Good morning. My name is [Boisha] (ph), and I will be your conference operator today. At this time, I would like to welcome everyone to the Cinemark's Q1 2014 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to hand the conference over to Robert Copple. Sir, you may begin.

Good morning, everyone. At this time, I would like to welcome you to Cinemark Holdings first quarter 2014 earnings release conference call. It's hosted by Tim Warner, our Chief Executive Officer, and myself, Robert Copple, President and Chief Operating Officer and Chief Financial Officer. In accordance with the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995, certain matters that are discussed by members of management during this call may constitute forward-looking statements. Such statements are subject to risks, uncertainties and other factors that may cause Cinemark's actual performance to be materially different from the performance indicated or implied by such statements. Such risk factors are set forth in the Company's SEC filings. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Today's call and webcast may include non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable financial measures, calculated and presented in accordance with GAAP, can be found in today's press release and on the Company's Web-site, investors.cinemark.com. I would now like to turn the call over to Tim Warner.

Thank you, Robert. Good morning, everyone. Thank you for joining us for our first quarter 2014 results call. Cinemark celebrated a record setting first quarter with $602.3 million in total worldwide revenues. We also set records in our domestic segment where we had our highest first quarter attendance in history and generated a record $442.1 million in Q1 total revenues. According to the industry sources, the North American industry box office for the current quarter was up approximately 5.5% from last year, while Cinemark's domestic box office increased an impressive 20.5%. Our international segment generated a 5.7% increase in total revenues on a currency adjusted basis, especially impressive given the cost with the sale of the Mexico asset. Excluding Mexico from the prior year results, total international revenues were up approximately 16% on a constant currency basis. Our worldwide adjusted EBITDA was $128.6 million for the quarter, representing an adjusted EBITDA margin of 21.3%. We compliment our worldwide operations team for continuing to achieve the highest adjusted EBITDA margin in the industry. We're also maintaining our high standards for customer service. The first quarter box office was led by a diverse slate that included, The Lego Movie, Ride Along, Lone Survivor, Divergent, 300: Rise of an Empire, and the carryover of Frozen. The North American industry began the second quarter with a highly successful Captain America: The Winter Soldier and Rio 2. The 3D takes on both these movies were approximately 40% and 30% respectively, demonstrating the continued demand for this premium format. The summer season officially kicked off this past weekend with The Amazing Spider-Man 2. While Spider-Man had a strong opening that included a 43% 3D take rate, last year's Iron Man 3 created a difficult comp as it earned the second highest opening weekend domestic box office…

Good morning, everyone. We followed up a robust 2013 with another record setting quarter for Cinemark. We set a first quarter record for total worldwide revenues at $602.3 million. Our worldwide circuit outperformed in North American industry by approximately 350 basis points. Our total worldwide revenues for the first quarter increased 9.9%. Worldwide admissions revenues were $380.9 million, an increase of 9%, and worldwide adjusted EBITDA was $128.6 million for the quarter resulting in an adjusted EBITDA margin of 21.3%. Our U.S. segment set records for the first quarter, driven by attendance increases in addition of the rate of circuit. Total U.S. revenues for the quarter grew 21.6% to a Q1 record $442.1 million. Admissions revenues increased 20.5% to a Q1 record $282.7 million. Attendance was a first quarter record 40.6 million patrons, an increase of 17%. Average ticket price rose 3% to $6.96. Concession revenues were $145.5 million, an increase of 23.3%. Our domestic concession per patron grew a healthy 5.3% to $3.58, marking our 29th consecutive quarter of concession per cap increases. We continue to successfully introduce new concession products and design new concession promotions to generate these incremental sales. Our U.S. segment generated adjusted EBITDA of $93.5 million with an adjusted EBITDA margin of 21.2%. Our international segment also outperformed extremely well this quarter despite currency headwinds of approximately 19% and a comp against 2013 that included our theaters in Mexico. Total international revenues this quarter were $160.2 million. Admissions revenues were $98.2 million. Average ticket price was $4.70. In constant currency, the average ticket price improved 13.3%. International concession revenue was $47.5 million. Concession per patron was $2.27 for the first quarter. In constant currency, the increase was 15.1%, continuing an impressive growth trend. Our Latin American segment generated adjusted EBITDA of $35 million, representing a…

(Operator Instructions) Your first question comes from the line of Robert Fishman with MoffettNathanson.

