Q1 2021 AMC Entertainment Holdings Inc Earnings Call
Yeah.
Hum.
Okay.
Okay.
[music].
Since at any time, please press star Zero as a reminder, this call is being recorded today Thursday may six 2021, and I'd now like to turn the call over to John Merriwether, Vice President Investor Relations.
Thank you good afternoon, and I'd like to welcome everyone to Amc's first quarter 2021 and earnings webcast with me. This afternoon is Adam Aron, our President and Chief Executive Officer, and Sean Goodman, Our Chief Financial Officer.
Before I turn the webcast over to Adam.
Let me remind everyone that some of the comments made by management today.
During this webcast may contain forward looking statements that are based on management's current expectations numerous risks uncertainties and other factors may cause actual results to differ materially from those that might be expressed today.
Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-Q.
Several other factors that will determine the companys future results for beyond the ability of the company to control or predict.
In light of the uncertainties inherent in any forward looking statements.
Listeners are cautioned to not place undue reliance on these statements.
The company undertakes no obligation to revise or update any forward looking statements, whether as a result of new information for future events.
On this webcast, we may reference measures such as adjusted EBITDA free cash flow adjusted free cash flow and constant currency, among others, which are non-GAAP financial measures.
For a full reconciliation of our non-GAAP measures to GAAP results. Please see our earnings release posted and the Investor Relations section of our website earlier today.
After our prepared remarks, there will be a question and answer session.
This afternoons webcast is being reported and a replay will be available and the investor Relations section of our website at AMC theaters Dot com later today.
With that I'll turn the call over to Adam.
Thank you John.
And good afternoon, everyone.
Thank you for joining us today.
For the last year.
And have started all our AMC earnings webcast and all our internal employee meetings by expressing my sincere wishes for you and your families along with your colleagues and friends.
All have been and are now still in good health and these challenging COVID-19 times today is no different.
So.
Do hope.
But you all are well.
But with 250 million vaccination doses already and the arm and the United States.
And more than $1 2 billion doses.
Of the vaccine having been administered globally.
And given that millions of more vaccine injections are taking place every single day, both at home and abroad.
This just may be the last time or.
And we're close to the last time that we feel the need.
To do a preamble on these calls.
And your health isn't that a glorious thing to contemplate.
I watched those vaccination and statistics closely all the time.
Because.
Let's say what it is vaccination is our way out of.
All of this.
Count and the among the many.
Who continue to marvell.
And by the way, that's little M, Marvel as and being amazed not capital and Marvel through which Disney is going to be releasing some extraordinary movies theatrically this year anyway I truly Marvel.
And that every one of us talking or listening today on this webcast.
Our now and our 14th or 15th month.
Of living through this real life horror show repeat of the Spanish flu epidemic of 1918 and 1919.
I doubt that anyone.
Anyone on this call really expected that ever in our lifetimes.
And we have to deal with something this bad.
Which is so disruptive to what we think of as normal living.
And to do that for.
For so long.
Before I leave the vaccination issue, though which is so critical to AMC recovery for obvious reasons.
And I said, a few months back that Albert boiler.
CEO of Pfizer.
Might just be the most important human and directly to comeback and the immediate future of the entire cinema industry.
And I meant that then and.
And that still today.
Although he may have to share some credit with Madonna and others and pharma.
And as well as with those and the Trump administration related Darrin commitment to operation Warped speed.
But today, we also are so incredibly grateful to the new bonds and illustration.
And for getting the vaccine rolled out and in arm to so many Americans so quickly.
The U S is conquering a mind numbing logistical challenge and the country doing so is a major reason why.
I am truly and absolutely.
Optimistic.
Hopeful and confident.
And AMC is recovery.
Turning more directly to AMC.
As I look back on the Odyssey of the past year for AMC.
There's just no other way to say it.
And this.
It is simply and utterly astonishing.
With AMC has accomplished since March of 2020 astonishing.
It should take your breath away, it's certainly did mine.
And.
And I say that.
Not trying to.
And any sense of braggadocio, it's just the truth.
And even as we say that when we look back and what we've accomplished in such challenging times.
We were not wearing rose colored glasses, we're not sugarcoating a reality.
We know that AMC is losing money today, not making money today.
And we know too.
And our so very well aware.
That there is enormous work ahead for us to steer AMC.
Through to a recovery.
But what gives us the confidence that recovery is finally and our reach.
And then going forward, we will maneuver our way to get AMC through these waters.
Is this.
