Earnings Call Transcript - CNK Q1 2026

Operator, Operator

Greetings, and welcome to Cinemark Holdings First Quarter 2026 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chanda Brashears, Senior Vice President, Investor Relations. Thank you. You may begin.

Chanda Brashears, Senior Vice President, Investor Relations

Good morning, everyone, and thank you for joining us today to discuss our First Quarter 2026 Results. Our earnings release, executive commentary and 10-Q were issued earlier this morning and are available on our website at ir.cinemark.com. Today's call is being webcast with a replay and transcript available on our website after the call. Before we begin, I'd like to remind everyone that during this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Forward-looking statements are subject to risks and uncertainties that could cause the company's actual results to materially differ from those expressed or implied. The factors that could cause results to differ materially are detailed in our most recent annual form report on 10-K as well as with the SEC and available on our website. Also today's call will 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 website's most recently filed earnings release 10-Q and on the company's website at ir.cinemark.com. Joining me this morning are Sean Gamble, President and CEO; and Melissa Thomas, CFO. Consistent with last quarter, Sean will provide some brief introductory remarks, and then we'll turn it over to Q&A. Sean?

Sean Gamble, President and CEO

Thank you, Chanda, and good morning, everyone. The first quarter of 2026 marked our strongest first quarter since the onset of the pandemic across all revenue categories and adjusted EBITDA with meaningful year-over-year top line growth and margin expansion. Worldwide revenue increased 19% versus 2025 to $643 million. Adjusted EBITDA grew 143% to $88 million, and our adjusted EBITDA margin expanded 710 basis points. Our results are indicative of our team's ability to effectively capitalize on a strengthening box office environment, while continuing to derive benefits from our sustained efforts to deliver unmatched entertainment for our guests, build audiences, grow new sources of revenue, strengthen our operating capabilities and optimize our circuit. As described in greater detail in our executive commentary that we published this morning, we believe our standout first quarter performance is the byproduct of strong operational execution and our advantaged market position, which continues to be reinforced by our ongoing investments and strategic initiatives. From an execution standpoint, we achieved significant year-over-year box office growth and sustained the sizable market share gains we've achieved over the past several years through impactful programming actions and far-reaching marketing strategies that boosted attendance. As a more compelling slate of films was released into our theaters, we were able to leverage our extensive consumer marketing network and sophisticated scheduling tools to help amplify film awareness and optimize screen utilization to drive ticket sales. Furthermore, actions we pursued to increase engagement and stimulate food and beverage consumption drove record high concession sales and diligent labor and overall cost management, combined with improved operating leverage contributed to our significant margin expansion in the quarter. Complementing our execution, the initiatives we are pursuing to drive incremental growth and productivity continue to position Cinemark for long-term success. These initiatives include a wide range of actions focused on sustaining our high-quality theaters, expanding premium amenities and leveraging new technologies to further advance our operating capabilities. Examples include sustained investments we're making in enhanced screen formats, laser projectors and motion seats as well as the overall upkeep of our theaters to ensure our guests enjoy a premium experience at Cinemark regardless of which auditorium they choose. Additionally, we continue to actively expand data-rich tools and automation throughout our operating practices to strengthen our decision-making, enhance our customer journey and improve process efficiencies. As we look ahead, we maintain our confidence in Cinemark's long-term growth prospects on account of our solid financial position, distinct competitive advantages and the multitude of opportunities we have to drive incremental value. Furthermore, we are highly encouraged by continued positive momentum in our industry's core fundamentals, namely sustained consumer enthusiasm for larger-than-life cinematic experiences, strength of upcoming film content and robust studio support of theatrical exhibition. These fundamentals were recently reinforced by moviegoing results in the first quarter and at CinemaCon last month as filmmakers and studio executives reaffirm their steadfast commitment to theatrical experiences, and showcased a diverse and plentiful volume of compelling films that will be released over the coming years. Moreover, there's been constructive progress over the past several weeks in expanding the theatrical window which is an important factor in the long-term health of the film ecosystem. So we remain bullish on our future, and we are thrilled with the strong kickoff to 2026 as well as the promising lineup of films on the horizon, particularly in light of last week's successful opening of Michael, and this weekend's highly anticipated release of The Devil Wears Prada 2. Operator, we'd now like to open up the line for questions.

