Cinemark Holdings Inc (CNK) Q1 2023 Earnings Call Transcript

Cinemark Holdings Inc (NYSE:CNK) Q1 2023 Earnings Call dated May. 05, 2023.

Corporate Participants:

Chanda Bashears — Senior Vice President Investor Relations

Sean Ganble — President and Chief Executive Officer

Melissa Thomas — Chief Financial Officer

Unidentified Speaker —

Analysts:

Eric Handler — ROTH MKM — Analyst

David Karnovsky — JP Morgan — Analyst

Omar Mejias — Wells Fargo — Analyst

Jim Goss — Barrington Research — Analyst

Presentation:

Operator

Greetings and welcome to Cinemark Holdings First Quarter 2023 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.[Operator instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Chanda Brashears, Senior Vice-President, Investor Relations. Thank you, you may begin.

Chanda Bashears — Senior Vice President Investor Relations

Good morning, everyone. I would like to welcome you to Cinemark Holding, Inc’s first quarter 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 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-Q and on the company’s website at ir.cinemark.com.

With that, I’d like to turn the call over to Sean.

Sean Ganble — President and Chief Executive Officer

Thank you. Chanda, and good morning everyone. We appreciate you joining us today to discuss our first quarter 2023 results. Over the past year, we’ve expressed our optimism about the future of theatrical exhibition based on positive sustained trends in consumer movie going behavior and improving volume of wide releases and forward-looking commentary by our existing and emerging studio partners regarding the value a theatrical release provides their film assets. We’ve also highlighted the advantage position Cinemark maintains within our industry on account of our stable financial health, resilient operating capabilities and plentiful opportunities ahead. As we’re now four months into 2023, we could not be more encouraged by the ongoing strength of these trends as well as our company’s and industry’s continued recovery.

During the first quarter, North American box office grew by almost 30% versus 2022, propelled by strong carry over from the global sensation Avatar the Way of Water and animated success Puss in Boots, The Last Wish, as well as a diverse range of crowd pleasing hits. Top performing films included Creed 3, Scream 6 and John Wick 4, which each broke records delivering all time high results for their franchises. Horror film Megan which far exceeded expectations generating over $95 million of domestic box office. Action adventure saga Dungeons and Dragons, Honor Among Thieves, the highly successful faith based film Jesus Revolution, the well received adult drama A Man Called Otto, comedy thriller Cocaine Bear and Antman and the Wasp, Quantumania, which drove over $200 million of domestic box office with close to $0.5 billion worldwide. They are truly was something everyone in the first quarter. And better than-anticipated box office performance during 1Q continued right into April, which yielded the third largest result in history for that month. April box office was up almost 55% year-over-year and within approximately 5% of 2017 to 2019 pre-pandemic average, which included two of the highest grossing movies of all time with Avengers Endgame and Avengers Infinity War.

Along with positive flow through from the first quarter titles, new releases that helped drive April success included the critically acclaimed Air, which was Amazon’s first full scale wide release under their Amazon Studios label, since they began making a larger push into theatrical exhibition this year. Horror film Evil Dead Rise, a title originally produced to streaming that is now on pace to deliver over $60 million in domestic box office. A wide range of small to mid tier titles such as rent Renfield, The Pope’s Exorcist and the Covenant, which helped drive April’s overall content volume to a level consistent with pre-pandemic output and of course the record setting Super Mario Brothers Universal’s and Illumination’s biggest animated title ever, which has already become the second largest domestic animated film of all time. Year-to-date results continue to validate that consumer enthusiasm to experience movies and varied forms of content in a shared, larger than life theatrical setting is as strong as ever. There is simply no better way to amplify excitement in cultural relevance for films than with an exclusive theatrical release.

A perfect illustration of this sentiment is the myriad of fans who dressed up like Mario, Luigi and Princess Peach to come see Super Mario Brothers over the past four weeks. I happen to be touring a range of our theaters during the film’s opening and loved not only seeing, but feeling the shared energy of our guests enjoying that moment together, which lifted the entire audience to a heightened level of engagement. A similar energy was present at Caesars Palace in Las Vegas last week during CinemaCon, our industry’s annual trade show event when exhibitors, studios, vendors and various members of the creative community congregate to view highlights of upcoming films as well as discuss pertinent industry matters. The consistent message delivered by studio executives, filmmakers and movie stars during that convention could not have been clear. It was one of overwhelming belief in and commitment to theatrical exhibition as the best way to present films, delight fans and maximize promotional and financial value for movies. Importantly, that belief is now backed by data analysis, feedback and financial results.

