Movie theater company Cinemark Holdings (CNK)
reported record earnings for the 2011 third quarter. Reading the report closely reveals this company needs a steady supply Hollywood hit movies to reach a level of sustained profit. An investor interested in Cinemark may want to keep an eye on the box office.
As of September 2011, Cinemark owned 448 theaters with a total of 5,096 screens. Of this total, 296 theaters and 3,864 screens were in North America. The balance was spread across 13 Latin American countries, with the largest numbers in Brazil, Mexico and Argentina.
Corporate revenues are two-thirds derived from ticket sales and one-third from concession sales. Approximately 30 percent of revenues and EBITDA are the result of international sales.
For the first nine months of 2011, Cinemark posted revenues of $1.13 billion, up from $1.06 billion. Net income for the three quarters was 98 cents per share, up from 96 cents. In the third quarter the company reported record levels of revenue and attendance, producing net income of 41 cents per share, up significantly from the 29 cents earned in the third quarter of 2010. For the full year, the consensus estimate is $1.38, compared to $1.29 earned in 2010.
Hit movies, hit sales
In Cinemark's third quarter earnings release CEO Alan Stock noted: "The 2011 third quarter was the highest-grossing North American box office period in history." This means that as the movie industry in general is performing, so do results for Cinemark. The 8 percent increase in revenues was fairly evenly divided between increased attendance, increased ticket prices and increased concession per person sales.
International sales provided some interesting result. Average ticket prices — while lower than in the United States — increased by 16 percent year-over-year, compared to a 4 percent boost in the U.S.
The current 21 cent quarterly dividend gives shareholders an approximate 4 percent yield. The 3 cents increase in the quarterly payout declared in November 2010 was the first increase in three years. The analysts at Caris & Company recently upgraded CNK to above average from average.
The company reports next on March 1.
© 2013 Moneynews. All rights reserved.