I got one for Tim and one for Robert, if I may. Tim, can you share with us if the volatility in the LatAm market presents any interesting M&A opportunities for Cinemark and also how you'd characterize the M&A market in the U.S.?

Yes, I mean I think while I don't necessarily agree with your analysis that it's really a volatile market in Latin America, I mean Latin America is, we have a very diverse portfolio in Latin America and we're in most of all the countries in Central and South America. There's a little turmoil in Argentina which is being driven by politics as well as economic issues that could create some M&A activities, but as far as the rest of the market I think that there is M&A activities and there are some very attractive companies down there that we would like to acquire if they become available and we are constantly searching for good M&A opportunities. We're also looking at new markets. We recently entered Bolivia and our 13-screen complex there opened extremely well and is performing very well, and we recently announced a deal that we're set for next year in Paraguay. So we continue to look to expand in those markets both organically and via M&A activities. In the U.S., as we discussed before, there is some very attractive circuits out there that we would want to purchase. However, they are primarily all my family owned groups and so their motivation for getting out of the business would be entirely different than a financially owned structure. And so, although they would be attractive, as to when they would come to the market isn't as predictable as some of the financial entities.

Okay, thank you. And for Robert, if no bigger M&A this year, can you just update us on thoughts on capital returns with growing cash balance and could you increase the dividend or the possibility of buyback this year?

Sure. I'm surprised by the question. It's one where we did – obviously we increased the dividend towards the year end of last year. As we said early this year and I kind of reiterate it, our CapEx spend is estimated to be $275 million to $300 million. So we are actually using a lot of our cash flow this year. It's a little bit higher primarily because of the digital rollout in LatAm and some of our XD conversions we're making as well as some flicks costs that we are incurring to expand flicks. Obviously our Board can make a decision to change the dividend, or to your point look at stock buybacks and it's something that we discuss at all of our meetings. I don't anticipate any changes but obviously it could be that. I think it's something that we continue to look at how to best utilize or reinvest our cash in this Company and the opportunities that are out there with organic growth, and again to your point, if sales do come up, but again I feel like we're kind of going where we set ourselves last year, and then again, what we constantly really evaluate with our cash flow position, the best use of that money.

Your next question comes from the line of Townsend Buckles with JPMorgan.

If you could talk about the LatAm attendance trends you've been seeing, it seems like March came on pretty strong and the April data points look even stronger, so do you see this momentum continue or really pick up steam into the second quarter?

Obviously we've been down there for 18 years and we have a lot of faith and conviction in Latin America and it's continued to perform well. It's always been project related and it's a combination of how films translate to Latin America and then also there might be some local films coming to the marketplace from time to time that influence at attendance trends. But we think that Latin America continues to be a great story for us and we're obviously strong believers of it and we have seen continued attendance growth over the years and think as we continue to build and expand that market, it will become an even better story.

Would you say what you're seeing now is really just the film slate heading down there?

Again, we've always maintained, as our attendance is product related, it's not related to the economies in the market, it's very similar to what the U.S. went through in 2008 when there was a downturn in the economy, our business was again more product driven and it turned out to be a very good year and we held up very good in spite of the downturn in the economy here in the U.S. And in the U.S., it's the same kind of matrix is that we tend to perform well strictly dependent on the product as it comes to the market as it translates [indiscernible] strong local product. And I think when you look at the upcoming lineup of films that we outlined, whether it'd be Godzilla or Transformers and Planet of the Apes, all those releases should perform very well in Latin America and hopefully we'll have some good local hits.

