club, our paid U.S. subscription tier, grew 13% during the year to over 1.2 million members, as moviegoers continued to highly value and embrace the meaningful benefits included in this program. During the year, Movie Club drove 24% of our domestic box office and our data continues to demonstrate that the program stimulates increased moviegoing frequency and food and beverage consumption. In tandem with our marketing and loyalty actions, we continued to actively collaborate with our traditional studio partners to drive the successful releases of their films, while also working closely with Amazon, Apple and an increasing number of non-traditional content creators to help establish and grow their foothold within theaters. To that end, we were thrilled to see North American industry box office grow to $9.1 billion in 2023, driven by a diverse array of studio hits, including Barbie, Super Mario Bros., Spider-Man

[Melissa Thomas:]

Thank you, Sean. Good morning, everyone, and thank you for joining the call today. We were thrilled to deliver strong operating and financial results for the fourth quarter and full year, while further strengthening our balance sheet. We are incredibly proud of the focus and execution our global team exhibited as we capitalized on the box office and remained nimble in this dynamic environment. During the fourth quarter, we served more than 40 million guests globally, an increase of 4% year-over-year and grew total revenue 7% to $638.9 million. With the uptick in attendance, our strong operating discipline and the ongoing execution of our strategic initiatives, we delivered $79.6 million of adjusted EBITDA in the quarter, up more than 8% year-over-year, and we expanded our adjusted EBITDA margin by 20 basis points to 12.5%. Moving to the results for our domestic segment. We welcomed 26.2 million guests across our U.S. circuit during the fourth quarter, an increase of 4% year-over-year. We grew our admissions revenue 7% to $267.5 million and surpassed the North American industry's box office growth by 140 basis points, driven by our strong market share in the quarter. Our market share benefited from the higher mix of family and horror content, which resonated particularly well in our circuit, coupled with the successful execution of our strategic initiatives, as Sean discussed. Our average ticket price grew 2% year-over-year, reaching an all-time high of $10.21 in the quarter, driven primarily by the elevated ticket pricing and box office success of Taylor Swift

[Operator:]

Certainly. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Eric Handler from ROTH MKM. Your line is now live.

[Eric Handler:]

Good morning. Thanks for the question. Wonder if you could talk a little bit about your free cash flow. Your conversion from adjusted EBITDA for the year was 50%, which going back to 2007 is a record number. Is that a good barometer going forward, or was there anything unusual there that sort of elevated that percentage?

[Melissa Thomas:]

Hi, Eric, thanks for the question. We were certainly pleased with our free cash flow conversion rate this year and optimistic about the possibilities over the longer term as our business recovered. But it's important to bear in mind that this year's free cash flow conversion rate was bolstered by moderated CapEx levels, which we would expect to ramp up as industry box office resumes its recovery though we do believe our peak CapEx years are behind us. The other key factors to consider going forward include, of course, our debt levels and corresponding interest payments as well as any working capital dynamics.

[Eric Handler:]

Great. Thank you. And one of the things you mentioned, Sean, in your commentary was, I think, two concepts to open in 2024 for sort of new concepts. What exactly is that? Is that within your existing footprint?

[Sean Gamble:]

Yes, thanks for the question. That's basically a new format of one of our theaters, that at least the way we're looking at it with the family entertainment center. So, an extension of theaters that has a little bit larger-scale gaming in it as well as some bowling concepts and a little bit larger bar restaurant facility. We've had some really positive experience with that in a joint venture that we currently have for a single venue. And we've seen how well these types of concepts have performed both during the pandemic and since. So, we look at that as a really positive opportunity for diversification, for growth. It can also provide opportunities both from a new build perspective, as well as also remodels of existing theaters where we may have a large theater that doesn't quite need all of the auditoriums that we have. So, the two that I referenced include one new build that we have currently underway in El Paso, Texas, as well as a remodel that we have underway of our Merriam, Kansas City theater.

[Eric Handler:]

Thank you.

[Sean Gamble:]

Thanks, Eric. Appreciate the questions.

[Operator:]

Thank you. Next question today is coming from David Karnovsky from JPMorgan. Your line is now live.

[David Karnovsky:]

Hi, thank you. Sean, thanks for the view on '24 supply. I know you spoke to '25 in that level being back to the recovery path you had been on. So, to be clear, does this mean you expect kind of the '25 wide release volume to be above '23, and maybe you could talk to some of the factors driving that? And then for Melissa, just wanted to see if you could provide any early expectations on average ticket prices or per cap levels in the coming year? Thanks.