Operator, Operator

Our first question today is coming from Robert Fishman of MoffettNathanson.

Robert Fishman, Analyst

A couple for you guys. Sean, we've been debating windows for many years now. So I just would appreciate your updated thoughts after talking to all the studios at CinemaCon about the value that they see in 45-day windows. And do you expect a return of consistent minimum windows to help improve the overall moviegoing habits and how we should think about the impact to film rental costs, would be the first one to start with, please.

Sean Gamble, President and CEO

Sure. Thanks for the question, Robert. As we've talked about before, following all the evolution that's taken place with the theatrical window and both the length and variability over a pretty short period of time following the pandemic, there has been a lot of ongoing discussion between studios and exhibitors as we've been evaluating the impact of that on consumer behavior. So your question on the value they see in 45 days, I think there's recognition that the shortened window has been creating headwinds in full attendance recovery, particularly for smaller titles and more casual moviegoers. So I think this is a big step in terms of course correcting what may have over-indexed in terms of reducing beyond 45 days and now shifting back to that. So we see all these announcements as a really positive step forward. I think, again, there's recognition not only by studios, but by the wider creative community as well that this is a necessary step to help sustain long-term industry health. I think the impact of that change still remains to be seen. We have to watch what that does over time. It's not a precise science trying to measure how much of opening weekend attendance has been affected by the window, but we all believe that this will have a meaningful improvement in moving the needle in a further positive direction. So it's something we will be watching to improve. As far as film rental rates go, there's a lot of factors that go into film rental discussions. The short answer is we don't expect it to impact film rental. I view the recent shifts in windows as an important reset in the right direction based on the sizable reductions that may have gone a bit too far over the past few years. While this progress definitely represents significant improvements even at 45 days, the window is still down approximately 40% from the pre-pandemic norm. Most of those film scales were predicated on an environment that preexisted before the pandemic. So we don't expect a material impact as a result.

Robert Fishman, Analyst

Okay. Maybe, Melissa, your Movie Club now drives about 30% of your box office. So just wondering how do we see the demographic breakdown of Movie Club and the frequency of returning to the movies for your members and how that might differ from just regular moviegoers? I know you referenced that Global Cinema Federation study, the success of the younger moviegoing habits, but what can Cinemark or the industry do to bring back older moviegoers?

Sean Gamble, President and CEO

I'll take that one, Robert. As far as the profile of our Movie Club members, I would say it largely is consistent with just general demographics of moviegoers on the whole. I think it is a program that is one of the examples that helps not only for younger audiences, but older audiences alike. And your question on what can we do to bring other audiences back: we continue to see that as we get new members into the program, their moviegoing frequency increases, and that spans all age ranges, which is part of the reason why it's such a valuable program and guests find tremendous value in it. So not only do they come more, they upgrade more, they buy more food and beverage and are some of our most satisfied guests. So that's one of the things. Beyond that, and this goes beyond the Movie Club question, I think it extends into the profile of films that are getting released. I think this year, it's probably one of the most diverse slates we've seen for a while. So as more of that content comes that appeals to other types of age ranges and that's more sustained, that should help. And then our marketing efforts, too. We continue to increase the sophistication of our marketing efforts to really target different consumer categories and really speak to what is motivating to them. Certain things that may appeal to younger audiences, we will craft messages one way and other things we'll craft differently for older audiences. So there's a range of things. We're thrilled with Movie Club's success. Again, it really spans all age brackets.

Operator, Operator

Our next question is coming from David Karnovsky of JPMorgan.

David Karnovsky, Analyst

Maybe following up on the first question. Sean, I wanted to see if post CinemaCon you see any traction in terms of getting the studios to space out their releases and getting more back to a pre-pandemic pattern, just kind of noting some of the still kind of large gaps in programming like in the winter or late summer.

