Q2 2021 AMC Entertainment Holdings Inc Earnings Call
Section of our website earlier today.
After our prepared remarks, there will be of Q&A question and answer session.
This afternoons webcast is being recorded and a replay will be available in the Investor Relations section of our website at AMC theaters Dot Com later today with that I'll turn the call over to us.
Thank you John good afternoon, everyone.
Thank you for joining us today.
The second quarter of 2021.
It was another very important quarter for.
For AMC.
We have a lot to talk about on this call as of the considerable progress towards recovery.
AMC is making.
And we have some real news to break today as well.
That will be new information.
To all of us.
Before we go there in detail.
First I would like to express a very warm welcome.
To what from past experience makes us believe.
The more than 10000.
Individual AMC investors will be listening live to this webcast.
And another warm welcome.
2 of the at least hundreds of thousands.
Millions of our investors, who will be listening to replace reading our press releases and AMC investor connect communications or following on Twitter and other social media platforms. Our earnings report and the accompany accompanying new news.
That will be discussing later in the call.
Realizing there is debt. It is these investors who know actually own control of the AMC Entertainment holdings for.
For the first time ever later in this call we will answer a potpourri of questions that have been submitted to us directly.
By our shareholders.
As to our second quarter performance.
I think you can see from the release the was issued after the market closed today, we're making tremendous progress as our business emerges from the impact of COVID-19.
This progress can be seen not only in our operating statistics and financial performance.
But also by the significant strengthening of our balance sheet.
AMC is stronger today.
Then it has been at any point since the pandemic forced the closure of all of our theaters in March of 2020.
Our quarter ending liquidity.
At the end of Q2 on June 30.
Is actually once again.
At a 100 year high.
No that's precisely what we said on the Q1 call.
When we reported to you.
Debt at March 31, we had $1 billion of quarter ending liquidity.
And that was the highest.
Quarter, ending liquidity that AMC it ever had.
L Inc.
In Q2.
Mostly may and June.
We raised another $1.25 billion of fresh equity capital and.
And our cash burn was meaningfully less.
Then we had previously experienced.
And recently passed quarters.
So.
We ended Q2 with some $2 billion of liquidity.
That's cash in the bank and Undrawn revolver.
And just a short 3 months later from our last call.
That $2 billion figure is literally double.
The Q1 Mark.
A new record doubling the old record.
That was set.
Just 91 days prior.
As for our earnings in Q2.
Thanks to rising attendance.
The increase ticket prices achieved both through mix changes in actual price increases.
Soaring food and beverage revenues per patron.
Our relentless focus on cost containment.
And the pruning of marginal theatres from our network of.
Our financial results in Q2 were.
We're well ahead of our own.
And consensus third party expectations.
In short.
AMC crushed it.
In Q2.
You've already seen some of the highlight the headline numbers.
Revenues in Q2 of $445 million.
Holidayed food and beverage revenues per patron up 44, 1%.
Over that same statistic of the second quarter of 2019 the.
The comparable quarter pre pandemic.
Net loss of $334 million an.
An EBITDA loss of only $151 million.
An EPS loss of only 71.
Per share.
Gross capex expenditures in Q2.2.
2021.
Of only $17.9 million.
These are very strong metrics across for across the board performance base AMC.
Compared to what many people ourselves included.
What might happen in.
In Q2 of 2021.
And here are more operating statistics that also suggest things are improving at AMC.
As 2021 unfolds.
Overall ticket admissions revenue in the United States in 2021 versus 2019 pre pandemic.
This is overall ticket admissions revenue in the us.
Well it was 13%.
Of what it was 2 years ago in this year's Q1.
But it was 29% of what it was 2 years ago.
In Q2 of <unk> 19.
And so far.
In the first weeks of Q3, we're running 45% of our 2 years ago levels.
So Q1, it was 13% of what it was Q2, 29% of what it was Q3, so far of 45% of it was.
It's still down.
But the trend line showed significant improvement.
And even that's somewhat misleading.
Because we've reduced so many showtime's at our theaters to save on theatre operating expenses, which partially mitigate those revenue declines.
So if instead, rather just looking at ticket admission revenues.
If 1 looks instead of capacity utilization.
What's the percentage of seats that we sold.
A total of what was available for sale.
You'd see that our capacity utilization.
<unk> was 41%.
In Q1 of 2021 of what it was 2 years ago in Q1.
Was 61%.
Of 2 years ago levels in Q2, and 68% of 2 years ago levels. So far in Q3 again capacity utilization.
41% in Q1.
61% in Q2.
68% so far in Q3 again that trend line is pointing up.
Certainly of a way to go.