[Sean Gamble:]

Sure. Thanks for the question, David. Yes, I mean, just to quickly answer your question on '25, we do anticipate, based on the information we have at hand right now that it would notch further forward from 2023's volume level approaching pre-pandemic levels. We saw a nice trajectory of progress from '22 to '23. As mentioned, unfortunately, that was disrupted by a disruption in supply chain production due to the Hollywood strikes. But based on all of our conversations with our studio partners with regard to what they have currently in process from production as well as their ongoing plans, coupled with what we know is happening at Apple and Amazon as well as with some of this additional non-traditional content, we remain positive and optimistic about that spring back in recovery. So that's really the drivers of why we think '25 will just quickly bounce back to that recovery path we've been on.

[Melissa Thomas:]

And then, David, in terms of your question around expectations on ATP and per cap, on the average ticket price side, we do anticipate modest growth in our domestic average ticket prices for full year 2024, though that may fluctuate quarter-to-quarter based on film mix. Just a couple of points on some of the key catalysts we see for that. We do think there's still additional opportunity on the strategic pricing front as we continue to leverage data and analytics to find that optimal price point that maximizes our overall attendance in box office. Of course, film mix also does play a role in our ticket prices going forward. But net-net, we do think modest growth there. The one thing I would keep in mind just from a modeling perspective is that Q1 and Q4 of 2023 are certainly going to be tougher comparisons given the outsized 3D mix due to the carryover of Avatar

[David Karnovsky:]

Thank you.

[Sean Gamble:]

Thanks, David.

[Operator:]

Thank you. Next question today is coming from Ben Swinburne from Morgan Stanley. Your line is now live.

[Ben Swinburne:]

Thanks. Good morning. Sean, just back on your 95 film expectation for '24, I'm just curious if you're assuming more are added between now and the end of the year. We've seen, at least we've noticed a number of films, still smaller films, but a number of films added to the slate even in the last month. So, I was just curious what you're assuming in that 95, if you don't mind sharing.

[Sean Gamble:]

Sure. Well, I think it's a great observation that you have. We do tend to see films continue to be added through the year. In some ways, that actually was a little bit elevated in the fourth quarter when several films moved out as a result of the Hollywood strikes. We saw a number of smaller films get dated that previously weren't -- some weren't even on the radar prior to that. So, as we sit right now, we have line of sight to about 90 titles. So, we're assuming another five or so get added above and beyond that. So that's kind of generally in line with what we've seen in the past. That may be tempered a little bit in 2024, just simply because of the effect of the Hollywood strikes on production cycle. The only other thing that I would flag is the way this year is -- the calendar is lined up, there is definitely a concentration of larger films toward the end of the year, again, a byproduct of the strikes on production. So, there is a chance. I'm just saying there's -- we have no line of sight to any risk right at this moment of anything fluctuating. But if the normal course of making movies, if something doesn't come together, there's a situation where something could slide out. So, I'm just flagging that because it's a little bit more heavily loaded at year-end than we've seen over the last couple of years. But there's the potential for additional films to pop in like we saw in '23, and that's where we sit right now.

[Ben Swinburne:]

Okay. That makes sense. And what do you guys looking for to resume the dividend? I know it's a Board decision, but as we track the business this year, got a lot of cash on the balance sheet. Can you just talk about the things you are waiting to see to bring that back?

[Melissa Thomas:]

I'll take that one, Ben. So, with respect to the dividend, reinstating the dividend does remain a key consideration for both management and the Board. However, the timing of any reinstatement is predicated upon our ability to sustain our net leverage ratio within our target range of 2 times to 3 times. Keep in mind that our leverage ratio is highly dependent upon the box office and our free cash flow generation, which are both expected to face headwinds from reduced content volume this year. So that may put some near-term pressure on our net leverage ratio. We do, though, remain in active conversations with our Board regarding our capital allocation priorities, and that includes potential timing of reinstating the dividend.

[Ben Swinburne:]

Okay. And then I just want to ask, Melissa, I don't know if there's any way to size Argentina for us since you called it out as something for us to think about in '24?

[Melissa Thomas:]

Yeah. So, on the Argentina front, I mean, they're certainly contending with sharp devaluation following the economic measures implemented in December with further devaluation projected this year. If we look at and of what bank projections are saying in terms of FX devaluation for Argentina, could be as high as 80% year-over-year. That said, we've got to keep in mind that Argentina is a highly inflationary environment. So, we do expect that inflation could provide some offset to that FX devaluation in the country. It's just unclear to what extend at this time and whether our pricing can keep up with the rate of inflation. But what I would say there is, it's a highly fluid situation. Our teams continue to closely monitor it and lean hard to kind of navigate through some of this. We have some long-tenured teammate -- team members that are at -- in our international countries. So, we feel good about our position there. But it's really highly fluid. So, it's hard to pinpoint at this stage.

