Cinemark Holdings, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; the filing was dated February 26, 2021. Cinemark operated 531 theatres and 5,958 screens in the U.S. and Latin America at year-end. The year was dominated by COVID-19 closures and limited reopenings.
Key financial results
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $686.3 million | $3,283.1 million |
| Operating income (loss) | $(755.0) million | $338.4 million |
| Net income (loss) attributable to Cinemark | $(616.8) million; $(5.25) per share | $191.4 million; $1.63 per share |
| Cash from (used in) operating activities | $(330.1) million | $562.0 million |
| Capital expenditures | $83.9 million | $303.6 million |
| Cash and cash equivalents at year-end | $655.3 million | $488.3 million |
| Long-term debt, gross | $2,527.9 million | $1,801.3 million |
- Revenue fell 79.1% year over year. Attendance declined 80.6% to 54.3 million; admissions revenue decreased 80.3% and concession revenue 80.1%.
- Adjusted EBITDA, a non-GAAP measure, was a loss of $276.9 million, compared with positive Adjusted EBITDA of $745.0 million in 2019.
- Interest expense increased to $129.9 million from $99.9 million, mainly following new debt issuance. The reported income tax benefit was $309.4 million, including $187.5 million related to CARES Act NOL carrybacks.
Liquidity, debt and material changes
- All theatres were temporarily closed in March 2020. By December 31, 217 U.S. and 129 international theatres had reopened, generally with reduced hours, limited capacity and limited new releases.
- Cash used in operations was $330.1 million. Financing activities provided $584.4 million, including proceeds from $250 million of 8.750% secured notes and $460 million of 4.500% convertible senior notes. The company had $100 million available under its revolving credit line, with no revolver borrowings outstanding at year-end.
- Debt increased by approximately $726.6 million during the year. In addition to $2.528 billion of gross debt, year-end balance-sheet lease obligations were approximately $1.347 billion operating and $141 million finance. The filing’s contractual-obligations table includes future lease payments and interest, so those totals are not directly comparable to balance-sheet liabilities.
- Cinemark negotiated rent deferrals of approximately $66.2 million, with most repayments expected during 2021 and 2022. It suspended its quarterly dividend in March; $0.36 per share was declared for 2020 before suspension.
- Capital spending was curtailed and a restructuring plan recorded $20.4 million of charges, including permanent workforce reductions and planned closure of 15 domestic and 9 international theatres. The company ended the year with 27 fewer theatres than at the start.
Outlook, risks and unusual items
- Management said that, based on its current recovery estimates, it believed available and expected cash would be sufficient to sustain operations. This is conditional on recovery; the filing provides no numerical revenue, earnings or cash-flow guidance.
- Management expected fewer new theatrical releases to be available in 2021 than historically, and noted release schedules could change. The filing identified shortened or eliminated theatrical windows, direct-to-streaming releases, capacity restrictions and consumer willingness to return as significant uncertainties.
- The credit facility’s leverage covenant waiver was extended through the quarter ending September 30, 2021, subject to conditions. The 8.750% secured notes may mature in 2022 or 2023, rather than 2025, if specified amounts of the 2022 and 2023 senior notes remain outstanding on the relevant dates.
- Impairment charges totaled $152.7 million, including a $92.7 million write-down of the NCM investment; management also cited pandemic-related pressure on theatre cash-flow estimates. A favorable appellate ruling led to reversal of a previously accrued litigation reserve and contributed to an $8.9 million gain on disposal of assets and other.
- Other key risks include substantial debt and lease commitments, foreign-currency exposure, film-distributor concentration, and uncertainty around reopening pace and recovery. Management and the auditor reported effective internal control over financial reporting; the financial-statement audit opinion was unqualified.
Important facts for investors to verify
- Current theatre reopenings, attendance, capacity limits and film-release schedules, including any further changes to theatrical windows.
- Cash burn, cash availability and access to credit; progress repaying deferred rent and meeting debt-service obligations.
- Compliance with covenant-waiver conditions and plans for the 2022–2025 maturities, including the conditional maturity provisions of the secured notes.
- Whether management’s recovery assumptions support future cash generation and asset valuations, including the NCM investment and theatre impairment estimates.
- Timing and conditions for any dividend resumption; the filing says the timing is uncertain.