Moreover, there was a collective recognition that movie theaters’ immersive communal environment creates a magic and inspiration and meaningful connection to stories that is unlike any other form of content distribution. Personally, I was overwhelmed by the adamant commentary from our studio partners as well as the overall strength of material that was showcased, which is some of the best collective content I’ve seen over the past decade at CinemaCon. Across every genre film, every demographic, every studio, the movies on display for the next year and a half looks sensational. In the family category, we’re shown spectacular footage from the Little Mermaid and Witch as well as a full 20 minutes of Pixar’s upcoming release Elemental which looks fantastic. We also saw stunning scenes from Wonka, Barbie and Haunted mentioned as well as exciting early glimpses of Migration, Trolls Band Together and Teenage Mutant Ninja Turtles: Mutant Mayhem, just to name a few. Superhero films were well represented with compelling first time reveals for Blue Beetle Aquaman and the Lost Kingdom, the Marvel’s Kraven The Hunter and Guardians of the Galaxy 3, which opens this weekend at Cinemark near you.

We also got an extended 15 minute preview of Spider Man across the Spider Verse, which looks absolutely tremendous and we had the opportunity to screen The Flash in its entirety. While we’ve been asked not to provide any specifics about that film, I can tell you that studio commentary suggesting The Flash is by far the best DC movie to date is very well justified. Action audiences are also sure to be thrilled, based on the extended sequences we saw of Indiana Jones and the Dial of Destiny and Mission Impossible Dead Reckoning part one, which suggest these franchises have been taken to an entirely new level. Likewise, new trailers for Fast X, Transformers Rise of The Beasts, Hunger Games, The ballot of Song Birds and Snakes, Gran Turismo and The Equalizer 3 appears set to fully captivate moviegoers. Along those lines, suspension horror fans are bound to be clinging to their luxury lounges, based on the terrifying reels we were shown for the Nun 2, The Exorcist and A Haunting in Venice as well as the full screening that was presented of the Bogeyman,which received rave reviews for the intensity of its scare factor

And the list doesn’t end there. We saw a diverse range of riveting footage from high scale spectacle films, including Christopher Nolan’s Oppenheimer, [indecipherable] and two epic sagas from Apple films, which include Martin Scorsese’s Killers of the Flower Moon, starring Leonardo DiCaprio and Ridley Scott’s Napoleon starring Joaquin Phoenix. All rated companies are back with Joy Ride, No Hard Feelings in Strays starring Will Ferrell and Jamie Foxx, there’s a new sequel to My Big Fat Greek Wedding coming, ample specialty films, inspirational stories and a phenomenal looking musical adaptation of the Color Purple that was presented by Oprah Winfrey. And what truly remarkable is all of the films I just described are releasing this year in 2023. I haven’t even touched on the wealth of material that was shared for 2024, which was equally as promising. Our entire team walked away from CinemaCon as encouraged as we’ve ever been about the pipeline of films that lies ahead.

In addition to the positive news coming out of Las Vegas last week, as well as this year’s solid box office results that have been exceeding expectations, we’re also pleased to report that 2023s total volume of film releases is tracking better than anticipated. Our previous estimate of 100 to 105 wide releases for the full year has already been surpassed with 110 titles now dated and second quarter volume resembling pre-pandemic levels. While film volume in the third and fourth quarter is still down approximately 15% to 20% that gap has also narrowed. Thanks to support from the recently dated Apple films I mentioned a moment ago as well as multiple new additions from various studios. Based on indications, we continue to receive from our traditional studio partners regarded, regarding their targeted levels of production as well as Amazon’s expressed intention to ramp to 10 to 12 films per year and Apple is growing theatrical aspirations. We remain highly optimistic about film volume recovering close to or better than pre-pandemic levels over the next couple of years.