But progress is clear.
And we should be getting the play a lot more gig movie titles in the balance of Q3, and Q4.2021 as contrasted with what was shown in our theaters in the first 6 months of this year.
Incidentally, we see the same exact positive trends.
Our European theaters.
Let's start with 2021 admissions revenues.
In Q1.
Of 2021.
It was a pretty bleak to percent.
Of 2019 levels, 2%.
In Q2 was 18% of 2019 levels, but so far in Q3.
We're now running at 57%.
Of 2019 levels.
218.57.
Clearly an upwards trend.
The same holds true for that same capacity utilization statistic in Europe for us.
In Q1, our capacity utilization in 2021.
Was 53% of the 2019 level in Q2 was 56% of.
Of the 2019 level, but so far in Q3, its 69% of the 2019 level $53.50, 669 again up arrows.
With way still to go for sure.
But up arrows Nonetheless.
Despite the financial and operating results would suggest we're on a path to recovery.
1 of the assure you there are no victory laps being taken.
We're still losing money.
We are still burning cash.
The burning lots of it.
But we're using cash not generating cash.
So we're not out of the woods yet.
We do still live.
And of Covid infected world.
But unfortunately.
We can see of light at the end of this tunnel.
Vaccination rates have climbed quickly in 2021.
And the Counterintuitive result of this new Delta variant.
Is it vaccinations likely will continue to rise.
And vaccination, increasing is very important for AMC and for the movie Theatre industry generally.
No 1 has the perfect crystal ball of of course, but based on what we know and what we see today.
We currently estimate that AMC theater level cash flows will turn positive in Q4 of this year.
Assuming that we all see.
At least of $5.2 billion domestic.
Domestic box office cumulatively for the year.
Now there are some naysayers, who are quick to point out of the size of our debt load.
What they do not bother dimension.
Perhaps because it does not fit their narrative.
Is that we of smartly ladder that debt.
We have no debt maturities at all.
Until 2023.
And most of our maturities do not come.
Before 2026.
This gives us considerable time.
To deleverage our company to further strengthen our balance sheet and to refinance our liabilities.
And hopefully in better times.
I'm reminded in all of this.
That day, where those who were absolutely certain.
They just knew.
The AMC would file for bankruptcy.
In calendar year 2020 early in 2021.
At AMC, we proved them wrong.
There are those who were sure that a recovery in Q2 with the slower that is the current reality again, the Q2 numbers for AMC.
Have proved them wrong as well.
But there are those still who continue to forecast the demise of the theatrical exhibition business overall or maybe they just want to predict the demise of AMC.
They say that streaming is going to beat us.
Their conventional wisdom.
Well a lot of people mark conventional wisdom.
Because so often it's just plain out wrong.
You've likely heard before this mantra, maybe even repeated it yourself.
Radio was going to kill off movie theaters.
He was going to kill off movie theaters. The Crs was going to kill off movie theaters Dvds were going to kill off movie theaters.
Each time.
Moving theaters proved resilient.
Americans went to a movie theater a billion times in 2019, that's billion with a b.
And the global box office in 2019 was a record high of $43 billion.
Yes, there was a pandemic, but now screening is going to kill off theaters, we breathlessly here.
Well at AMC.
We intend with all of our might and brains and heart and Sunoco.
The approved those per <unk>.
And prognosticators wrong too.
I am now going to turn it over the call is our Chief Financial Officer, Sean Goodman to give you some more insight into the progress, we're making and then I'll come back to break some news before we head into Q&A Sean.
Thanks, Adam and thank you everyone for joining us this afternoon.
As Adam noted this quarter marked an important and very successful step along our pathway to recovery.
Overall, our global attendance in Q2 was more than 3 times debt of Q1.
While this is approximately 77% below the 2019 us attendance levels. It is only approximately 45% below our 2019 attendance per showing.
This is an illustration of how we actively managing our showtimes and associated costs to optimize the efficiency of our operations.
We have a weighted before the business fully normalizes, but clearly we're on the right path and making significant progress.
In general comparison of our results to 2020 in 2019 are not particularly meaningful given that we are still in the ramp up phase. However, there are certain metrics that are really very encouraging and worth mentioning.
On page of the second quarter of 2019.
The domestic average ticket price was up more than 15%.
And food and beverage revenue per patron was up nearly 42% to a very impressive $7 of 91.
And this compares to $5 and 58 during the same quarter of 2019.
Some of the Liza International average ticket price was up 6% and food and beverage revenue per patron was up nearly 33% compared to the second quarter of 2019.
This food and beverage increase is primarily driven by a significantly higher percentage of the guests choosing to purchase our food and beverage concessions.