Sean Gamble, President and CEO

Sure. Yes, it's another great observation, David. And it's probably the next piece of the puzzle to continue to make progress on. We've seen volume continue to recover. That's made leaps and bounds from where we were a few years ago. We've obviously just had the recent news on windows, which we think is great progress in terms of supporting a healthy theatrical exhibition ecosystem. The other piece is just the cadence of movies because this does tend to be a momentum business where people go, have a good time, see what's coming up, and come back. When there are gaps, that can disrupt momentum and then we have to reboot the engine again and again. This year, I'd say we have a little bit of that clumping in the summer months and at year-end. I think coming out of CinemaCon, at least beyond just talking about it, when we looked at what is currently lined up for the first quarter of next year, assuming release dates hold, the first quarter looks far more robust than we've seen in prior years, the first quarter of 2027, I mean. So we've seen some clumping and we had wished some of the stuff programmed in the summer would have been spread earlier in the year. We saw more of that this past CinemaCon. Hopefully, that will continue to stretch out over the full year, and that will be beneficial to the industry.

David Karnovsky, Analyst

Okay. And then in the prepared commentary, you spoke to marketing and the resonance of some of the direct-to-consumer brand programs. I'm curious if the traction here changes your long-term view at all of market share gains, per caps or even other revenue, assuming customers might be more inclined to buy tickets through Cinemark rather than a third party. And then just for Melissa, given the marketing runs through film rent, is it possible to quantify at all some of the added expense you've incurred here?

Melissa Thomas, Chief Financial Officer

Yes. Thanks for the question, David. On the marketing front, we have leaned in there. We've stepped up our investment post-pandemic. We have seen some nice successes, and our marketing efforts span across both the admission side as well as the food and beverage side. We do think that we have been seeing benefits there, and our market share reflects those benefits. You saw us even in Q1 maintain elevated market share in the quarter, and that was flat year-over-year despite a challenging comp. There are a number of factors across our business beyond marketing driving growth across market share, average ticket prices and our per cap. It's a combination of marketing, loyalty, our showtime optimization as well as our investments in our circuit that we've been doing on an ongoing basis. So I wouldn't call out one area specifically, but we have made significant progress on the marketing side, and I do think you're seeing that in the results. For investment going forward, not only have we had a step-up since 2019, but as you look at full year 2026, I would expect our marketing as a percent of revenue to increase year-over-year based on the returns we've been seeing to date. We continuously calibrate that spend as we're monitoring our returns and adjusting our mix based on what we're seeing in the data, but feel really good about the progress we've been making there.

Operator, Operator

Our next question is coming from Eric Handler of ROTH MKM.

Eric Handler, Analyst

Thanks for the question. Sean, Cinemark has always prided itself on having a wide range of offerings across premium and baseline pricing. I'm curious, with this week's Wall Street Journal report having a competitor charging $55 for IMAX film streamings for Dune 3 in this opening weekend, how do you feel about price sensitivity from consumers? And do you have a $55 ticket presale for Dune 3?

Sean Gamble, President and CEO

Well, the short answer is we don't have that for Dune 3. As far as pricing more broadly, the way we look at it is on the unique profile of each theater and expectations of our guests with the overarching objective of maximizing attendance and box office and food and beverage incidents and total revenue, while ensuring our guests perceive strong value in their experience to encourage repeat visitation. Through our pricing team and analytics, we found that approach has served us well. When you look at our attendance recovery compared to the industry and our growth in concession per cap year-over-year, we think that's working. To the extent we were to pursue something in that direction, we would do so very cautiously to gauge the impact it has on guest value perception, visitation frequency and our overall Cinemark brand proposition.

Eric Handler, Analyst

That's helpful. And secondly, looking at your concessions line, you've seen really good increases in per cap spending. Merchandise, I'm seeing more and more of in my local Cinemark. So I'm curious how much of the lift is driven by merchandise versus sort of the core food and beverage product?

