Cinemark Holdings, Inc. (CNK) Earnings Call Transcript & Summary

Okay. We're going to get started. Good afternoon. I'm Ben Swinburne, Morgan Stanley's Media and Entertainment analyst. Quick disclosure statement. Please note that important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures all appear as a handout available in the registration area and on the public -- and on the Morgan Stanley public website. So really excited to welcome back to the conference, Cinemark Holdings. So please welcome Sean Gamble, CEO; and Melissa Thomas, CFO. Thanks for coming back, guys.

Thanks for having us, Ben. It's great to be here.

Yes. Good to see you guys. So I think most people know our views on the box office, I think we share the same optimistic outlook, Sean, on the recovery from here. Maybe we could start by talking about the supply side, which is a big focus for everybody which is essentially product, supply and the amount of films being made. This year is going to be down from pre-pandemic levels still. We have not seen the number of movies released widely fully recovered yet. But tell me what underpins your view and Cinemark's view that the studios are ramping product back up, particularly as we head into '25 and '26?

Sure. Well, look, I think the biggest thing underpinning that is what we hear directly from them in terms of their plans to continue building back their pipeline of films. We've seen consumer enthusiasm for going to the movies holds strong as compelling film has been coming out. Audiences have been coming back. And these are -- these films for these studios are big drivers of their overall content portfolio. So when we talk to our traditional studio partners, for the most part, we're hearing pretty consistently that they're aiming to get back to where they were pre-pandemic. In certain cases, even go a touch beyond that. And then when you add to that, what Apple and Amazon are communicating regarding their aspirations for theatrical exhibition, which are largely in line with a major studio. And then on top of that, you add in some of the growth we're seeing with nontraditional content in faith based, foreign films, concert films, anime. You put all that together, and it gives us confidence in the return of overall volume back to pre-pandemic levels, if not a touch beyond that.

And it's interesting because a lot of this is happening in the context of media companies, in many cases reducing overall content spending. It's been a big theme of earnings season, et cetera. Why do you think they're growing theatrical while output while removing or reducing television?

Well, I think in certain pockets, they over-indexed in their content creation, right? They ramped up considerably as they were launching these streaming platforms in terms of the number and volume and cost that there were -- investments that they were putting into some of these TV series. And I think there was a lot of questions in terms of the sustainability of that over time. And as there's been a heightened focus on profitability of both the assets and those platforms, I think there's some rationalization more focused on quality versus just overall volume, right? So we're seeing that as being one of the main areas of rationalization. In our space, for theatrical films, it was a different story where we never really caught back up, right? Like we were reduced as a result of the whole production pipeline being shut down from the pandemic and things were coming back, right? '22 was a nice improvement from '21, '23, grew again from '22. And then we had these Hollywood strikes, which shut everything down again for 6 months. So we've never fully gotten back. So I think that's really the big distinction. At least that's what we certainly hear when we're talking to the studios and these media companies that produce this content, they're still in ramp-back mode to get back to that level.

Just talk a little bit more specifically on numbers. What are you thinking today the number of wide releases will be in '24 versus '23 sitting here in early March.

So in -- I'll step back even a little further. In '22, there's about 85 wide releases. That grew to about 110 wide releases last year in 2023. As we look to '24 this year, because of the headwinds from the strike and certain things getting pushed out, we're looking at volume. Right now, we've got line of sight to what we think will be about 95 films for the year. So a slight step back from 2023. And then as we look at beyond that, we anticipate '25 spring back to that recovery trajectory we've been on, where if you look probably somewhere a bit up from '23, perhaps still touch behind pre-pandemic levels, which were around 130 or so wide releases per year. And then '26, we'll see what comes. But it's just -- that's the continued build back based on, again, what we're hearing from the studios in terms of their plans and where they are in their production process.

Yes. But we had both Disney and Warner Brothers Discovery talking a lot about their slate '24 and into '25. What is your visibility at this point sitting here in early '24 into next year's slates?