Robert, can you give an update on how you're seeing the new builds this year specifically for Latin America? You mentioned I think 54 screens committed for the remainder of the year on top of the 32 in the first quarter. So do you think you can still get into that general target range you have of being above 100 screens? And then just looking longer term, with the development deals you mentioned, any updated sense of how you're seeing the pipeline further out in relation to those growth targets?

We still do feel like that we can get our 100 plus screen count in LatAm. The numbers we gave, as you mentioned, they are the committed projects and we still have some in the works, and so we feel like there's potential to still reach over 100 this year. And then when we look at the pipeline, I think the big story in the Brazil smaller market opportunity that we've now created, is it just helps continue the pipeline. It's not necessarily saying that we're going to ramp up the rate of expansion in LatAm, but I know some people have been concerned, and over the last few years when we've talked about Brazil, we've had some wide under-performance, and as we've discussed, that primarily is where other competitors have built in some of the smaller markets and we were focused on the middle to large markets. And so by really getting with this new developer and having a smaller market strategy, it gives us that in-roads and really just gets us better clarity and comfort in the pipeline going forward, so that again as we said before, 100 to 150 screens in LatAm a year feels very comfortable.

And also just a point of clarification on the small market strategy in Brazil that we announced is that, there are markets in the 250,000, 300,000 [indiscernible] range which would be a fairly large market in the U.S., but that's the type of markets we are talking about in Brazil.

Your next question comes from the line of David Miller with Topeka Capital Markets.

One of the things that makes you guys so unique is, you sort of double dip nicely in product, I mean you nicely capitalize on America in Temple releases, playing in Latin America but you also capitalize on Brazilian films and Portuguese films that also play in Latin America, that we would never hear about in the United States. So my question is, with the Studio System finally figuring it out that you could spread around all these kind of event driven Temple releases to kind of a 12-month year where everyone can make money, has that affected what the creative community down there has done with Brazilian releases, Portuguese releases, we've noticed in the past that those releases tend to come at a time of set interval, are you seeing any changes there with regard to the composition of product vis-a-vis what the Studio System in the United States is doing right now?

As these markets have expanded and have more theatrical platforms between what we're doing and other people are doing in the marketplace, it is really help with the local production. And to the point which I think you're making is that they would tend to book around some of the high-profile international films that would be coming out of the U.S. and so it is a nice supplement. And although both our international president and our local groups that attend a lot of the film seminars or interventions in the local marketplaces, it's tough to get the kind of a read that you would get in the U.S. when a franchise is going to come to the market or one that's going to work. And so we try to get a sense of it when we're measuring, but a lot of the time we don't have as much insight into the film as to how the [product] [(ph) is going to react to the local market, but some of these films, like in Chile and Peru, we have films that from an attendance standpoint outperformed Avatar and so some of them could be very, very big.

Your next question comes from the line of Eric Handler with MKM Partners.

Just curious, when you look at Brazil you have a path for some of the smaller markets, I'm just curious with all the development that's gone on there in the last several years, how under-screened or how much expansion potential do you continue to see in this market over the next three to five years, are we still in the early innings here or is this becoming much more of a mature market? And then similarly is this the market that you continue to see the most significant opportunity throughout Latin America?

To give you some perspective on this, in the U.S. you have roughly 35,000, 36,000 screens for 320 million people and in Brazil you got roughly 2,600, 2,700 screens for a market of over 200 million, and Mexico which would be more of a Latin American market you have almost 5,500, 6,000 screens for 100 million people. And so you can see there's tremendous growth opportunity still exists in Brazil. The barrier to growth has always been that you pretty much – and this would be the case for all of Latin America, that you need to move along with the mall development because the projects are included in malls for a lot of reasons. And so we feel that we can say for the next five or 10 years that Latin America has a tremendous upside and sort of if you build it, they will come, and all the theaters we've opened now in these various markets have been very, very successful. An example like I talked earlier about Bolivia, we opened up with a great complex and we actually build like the number one, number two theater in the marketplace, and so it's an exciting time. But it's not only a story about Brazil. I mean we're building throughout the markets in Chile, Colombia, Central America, there's still a lot of potential in all these markets, not just Brazil.