Melissa Thomas, Chief Financial Officer

Thanks for the question, Eric. On the per cap side, domestic per caps were up 7.5% year-over-year. That's largely driven by strategic pricing, which is the majority, followed by higher incidents and then a shift in product mix. This quarter, the product mix favorability was predominantly driven by a shift into larger sizes within our core offerings, specifically fountain beverages and popcorn. That was offset in part by a lower mix of merchandise, driven by the film content in the quarter. If you look at the relative mix year-over-year and what lends itself to movie-themed merchandise, we had a lower mix of merch in the quarter. So other factors are driving per cap. As you think about the balance of the year, however, we do expect, based on the film slate, meaningful merchandise opportunities ahead, and we would expect that to be an increasing part of the mix and a key driver of per cap growth for the balance of the year.

Sean Gamble, President and CEO

And I would just add, last year, merchandise was up about 40% year-over-year. So to Melissa's point, we continue to see growth over time. We expect to continue to see further opportunity as it's something that fans continue to embrace and it enhances the overall experience and event of coming to our Cinemark theaters.

Operator, Operator

Our next question is coming from Mike Hickey of StoneX.

Michael Hickey, Analyst

Great quarter, guys. Congratulations. Just two from us. Sean, I guess, CinemaCon was pretty exciting this year. Hot topic was the Paramount, Warner Bros. deal. Obviously, there's an industry view that I think most exhibitors are subscribing to. But just curious with David's presence at the show seeming pretty meaningful, and I know he was really messaging to all of you that he's going to deliver on film volume and committed to that 45-day window. Do you think that has any impact on your view of the deal or the industry's view of the deal? And on the concession side, what do you think is really achievable on a deal that everyone kind of thinks is going to get through? I have a follow-up.

Sean Gamble, President and CEO

I'm sorry, could you clarify that last piece of the question, Mike? I missed that.

Michael Hickey, Analyst

Yes. I think there's obviously pushback from the industry, and there's the view that it's intended to drive some level of concessions in terms of commitments, whether it's film volume or window or marketing. I was just wondering what's actually achievable there in your view?

Sean Gamble, President and CEO

Got you. Let me start, and then you can tell me if I captured it fully. Paramount is a great partner to exhibition. They've been for many years. It was a nice step that David came out to CinemaCon to speak directly to the wider exhibition community. I think the positive thing is they're saying all the right things regarding their future intentions for film volume and windows in a combined company, which is a great start. That said, similar to the wider community, we'd like to see those statements backed by firm commitments to ensure there is follow-through and that leads to the preservation of a healthy and sustainable theatrical and film ecosystem going forward. That's the big piece and what the industry is seeking out of this.

Michael Hickey, Analyst

Okay. I think that works, Sean. The other is on Netflix. I think Ted showed up, which was great. He made a statement post the deal that obviously didn't go Netflix's direction. Just curious your conversations with him or the broader Netflix team, whether it's at CinemaCon or before or after. They gave themselves an off-ramp from their prior philosophy on theatrical when they were romancing the Paramount, Warner Bros. deal. Now that that's gone, there's still the formation of that ramp. Do you see Netflix becoming or wanting to be a more constructive partner with exhibitors? Obviously, Stranger Things and other one-offs have been successful. The key here is the theatrical window. Do you feel like there's some momentum to move in the right direction?

Sean Gamble, President and CEO

Thanks, Mike. It was great to see Netflix and Ted personally take the time and initiative to come to CinemaCon. I would categorize the discussions as productive and opening the door to the possibility of greater collaboration down the road. As you mentioned, they're pleased with the recent successes they've had in theaters with their Stranger Things finale and K-pop Demon Hunter sing-along, and they've expressed a desire to explore more of those types of events as well as possibilities for film releases. That's a step in the right direction. While I don't necessarily anticipate any type of material shift on their part in the near term following that meeting, we do continue to believe there's mutual opportunity in partnering together and remain optimistic that they will pursue a more meaningful venture into theatrical distribution over time.

Operator, Operator

The next question is coming from Drew Crum of B. Riley Securities.

Andrew Crum, Analyst

Sean, you highlighted the success of your PLF screens in the last few quarters. As you look ahead and continue to invest, is there an optimal mix of PLF screens versus standard screens you see for your circuit? And what is the time frame to achieving that?