Well, '25 is the normal view we have this early on is limited. You've got a decent sense for some of the larger films because the studios tend to plant those stakes pretty early on in terms of claiming some of the prime dates. So you see a lot of -- what looks to be a lot of real potential and some big movies coming out next year. So you look at the size and scale you got, obviously, another Avatar. The Superman Legacy, another Batman, you've got another Jurassic World, Live Action Moana. You just look at -- another sequel to Wicked that will come out this year. So it's looking pretty robust in terms of the big blockbuster films. Beyond that, though, we've got a general sense for the volume of things, but that will have better line of sight until we get really closer to the end of this year, which is usually when we start putting our plans together because you just don't get a full sense for that until around that time.

Yes. My sense is that people are getting more -- markets getting more comfortable and confident with the supply discussion we're having. But there's still definitely some questions on the demand side. So maybe we could talk about that. We haven't seen the number of tickets sold, recover anywhere near to where we were pre-pandemic. When you look at the performance of films and the box office over the last couple of years, even early in 2024. What gives you confidence, we haven't seen a structural reduction in just the number of people who want to go to the movies relative to pre-COVID.

Well, I think what gives us confidence is just our data, right? When we actually look at how individual films are performing, we don't see a major difference in terms of how they're performing now versus how they were performing prior to the pandemic. In certain cases, they're actually performing better. And that cuts across all categories of movies. When compelling content is being made available, people are coming out to see it. Interestingly, too, even when we dissect that down based on the mix of demographics and types of viewers who are coming to individual films, when you look at the profile film by film, it very much mirrors what we saw pre-pandemic, in terms of the pattern. So you're not seeing like a deficit of any types of moviegoers. And it boils down to quality, right? I think probably the one thing that we've seen is maybe slightly different pattern, which could be connected to just the overall volume discussion we're having is films that are not resonating quite as well with audiences are perhaps falling a bit faster, whereas films that are connecting well are running much longer. Net-net, that's all -- it's all adding up to a positive, but that's probably like the one little dynamic we're seeing of something that's a bit different, but it's just also probably word of mouth to sprint so much faster now that movies that have got the goods, that tends to resonate because but gets out there and it holds and those that don't just don't carry so much...

The rotten tomatoes in fact…

So fast...

So we see this faster phase [indiscernible] better holds for the Dune. Right. What about the narrative out there that it's just increasingly about 10 poles and that getting people to the theaters to see things within CGI and full of explosions is just harder and harder? You just -- does your data kind of disprove that to you?

Well, look, I think 2023 is the perfect example of that not being the case, right? If there's a huge film, CGI-driven big spectacle film that really connects well, sure, it's going to do great. And by the way, that's fantastic for the industry. But if you look at what drove '23, I mean, you start with the biggest films, you had an upscale comedy with Barbie. You had an animated film with Super Mario Brothers. You had obviously a big superhero film, Guardians of the Galaxy 3, then and an adult drama with Oppenheimer. You had an action film John Wick and faith-based film with Sound of Freedom and a concert with Taylor Swift. I mean it was the perfect blend of diverse content across all different categories. And that was at the top level, but really cascaded across all different types of films for the year. I mean that's the perfect example to just showcase. Look, there's appeal across all different types of audiences for these varied films and not just the big CGI superhero films.

How are premium formats impacting box office receipts overall? That is something we should all be thinking about as something that impacts how we think about the recovery.

Look, premium offerings, I think they've shown to have a lot of staying power, they have a lot of potential, right? We've -- we were leaning into premium opportunities before the pandemic, and we continue to do so since. Our -- perfect example is our reclined seats, right? About 70% of our circuits now reclined. Those have been in the theaters that have clearly rebounded the fastest coming out of the pandemic because consumers are seeking those out. The large format screens, our motion seats like all those types of -- by the way, even our enhanced food offerings from a premium food offering. When -- it's an interesting thing our industry in the sense that there were some concerns about how recessions and then those types of macroeconomic factors could play into our world. What tends to happen is people may cut back on other types of entertainment. But when they come to the move it's their moment to splurge and make a moment out of it. Even in period, we've seen this across all kinds of ups and downs in our Latin American business. We've seen it here in the U.S., even in more pressured economic cycles, people will come and still upgrade, right? So nowadays, as people are seeking more experiences than anything else, certainly post-pandemic, they are even seeking more of those premium experiences. So we've been leaning into that and it's just further opportunity for revenue generation and upside.