Just look.
And what this management team.
Already has pulled off.
And these.
Unparalleled times.
At AMC, we were within months or weeks of running out of cash.
Five different times between April of 2020 and January of 'twenty one.
There are a lot of smart people on this call and many of you we're certain.
And that AMC would collapse y.
To use a billiards metaphor.
<unk> to succeed.
We would have had to run the table.
And 10 times and our ROE.
We would've had to execute flawlessly.
And on so many different dimensions.
But thats the thing here.
And AMC, that's precisely what we did.
My goodness, the strength and circumstances of AMC are so much radically different and radically improved on may six than.
And then they were just months ago on November six for December six are on January six.
Six months ago in this very quarterly earnings call Forum.
I was quoting Winston Churchill's famous we will fight on the beaches speech.
To discuss the war time mentality that we had at AMC to successfully tackle are seemingly to many insurmountable challenges.
Well, we know where the benefit of hindsight.
Sir Winston one his war.
And we have every confidence and looking ahead.
And that AMC will win hours.
We certainly are well on our way.
Here's where we've ended up.
Coming out of Q1.
And moving into Q2 and.
And calendar year 2021.
As of March 31, 2021.
We are strong.
Almost all of our U S theaters are now open and.
And ever so and importantly, our theaters and New York and Los Angeles are open.
And we're in both markets.
<unk> is the number one player and.
And which together represent about a third.
Of our total U S business activity.
And our market share and the United States has soared.
Increasing by about 25%.
Compared to pre pandemic levels.
Amc's U S market share was about 26, 27% a year back.
Recently, we've enjoyed a share that is more around the 33% level.
We've taken share from those who stayed closed.
For those who've gone bankrupt or those as marketing prowess as not as imaginative as that of AMC.
Or from those theaters are not as nice as ours.
Given our substantial reinvestment in them over the past many years.
And even as others finally reopen.
And the movies being released to theaters and May June July and beyond.
And critically important too.
Critically important.
For AMC at the end of two one.
AMC had more than $1 billion.
Other immediately available liquidity.
That is the highest quarter and liquidity.
That AMC has ever had.
And our entire 101 year history.
And our new equity raised announced just last week.
We had already brought in another $153 million and.
And an average share price of 985 per share as of yesterday.
And just five trading days.
But and number is now $172 million in the door for AMC.
As of market closed today.
This takes our total amount raised to approximately $2.9 billion and fresh equity and debt capital.
And over the last year.
Including the conversion of $600 million of convertible notes into equity at a price of $13 and 51 per share.
And wait and hear this literally tomorrow for.
Friday may seven.
We will cross the 2 billion dollar Mark.
Of cash raised for equity or debt about for this or that being equity rather than that.
Since December 14th.
2020, only five months ago $2 billion in the door.
Boosting our liquidity since December 14th.
And that's in addition to all that we did from a capital perspective between April and November of 2020, which was about another 2 billion and edition.
Spelled out in more detail and our press release today.
And above all else.
Buildup liquidity bolstered cash.
Cut spending differ obligations renegotiate theatre leases from our landlord community, who I might tangentially ad.
Heroically really had our back in 2020.
And to whom we are ever so grateful now and will be perpetually grateful too.
As we return to our former self.
But the lift continues we had to raise equity and debt all the while deleveraging to the tune of some $1.255 billion and debt that was either for given by our lenders or.
Our converted and instead to equity.
Why am I sharing all of that.
With you now today.
Well some of this new information for many of you.
And some of it you already know.
But in a simple summary.
Here's the point that I've been trying to make.
When you look at it all.
As one interwoven tapestry.
Our dedicated experienced AMC management team and employees.
And coupled with the biggest and best collection of theatre assets in our industry, both in the U S and globally.
Had enormous challenges to deal with in 2020.
And we performed beyond all expectations.
Over the past year.
Of course, it's clear that challenges and new.
Are still out there are plenty.
For AMC to deal with.
Our recovery and the movie Theatre industry has not yet started.
It's just about to start.
You can feel it you can taste. It you can see it just over the horizon.
But it hasnt actually started yet and.
And literally no one knows what the pace faster slope of that recovery will be.
It's clear to us.
That there'll be much more flawless execution needed and items at AMC and by AMC to energize this recovery.
And to benefit from this recovery.
But think about all of this.
With passion and the energy that drive the creativity the work ethic, the smarts and the sheer.
Will.
That AMC displayed in 2020.
To make it through this pandemic.