We are continuing to see strength in both the average ticket price and food and beverage per patron as we move through the third quarter.
Clearly our guests of celebrating the advent of going out to sea of movie and enjoying the full immersive theatrical experience the sites the sounds and innovative AMC concessions.
Let's talk a bit about our balance sheet.
As Adam noted we ended the quarter with 2 zero to $3 billion of total liquidity.
And this is comprised of 1.8 to 1.1 billion of unrestricted cash and $212 million.
Under our revolving credit facilities.
This record liquidity level was made possible by our equity issuances during the quarter plus the completion of the sale of our remaining equity interest in the theaters in Lithuania.
On average during the second quarter, our cash burn was $85 million per month.
This is of significant improvement from Q1, when the average cash burn per month was $120 million.
And this improvement in cash burn is the result of higher gross box office grosses together with a very strong operating performance.
And it's particularly noteworthy and an impressive improvement when 1 considers.
Debt, our cash interest spend and deferred rent prepayments were significantly higher in Q2 than they were in Q1.
If we look at cash burn before the payback deferred rent and debt servicing costs.
It was approximately $40 million per month in Q2 versus the burn of $115 million per month in Q1, a very significant improvement.
Note that our cash burn numbers are stated after normalizing for the impact of capital raised during the quarter and therefore exclude the proceeds from completion of the sale of update us in Lithuania, and the equity capital that we raised during the quarter.
Regarding capital allocation.
We are pursuing a balanced approach to capital allocation and.
And our priorities are as follows 1 ensuring that we have sufficient liquidity to withstand any bumps along the road.
And the inevitable volatility as our industry recovers from the impact of the Covid pandemic.
2 strengthening our balance sheet by reducing our debt and associated interest costs.
3.
Investing in our business to enhance the guest experience.
And for Opportunistically pursuing value enhancing partnerships or acquisition opportunities.
With our current solid liquidity position and the recovery that we are seeing in the business. We believe that in the appropriate to carefully deploy our cash in ways that are most beneficial for the long term future of the business and of course, we will continue to be ultra focused on our operating efficiency.
This will be rather than focusing on short term monthly cash burn.
And what I mean in this regard us we expect going forward that we will choose to pay cash interest as opposed to payment in kind of pik interest. This will avoid any increases in our debt position. We also anticipate taking thoughtful actions to reduce our debt, including the deferred rent balance of.
All of this with the view to strengthen our company for the future.
In addition, we will continue to actively manage our theatre portfolio claw.
Closing underperforming locations, we've quietly closed more than 70 for marginal or money, losing locations over the last 18 months.
And opportunistically pursuing attractive high potential locations, which Adam will discuss when he comes back on.
Turning to our landlords.
At the end of the second quarter, we had deferred rent obligations of $420 million, representing a decline in obligations of approximately $55 million compared to Q1 of 2020 line.
For the second quarter actual cash rent paid was approximately $55 million more than what is shown on the face of the income statement as we repaid 2 third range.
While future cash rent payments will continue to be dependent on ongoing discussions with landlords, we anticipate cash rent paid in the second half of 2021 will be significantly higher than in the first half as we continue to work on reducing the deferred rent balance and we take advantage of opportunities.
That may arise to for example, prepaid rent in exchange for favorable lease terms.
For now we continue to focus the substantial majority of our capital expenditures on maintenance spend however, a small amount of growth capex crude arrives from potential opportunistic high return investments later on in the yen.
Capex for the second quarter was $10.5 million. This is net of landlord contributions net capex for the whole of 2021 is expected to be in the range of $100 million to $120 million.
Yes.
Reflecting on our results and the financial position at the end of Q2. It is quite remarkable just how far we have come in a relatively short period of time.
We believe that we are uniquely well positioned for a strong and profitable recovery now that all of our theaters are open we have a backlog of exciting movie titles to be released and we have record levels of liquidity.
And with that I'll pass the call back of the Janet Thank you Sean.
I've been saying publicly.
Ever since we raised that life for along the additional equity in May and June.
But it was high time for AMC to start playing offense again.
And earlier on this call I promised us some news.
So here goes quicker.
Quickly on 10 specific items 1.
You already know that with Arclight and specific theatres decisions of permanently shut down.
We announced that we have executed 2 leases with Rick Caruso US World class real estate organization to add to the AMC fleet of theaters 2 of Los Angeles was highest grossing cinemas the.
The growth.
<unk> Americana at brand where.
For the second and fifth highest grossing theaters in greater Los Angeles.
As recently as calendar year 2018.
They should open.
Later this month as AMC theaters.
However.
I can confirm today.