Our enthusiasm regarding our industry’s ongoing rebound also holds true for Cinemark and our first quarter results certainly reinforce that perspective. We entertained 43 million moviegoers worldwide in 1Q, which was up 30% year-over-year. We generated total revenue growth of 33% and a sizable increase in adjusted EBITDA of over 240% to $86 million with an adjusted EBITDA margin of 14.1%. Furthermore, we continue to be the only major US exhibitor to have achieved and maintained a meaningful increase in market share since reopening, which remained up approximately 100 basis-points compared to our pre-pandemic average. As a result of our improving financial strength, our strong first quarter results and our positive outlook regarding the remainder of 2023 and beyond, we are pleased to report that on Monday, we paid down a further $100 million of the incremental debt we secured during the pandemic. Our solid first quarter results and subsequent retirement of debt this quarter is a direct byproduct of the continued improvement of our industry is making in its recovery combined with the positive impact we are deriving from our strategic actions to maximize attendance in box office, drive overall top line growth and improve our productivity, while delivering top notch entertainment for our guests.

These actions include a wide range of initiatives, beginning with enhancing various experiential aspects of our business, such as making further advances in our guest services practices, simplifying the transactional ease of ticket including food and beverage purchases and expanding our premium offerings like luxury seating, large format auditoriums and elevated sight and sound technologies. Our strategic actions also include efforts to expand our audiences, which range from utilizing sophisticated targeted marketing techniques to leveraging highly valued and engaging loyalty strategies like our industry leading movie club program to identifying and growing new sources of content to capture a broader base of consumer interest to further strengthening our utilization of data analytics as we optimize our pricing and showtime planning decisions. We also continue to place a significant emphasis on growing new and existing channels of revenue. Examples include further scaling up our online food and beverage ordering platform, optimizing the range and assortment of products we offer, growing merchandise sales in theater and online, developing new third party distribution partnerships and increasing monetization of unused physical spaces in our theaters.

And while we are pursuing all of these varied revenue generating opportunities, we are also actively working on productivity measures to do more with less. Initiatives in this regard, include further enhancing our workforce management tools and processes, simplifying and strengthening inventory management, expanding our continuous improvement in automation projects more extensively across our organization and leveraging more advanced sourcing and procurement strategies. We are already realizing material benefits from these wide ranging initiatives and we are highly enthusiastic about the positive incremental impact they will provide going forward. Furthermore, as a result of these enhancements and the disciplined way we’ve operated our company and managed and invested capital over the years, Cinemark remains situated to capture an outsized portion of our industry’s ongoing recovery. This advantage position would not be possible without the resourcefulness, skill, determination and diligence of our remarkable global team that is second to none in this business.

With that, I’ll turn the call over to Melissa, who will provide further information about our first quarter results.

Melissa Thomas — Chief Financial Officer

Thank you Sean. Good morning, everyone, and thank you for joining the call today. We were pleased with the strength of the first quarter box office, which far exceeded our expectations as well as our ability to fully capitalize on that strength through operational excellence and the ongoing execution of our strategic initiatives to grow revenue while mitigating costs. Across our global footprint, we welcomed approximately 43 million guests to our theaters, an increase of 30% from the first quarter of last year. And we grew total revenue nearly 33% to more than $610 million. With a meaningful increase in revenue, we were able to gain operating leverage of our fixed costs and grow adjusted EBITDA 242% year-over-year to $86 million, resulting in a healthy adjusted EBITDA margin of 14%. These results are a testament to the hard work and strong execution of our team. Turning to our domestic segment, we served 25.2 million patrons, an increase of 22% year-over-year and we generated $244.7 million in admissions revenue. Our average ticket price was $9.71 in the quarter, up 5% relative to the first quarter of last year, driven by strategic pricing initiatives and the ongoing strength of premium formats, particularly 3D penetration partially offset by ticket type mix.

Domestic concession revenue continue to demonstrate strength in the quarter, growing 32% year-over-year to $186.8 million. Our concession per-cap increased 9% to $7.41, in line with the all time high we delivered in the fourth quarter of last year. Strategic and inflationary pricing initiatives, coupled with our ability to maintain elevated incidence rates were key drivers of our per-cap strength. Other revenue was $47.6 million, an increase of 22%, which was in line with our growth in attendance. Overall, our domestic segment generated total revenue of $479.1 million and adjusted EBITDA of $63.4 million, yielding an adjusted EBITDA margin of 13.2%. An increase of 930 basis-points compared with the first quarter of 2022. Turning to our international segment, the first quarter film slate resonated well with Latin audiences. And the recovery in the region continued to take hold. With 17.7 million patrons visiting our theaters in Q1, an increase of 43% relative to Q1 of last year. Our international segment delivered $66.3 million of admissions revenue, $49 million of concession revenue and $16.3 million of other revenue. Altogether, total international revenue increased 49% to $131.6 million. Adjusted EBITDA increased 112% to $22.8 million, yielding a 17.3% adjusted EBITDA margin or 510 basis points of margin expansion from Q1 of 2022.