Great, and then just as a quick follow-up, you've got the World Cup starting in another month and a half running for a month, how is Hollywood or some of the local studios programming around that event and are you going to be showing any World Cup matches?

This is our fourth World Cup since we've been down there. So we've been through this process before. From the Hollywood studios standpoint, they tend to put family movies more in a head to head with – and so an example of that would be How to Train Your Dragon is going during the World Cup period, The Fault in Our Stars which is another – and so it would be that type of films that would appeal more to families or general audiences and then also to more female oriented would go directly where the other franchises would – the big franchises would sort of move around the World Cup. It starts in early June or June 10 and then it ends on I think July 12, and so that will be the period. During the period that the World Cup is on, it does impact our attendance numbers, but however when you look at it on a 12 month basis from our past experience, it sort of evens out because of that product shift that you identified. Yes, and to answer your other question, we're in negotiations, we try to bring the World Cup to our screens in Latin America, we think we'll be successful in that, but we don't have anything firm signed up at this time.

Your next question comes from the line of Barton Crockett with FBR Capital Markets.

I was curious on the Latin America comparable kind of growth metrics. I think you highlighted like a 19% kind of currency impact. But there was also the impact of just divesting Mexico, those screens were lower yielding. So I was wondering if you could tell us on a comparable screen basis, constant currency, how does the growth rate in box office per screen in Latin America compare to the U.S.?

If I look at box office on a constant currency excluding Mexico, it was up ballpark about 12 plus percent for admissions.

Okay, so still nice outperformance?

Yes, and obviously that includes ticket price as well but actually did very well, and I think as thrown out earlier, I mean what we're seeing Brazil in particular, it was Brazil is a bit slow the first two months and really came back on in March, has to do with the weather and a number of other things, but most of all the countries did extremely well this quarter and Brazil is really kicking in here now.

The next question comes from the line of Jim Goss with Barrington Research.

Maybe I'll start off one, I was wondering that with the stepped up experimentation you have done with various types of amenities, should we expect concession revenue growth to accelerate but margins gradually contract as a higher value but lower margin product is introduced, and I was wondering if you could provide any context or parameters with that event?

As we outlined in our call, we continue to experiment with them but keep in mind that the vast majority of – and I would add, most of all exhibitors are experimenting within some basis area and you'll have them experimented with them to where the food and dine concept has been in the market for some time and the VIP recliner theater concept has been in the market for some time, so a lot of that data is sort of already integrated but it's a small percentage of whether it's any of our circuits that is being driven by that. A vast majority of our revenues and our concession results are from what you'd consider traditional kind of concession operations but we do see the upside of – it's sort of a market by market adaptive kind of strategy and same way our Bistro concept has worked really well. We're very optimistic that our Cinemark Reserve concept that we're opening up in Playa Vista [indiscernible] in this year are going to be very, very well received. Also adding beer and alcohol and mixed drinks in a number of markets has been very additive, but I think for the foreseeable future, the big driver for us is – as we had over 29 quarters of book cap increases in concessions, is the focus on bringing value to the customers and speed of service and our self-service concession concept has been as additive as anything.

Okay. One or more of your competitors have also observed that the one product like that that will maintain the 85% margin is [Ultra Home] (ph) based on expand that way. Do you have many situations where you have multiple POS, either two XDs or an XD in addition to one of your few IMAXes?

Yes, we have I think it's three or four locations where we've been testing two XDs in the same market. We don't have an example where we're doing both IMAX and XD, but we have been testing and it's been fairly well-received. Like I said, I think it's three or four theaters that we do have two XDs in the market.

Your next question comes from the line of Brian [indiscernible] with Morgan Stanley.

Two if I may. Robert, just as a follow-up on the Mexico impact, I think you mentioned there was some margin benefit in the quarter. Any help quantifying that?