You mentioned earlier, Sean, alternative content. And we have to be careful not to extrapolate the Taylor Swift effect into other areas. But this has been an area you've talked about for many years, is your sense now that there's enough proof points, Taylor Swift, Beyonce, et cetera, that we're going to see more supply and real capital behind alternative content for theatrical distribution?

We certainly hope so. I mean you're right, this has been an area of unfulfilled potential for many, many years, where it generally hovered around 2% or so of box office. And last year, at least for us, it was about 14%. Now clearly, that's inflated based on 2 big, big one-offs in the sense of Taylor Swift and Sound of Freedom that each did $180-plus million of Box Office. We'd love for more of those. But if you take those out, even, we were still about 9% to 10% or so of our Box Office which has been recently. So I think what we're seeing is definitely some traction finally happening in these different buckets of nontraditional films. If you're a musician out there and you just saw what Taylor Swift and Beyonce did, I don't know how you wouldn't want to extend the life of your tour by bringing it into theaters, delighting your fans and just capitalizing on it further after you spend all that effort putting it together, right? And then you could even bring it into the home after that and further monetize it. Foreign films have been connecting exceedingly well. Indian films in particularly have been showing some nice growth as has Anime. And like I said, faith-based film, we saw what happened with Sound of Freedom last year, but there is quite a number. I mean, this past few weeks, The Chosen, the faith-based series, The Chosen just shown in theaters prior to coming out in home as it did over $30 million of Box Office, right? Angel Studios, who brought us Sound last year has about 5 or 6 films already dated for this year. So I think, yes, there's definitely in seeing some of the success more companies are leaning into that, and I think we'll continue to see further opportunity there. So it's nice to see that finally having to do here.

Maybe Taylor, so do figure out some other ways to release...

I hope she can do brand new concert every single year...

Yes, she's pretty business -- so. All right. Let's turn maybe to some more Cinemark-specific questions. A big focus in the before times where these subscription services like Movie Club and it's still -- maybe surprisingly big part of your business. Maybe sort of the list you could talk a little bit about how Movie Club. Give us a sense of the scale of that member base and that business and what you guys are continuing to invest and innovate in that service.

Yes. So we certainly feel good about Movie Club. We have over 1.2 million members at this stage and have grown our member base since the pandemic despite box office, not fully recovering. So we feel good about that. We also see those members are purchasing at a much higher frequency so we really like the engagement that we're seeing in that program, and we continue to push membership growth there, the opportunity.

What's -- how much of your box office came from Movie Club tickets last year, I know you guys have talked about that.

It's over 20% the Box Office coming from Movie Club.

And are you guys continuing to invest and innovate in that product? Do you think that product evolves over the next several years?

Yes. I would say just in general, given the stickiness of that, what we want to continue to do is look at the freshness of the program and make sure that members are continuing to see that benefit. So it's something that we evaluate on an ongoing basis. You saw us do that with Movie Club Platinum that we introduced for those highest frequency members, and we'll continue to look to innovate on that side given the success we've seen there.

Maybe on the concession front, which most people know generates more gross profit dollars from concessions and admissions. You guys have had a really impressive track record of growing that, I think mid- to high single digits over many, many years on average. We keep waiting for it to slow down, and it doesn't. So what's the opportunity ahead to continue to drive that kind of per capita growth, which is so important to your cash flow?