Sean Gamble, President and CEO

Sure, Drew. Good question. One of the governors on large screen format and enhanced format screens is the size of the auditorium and size of the screen. You have more flexibility if you're building a brand-new venue. With existing theaters, you need to make sure it delivers the appropriate level of enhanced experience. On the whole, we still have about 6% of our screens in the PLF category. There's more runway there—we've announced more XDs and more ScreenX, and we're adding a few more IMAXs. We continue to see opportunity. The overall extent is capped by how many screens can fit premium amenities. There's a growing appetite for enhanced formats by certain moviegoers, but others don't prefer to pay the upcharge. Striking the right balance is important. By and large, PLFs generate about 15% of box office, so 85% of overall box office is from other screens. It's still relatively small in the whole scheme of things, and we have to bear that balance in mind while offering a range of options to consumers and how those things get marketed.

Andrew Crum, Analyst

Got it. Okay. And then, Melissa, you highlighted in the deck a marginal 3.5% increase for salaries and wages expense against a much higher attendance figure. As you look at the middle of the P&L and aspire to achieve discipline around spending, what areas do you see where you can achieve or drive further efficiencies?

Melissa Thomas, Chief Financial Officer

Thanks for the question. The key areas we're focused on from a cost management perspective are salaries and wages and concession COGS. Those are two key areas where we've been driving efficiencies and have seen success. For labor, we aligned staffing levels and operating hours in response to consumer demand, effectively managed wage rate inflation, and delivered on labor productivity initiatives. Looking forward, labor hours and wage rates will be the key factors. We'll continue to flex labor hours up or down based on projected attendance and operating hours, though not necessarily at the same rate, and we'll try to drive efficiencies within those hours. For modeling purposes, note that in Q2 last year we had a significant overperformance from Minecraft, which resulted in fewer labor hours than would typically be expected for that level of attendance, so there will be a tougher comp for salaries and wages in Q2 on a year-over-year basis. Wage rate inflation is expected to remain a factor, but we'll try to offset some of that with productivity initiatives. On the international side, particularly Latin America, we've seen government-mandated wage increases that have exceeded inflation, putting pressure on that line item. On the COGS side, we've been active on strategic sourcing. We made changes to our distribution model, expanding product selection and lowering product cost. We've also been consolidating our vendor base to leverage scale and competitively source products. Lots of efforts to combat inflation.

Operator, Operator

The next question is coming from Omar Mejias of Wells Fargo.

Omar Mejias Santiago, Analyst

Sean, maybe first on M&A, there's been recent media reports of potential consolidation activity in the space. Without getting into specifics, how are you thinking about your appetite for accretive opportunities right now? When you evaluate deals, are you more interested in circuit-level pickups or something larger, more transformative?

Sean Gamble, President and CEO

Sure. One of the areas of focus as we position ourselves for success is optimizing our footprint, and that includes growing, recalibrating and strengthening our circuit as appropriate. M&A is part of that equation and it's on the table. We look at all prospective opportunities and tend to target high-quality assets with solid assured returns. We prefer deepening penetration into markets where we already have some presence because that leverages our established infrastructure and market knowledge, but we also consider scale, strategic importance, competitive positioning and margin profile. Ultimately, our goal is to create value for shareholders. As for tuck-ins versus transformative M&A, it boils down to the deal economics. There's probably more inclination to move on tuck-ins that can move a little faster, but it depends on the specifics.

Omar Mejias Santiago, Analyst

That's very helpful. Sean or Melissa, on Latin America, attendance and results were a bit below expectations. Just wanted color on how much of that was the slate not resonating versus anything you're seeing on the consumer side? With the Q2 slate ahead and the rest of the year, how does the slate look for that Latin American audience?