Shifting to global expenses. Film rental and advertising expense was 53.6% of admissions revenue, down 50 basis-points year-over-year due primarily to lower marketing spend as we flexed our investments to align with our expectations around box office and returns. This benefit was somewhat offset by the content mix in the quarter. Regarding our marketing spend, with the first quarter box office meaningfully exceeding expectations, we spent somewhat less than we would have otherwise. We continue to see meaningful returns on our marketing investments as we seek to grow our customer base, increase visit frequency and strengthen loyalty. Concession cost as a percent of concession revenue were 18.5%, up 120 basis-points compared with the first quarter of 2022, driven primarily by inflationary pressures and mix impacts partially offset by strategic pricing actions. It’s worth noting that the year-over-year comparison is impacted by one time benefits to the COGS rate in the first quarter of 2022. Global salaries and wages as a percent of total revenue declined 320 basis-points due to operating leverage associated with the growth in attendance, the unexpected strength of the box office and our ongoing focus on labor management. While we continue to face some wage rate pressure during the quarter, it was mostly government mandated rather than market driven. Facility lease expense as a percent of total revenue declined 300 basis points compared with the first quarter of 2022 as we gain more leverage over our lease costs, which are largely fixed in nature, particularly in our domestic segment. Utilities and other expense was $103.8 million, up 19% from the first quarter of 2022, primarily driven by variable costs that grew with attendance and rising utility rates. D&A was $46.5 million in the first quarter, reflecting incremental headcount to support business recovery and strategic initiatives, wage and benefit inflation, a shift towards cloud based software and higher stock based compensation.

We remain disciplined around discretionary spending in staffing with headcount below 2019 levels. Globally, we generated a net loss attributable to Cinemark Holdings Inc of $3.1 million in the first quarter, resulting in a loss per share of $0.03. Moving to the balance sheet. We ended the quarter with $650 million of cash and we generated positive operating cash flow and only modestly negative free cash flow in the quarter despite working capital headwinds. Our balance sheet remains a key differentiator. Considering the strength of our cash position earlier this week, we redeemed $100 million of our 8.75% senior secured notes, scheduled to mature in 2025, underscoring the health of our company and our optimism regarding the industry’s recovery potential. We also continue to invest in the long-term health of our fleet. With approximately $150 million of capital expenditures anticipated for this year. Roughly half of the spend is allocated towards maintaining a high quality circuit and the remainder to ROI generating initiatives including new build theaters and premium amenities such as recliner conversions, premium large format screens and D BOX motion seats.

Our near term capital allocation priorities remain centered around strengthening our balance sheet and making investments to position the company for long-term success. As the box office and our free cash flow continue to rebound, de-levering is a priority for us. As is extending maturities of capital market conditions warrant. Of course, we intend to remain balanced and disciplined when it comes to our capital allocation. With the target net leverage ratio of two to three times.

In closing, we remain highly optimistic regarding the ongoing recovery of theatrical exhibition and our company. We expect to gain further operating leverage as the overall box office rebounds and we continue to realize the benefits from the execution of our strategic priorities. We remain focused on maintaining our ongoing financial strength, delivering industry leading results and driving long-term shareholder value.

Operator, that concludes our prepared remarks and we would now like to open up the lines for questions.

Questions and Answers:

Operator

Thank you. We will now be conducting a question and answer session. [Operator instructions]One moment please while we poll for your questions. Our first question comes from the line of Eric Handler with MKM. Please proceed with your questions.

Eric Handler — ROTH MKM — Analyst

Good morning, and thanks for the questions. Sean, forgive me if I missed this in the call, but what percentage of your box office revenue was premium and how does that compare to the prior year. And then, now that you’ve seeing some improved depth of movie product. I wondered if that’s having any positive impact on Movie Club and wonder if you could talk about where the the subscription numbers are and also a while back you guys used to talk about credit redemption and maybe you could give a little update there.