Yes. So as you mentioned, we've seen really healthy growth rates on the concession side, on concession per cap pretty consistently. And in fact, if you look at our concession per cap in 2023, that was up domestically 40% from 2019. So nice healthy growth and what we like to see there is that's predominantly driven incidence rates. So consumers purchasing more and to a much lesser extent, the pricing side of things. So we've seen nice benefits, not only across our core concessions of popcorn and Coke but also as we've enhanced our food offering. So introducing alcohol into more locations, pizza in more locations, ICE, so continuing to expand those offerings has really served us well. And we still do believe that we have runway on the per cap side as we look ahead in what we're currently pursuing on the initiative side for per cap heavy focus on continuing to grow incidence rates. What we want to ultimately do is create that frictionless experience for the customer. So we're trying to drive further adoption of our mobile ordering platform, for example, because we know that, that ultimately reduces our lines, which can be a deterrent from consumers purchasing concessions. So we're promoting that convenience element. We're also looking at our space management and ultimately how we can improve that flow. And as a result, impulse purchases as folks are going through lines. We also are on the category management side. We are continuing to expand our hot food offerings. We still see opportunity there as well as opportunities to look theater by theater and make sure that we're aligning the products that we offer with what consumers are consuming and ultimately improving our conversion there. And then the 2 other points that I would call out is we are scaling movie-themed merchandise. So that's an area that we saw nice success with...

So the Dune popcorn -- little strange.

Not our circuit, but yes. But we see really strong opportunity on movie theme merchandise that we continue to lean into. And then I'd also mention on third-party delivery, that's a unique opportunity for us to reach our customers outside of our 4 walls. So that's something that we're pursuing. And then prices is certainly another area that we still believe we have opportunity on the concession side. But again, we'll approach that cautiously because ultimately, we want to optimize the incidents that we're driving.

It's not really been a big theme in the entertainment industry, but certainly in the food space, focused on healthier options, people being more focused on that. Is that something you guys think about when you think about long-term planning for your business?

Yes. So ultimately, we don't see that trend having a meaningful impact on our business at this stage. As we think about in the future, we're certainly continuing to monitor consumer trends as well as their trends for food options that they're selecting. But what I would say is we do have some healthy options. So our team has focused on, whether it be bottled water products, juices and other snack offerings that are on the healthy side. We do have some options. But by and large, when we see consumers come to the movies, we do see them looking for more of a treat and looking to indulge. So whether it's concessions or Sean talked about the premium format side, we're seeing them lean in there.

Right. That makes sense. Last year, you guys reported margins. I think you're approaching 20% and in the pre-pandemic years you were doing sort of 22% to 24% adjusted EBITDA margins. Maybe again, Melissa, is there any reason why you can't get back to those historical margin levels as the box office rebound?

So that's certainly our goal. We feel really good about the potential of our business being what we were able to deliver on the margin front in 2023 or less attendance than in 2019. So feel good about the opportunity there. And we do have a series of revenue generating and productivity-driving initiatives that we're pursuing to try to get back to those margins. Certainly, outside of attendance and box office, the other key areas that are going to influence our ability to do that is maintaining or growing our market share, continuing to grow our average ticket price and concession per cap, which we believe there continues to be runway there as we talked about, offsetting any further inflationary pressures that we may see as well as being able to capture the benefits from the strategic initiatives we're pursuing.

I would imagine you guys have probably absorbed a lot of minimum wage labor cost pressure, probably also utility costs since 2019. Is that something that's already been more or less absorbed into the P&L?

Yes. So a couple of things on the cost side from an inflationary pressure that I would point out. There's really 2 key areas, the labor side that you mentioned. We have experienced as kind of the broader industry has outsized increases in average hourly wage rates, and that was particularly in '21 and '22. And then last year, we started to see wage rate increases return to more into historical levels and be more driven by government-mandated increases versus market -- labor market dynamics. We have initiated several productivity initiatives on the labor front, and we've been able to offset nearly half of those impacts on the wage rate side. So you do see that factored into our margin rate that we delivered in 2023, but we continue to pursue other opportunities to look to offset some of those headwinds. And then the other point I would call out is on the COGS side. So as we think about inflationary pressures that is seen. Our business, our cost of goods sold is impacted by commodities and corn and canola were pressure points for us. Now those are starting to ease. However, sugar and cocoa were at all-time highs, given weather impacts on crop production. So we still expect at least in the near-term commodities to present a headwind. And then the other point I would call out on the COGS side is some of the initiatives that I mentioned around third-party delivery are pushing movie-themed merchandise sales. Those do have lower margins than our core concessions offering. So that might put a little bit of pressure on the COGS side, but we continue to look for opportunities to offset some of the pressure there. I'd say net-net, though, overarchingly, I mean, we've -- you can see in our margins in '23, we're pursuing the top of line initiatives as well as productivity, and we've seen kind of the overarching benefit as a result of that.