That is precisely what we're gonna display again at AMC and 2021.
And again in 2022.
No resting on recent laurels here.
No taking a year sabbatical.
No coasting.
No mailing and Ed.
We all know.
This is a what have you done for me lately world.
And we will give it our all.
It may.
Make people as impressed with Amc's accomplishments this year and 2021.
And next year and 2022.
As they were with the strides AMC made in 2020.
In November of $19 42.
And two five years before World War, two ended and Europe.
My favorite Winston Churchill setting yet another of his famous speeches.
No.
Now this is not the and.
It's not even the beginning of the and.
And.
But it is perhaps.
At the end of the beginning.
It took him another two and half years.
But sir Winston one his Titanic fight.
Indeed, it's going to take us a while too.
But here me now and write it down and hold us to it.
As you think about COVID-19, its aftermath and the structural changes and our industry that may come our way I believe that AMC will win.
Our award too.
I'm now going to turn the call over to Sean to update you on where we are financially and then we're going ahead pretty quickly.
After that for Q&A Sean.
Thanks, Adam and thank you to everyone for joining us this afternoon and I also do hope that you and your families have been keeping safe and well during this time.
The COVID-19 crisis has continued to severely impact our business during the first quarter.
We ended the quarter with nearly 99% of our U S Circuit open, but we also contended with a combination of significant capacity limitations and reduced operating hours of our own accord to decreased costs for.
Sizable number of our theaters that were closed for much of the quarter.
The continued closure of the vast majority of our international theaters.
And all of this combined with a limited number of new title releases.
So not surprisingly the sole significantly impacted our attendance levels for the quarter.
The very low attendance levels ultimately make this quarters financial results of somewhat limited relevance.
The data is of course school to see and our press release, so I'm really not going to dig into it and much detail on this call and I'll focus my comments with you. This afternoon and stayed on our prospects looking ahead.
But before I do say that I do want to mention too first quarter statistics that are particularly encouraging.
Compared to the first quarter of 2019 before the onset of COVID-19 all.
Domestic average ticket prices were up more than 11%.
And our domestic food and beverage revenue per patron and a very high margin food and beverage business was up more than 45%.
Clearly gas returning to our theaters are eager to participate in the full theatrical experience.
<unk> and enjoyment of our innovative and tasty competition.
The key performance indicators that drove these two improved metrics for the quarter.
<unk> benefited from a higher proportion of evening and weekend shows.
Strategic tickets and food and beverage pricing adjustments the success of our very popular private theatre a rental program.
And increased usage of our mobile and AMC app for both ticket and food and beverage purchases.
We used the time period of this pandemic to rollout mobile food and beverage ordering on our smartphone app and basically all of our U S AMC and AMC classic theaters.
Our industry, leading smartphone app now it makes it so easy to convenient the order food and beverage items at the same time as purchasing tickets for the food and beverage items for the prepared and waiting for our guests EBIT to collect when they arrive at our theaters or delivered to their seats.
And similarly during the height of the pandemic, we dramatically upgraded our mobile platforms for our UK guests the UK being our second largest country territory.
Now moving on from the quarter's results, let's talk more broadly about amc's overall liquidity for.
Financial.
Our financial position and prospects ahead.
And our press release issued earlier today, we provided a comprehensive list of the decisive actions that we took over the last 13 months to improve our liquidity position.
For success in 2021 and beyond.
And these actions included raising $2 $95 billion of capital, which includes the conversion of $600 million of convertible debt to equity that's price of $13 51 per share.
Securing more than $1 2 billion of creditor and landlord concessions.
Obtaining more than $150 million of assistance from European governments, and generating $80 million.
Asset sales.
So as of March 31, we had $813 million of cash $29 million of restricted cash and approximately 212 million and.
Available under our revolving credit facility given that we paid down our revolver balance during the first quarter.
This gives us total liquidity on March 31, 2021 of $1 <unk> $5 billion as Adam said earlier. This is the highest amount of quota and liquidity that AMC has ever had in our 101 year history.
The monthly cash burn in Q1 came out at approximately $120 million per month net.
This is after normalizing for the impact of Capex.
Quarter.
Of course, it goes without saying that with all the data and equity capital for that we raised during the quarter.
Our cash position greatly increased during the quarter not decreased.
As previously announced last week, we launched and at the market or ATM program to issue up to 43 million shares to further enhance our financial strength and strategic flexibility of AMC during what continued to be challenging times.