Sean Ganble — President and Chief Executive Officer

Sure, thanks for the question Eric, and good morning. As far as our our premium box office as a percent of total for the quarter, we were about 12.5% or so in the US and about 12% overall. That’s pretty consistent with where we were last year. We continue to see in over-indexing. And by the way, that’s just of our XD screens that doesn’t include other premium formats, when we include everything else it probably takes it up a bit closer to 15%. What I’m saying is that, that continues to over-index versus where we’ve been historically on pre pandemic terms. We continue to see consumers electing to upgrade not only for premium formats of viewing, but also with regard to their food and beverage consumption. By the way Movie Club to, I’d say has sustained trends of Movie Club are very positive. We continue to add members in a consistent pattern to what we saw prior to the pandemic. Our membership levels are continuing to exceed 1.1 million members and our consumption has been consistent.

I’d say if anything consumption in terms of the utilization of credits is perhaps down a slight tick from where we were pre pandemic, but based on our assessment, it’s largely just due to the content recovery cycle akin to what we’re seeing with overall attendance trends, so we can continue to be very encouraged by the dynamics of Movie Club and even our newest members that we continue to add into that program. Our consuming at a level consistent with some of the earliest members who joined, which gives us ongoing optimism about trying to get people into that program. We see the value as we get people in the program, their consumption rends to, tends to be at a higher level with regard to the number of movies they go to, the amount of upgrading they do and the amount of food and beverage they consume.

Eric Handler — ROTH MKM — Analyst

Thank you very much.

Sean Ganble — President and Chief Executive Officer

Thanks, appreciate it.

Operator

Thank you. Our next question comes from the line of David Karnovsky with JPMorgan. Please proceed with your questions.

David Karnovsky — JP Morgan — Analyst

All right. Thank you. On market share, your numbers look pretty similar to-Q1 last year despite the Canada market fully open. And so it does seem like you’re continuing to gain share on an underlying basis. I guess how sustainable, should we think about your share at current levels. Was there anything about film mix that maybe helped in the quarter. Or can you sustain or even grow your position here. And then my second question is just on the film rent and advertising. It seems like that helped you deliver better margin relative to Q4 despite lower box. Can you just discuss a bit how you think about flexing that investment up and down. I would assume some of that spend does come back to you in the form of market share gains.

Sean Ganble — President and Chief Executive Officer

Sure, thanks for the question, David, I’ll take the first one and Melissa will take the second. As far as market share goes, we certainly benefited from content that resonated very well across our global business domestically and within Latin-America. You had films like, family films like the Puss and Boots, horror films like Megan and Scream 6 and faith-based like Jesus Revolution, which we all tend to over-index on. So that certainly helped us in-market share, we will see ebbs and flows quarter-to-quarter in share. However, as we kind of indicated on some past calls, we tend to think that somewhere around 100 basis-points of increase relative to our pre pandemic levels is reasonable to expect going-forward. And certainly our aim will be to expand that, but we think that’s a good, good target to hold.

Melissa Thomas — Chief Financial Officer

And in terms of film rental and advertising rates I do think about it, those in the near-term similar with 2022, it’s reasonable to assume that our film rental and advertising rates will continue to be impacted by a higher concentration of larger tentpole films with some offsets from the modifications to film rental terms, commensurate with the shortened theatrical window. But with respect to marketing, while our marketing spend will continue to vary based on our expected attendance and ROI, we are expecting a meaningful step-up year-over-year in our marketing spend as a percentage of admissions revenue.

David Karnovsky — JP Morgan — Analyst

Thanks.

Sean Ganble — President and Chief Executive Officer

Thanks, David.

Operator

Thank you. Our next question comes from the line of Omar, my with Wells Fargo. Please proceed with your questions.

Omar Mejias — Wells Fargo — Analyst

Good morning guys and thank you for taking my questions. Maybe first, can you just talk about the impact from the writers’ strike and the potential for the directors and actors who follow us, we know that the immediate impact that since the none existing given the lifecycle of the production for movie sounds, but at what point of length of the strike would be into impact future production and just any color that you guys can provide that will be helpful. Thanks.

Sean Ganble — President and Chief Executive Officer

Sure. Thanks for the question Omar. It’s certainly something we’ll all be watching very closely and it’s unfortunate come to this because it certainly has a meaningful impact on a lot of people. You know it’s probably still a bit too soon to speculate and we can talk about the Writers Guild hard to really say what ultimately comes with other Guilds down the line, the ultimate impact, as you know, it really depends on how long the strike last a lengthier one posted more risk than a shorter one while television tends to feel more of an immediate impact from these types of strikes, at least the positive thing for our industry in the short run is the majority of films scheduled for this year and next are unlikely to be materially affected based on the stage of production there into hit those dates. And we know from our studio partners that they’ve been planning for this, trying to accelerate, where they can and given the long-lead time and making films are often able to recuperate some of that time down the line, depending on how it goes in the past, some of the longest strikes, like what we saw in 2017 to 2008 with the 100 day Writers Guild strike had perhaps some impact on the industry, but the overall disruption to the flow of films was fairly limited as the studios, they were able to pull forward and work around that because of the lead times of their productions to try to minimize the overall impact. So we’re going to have to see how things progress and hard to say what point, there is a tipping point in terms of impact, but I know it’s something that we’re watching and our studio partners are very focused on as they certainly don’t want to have a major disruption in their flow of content.