Are you guys still seeing wage inflation pressure? I think California has got some stuff that people are focused on, and you have some assets here.

Yes, we do see -- we certainly see pockets of that pressure, but it is more government mandated versus the dynamics of the labor market.

Right.

I wanted to ask you about the Latin American business. I think EBITDA last year actually was a new high for you guys without having the box office fully recovered. So what's driven that faster recovery in the business?

It's interesting in Latin America. We just -- we continue to look at a lot of positive signs in the area in terms of our space, our industry. I mean, what some of the key drivers are really just consumer appeal for movies and these markets are exceptionally strong. As people have returned -- all our theaters are in malls there. So as people have returned to malls, return to go into movies, it's a big family pass time oftentimes in these markets. They've come back and in certain places like Argentina even, even the volume has been down, attendance was actually up from 2019. So we've seen examples of that. And you're right. I think our team has done an exceptional job of being able to further optimize the circuit during the pandemic, find new pockets of efficiency and then make the most of the volume. So you're right, with 20% less attendance, we were able to generate more EBITDA overall. So it's like -- we're very confident about the long-term potential of these markets when you think about further opportunities for expansion, just the level of penetration. There's always the nuances of the economic and political landscape. So you have to navigate in these markets, it can be complicated. But we've got a phenomenal team there. They've been there for many years. They've built these businesses. These are very self-sustaining operations in these markets. And we have a very strong share in the marketplace. We tend to be to 25 to 30-plus percent market share in each of these countries. So we're very well established and I think there's a lot of potential.

And I know it came up on your earnings call, you guys brought up the Argentina currency situation. I know maybe, Melissa, there's a way for you to help us think about, I don't know, sizing that or factoring that into our expectations for '24.

Yes. So Argentina is the second largest country for us in Latin America...

Is that a revenue term?

And, that's in terms of EBITDA contribution. And as we think about Argentina for folks who didn't listen to the earnings call, we did Argentina as a result of some new economic measures put in place by the government in December of last year, experienced sharp FX devaluation, and we expect further devaluation to occur this year. Now we do expect some offset from inflation given the hyperinflationary environment in Argentina. However, the extent of that is unclear at this time. As you think about kind of quantification on Argentina, I think the other point that I would mention as it represents about 14% of our screen count in international, but it does punch above its weight in terms of EBITDA contribution in a post-pandemic environment because, as Sean mentioned, it does have the fastest recovery rate in the region with attendance north of 2019 level.

Got it. Okay. That's helpful. Shifting more to cash flows. You guys guided to a flat CapEx, $150 million year-on-year. Where are you guys investing? And was there any temptation to spend to lean in a little bit more when we talk about premium formats and the things that are working for the business in '24?

So in 2024, we are expecting $150 million of capital investment. If we think about where that's earmarked, about 40% of that, we are allocating towards maintaining a high-quality circuit. About 25% of that is earmarked towards new builds. So both new theaters as well as family entertainment centers. We also have about 15% is earmarked towards laser projectors. So as part of our multiyear conversion project that we have underway. And then the reminder is driven by other ROI-generating opportunities, and that is in the area of premium amenities, whether it be motion fees, premium large formats, recliners, or some of the enhanced food offerings that we're pursuing. As we think about going forward beyond 2024 as we see the box office rebound further, we would expect our capital expenditures to grow. And as we think about what that looks like at this stage, from a normalized perspective, we think it's reasonable for us to get to kind of that $200 million to $250 million range for CapEx, again, provided -- depending upon where the box office ultimately settles and the ROI-generating opportunities in front of us. But I would say right now, we have more opportunities to go after than the capital we're deploying in '24, given a balancing nearer-term maturity with our 2025 maturities and the dynamics of the box office.