[Operator:]

Thank you. Next question is coming from Mike Hickey from Benchmark. Your line is now live.

[Mike Hickey:]

Hey, Sean, Melissa, Chanda, congratulations, guys, on 2023 and your fourth quarter. Great job. Just curious, Sean, on the product volume question on '25 getting back here to sort of pre-pandemic levels. Just curious what sort of boost you're thinking getting from '24 films that were delayed because of the labor strikes in the '25. I guess the question being, do you feel like your studio partners at this point structurally are sort of ready to provide you the volume of films that they had pre-pandemic? And then, on '25, are you including incremental films from streamers? Obviously, that business looks like it's scaling. And I guess you would think over time, streaming plus your traditional studio partners would give you a volume of product that was above pre-pandemic. Curious when we hit that inflection point, Sean. And then, the second question would be on your domestic network. It looks like your theater count has contracted about 10% versus where you were pre pandemic. It looks like most of that is just sort of thoughtful optimization from you and your team. So obviously, that would be accretive. But as we move forward here, do you think you're getting in a better position to sort of base and build your domestic network? And I get the new concept you're trying with, that looks interesting. Curious also, if that's an M&A opportunity if you're successful there. Thanks, guys.

[Sean Gamble:]

All right. Thanks, Mike. Let me start with the first question. So, just touching a little bit more on 2025 estimates volume, prior to the strikes, the whole industry was still in the recovery mode, rebuilding the whole production pipeline of films that was affected by COVID. And at that time, we were anticipating perhaps in '25, '26 would be the time that we could see things get back to pre-pandemic levels, again, based on how things were progressing at that point. As a result of the strikes, clearly, that created over six months of work stoppage and delayed things. There were some movements out of '24 into '25. And as we sit here today, and what we're going on is just largely the discussions, the ongoing conversations we're having with our studio partners. 2025, while there's certainly the potential it could get back there to pre-pandemic levels, I'd say we're probably looking at that maybe more of a 2026 phenomenon. Apple and Amazon are certainly building to your question on that, they've been adding. We know that Amazon has publicly stated that they are working towards a slate of eight to 12 films a year. They may get there in 2025. I think we'll have to see how that just comes together, but I know that's a directional target that we understand at least that they're working towards. And Apple's building as well. So, can't fully call it now. It's kind of why we've tried to give a sense where we see things coming in somewhere between 2023 and 2020 in pre-pandemic levels as we sit here today. But we're optimistic. Again, things are moving in the right direction, and we're thrilled to see that the studios, despite what happened with the strikes, there hasn't been any change in the strategy with regard to studios' intentions to continue rebuilding their pipeline of films. If anything, it's been reinforced by just the ongoing results that these films are providing those companies. Transitioning to your question on our circuit, you're right, we've had certainly a higher number of closures of theaters domestically over the last couple of years than we have had new builds and additions. As you mentioned, those theaters, while we've always had a process of optimizing our circuit and closing lower-performing feeders and older theaters and repopulating that with newer opportunities, there have been more of those that have been on the cusp that we've exited, which net-net do provide a bit of bottom line lift for our company going forward. So, from a just pure EBITDA perspective, it's actually a net positive. We have added, at the same time, about 16 new theaters over the last few years, and we've seen that the results of those theaters have been very strong. In fact, in the majority of those cases, our actual results have exceeded our pre-pandemic pro forma targets that we had in mind based on significantly higher volume levels. So it definitely gives us a sense that there are clearly those market opportunities still. And as I mentioned in prepared remarks, we've reactivated that development pipeline now as we've seen that, and certainly, as we just continue to build further in our recovery. So, as we look forward, I think, yes, we do anticipate that we will start to see a greater amount of activity of real estate, new build to supplement and offset some of the closures that we had. It doesn't mean we wouldn't have some more of those types of closures that happen as we're just trimming some of the lower-performing older assets in our company, but we do expect that we'll be adding more than we have over the past few years. Clearly, that's going to be moderated a bit just based on our continued cash flow generation coming out of this year in 2024 as we continue to recover and balancing that with some of the debt actions that Melissa mentioned.

[Mike Hickey:]

Thank you.

[Sean Gamble:]

Thanks, Mike.

[Operator:]

Thank you. [Operator Instructions] Our next question is coming from Jim Goss from Barrington Research. Your line is now live.