Melissa Thomas, Chief Financial Officer

Thanks, Omar. For international in Q1, what you saw in our results is essentially the film content simply didn't resonate as well in the region in the first quarter. That happens from time to time and it impacted our margin. That said, our team delivered results in line with Latin America benchmarks. Looking forward, we feel good about the slate for the remainder of this year for Latin America and believe it will resonate well. Titles like Toy Story 5, Spider-Man, Avengers, Minions and Michael are all anticipated to deliver strong box office in LatAm. We also have another title from the Insidious saga this year, which typically performs well in the region. Certain films such as Odyssey or Supergirl, Cat in the Hat, Dune 3 might not index as favorably as in the U.S., but we also have local content internationally—less visibility there yet into major contributors, but there's always opportunity for a breakout film. On balance, I attribute Q1 to a film slate that didn't resonate; balance of year we feel optimistic.

Operator, Operator

Our next question is coming from Chad Beynon of Macquarie.

Chad Beynon, Analyst

Great to see you all at CinemaCon. Melissa, you've touched on this a little bit throughout the call regarding cost items, but approaching it from a different angle with respect to the Middle East conflict and gas prices, we saw some big fluctuations even this week. How are you thinking about the impact from this if that continues, either domestically or internationally? Are you starting to see some of your vendors pass through these costs of delivering goods or anything else that goes into the margin?

Melissa Thomas, Chief Financial Officer

Thanks, Chad. On the cost side, we do benefit from contractual structures that provide some protection for rising gas prices, though there are elements of fuel charges in select agreements. To the extent higher fuel costs have an impact, it would most likely show up in our cost of goods sold line item. At this point, we wouldn't expect it to be material, and we're not seeing those costs come through broadly. So I would say we're not expecting it to be material or have a big impact.

Chad Beynon, Analyst

Okay. Great. And then one of the big takeaways from CinemaCon was around renewed interest from the Gen Z age group. Outside of just the content coming out, can you talk about some of the things Cinemark is doing to better attract and retain some of these customers that maybe haven't been as frequent in years past?

Sean Gamble, President and CEO

Sure. One of the biggest things we've done recently is launch our first-ever Cinemark brand campaign called 'It's Showtime' late last year. That was structured with an eye toward younger moviegoers to showcase the freshness and fun of moviegoing and specifically at Cinemark. We're using that strategically as part of our overall marketing to speak to that audience. Along those lines, our social media efforts use influencers, which resonates with that audience in particular. We also calibrate media spots and run personalized emails based on guest attributes in our direct communications network. When they're in our theaters, we offer things that appeal to them, whether that's food and beverage or premium amenities. As we roll out motion seats, large screen formats, ScreenX and other premium options, those speak to younger audiences and are working well. All those things, combined with appealing film content, help attract these audiences.

Operator, Operator

Our next question is coming from Patrick Sholl of Barrington Research.

Patrick Sholl, Analyst

So following up on an earlier question, do you have any sense on the extent of the audience that with shortened windows was staying home? Or is that hard to tease out?

Sean Gamble, President and CEO

It's difficult to fully pierce that out. One thing we've seen is week-to-week patterns of film releases have held relatively consistent to pre-pandemic characteristics, which is positive. But the overall opening that then plays through that pattern is where the challenge has been. As we said, we've seen the effect across all categories of moviegoers, particularly pronounced in more casual moviegoers who come only once or twice a year and on smaller films. Those areas of the audience have perhaps been more affected, but it's cut across the board. The hard part is there's a big unexplained gap in attendance recovery. When you go through all the potential causes, everything points to windows, which is why we're encouraged by recent changes, but singling out a specific audience area is difficult.

Patrick Sholl, Analyst

Okay. And then just on the concession side, could you talk about the breadth of the wide release slate that you offer merchandise for and how you would expect that to trend as film volume increases? And maybe just the overall contribution from merchandise in concession spending.

Sean Gamble, President and CEO

Sure. I'll start. As Melissa referenced, merchandise has been growing in appeal and represents a revenue opportunity and helps eventize going to the cinema. It's largely tethered to film content. We do sell a range of other items—Cinemark blankets, brand apparel, nostalgia T-shirts—but the big drivers of growth are new releases. This quarter's performance was driven by the film mix; last year the films released lent themselves more to merchandise than this year's first quarter. Over the course of the year, though, the slate is quite robust for merchandise opportunities. It's something we're leaning into more and expect to continue. Based on what we saw at CinemaCon and the trends in studio investments, much of it lends itself well to merchandise, including tentpole blockbusters and other categories that can resonate strongly.