As of the close of the market today, and just six trading days, we had sold approximately $17 5 million shares for gross price gross proceeds of approximately $172 million and and average price of $9 and 77 per share.
Needless to say from a liquidity perspective has been a good week for AMC.
At the end of the first quarter, we had deferred payment obligations of approximately $470 million. This is up from $450 million.
At the end of Q4 2020.
Repayment terms continue to be an average of 27 months and although a number of agreements have repayment periods that extend through the remaining lease term, which in some cases is well in excess of 10 years.
I remind you that the rent expense shown on the face of the income statement represents our rent obligation for the quarter as opposed to cash rent paid.
For the first quarter actual cash rent paid was approximately $40 million less than what is shown on the face of the income statement.
And while future rent payments will continue to depend on ongoing discussions with our landlords, we anticipate that our quarterly cash rent payments during the remainder of 2021 will be meaningfully higher than Q1 levels.
And also that the cash rent in the second half of 2021 will be higher than the income statement range. Both because attendance levels are expected to increase and we will also be repaying some rent deferred from prior periods.
And.
Shifting to capital expenditures.
As previously stated we have continued to limit capital expenditures to minimum maintenance levels really eliminating all but essential and previously committed capex.
During the first quarter Capex spend was only $8 2 million net.
Net of landlord contributions.
This is $67 $4 million lower than the same quarter a year ago.
As a reminder, net capex for the whole of 2021 is expected to be approximately $100 million.
And going forward, our Capex will ratchet up or down based on the speed of a recovery and we expect 2022 capex to be between 101 hundred $50 million.
These numbers are orders of magnitude below and then the AFC capex programs, two three and four years ago.
Overall, we are and a solid financial position to continue to withstand COVID-19 related disruptions to our business and to capitalize on the expected return to more normal attendance levels later in yet at.
At the same time we.
We believe that it is important to continue to take strategic actions to further strengthen our balance sheet and enhanced our liquidity profile. So as to optimally position ourselves for long term sustainable success and the post COVID-19 world.
With that I'll now pass the call back over to Adam.
Thanks, Sean.
Two very quick points.
For the important points before.
Before we open it up for your questions.
First.
On AMC continuing liquidity.
Let's assume.
That our current 43 million share at the market equity raise continues to go well.
Sure.
Lets also assume that the domestic box office as a proxy for the industry's overall health has some semblance of a recovery starting in the second half.
Of 2021.
How do we define some semblance of recovery.
Domestic box office, meaning the box office for the U S and Canada hitting.
Hitting $5 billion or more in 2021.
And the domestic box office of $8 billion or more and.
In 2022.
How reasonable.
There is an $8 billion placeholder for 2022.
We all have our opinions some more informed and others.
And literally no one knows for sure.
After all 2020 was a disaster.
And there are a myriad of predictions as to how quickly a recovery and movie theatre ticket sales will occur.
Phil.
Reflect on this.
Absent a global pandemic.
The domestic box office has exceeded $8 billion.
Every year.
Between 2001.
And 2019.
19 years and our ROE.
It has exceeded $9 billion.
Every year.
Between 2006.
And 2019.
14 years in a row.
It is.
Ceded $10 billion.
Every year between 2009.
And 2000 1911 years in a row.
And has exceeded $11 billion every year between 2015 and 2019 five years in a row.
And finally also assume that everything else more or less works out along the lines of our current expectations.
In that scenario.
When looking at our liquidity.
We can say now.
That AMC.
We will have materially extended.
Our liquidity runway all the way through the and.
Of 2022.
And given our sizable market share.
Domestic box office, and 2021 above $5 billion.
Our domestic box office in 2022 above $8 billion.
And would put a lot.
Of extra money.
And to Amc's coffers.
Second point.
AMC now has an army.
Of passionate interested individuals shareholders.
Some 3 million strong.
The exact number was $3 2 million shareholders on March 11th.
For the last time, we got and Investor Count.
The owned more than four fifths.
Of our then 450 million outstanding shares as of that March 11th date.
Since then a lot of AMC shares have changed hands.
So we actually delayed our annual meeting of shareholders to July 29.
And with a new record date of June two.
And we will get and updated count of shares outstanding as of that date June two and we'll also get the number of shareholders and their contact information.
And early June.
Yes.
We did all of this and parts of that we could give our current investors.
The opportunity to make their important voices hurt.
So we already know this wealth of for June two.
These individual investors.
Likely hold a majority of our shares.
Day, one AMC.