Omar Mejias — Wells Fargo — Analyst

Well that’s very helpful. And Melissa, maybe on the cost side on US concessions as a percentage of revenue were a little bit higher than expected, but on the other hand, salaries and labor seems to be much improved. Can you give us a little bit of color on just an update on what’s the inflationary cost pressures. And how should we thinking about it for the balance of the year. Thank you.

Melissa Thomas — Chief Financial Officer

Sure, so a couple of things worth calling out here, Omar. So starting with the COGS side of things. It’s important to note, when you’re looking at the year-over-year comparison in our COGS rate that Q1 of 2022 benefited from some one time cost savings, including purchase of generic popcorn bags from bank for cinemas and our ability to use inventory on hand in Q1 of 2022 that was purchased at lower prices in late 2021 in anticipation of future price increases as well as supply chain challenges. So if you look at our COGS rate for the last nine months of 2022, you can see that we’re only slightly up from a COGS rate perspective in Q1 of 2023. As we think about balance of year on the COGS side, we still do see some inflationary pressure particularly on commodities. While we’ve seen some easing in canola and corn prices, that has been offset by rising sugar prices. So as we think about the full-year 2023 COGS rate expectations. We are expecting to continue to see some modest pressure in our COGS rate relative to 2022. On the labor side in particular, with Q1 our labor benefited from our outperformance on the box office versus our expectations. As you may know, the way that we step our theaters is based on projected attendance. And with that outperformance we weren’t staff that the levels that we typically would be stopped at to service that level of attendance. So that did benefit us on the salaries and wages side in the first quarter of this year.

As you think about going forward on labor there, what you can expect is on the our side, our labor hours. We would expect to step-up, as attendance further recovers, albeit, that’s not going to grow at the same rates per se as attendance and we will gain some operating leverage there. And then on the wage rate side, which is where we felt quite a bit of pressure over the past few years. We have started to see that pressure subside, particularly on the market driven pressures. So as we think about going -forward for salaries and wages. What we expect to see there more more so is going to be government mandated increases, which we’ve seen pre pandemic times as well.

Omar Mejias — Wells Fargo — Analyst

Thank you.

Sean Ganble — President and Chief Executive Officer

Thanks for the questions Omar.

Operator

Thank you. Our next question comes from the line of Chad Beynon with Macquarie. Please proceed with your questions.

Unidentified Speaker —

Hi, this is Aaron on for Chad. Thanks for taking our questions. Regarding pricing, where movie going is still much more affordable than other entertainment options. Can you talk about the further opportunities for just organic price increases. Thank you.

Sean Ganble — President and Chief Executive Officer

Certainly, look, pricing is a very important factor in our industry as it is in many moviegoers on a whole tend to be relatively price sensitive. So it’s something that we keep a close watch on our general strategy as we’ve been recovering from the pandemic is to be careful with the pricing as we’ve certainly been trying to reignite movie going and encourage increased frequency of our moviegoers, we use a tremendous amount of data in our decision making process with regard to pricing. And it really becomes a very discrete theater by theater based exercise in terms of what that in each individual market can bear and what each individual theater can bear. As we look-forward in terms of where opportunities lie. We believe there is actually quite a bit of opportunity. It’s one of the upside areas of potential, we have not just necessarily from taking prices up, but really fine tuning our pricing and optimizing that, as we continuously, I’d say some of the techniques we’re doing are relatively a new and we believe we’re seeing great results on a Canada that we talked about market share earlier we attributed some of our positive benefits and market share to the pricing strategies that we’ve been utilizing and we think there’s quite a bit more opportunity as we look ahead.

Melissa Thomas — Chief Financial Officer

Aaron I think the one point that I would add on and that’s important context is that if you look at our pricing and how that changed since Q1 of 2019, right. We’ve seen big lift on the concession side, we’ve seen nice lift on ETPs. But our from a price standpoint, our prices have actually increased below inflation. So we do think there’s room there.