[Jim Goss:]

Okay. Thank you. I wanted to talk a little more about the relationship with streamers that you've alluded to. I'm wondering if it's going to match the traditional studio partner patterns or are you creating some sort of new mutually beneficial working models in terms of the number and variety of releases and expectations in terms of theatrical windows? For example, are they looking at it as a way to directly create new -- launch new series and it might tie in that way, or certainly it goes directly into their product? So, anything -- it seems to be early stage is the best time to shape plans and expectations. And I'm just wondering if you have any commentary on that.

[Sean Gamble:]

Sure, Jim, let me answer that and then if need be, I can elaborate further. The current direction is, I'd say, more akin to traditional studios. I think what everybody's data has shown is these films that are being released theatrically are performing better on streaming platforms and they're delivering [indiscernible] amount of value in terms of consumer interest. So, acquisition, retention, those are the films that tend to be viewed to a higher extent. So, I mean, what we're seeing right now from the streamers is they're leaning into similar types of traditional films and looking to launch them in similar ways to derive that same type of lift on their platforms when they hit those platforms. By the way, with comparable types of windows, which are starting to gel around that 45 days give or take us some. By the way, that also -- we also continue to see the opportunity for additional types of programming, as you mentioned, where it doesn't have to be limited to films. We've seen phenomenal consumer enthusiasm and response for premieres of series, episodes, even bringing back episodes that have previously been shown on these platforms that are really well received by fans. They just -- they love. Again, as we know, the most active streamers are our most active moviegoers. These are people who just love to view this content in an elevated format and they also view it amply at home. So, this is just a great way to give fans an elevated event and [indiscernible] opportunity. So, they're leaning into in similar ways and we just -- we see the opportunities there to be sizable both for films as well as other episodic type of programming.

[Jim Goss:]

Okay, thanks. Just one other thing. I'm wondering, in discussing how you're leaning into merchandise, I'm wondering if you're taking any inventory risk on this. Do you have to determine how much you think you can sell? Or is -- will they take totally back and you're an extension of them, so there's really no added risk to try to managing that getting into the concessions mix portfolio?

[Sean Gamble:]

The deals definitely vary based on who carries the inventory risk. So, it is something that we remain highly focused on as we pursue merchandise. So, there are many examples where we do take on that risk and we're careful about how much we're purchasing as a result of that. And then like I said, there's other models where the supplier is carrying that risk. We are leaning more into e-commerce opportunities with merchandise in addition to what we have in our theaters with -- we've seen a great appetite for that for consumers. And obviously, there's greater self space and greater opportunity to host more SKUs that way. And those types of models lend themselves more to a model where there's more risk for by the actual supplier than by us. But it's a great question. It's something that we are particularly focused on, especially as we're ramping that part of our business more.

[Jim Goss:]

Okay. And just a follow-up. So, you could probably put kiosks in your theaters or something like that and then it becomes sort of a catalog merchandise online when the consumer is very interested in it at that moment?

[Sean Gamble:]

When you mention a kiosk, are you referring to just like kind of a pop-up stand or are you talking about...

[Jim Goss:]

Yeah, something of that nature, just some direct access. I know you can go to your phone and do it that way too, but...

[Sean Gamble:]

That's right. I mean, we have shelf space and stands in the majority of our theaters already where we put merchandise. Sometimes that's limited by the size and space in our lobbies, but we do that already today. And what the online channel provides is an opportunity not only for that same merchandise, but other SKUs. I mean, a perfect example is what we saw earlier in 2023 when we had Scream popcorn tubs that all of a sudden became this huge phenomenon with fans and we sold out of them almost instantly in our theaters. And we were able then to extend that to an online offering and direct consumers to go purchase them online because they were no longer available in our theaters. And we sold a ton of those online as well. So, it's a great way to just extend that in certain cases as well as gain greater shelf space for that we may not have available in our theater while carrying lower inventory risk.

[Jim Goss:]

All right. Thanks very much. Appreciate it.

[Sean Gamble:]

Thanks, Jim.

[Operator:]

Thank you. Next question is coming from Omar Mejias from Wells Fargo. Your line is now live.

[Omar Mejias:]

Good morning, and thank you for the question. Sean, you mentioned that non-traditional content was 14% of total North America box office in '23. Can you maybe give us an update on what are your plans for non-traditional content this year, and if you expect that number to continue to grow as a percentage of box office? And just -- my second question, just on -- can you guys unpack the impact from the Taylor Swift concert film on average ticket price and concessions per cap? Thank you.