We work for them.
And I work for them.
So by definition there.
And their interest and passions are important to AMC.
Our interest and passions are important to me.
Many of you remember the extraordinary and heartwarming 1988 movie.
<unk> and the mist.
<unk> for five Oscars Star.
Starring Sigourney Weaver gorillas and the mist showcased the extraordinary life story.
Of American Primatologist Diana <unk>.
For dedicated her life to.
And to saving the endangered gorilla species.
Especially where they commonly reside in central Africa, mostly in Rwanda, and the Democratic Republic of Congo.
With all that support over decades.
The gorilla population quintuple more than quintupled actually.
But even so there are still fewer than 1100 guerrillas alive today.
And this part of Africa.
David and these beautiful creatures and noble goal.
Many of our investors too.
Have embraced Diane losses cause.
And a raise substantial money for it.
Each year AMC.
AMC range as third party money from our suppliers and others and.
Such that our off balance sheet charitable foundation AMC cares can provide financial support.
So worthy causes.
I am pleased to announce today.
That AMC carriers will make a $50000 cash donation.
For the Diane Fossey Gorilla fund.
And I also am pleased to announce today that out of my pocket personally.
I will match that AMC cares donation dollar for dollar.
Bringing the total contribution from.
And from AMC cares.
And for me up to $100000.
AMC is going to become one of only seven.
Platinum sponsors.
For the Dian Fossey Gorilla fund.
The highest tier of their sponsorships.
And I will join its digits society, its highest tier of personal donors.
And the digital society by the way Harold's digit.
Does it was Diane fossey's favorite gorilla.
When she was alive.
Above and beyond those cash donation, we already have started discussing with the FERC fund other ways.
That AMC and vehicle.
Within the boundaries of course with the law.
Integrity and ethics as.
As well as the exercise of wise judgement on behalf of all stakeholder constituencies.
And the free market capital is system.
And the shareholders King.
And as I said before.
The interest of our shareholders that come our interest.
The passions of our shareholders.
But from our passions too.
With that operator, we're ready to go to Q&A.
Certainly and thank you very much.
And I would like to register a question. Please press the one followed by the for on your telephone you will hear us retail and prompt to acknowledge that request is for your question has been answered and you would like to withdraw your registration. Please press the one followed by the three <unk>.
First question comes from Eric Wold with B Riley.
Your line is open.
Thank you.
Afternoon, Adam and Sham free.
I appreciate that thank you for your question.
A couple of questions I guess one.
Maybe as the markets start to reopen a question on your two largest states. How are you incorporating the new social distancing capacity rules, and New York City, and what do you actually need for capacity limits near term and then on California and.
And do you plan and going to 100%.
And our capacity and weren't allowed to and mid June or other.
And local restrictions that may not allow that.
So Eric.
Whatever the capacity limitations are.
There are a lot higher than zero percent, which is where it was.
Slide eight weeks ago and.
And 25%, where it's been recently and 50%.
And New York, especially.
The the capacity we expect.
And that the capacity limit will be removed.
But the enforcement of the six foot social distancing rule, we will continue to be enforced by governmental authorities, which of course, we will respect.
And we've already made the decision and some you know.
And to continue our mandatory map policy.
Deep and over the summer at the very least maybe beyond that.
As we learn more about.
Not the pace of our recovery, but the pace of the nation's recovery from the spread of the COVID-19 vaccine. So.
I think clearly capacity limitations are going up.
IRA.
It is true and New York, Thats true and La <unk>.
We intend to be very cautious.
I am immensely proud.
Of how much effort AMC put into AMC safe and clean.
But we opened our theaters back in August.
And we still have not heard of one documented case.
COVID-19 being transmitted.
Guest the guest.
And our theaters.
That's so and Thats such attribute.
Through our people at our theaters, who work so hard to operate their theaters cleanly.
Operator, there are theaters responsibly operate their theatre safely.
With with this.
Our commitment to safety.
And at.
And extraordinary expense I might add that AMC has shown over since.
Last August.
Protocols that we started working on last May.
And we're not.
We're not about the blow it now.
Bye.
Taking unnecessary risks.
So.
We will.
Paul the science very carefully.
We're listening to our Harvard faculty very carefully.
It's interesting that.
The people, we've been working with a per school of public health.
We're so far ahead of the rest of the country.
That airborne and transmission.
Was the real thing to worry about here rather than.
So Mike touch and.
And Youll recall back last spring and the whole world.
Worrying about what you touched.
