Cinemark Holdings, Inc. — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. The request labels the period “2021 Q4,” but this filing reports full-year results; the supplied text does not provide a clear standalone fourth-quarter income statement or cash-flow summary.
Business context
Cinemark operates movie theatres in the United States and 15 Latin American countries. At year-end, it operated 522 theatres with 5,868 screens. All domestic and international theatres had reopened, although some international locations remained subject to capacity or other restrictions. New film releases returned in April 2021 and increased through the year.
Financial and operating performance
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $1.510 billion | $686.3 million |
| Operating income (loss) | $(252.5) million | $(755.0) million |
| Net income (loss) | $(422.2) million | $(617.9) million |
| Operating cash flow | $166.2 million | $(330.1) million |
| Capital expenditures | $95.5 million | $83.9 million |
| Adjusted EBITDA | $80.0 million | $(276.9) million |
- Revenue rose 120.1% year over year, but remained about 54% below 2019 revenue of $3.283 billion. The increase reflected reopened theatres, higher attendance and more new film content.
- Attendance was 105.6 million, up 94.5%. Average ticket price increased 12.5% to $7.39, and concession revenue per patron increased 24.9% to $5.32.
- Operating loss equaled about 16.7% of revenue; net loss equaled about 28.0% of revenue. Both losses narrowed substantially from 2020 but remained significant.
- Operating cash flow less capital expenditures was approximately $70.7 million, calculated from the reported figures. Cash and cash equivalents were $707.3 million at year-end, including $25.8 million of restricted cash.
- Gross debt was $2.543 billion. Balance-sheet finance and operating lease liabilities totaled approximately $1.413 billion; contractual future lease payments were $1.689 billion before interest. The company also reported $100 million available on its revolving credit line.
- Current assets were $874.5 million and current liabilities were $769.1 million. The company reported a $46.6 million current income-tax receivable.
Material changes versus prior periods
- Compared with 2020, the recovery in attendance drove higher revenue and a return to positive operating cash flow and Adjusted EBITDA. Nevertheless, 2021 remained deeply loss-making and materially below pre-pandemic 2019 revenue.
- Long-lived asset impairment charges declined to $20.8 million from $152.7 million in 2020. The 2021 charges mainly related to theatres whose recovery lagged the wider circuit.
- Interest expense increased to $149.7 million from $129.9 million, primarily reflecting debt issued during the pandemic. The company refinanced debt in 2021: it issued $405 million of 5.875% notes due 2026 and $765 million of 5.25% notes due 2028, and retired its $400 million 5.125% notes and $755 million 4.875% notes.
- The quarterly dividend remained suspended; the last cash dividend was declared in February 2020. The company reported a $6.5 million debt-extinguishment loss related to 2021 refinancing.
Outlook, risks and unusual items
- Management said it expected existing cash and operating cash flows to cover working capital, capital expenditures and known contractual cash needs for the next 12 months and beyond. It provided no specific quantitative revenue or earnings guidance in the supplied filing text.
- Management described industry recovery as ongoing. It expected new-film volume to remain below historical levels during 2022 and cited evolving theatrical release windows, streaming competition, consumer sentiment, inflation, supply-chain disruption, labor shortages and wage pressures as uncertainties.
- Management planned continued investment in theatres and identified approximately $64.8 million of signed theatre-development commitments at year-end, including $28.6 million expected to be paid during 2022. It said it would prioritize liquidity and balance-sheet repair.
- Debt and lease obligations remain substantial. The company’s ability to service debt depends on recovery in attendance and cash generation; debt agreements restrict dividends and other actions. The company reported compliance with debt agreements at year-end. The secured-leverage ratio was 1.1 to 1 under a modified covenant calculation; the indenture coverage ratio was 0.6 to 1, compared with a 2-to-1 threshold for certain additional debt incurrence.
- Other material exposures include film availability and studio licensing terms, shortened or eliminated theatrical windows, foreign-exchange and Latin American economic risks, impairment estimates, and continued COVID-19 effects. Argentina was treated as a highly inflationary economy.
- Unusual items included $137.8 million of cash tax refunds received during 2021, a $20.8 million impairment charge, and an $8.0 million loss on asset disposals and other items, which included a litigation settlement reserve and projector write-offs, partly offset by land-sale gains. A $1.0 million restructuring-cost credit reflected final lease-payment adjustments.
- Cinemark said pending legal proceedings were not expected to be material overall, but the outcome of its COVID-19 business-interruption insurance litigation was not predictable. It also disclosed a class action alleging Fair and Accurate Credit Transactions Act violations, which it said it would defend.
Important facts for investors to verify
- Whether attendance, film supply and theatre economics continue recovering, and how much results remain below 2019 levels.
- Cash generation after capital spending, and whether management’s liquidity expectations remain achievable as deferred rent repayments and other obligations come due.
- Debt maturities, interest costs, covenant headroom and the terms restricting dividends or additional borrowing.
- The status of the dividend suspension and the company’s progress in strengthening its balance sheet.
- Exposure to streaming and changes in exclusive theatrical windows, alongside wage, inflation, supply-chain and foreign-exchange pressures.
- Developments in the insurance and consumer litigation matters, and whether impairment or tax-asset valuation allowances require further charges.