[Sean Gamble:]

Sure. Thanks for the questions, Omar. Well, first just to clarify, the 14% is specific to Cinemark. So that was our percentage that non-traditional represented of our box office results. So, it was certainly a large part of the industry as well, but we tend to over index on that type of content. So, it would be a touch lower for the industry as a whole. In terms of future expectations, look, we remain optimistic about the growth in this area. Historically, pre-pandemic, we were seeing -- we always believe there was a lot of potential in alternative content. And it was just something that never really seemed to meet that potential. It generally hovered around 2% or so of box office each year, despite what we saw as upside. And it's been great to see now that that's been playing through certainly in the areas of foreign films, faith-based films, concert films, like those all of a sudden have been taken off. When we look at 2023 specifically, I would say that was in -- the results were inflated a bit by some real outliers. I mean, obviously you had Taylor Swift

[Melissa Thomas:]

Omar, with respect to your question around impact of Taylor Swift

[Omar Mejias:]

That's very helpful color. Thank you, guys.

[Sean Gamble:]

Thanks, Omar.

[Operator:]

Thank you. Next question is coming from Stephen Laszczyk of Goldman Sachs. Your line is now live.

[Stephen Laszczyk:]

Hey, great. Good morning. First on margins, perhaps for Sean, you mentioned the efficiency from the variable workforce. I was wondering if you could perhaps talk a little bit more about what you've learned on that front in 2023 and how much more room you think there is to operate the business more efficiently from a structural perspective as we look into '24 and then as the slate normalizes in '25? And then, one on CapEx for Melissa. You talked about your expectations for CapEx increasing as the box office recovers, but not back to peak levels. I think you're at $150 million for this past year. CapEx is north of $350 million at its peak, that's a fairly wide range. Is there any framework you could offer us in terms of thinking about how CapEx could trend as the box recovers in '25 and '26 that'd be helpful. Thank you.

[Sean Gamble:]

Sure. I'll start on margins and I'll let Melissa delve into that further as well as your second question, Stephen. This is -- when we talk specifically about labor management, this is an area that we've been working on for some time. Obviously, predates the pandemic, we've seen a lot of opportunity just in the workforce management realm. We've put in that all kinds of time studies around what it takes to perform different activities in our theaters. We become more adept certainly with lower volumes of attendance in determining what things we should turn on or off based on expectations of demand. It's an area that we've got a range of initiatives that we're continuing to lean into to drive that further. Obviously, the deeper we go into that, the more complicated those efforts become because you're getting into reengineering processes more significantly in order to capture more productivity and do more with less. But we've got a line -- a range of initiatives going forward and I'll let Melissa speak to just margin expectations.

[Melissa Thomas:]

Yeah. As you think about salaries and wages in 2024 while we continue to drive and pursue further productivity initiatives as Sean mentioned, I think the big thing to keep in mind for 2024 is that we may be more impacted by minimum staffing levels given the expected reduction in content and box office potential. So that's something to keep in mind as you think about how that line item moves. And then in addition to that wage rate pressure, which we expect will be more in line with what we've seen historically on the labor front. And then, with respect to your question on capital expenditures, as we think about our CapEx expectations, as you mentioned, we do believe our peak CapEx years are behind us and we are continuing to benefit from those investments that we've made in our circuit historically, which we think is actually a key differentiator for our company. As you look forward, we do expect to continue to ramp up our capital expenditures as the industry rebounds in '25 and continues in 2026. What I would say just from a normalized perspective, there's a couple of things to keep in mind from a maintenance CapEx perspective. We do think it's reasonable to assume that over the longer term, our normalized run rate there will be within that $80 million to $100 million range, which is where we've historically run in pre-pandemic time. Outside of that, it's pretty hard to predict because the remainder of that is going to be largely focused on ROI generating opportunities, which includes new builds as well as the family entertainment centers that Sean mentioned, and then premium amenities, and that's really going to depend on the nature and scale of opportunities that arise. And then, outside of that the other key consideration would be we continue to progress through our multi-year conversion of our projectors to laser projectors.

[Stephen Laszczyk:]

Great. Thank you.

[Sean Gamble:]

Thanks, Stephen.

[Operator:]

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Sean Gamble for any further closing comments.

[Sean Gamble:]

Thank you, and thank you all again for joining us this morning. I'd just like to say once again that we're incredibly proud of the results our tremendous Cinemark team was able to deliver in 2023, and highly encouraged by what those results suggest regarding the potential of our company ahead. While 2024 will be pressured somewhat by the strike-induced volume headwinds that we've discussed, the fundamentals that drive our industry remain intact and we continue to be highly enthusiastic about the future of theatrical exhibition and certainly of Cinemark. We look forward to speaking with you all again following our first quarter 2024 results. Thank you.

[Operator:]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.