And in fact, we were out buying.
<unk>.
Of Merv 13.
Air filters for our HVAC systems.
Thus we were way upfront.
That in addition to cleaning and sanitizing and wipes and gels and.
Masks and social distancing boy, we needed high Tech solutions too to make sure that the.
And the transmission of the virus through the year was.
Was greatly minimized and <unk>.
AMC so low.
Looking ahead I am sure that capacity limits are going to rise all across the country.
We all know what president and finding the third fourth of July is going to be a great weekend and the United States. He says.
We know that there were 250 million injections.
And arm and the United States 48 hours ago.
And there are more than that today and.
And they've got a lot more than that by the end of may and by the end of June.
And all of this bodes well for us.
Taking capacity levels up.
But we're only going to do it safely we think are our associates deserve it.
And our customers deserve it and the other thing to remember.
And our case.
We have the opportunity.
To be.
And so forgiving on capacity limitations.
Because as you have heard me say before.
We only sold so we saw more movie tickets than anybody in the world and we only sold 17% of our available seats and 2019, we have so many showtime's where these capacity limitations.
<unk> cost us.
<unk>.
So that's how I'd answer your question, we're upbeat capacity limits are going to rise.
And jurisdiction and after jurisdiction and month to month as vaccinations rise as the infection spread diminishes.
Thank you and maybe just one more if I may I guess.
<unk>.
Talk about what Youre seeing and the current labor market and.
And hiring R&D employees to come back to the theatre are you needing to push up wage rates and I'll do track workers and then taking.
And taking it from the reverse.
Obviously, you are trying to get out of this.
Pandemic and a more efficient manner.
Yes.
And you have the same number of hourly workers on hand kind of when things ramp back up and you did 19 or will that number actually be lower.
So let's talk about how difficult it is or is not the higher and then I'll talk about our staffing levels.
And the next several weeks.
We're going to be hiring between 5000 10000 people.
To beef up our staffing levels as we approach the summer season.
When we see a lot of new movies being released.
And a lot more people coming to our theaters.
Fortunately for us.
AMC has always been a very happy place to work.
Morale and our theaters has always been high.
And our theater general managers.
Just devote so much effort.
The care and.
Attention day direct at what we call our film growth and our theaters.
And so if anybody is going to get employees to come back I believe it will be us.
We have seen some wage pressure by other employers and some low cow.
But we ourselves have not felt much wage pressure yet.
And how that will change.
Over the next six to eight months.
We will all learn together, but.
I know that.
As captain and the ship and relaxed about.
Hiring talented people to work and our theaters and our operations department as nervous as all get up about it.
And thats, because I get to tell them to hire the people and they got to go figure out how to do it.
They've done it really well for a lot of years I think they are going to get it done again, here's a little fact.
You may not know.
About <unk>.
Companies like ours, who tend to pay.
Starting job wages.
Not necessarily minimum wage and some cases minimum wage and other pace other times higher than minimum wage, but still these are first jobs for allotted a lot of young people and the country.
The turnover.
And that workforce.
What I might call the starting wage workforce.
It's like it turned and I don't mean, just for AMC and I'm talking about across the country.
It turns over every four to six months.
And while our theatre managers.
Mike stay with us for 30 years.
And while our supervisors might stay with us for 20 years, and our hourly managers might stay with us for 20 years.
A lot of our film crew cashiers.
<unk> tankers popcorn poppers.
And with us for six months, they had a great day had a great.
Work experience and they move on so actually pre.
Pre pandemic.
AMC was hiring about 50000 people a year.
Every single year.
And to staff up our theaters.
So we've got a lot of practice, Adam we know how to do it.
And I am confident we will staff as needed.
And then we will be able to do it without massive wage pressure, where the wage pressure will come in.
And is as more and more laws are passed raised.
Raising the minimum wage.
Because.
Not only will it raised the minimum wage and it will raise wages.
And that are close to minimum wage.
But that's a problem for.
2022, or 2023 more than it's a problem for June of 2021.
As for staffing levels.
Oh.
And we worked really hard.
During this horrible pandemic.
To get more efficient than we've ever been.
Before.
And.
We skinny down our overhead.
A lot.
And our corporate headquarters and Leawood, Kansas.
Our managed and staffing is about a third less.
And then it was two years ago.
And the company is the same size.
And in our theatre manager accounts.
The way, we manage our theaters general managers senior managers supervisors hourly managers.
Were also down.
Roughly a third.