And should we think about that range of CapEx coming with the box office getting back to the $11 billion type pre-pandemic levels from a timing point of view?

Yes. As we think about seeing a rebound, as Sean mentioned, we expect volume in '25 to be greater than '23. So we would expect a step up in '25 and then a further step up in '26 as content continues to rationalize.

Okay. Great. That's helpful. Anything else on free cash flow that we should be thinking about for '24, any other puts and takes or seasonality you would want us to keep in mind?

Yes. On the free cash flow side, because it is so dependent on attendance and box office. We do expect some pressure there given the content headwinds. I think from a seasonality standpoint, the one thing I would call out is, given the current release patterns of the slate, the box office is back half weighted and particularly in Q4 is where we see a lot of strength. So as you think about the phasing of free cash flow, we would expect the first half of the year to be pressured in fact, cash burn and then the second half of the year cash flow generation.

Okay. Very helpful. Sticking with the theme of cash, you ended the year, I think, with about $1 billion of it, nearly $1 billion of cash on hand. I don't think you're super focused on this, but any appetite for M&A in the business, to the extent there are opportunities that come up either in the U.S. or internationally?

Yes. I mean, look, when we think about growth channels for the organization. M&A is certainly one of the areas that we look at. Now that being said, we tend to be disciplined picky buyers, generally looking assets that are high quality and that we have really strong confidence of financial accretion over a short time frame. So we have not pursued growth just for growth's sake, and we don't intend to in that sense. But you keep a close watch of what assets are out there and what could potentially come to market. It will be interesting to see what happens over the course of the next year. I would say probably more right now in the domestic landscape more so -- and LatAm. But it really just depends on what opportunities may come to bear. The one thing I would flag that we've continued to see in this market is still a little bit of the store seller expectations relative to where the market is. And there's, I think, still a sense of wanting to be -- wanting to be paid at levels based on 2019 performance and valuation versus what we've been seeing [indiscernible]...

Maybe once your stock reflects that.

Yes. It's hard to close the gap. Yes, I think that's probably more a realistic time frame to pursue that. But that's certainly something that we keep a close watch on that as we think about optimizing our circuit and looking for opportunities that has potential and we'll continue to move forward with it.

Great. You've got some debt maturities coming up, I think, in mostly or entirely pretty much in '25 a little bit that you're calling this year. But Melissa, any thoughts you could share with us on how you guys are thinking about those maturities, in particular, the sort of the way the convert gets addressed?

Sure. So we do have 2 debt instruments which maturing in 2025, we have $150 million of 8.75% notes and then we also have the convertible notes that mature in '25. We have stated that it is our intent to repay the $150 million in May when step down to par...

Of this year.

Yes, of this year. So the remainder would be, as you pointed out, the convertible note, which matures in August of 2025. We have ample time and a number of alternatives available to us to address the convert. So we're really looking to be opportunistic, yet prudent in our approach. Our approach is going to be dependent upon box office and free cash flow generation. But in addition to that, as we evaluate our options, we're certainly looking at the trading prices of the convertible notes, our stock price today as well as our future expectations and then just general market conditions, including interest rates. But overarchingly, we'll make the best selection for the company and in best interest of our shareholders.

Yes. Okay. You've got some time on that one for sure.

Yes.

Okay. The last question that I'm sure everyone wants me to ask you, which is on the dividend. I can give you all the reasons why you guys can pay dividends. So you sound quite optimistic about the box office. Obviously, you talked about the '25 slate. I mean, by our numbers, you're still going to be in your leverage range by the end of this year. I'll ask you the same question, I asked you on the earnings call. See if you have a different answer, which is what are you guys looking for to resume the dividend at Cinemark?