On the margin overall, I think for LatAm taking out Mexico again, probably the best way – when I look at overall what happened in LatAm, as we said, if you take our reported numbers, you've got actually, especially when you get to the bottom line, it was slightly higher than the revenue side probably about 20% FX headwind that's bigger again. And then with respect to Mexico in general, whether it's attendance or revenues and it definitely has some variance, but if you are comparing, it ballpark was probably in the 9% to 12% range of what Mexico represented of our numbers last year and it just varies by category. But that would give you a way to kind of back into what the real performance without Mexico. I mean I could – overall if I took it on a constant dollar basis, TLC margin definitely increased significantly and somewhere in the range of probably 200 to 230 bps, again excluding Mexico. I don't know if that helps answer your question.

Yes, that helps, thank you. And then I guess for either Tim or Robert, I'm curious from the conversations that you have, what your sense is of how the major studios are thinking about investing in content over the next medium term, say three to five years? I think it seems like we're done with the period of the major scaling factors, slates and we're seeing more competition for release dates going out now a couple of years. So I'm curious if you think we're starting to see any renewed appetite by the majors to invest in film content?

I mean I think they have been investing and they continue to invest and usually we don't have a lot of insight into like '15 and '16, but because the studios are trying to lockdown dates to the point that you are making, the competition for play dates is really there among the major studios. So like in '15, I mean they've already announced, Divergent has been announced, Penguins of Madagascar, [indiscernible] Avengers, Tomorrowland, Jurassic World, Inside Out, [indiscernible], 2400, Hunger Games: Mockingjay, Star Wars, Mission Impossible, and so a lot of big franchises, they have already set their dates. And then to be even more additive to your question is, again 2016 they've already announced firm dates on Captain America, Superman vs. Batman, Alice in Wonderland, X-Men, another Spider-Man, Finding Dory, Independence Day. And so they are going further and further out, and I think then also Avatar is coming into the market in 2016. And so I think that – which is great for exhibition and also great for the studios. The other point we were making earlier on the call, because of the competition for dates you're seeing, the year being spread out which is good for the patrons and it's good for exhibition and also good for the studios that they aren't kind of poured everything into the summer play dates.

Your next question comes from the line of Tony Wible with Janney.

Two things. First is, can you give us some kind of indication on how Latin America is currently pacing up for attendance per screen now that you've kind of netted out of Mexico? And then also on the concessions improvement, is there a way of breaking down how much of that was volume versus pricing versus new product?

I'd say overall with concession, we're performing as we mentioned both well domestically and internationally. The volume is – we're getting ready at both, benefitted both sides with introductions of some of our new products. As Tim mentioned, we're introducing [our content in] (ph) some markets. We're seeing both the volume increase overall per patron, buying increase as well as we do have some pricing increases. Price hasn't been our primary driver but it's definitely been something we've looked at. We've tried to be I'd say more conservative on a pricing versus introduction of products. But really to other programs we have such as putting combos together and things like that, we're also getting the benefit of just more purchases per patron. So when you look at the 29 quarters that we've accomplished, that's been a lot of the driver. On attendance per screen, haven't necessarily given that out of what it was kind of with and without Mexico, but again if you look at our overall numbers that we reported, and I gave some ballpark of what FX did and what we saw with respect to generally what Mexico represented, we did get a nice boost overall in total admissions per screen. Attendance per screen probably was reasonably in line with U.S., maybe a little bit behind it in that again Brazil started off kind of soft in January and February and it's a big piece of our number, made up all the ground in March and April is doing extremely well. And a little bit of what hit January and February, and I don't want to over-dwell on it and I'm not big on making excuses of weather, but we actually had one of the hottest summers, because our winter is their summer, one of the hottest summers on record in Brazil and actually a lot of people were just getting out of the major cities. And so interesting to see, it's how a number of our patrons unfortunately not only have been gone but more so use their disposable income because we were questioning what was happening because of a number of our other countries where we're very solid. And then sure enough, once the kind of summer season ended and everybody was back home, also the numbers started really moving quickly. And so again, when we look at overall payments there, we kind of expect international performing in line with U.S. and we think it generally did and we'll continue to do so this year.