Operator, Operator

Our next question is coming from Stephen Laszczyk of Goldman Sachs.

Stephen Laszczyk, Analyst

Sean, I wanted to get your latest sense and see if you could talk a little bit more about what you're seeing out there on the competitive front in the markets you're operating in. Specifically within those markets, how is what you're seeing influencing decisions around marketing, pricing at a market-to-market level and strategic investments on the CapEx side?

Sean Gamble, President and CEO

Sure. The competitive environment continues to get stronger, which isn't necessarily bad. This industry can be one where, in certain circumstances, all boats rise together. To the extent peers deliver a positive moviegoing experience, that bodes well for the industry. Others are leaning into premium amenities and stepping up marketing to attract people, and that helps overall demand. We feel in an advantaged position because of work we've done in recent years—we have a head start, which shows in market share, attendance and performance results. We haven't stopped; we continue to advance programming, marketing, pricing, scheduling and other initiatives. For us, it's about keeping that lead and continuing to gain it even as competition strengthens.

Stephen Laszczyk, Analyst

Great. And then maybe just a follow-up for Melissa. Could you unpack with more detail the drivers around utilities and other and SG&A expense increases in the first quarter? How should we model those line items across the rest of the quarters?

Melissa Thomas, Chief Financial Officer

Sure. Utilities and other were up primarily driven by the increase in attendance as many of those costs are variable or semi-variable in nature—credit card fees, janitorial, repairs and maintenance, electricity costs. You'll see that uptick and it's primarily attendance related. Looking forward, we expect those costs to scale with anticipated attendance growth for the balance of the year, and from a rate perspective, we expect electricity costs to be higher reflecting market rates. On repairs and maintenance, we expect repairs and maintenance to remain elevated as we address deferred maintenance across the circuit. We don't expect a meaningful year-over-year impact because we started those efforts last year, but there could be quarterly timing variability. Other factors include fixed costs like property insurance and real estate taxes, which are subject to broader market dynamics. We're focused on disciplined management, particularly usage related to electricity. On G&A, excluding stock-based comp, G&A was up about 2% globally driven by wage and benefit inflation and targeted investments in headcount and capabilities, including a shift to cloud-based software to support initiatives. Those impacts were partially offset by lower professional fees. Going forward, we expect continued impact from merit increases and investments in talent, though variability in professional fees and incentive comp may offset some of those increases. We remain disciplined and are not expecting meaningful increases overall.

Operator, Operator

Our next question is coming from Eric Wold of Texas Capital.

Eric Wold, Analyst

I want to take that last question to a higher level. Knowing that recovery in attendance, box office and concession spending are the biggest drivers to pushing your margins higher toward pre-pandemic levels, I'd like a high-level sense of where you see margin leverage this year on that revenue growth as we get back towards a $10 billion box office environment given labor, utilities and inflationary headwinds that may push back versus what you may see in a more optimal recovery environment?

Melissa Thomas, Chief Financial Officer

Thanks, Eric. We expect to gain the most leverage against our fixed expenses, particularly on the U.S. side where facilities lease expense is primarily fixed, as well as G&A expenses. Those are primary areas we expect leverage. Beyond that, we've discussed different expense impacts across the P&L, but stepping back, we've been delivering strong margins despite inflationary pressures because of offsets and top-line growth from food and beverage per cap and average ticket, as well as maintaining market share gains. We'll continue to focus on growing the top line, which will give us leverage, and try to mitigate expense pressures. Overarchingly, we expect box office and attendance to improve year-over-year, supporting margin expansion, and we'll continue to focus executionally on getting the most leverage from that growth.

Operator, Operator

At this time, I'd like to turn the floor back over to Mr. Gamble for closing comments.

Sean Gamble, President and CEO

Okay. Thank you, Donna, and thank you all for joining us this morning. We appreciate you taking the time to participate today. We look forward to reconnecting in a few months to share and discuss our second quarter 2026 results. I hope you all have a wonderful weekend. Thanks.

Operator, Operator

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.