Yes. So we are in ongoing discussion with our Board around our capital allocation priorities, which includes potential reinstatement of the dividend. But the timing of that, as we've said, is going to be predicated upon our ability to sustain our net leverage ratio within our target range of 2 to 3x. We do think, given the headwinds on content this year that there could be some pressure on that net leverage ratio. So we'd like to ultimately get that uncertainty behind us, particularly in the first half of the year as we have a much lighter slate. And given kind of the back end Q4 waiting. So our near-term priorities remain strengthening the balance sheet, addressing those maturities and investing in the long term.

Okay. Sean, anything you want to add?

I think...

Any questions from the audience? All we have -- yes, go ahead...

I guess doing pretty successful, curious how that tracked relative to what you thought. And then market share, anything interesting you're noticing by geography, smaller, kind of more premium places, are they gaining share in the marketplace. Obviously, you've done nice work on that.

Sure. Well, look, Dune was a fantastic result this past weekend. So if anything, I think it hit at the high end of our expectations for this opening weekend. I think what's really encouraging is just how positive all the audience feedback has been, right? The critics have raved about it. Now the audience scores are exceptionally strong. So as we look at the potential it has, just to continue to have a really long run, it looks extremely promising. And again, SciFi is always one that can go either way because it's not always for all audiences, but given this is such a huge spectacle of a film with such a phenomenal cast and it's a high-quality film, has that potential really to kind of grow and continue to perform. So we're very optimistic about where that goes. As far as market share on premium or any types of nuances there. I mean, interestingly, I think probably the strongest thing we've seen with share benefits is something I mentioned earlier, particularly within our circuit, is just how the reclined seats. Those theaters have rebounded the fastest compared to those theaters that don't have that feature. That's probably the biggest thing we've seen. There's clearly uncertain opening weekends and things that there can be a bit of an over-indexing on some of the premium large screen formats and whatnot. That tends to work itself out over the full run of theater, but there has been an uplift of that. I mean we had, for instance, in 2023, we generated more revenue, like 90% more revenue of our D-BOX motion seats than 2019, our XD premium large format screens were up in total revenue, even on 25% less attendance, we generated more overall box office in 2019. So that's back to what we were talking about, a moment ago, on the premium. But when you talk about market share, I mean, in the totality of these theaters, it's really been more probably the recliners, I think -- and that really is market by market when you just look across the patterns are fairly consistent across the entirety of our circuit.

Just again, with respect to the dividend, is there anything that's preventing you from doing it in a more phased percentage of free cash flow rather than waiting to get to the full 50%? Like why couldn't you make that more of a schedule over time?

So in terms of level of dividend?

Right.

Yes. So just even we looking to reinstate the dividend, the timing of that, regardless at what level would be predicated on our ability to maintain our leverage ratio within that 2 to 3x.

Okay. Last question as we're running out of time. Which film [indiscernible] the surprise to the upside this year when you look at the slate?

Surprise it. Well, I had an investor call me out saying that Little Mermaid was going to be the biggest film last year, which didn't happen...

Your account...

So you guys to take my answer with a grain of salt, I guess, in terms of what it means. But look, what has the biggest potential for upside surprise, I mean, surprise is the big question. I think I would say of the films out there that I'm probably personally most enthused about, I think Wicked looks unbelievable. So that has the potential to just be beyond, I think, people's expectations, I think Deadpool 2. We've just seen some of the early spots on that and how audiences have responded. I think that has some real breakout potential. And then fan favorite, I'm going to throw out more at a different scale, but [indiscernible], I think we'll see what that has -- what lift that could be -- that could be more of a surprise...

Melissa, you want to give your portfolio?

I agree with Wicked. However, I'm really excited about the slate of family content. So that's something -- while it might not be the biggest film of the year. I think there's a nice diverse slate of family content, so excited for that...

This is the second Deadpool 3, promotion of the conference of the day, so that's -- All right. Well, thank you guys for coming. Thanks, everybody.

Thank you for having us. Thank you.

Thank you.