Unidentified Speaker —

Okay, awesome. That’s very helpful. And can you also talk about any opportunities to expand beyond the current portfolio and what your appetite is or how this ranks among your priorities. Thank you.

Sean Ganble — President and Chief Executive Officer

Sure, look, we’re constantly looking at what is the right profile for our portfolio of theaters and circuits and where there may be opportunities to expand mean which one of the focal areas we’ve talked about optimizing our footprint, which is a combination of looking for new opportunities in existing markets or new markets as well as trimming down in areas where perhaps we have underperforming theaters. We’ve been doing that, so. I would say we kind of look at all the opportunities out there, obviously there’s a lot of moving pieces in our industry right now, if certain theaters coming back to market, different levels of the health of different circuits. So it’s something that we’re just going to continue to look at. We do think there could be opportunities there. We are going to be careful as we are looking to restrengthen our balance sheet as we go ahead and pursue a lot of organic opportunities that we have on hand that we think have rich ROIs against them, but I mean, look, we’re optimistic about further opportunities coming to the table here over the next year or two.

Unidentified Speaker —

Awesome.

Unidentified Speaker —

Thank you very much. Congrats on the quarter.

Sean Ganble — President and Chief Executive Officer

Thanks Aaron. I appreciate.

Operator

Thank you. [Operator Instructions ]Our next questions come from the line of Jim Goss with Barrington Research. Please proceed with your questions.

Jim Goss — Barrington Research — Analyst

Good morning. Speaking of optimizing the portfolio. If we turn to Latin-America, in particular, I know the ability to grow organically depending on shopping center development has been a problematic, but I wonder if you’re seeing more M&A potential there versus the US as a way to increase your penetration in those markets.

Sean Ganble — President and Chief Executive Officer

Sure, great question, Jim. I would say, particular to M&A, we would look at the US is likely having more potential there. Then perhaps LatAm, not to say there couldn’t be opportunities in Latin-America. But the different dynamics, you have is US tends to be far more fragmented market one LatAm, generally, the top two or three circuits drive 80% of the box office and they tend to be owned,our peers tend to be owned by well financed organizations. These are very wealthy families and or institutions that aren’t any type of financial risks. So because of that, and many times they own malls themselves or the theaters are part of an enterprise that they have that fits in strategically. So, we think it’s unlikely that there are many opportunities to come to market in that area just because of that. Again, not to say that there couldn’t be some.

Jim Goss — Barrington Research — Analyst

Okay. And coming out of CinemaCon, I’m wondering if any of the discussions involve the role of the theaters in persuading the studios to fill the schedule in a way that would benefit all, stage blockbusters for example, are good windows usage and counter programing. As things are developing back towards normalization.

Sean Ganble — President and Chief Executive Officer

I think as I’ve mentioned in the prepared remarks. I think we all were really encouraged by the collective materials that we saw at CinemaCon and I would say it was a very wide ranging and diverse set of films. So the good news is, there certainly were plenty of large tent-pole blockbusters on the horizon, but quite a range of romantic comedies, and R rated comedies, and as I mentioned faith-based, adult dramas. I mean there was really a range of product for all types of audiences, which we think is very healthy for the industry. CinemaCon, the studios tend to highlight some of their larger content that is more on the helm. We have been having plenty of conversations about other forms of alternative programing as well like things like concerts and anime and things of that sort. Anime should say, is part of some of the studios, Sony has a relationship with Ccrunchyroll, but we do have concerts and multi culture and things like that. There’s a lot of that has been starting to ramp-up and increase that we’re encouraged about. We have been talking to the studios about how do we also tap into some of the serialized content that they have been producing and look for opportunities with premier events and things of that sort.

We’ve done a handful of those already with a lot of success and a lot of fan base fan based excitement. So I expect there to be more and more of that over time. I would say alternative content as category has been an area that we’ve always felt had a lot of potential and unfortunately never really seem to scale materially. Over the past couple of years, we finally seen that start to get a little bit of momentum. As an example, alternative content for us was a little over 8% of our box office in the first quarter. And historically, that is typically around 2% or so. So we’ve definitely seen that start to scale up and we think somewhere around 5% plus is an area of opportunity for it to hold out into the future.