In terms of.
Supervisory workforce.
But I.
I don't expect that we'll cut line staffing.
Very much now we certainly have.
Since last March when we shuttle our theaters.
And when we reopened our theaters.
We were really tight on reducing operating hours and reducing days and our theaters are open and so while some stake a circuit stayed closed AMC made the decision that all of our theaters would open.
When governments allow them too, but not necessarily open seven days a week.
14 hours a day.
For months and months, even though we are open.
We only had one or two showtime's a day at our theaters.
When historically, we would have had for five showtime's a day, so we were able to ratchet down and staffing levels.
Commensurate with the MX.
Lower demand levels and much lower attendance levels that we're experiencing here to for.
But we do expect.
But that's about to change.
Big New movies are coming out.
Thank you universal for F&I.
Thank you Disney for Black widow.
Thank you Warner.
For the movies, they are bringing to our theaters.
And Paramount and Sony and Lions Gate, and all of the studios we work with.
A lot of new movies are coming.
The number of guests coming to our theaters.
Should geometrically increase.
And we will have to raise our staffing levels to serve them well, but of course as we raise our cost we're also raising our revenues.
Those people will be paying customers, I, especially like seeing a paying customers.
Just look at the food and beverage revenue per patron.
That we put on the board and the first quarter.
<unk> continue to be.
Historically high.
Our food and beverage business is a high margin business.
And these people haven't been deprived.
And of their AMC perfectly popcorn accompanied by a nice.
54 ounce Cup of Coca Cola.
Theyre heading into cash concession stands.
And they are getting the whole AMC experience and.
So we do need to make sure that we staff up so that we can let them buy.
At least and food and beverage items from us with.
And with a high margins they bring in.
Yes.
Okay very helpful. Thank you Adam.
Thank you Eric.
Okay.
And our next question comes from Meghan Durkin with Credit Suisse. Your line is open.
Hi, guys.
Adam I wanted to ask about the new shareholder base quickly.
So how do you see this going I mean, it's management. Thanks for increasing the share authorization is the best move for the company, but for new shareholders don't and what is the way forward from there.
And then for Sean quick one are you still expecting to cross over and turning cash flow positive and for <unk> 'twenty one.
That's it for me.
Thank you Megan and I will take the first one.
If management thinks something.
And the owners of our business thinks something else.
And the free market system guests who wins.
Yes, it will always wins.
Owners of the business because the management's work for.
And for the owners.
Now.
We can try to explain and we can try to persuade.
And we can also listened.
And we can adjust our strategies.
There are a lot of ways to skin and cap.
And I'm quite optimistic.
About.
The new shareholder base of AMC.
Just go on Twitter.
Just go on rent it.
And just go on Youtube.
Read what these people right.
They love AMC.
This is and these are not people, who are just going to be investors and AMC. These are going to be customers of AMC, who come to our theaters and.
And enjoy watching movies and our theaters as paying guests.
No.
I love the idea.
We have a passionate and committed enthusiastic shareholder base and I am sure.
As we work together management and ownership.
We'll come to the right answer.
Look at what we've achieved.
As IV and the whole point and my prepared remarks look at what we've achieved and the last year, we're going to achieve good things for the next year and the year after that too.
The.
The only thing and it'll be different though.
Is <unk>.
Before when I wanted to talk to.
So the company's ownership.
I can fly to Beijing.
And I could sit down with three or four people.
And they had 75% of the votes.
For <unk>.
And I could talk to some of you analysts.
But we're in frequent contact.
And with people who also had.
Huge percentage votes.
Of our company's shareholding base, we could go on non deal Roadshows with you all and meet this institutional investor that institutional investor and make our case and make our pitch.
Well, it's going to be a little different now because.
I don't know five people and one office.
And I don't have 15 securities analysts, who talk to all these institutions. We've got three two and say we have as on March 11, we had $3 2 million people, who were going to have to talk to.
To explain what the companies up to what the company is doing what the company wants to do.
Why do we want to do it how it impacts them and do they agree with us and.
So youre going to see a lot more outreach.
To literally millions of investors and our company and.
And it's going to be quite public I've started tweeting again.
Back when I ran the Philadelphia 70 Sixers.
I was tweeting 15 times a day.
And I don't think Ive treated 15 times, a year and the last five years at AMC.
And I started tweeting again.
And we are communicating.
With our shareholder base.
So you saw it may have seen our Youtube interview that I did try getting for minutes on CNBC, that's pretty hard.