Your next question comes from the line of Matthew Harrigan with Wunderlich.

So now we can stop worrying about winters and start worrying about global warming I guess. I was curious, [Jeff Lucas] (ph) did a pretty good job comically of shooting down [indiscernible] markets the [MilCon] (ph) Conference, but they were so extreme seasonality, like everybody is kind of adjusted to the barbell notion, international growth in theatrical and then digital streaming, is there still some advocacy out there for a view that changes very sharply, I mean maybe more up in Silicon Valley than rather at the studios, but I mean it seems like [he's a martyr] (ph) out there, I'd be curious to get your comments.

We have a lot of respect for Jeffrey as a filmmaker and as a [indiscernible] head that obviously we tend to agree with Jeff's shell on his vision of it as a growth industry, and I mean I just pulled some revenues on a worldwide basis and I just went back to 2009, the worldwide box office was $29.4 billion and in 2013 it was $35.9 billion. So Jeff's shell has the numbers to also back them up that the growth of the international markets has been very, very substantial. And the U.S., as you pointed out, has been a mature market and Cinemark has been fortunate that we've been able to grow in a mature market domestically and have achieved a lot of success. And those numbers would be reflective of Cinemark's growth and one of the obvious reasons why we decide to focus both on the U.S., and we think we have one of the leading performing U.S. companies, but we also have got one of the leading performing international companies, and at the same period, if you went back to 2009, you'd see that there's been a great growth in Latin America. So we think it's a great story and another – when you just look at like a movie like Spider-Man that comes out and if it gets like $92 million in the U.S., but then its total international take is almost like $277 million, $278 million in this initial opening and it's just opened in a limited number of international markets, and so we think it's an exciting time for our industry pros in which is up to $1.2 billion on a global basis and a great run in the U.S., but when you look at it on an international basis. So, no, I mean I think the studio see the theatrical window as the primary window and I think they see great promise also in the electronic sell through and that windows battle has really shifted between the electronic sell-through window and the DVD and the after-markets there. And so we think the entire Industry is in a great place right now.

So I assume that there's some activity under the surface in terms of using your database to help the studios on the streaming side or is it still just really early?

I mean I think certainly what work – we've done a lot of work with the studios on as to how we can work together to try to help them solve their in-home problem. I mean the theatrical window has never been a problem. It's always when really this whole issue came up, what was driving it was a lot of in-home revenues not the theatrical revenues. And so, we have worked – and you're seeing some where they try to like a Spider-Man, they are trying to tie in the theatrical release that if you will find out for a digital or electronic sell through purchase, you can buy at an earlier time when that becomes available which is usually the 90 plus range, and so there is an effort in the industry to really work together to try to solve that in-home problem.

Your final question comes from the line of Ben Mogil with Stifel.

So I'll be quick just given time, two quickies, first question is on the liquor in Latin America, can you sell or can you sort of serve and sell liquor in Latin America regarding to the World Cup in particular? And then on the domestic front, when you look at what's going on with AMC, are you seeing any impact in terms of just renovations, are you seeing any impact at all in terms of the zones you guys overlap?

First off in Latin America, we have operated theaters with reclining seats and alcohol sales were probably the last seven or eight, nine years, but again I don't want to give the impression that we're selling alcohol everywhere. It's market by market and also on a reclining seat basis, it's market by market in Latin America just like it is in the U.S. We don't compete a lot directly head on with AMC, like they are into Dallas market and we're into Dallas market, the only place I think we compete head to head is in the San Francisco zone where we have the San Francisco Center and they have the Metreon. And so, just like when we would build a new theater or when they would do something differently, there might be some impact in general in the marketplace but there's not what I call a significant change in the marketplace going on in any of our markets.

Operator, was that our last question?

Yes.

So, thank you for joining us and we look forward for you joining us on our second quarter call. Thank you.