Jim Goss — Barrington Research — Analyst

Okay and then one last one. And I know this I appreciate this would be tough to measure precisely, but I wonder if there’s any perceived slippage is streaming that you might have experienced absent the pandemic. It’s staying where there could have been some slippage in the past that. It’s possible that some of those potential customers may return less frequently if at all. Do you have any sense of that.

Sean Ganble — President and Chief Executive Officer

We haven’t seen any data to suggest that’s happening. In fact, we tend to think that there’s been a false narrative painted in the media that streaming and theatrical compete with each other, when in reality, they tend to be very complementary. It’s not to say that there might not be some really compelling piece of content on TV that causes somebody to elect to stay home versus not go out in a particular evening. But what we know from a lot of analytics, multiple analytics that have been performed is, the most active moviegoers are the most active streamers and conversely, those who don’t go to movies are the people who consume the least amount of content on streaming services. It’s just not the thing they do do other forms of entertainment. I think probably one of the biggest data points we tend to look to historically as the biggest weekend of movie going ever in the US, which was the opening weekend of Avengers Endgame was also the biggest night in television history with the Climax episode of Game of Thrones on HBO. And both of those two things coexisted on the same weekend.

So there certainly is the ability for these things to play together. And if anything, what we’re seeing is the opportunity for things to build-off of each other. I mean you look at all the series on streaming platforms that have come out of movies. We think some of that is kind of going to play back into the play off of each other. So we think these are just great opportunities for complementary programing that builds the pie in total. And we’re not seeing any data to suggest that that we’ve lost consumers are there has been slippage. Obviously the pandemic was a unique period where there was a health concern that could have affected that during that period. But now that we’ve gotten beyond that and content has been coming back to theaters and there’s a more sustained momentum of movie-going, we’re not seeing any data to suggest that that’s the case.

Jim Goss — Barrington Research — Analyst

All right. Thanks very much Sean.

Sean Ganble — President and Chief Executive Officer

Thanks Jim. Really appreciate it.

Operator

Our next question is from the line of Omar Mejias with Wells Fargo. Please proceed with your question.

Omar Mejias — Wells Fargo — Analyst

Yes, thanks for taking my follow-up. Just a quick question as it relates to-long-term margins. With the sense of ACP’s and per caps, and other works that you guys have been doing on the cost side and working with the operational efficiencies. Do you guys think that you can return to pre pandemic margin levels without, or without just a similar attendance levels at the box office. Just give your thoughts on the future or future margins for the business. Thank you.

Melissa Thomas — Chief Financial Officer

Happy to take that one. Omar. So, we generated in Q1 a healthy adjusted EBITDA margin of 14.1% globally and that was despite attendance only recovering to around 70% of 2019 levels. So clearly our goal over the longer term is to get back to pre pandemic adjusted EBIDTA margin levels in the low 20% range, even without the dividend income historically received from NCM and DCIP, but our ability to do so is going to be dependent upon a number of variables. Primary driver as you know of go forward margins is going to be the the extent to which attendance in box office recover. However, there are a number of other variables that weather tailwinds from market share, elevated per-caps, and average ticket prices continue. And then how inflationary pressures evolve from here. As it relates to 2023, we definitely believe that we can continue to expand our margin [indecipherable] our expectations of further recovery and the box office as we gain more leverage over that fixed-cost base. But clearly, over the longer-term, we are striving to get back to those pre pandemic adjusted EBITDA margins and we do have initiatives both on the top-line as well as on the productivity side to try to do so.

Omar Mejias — Wells Fargo — Analyst

Perfect. That’s great. Thank you.

Sean Ganble — President and Chief Executive Officer

Thanks, Omar.

Operator

Thank you. There are no further questions at this time. I would now like to hand the call-back to Sean Gamble for any closing remarks.

Sean Ganble — President and Chief Executive Officer

Thanks, Gerald. As we wrap. I just like to emphasize again that we could not be more encouraged by the positive momentum, progress and performance our industry and company have realized year-to-date. As we look-forward, we believe all of our key stakeholders, including investors, partners and employees have much to be excited about. Consumers continue to demonstrate their strong enduring demand for the types of experiences we provide, studios are definitively recognizing the enhanced promotional and financial value that an exclusive theatrical release delivers their films. The pipeline of future content volume continues to recover towards pre pandemic levels and the array of opportunities that remain well within our control to grow in strengthening Cinemark are significant. Thank you all again for joining us this morning and we look-forward to speaking with you again following our second-quarter results. Have a great day.

Operator

[Operator Closing Remarks].