We got 90 minutes on Youtube.
And it had 250000 views.
And.
And Youtube they get the great. It gives you a thumbs up for a thumbs down and the last time I looked.
Over 20000 people took the time to right at this 90 minute and interview and.
And 99, 4% of them gave us the thumbs up.
So it is going to change the way we communicate.
And it is going to change who we communicate too.
But I'm very confident there.
The outcome will have a happy ending.
Sean Mega and so to your question on the cash flow forecast for 2021.
What I'll say is firstly that our overall forecast for 2021 remains the same as it was when we <unk>.
<unk> spoke on the previous earnings call.
And there is an assumption behind that the assumption is that the domestic box office and around $5 billion level.
Level and international is somewhere some of that.
Timing of the cash flow is obviously going to be very dependent on the timing of specific for leases.
And what we see price from the timing non and predictions for the remainder of this year is that a Q2 cash flow.
Some of them for Q1.
The second half of the year overall will be significantly better and the first half of the year.
But youre going to see Q3 is going to be better than Q2 quite a lot better than Q2, and Q4 is going to be better and Q3, but exactly whether or not.
We will be.
Be breakeven cash flow in.
Q4 really does depend on.
And how the final film slate and.
At the end of the day here.
Okay. Thanks, guys.
Yes.
And all we have time for one last question, which will come from Chad Beynon with Macquarie. Your line is open.
Hey, this is Aaron on for Chad.
And you guys had some really strong ticket and concession pricing, obviously and the quarter.
Can you share how much of that strength was driven by the strategic pricing adjustments you mentioned and.
Do you think this is sustainable going forward when demand starts to return to full and other entertainment options open up.
So I'll, let Sean give you the specific.
And what part of this high food and beverage spend per patron was was price rather than quantity, but I will tell you that the lion's share of this.
<unk> search and.
In food and beverage purchasing is that more people are going and the concession stand.
And they are buying more things when they get there.
I remember being kind of astonished when I joined AMC five years ago.
That almost a third of our of our entire.
Clientele.
Went through a theatre watch the movie and didn't get anything never bought any food and beverage items.
<unk>.
And so one of the ways to increase and but but our food and beverage revenues are divided by our total patron count.
So.
That which is being bought by the people who buy is being blended with the nothing.
That was bought by a third of our clientele well.
People have been so deprived of something that they love the people love go into the other movies all the talk about streaming that we hear.
People love going to theaters.
It happened 1 billion times and the United States in 2019.
And.
What we're seeing now is hardly been deprived of.
Enjoying movies on the big screen and going back to theaters.
People want the whole enchilada.
They want the whole thing they want popcorn and they want a drink.
And I want candy sales.
And one Hotdogs day, one nachos.
Everything that we have and some of our.
More imaginative food and beverage items, they want those too.
Flatbread pieces give me or give me give me another and so what we're seeing as more people are going the concession stand.
And then when they get there.
If and the old days, they bought two items today and they are buying III.
So I think that trend is going to continue for quite some time.
When you think of this recovery this rolling recovery.
And we're imagining for our industry and for our company that really starts kicking in and Memorial day weekend and runs and the second half of 2022.
A lot of people are.
<unk> going to be coming back to the theaters for the first time again in a year when.
When they show up in July and when they show up in August.
Even though some people and our theaters will then come and every month since February or March.
And so I think it has to be a lot of this splurging going on.
And so I would expect that we would.
Elevated food and beverage spending levels for quite some time will it be at this high level.
And will it stay at this high level forever.
We're all going to find out together and no one's got a perfect crystal ball.
To understand what the mutual break, but we're pretty optimistic that at least.
As the recovery begins.
And and beverage spending will be higher than what we've seen and more routine types as for.
For pricing, Sean Yes, Adam explained the drivers of the food and beverage.
Statistics, very well as to pricing that was the least significant impact for much more significant impacts.
As Adam said.
People were buying and Easter.
And the number of guests going to the concession and actually.
Buying products as well.
And the price adjustment was very very small in the total drive is there less than 10% on for.
Total increase.
Ladies and gentlemen, we thank you all for joining us today.
<unk>.
And it's been a wild ride.
And that wild ride is going to continue.
But we are.
Very much helpful.
That recovery is right around the corner. Thank you for thank you for being with us today.
And all of that does conclude the conference call for today and we thank you very much for your participation and please disconnect.
Yes.
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Okay.
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Sure.
Okay.
And.
Alright.
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And then.