The the number is not 2 new theaters for AMC.
It might be 10.
We actually now have 6 <unk>.
New theatre pickups under lease or signed letter of intent not to.
3 of those are in Los Angeles, 2 are in Chicago, 1 is in Atlanta.
And we also are currently in advanced negotiations to.
To add for more bringing the possible pickups to Tim.
8 of the 10.
Would come from former Arclight specific locations.
Item 2.
Speaking of new theaters.
In 2021, we will open about a dozen newbuild theaters in the U S Europe and the Middle East.
They were all well underway before COVID-19 struck.
I am happy to report that we do know something about designing beautiful and productive theaters.
In the United States for example.
We opened 3 new theaters in 2021.
The 2 in Los Angeles, AMC, Porter Ranch, and AMC dine in Montclair.
Our already each among the top 25 highest grossing movie theaters in the entire United States.
That puts each of these 2 theaters in the top 1 half.
Of the 99 percentile of highest grossing us cinemas.
And that was achieved in just the first few months of operation.
Really astounding are.
Our new AMC Dine in theatre in Sunnyvale, California.
Also is doing amazingly well, it's in the 94th percentile of highest grossing U S theaters.
Item 3.
Many of our new individual investors.
Of showered us with great ideas.
About how we can strengthen and brighten the future of AMC.
Among their ideas for AMC.
Our debt, we show concert movies professional sporting events esports and gaming events.
Wasting no time we've.
We've immediately started to implement.
On these very good ideas.
Our first 2 UFC match ups.
Which were in July drew significant attendance to.
To our theaters.
Our first 2 concert movies.
With chance the rapper and Halsey will show at AMC theaters across the country. Later this month in August.
We're quite optimistic that this alternative programming can be built into a real revenue opportunity for AMC in future years, and we're chasing at heart.
We also hope to engage in meaningful dialogue with professional sports leagues.
And collegiate sports conferences.
To see if we can obtain the rights to show more sporting events at our theaters.
As for gaming opportunity.
Indeed, the president of epic games.
As a member of the AMC board of directors.
I cannot even count the number of times already.
<unk> that our shareholders have asked us to reach out and partner with Gamestop.
We're on the case.
More to come.
Item 4.
Many of our new shareholders also are quite enthusiastic about.
About crypto currency.
So you may know.
Net my best brand of almost 25 years duration of Europe.
The 1 billionaire of former chairman and owner of Silversea cruises.
Formed of spec earlier, this year called <unk> and the.
He asked me to join US board of directors.
Spak for those of you don't know what it stands for a special purpose acquisition company.
That's a fancy name for a pool of investment capital in search of the company to buy.
Ironically centric us.
Is under contract to buy a fascinating company called <unk>.
<unk>.
Who just happens to be on the very cutting edge of quantum encryption and blockchain technologies.
It was initially funded by the British government. Its clients include British Telecom, the European Space Agency and Verizon among others.
My role as the board member is merely to ensure that all laws and stacked norms of being complied with when that acquisition of market is completed.
We will be soon I would expect I will then drop off the board of directors. However.
However to get to this point.
I've had to learn more in the past 6 months about blockchain and crypto currency, the and I learned about it and the entire decade before that.
This increased knowledge has.
It has given me the confidence to tell you all today.
The AMC is hereby formally announcing on this call debt by year end, we will have the information technology systems in place.
To accept bitcoin.
As payment for movie tickets and concessions.
If purchased online.
At all of our U S theaters.
We also.
In the preliminary stage of now exploring how else AMC can participate in this new burgeoning crypto currency universe.
And we are quite intrigued.
By potentially lucrative business opportunity for AMC.
We intelligently pursue further serious involvement with crypto currency.
More details will be shared publicly with you.
So the only if as and when our plans are more firm.
Item 5.
Since we have the due to the programming to accept bitcoin anyway.
We are simultaneously writing the code right now.
Apple pay and Google pay for online purchases at our U S theaters also.
These new payment methodologies for us.
Could also be implemented.
By year end.
Items 6.
Again speaking of our new shareholders.
In June we.
We introduced a new program called AMC Investor connect.
<unk> got a lot of press attention.
As part of AMC stubs and offers our shareholders who participate full stubs benefits.
We are thrilled that almost 300000 of our shareholders have already joined.
Our goals of the program are simple.
We'd like to improve the communications.
That we have with the people who own AMC.
And we also want to convince many of the millions of people who are now our shareholders and the becoming avid customers of our theaters as well hence.
Hence we already have made multiple free of discounted offers to participants in the AMC investor connect.
And we're setting up a program of special advanced screenings.
For our AMC investor connect members.
To that end of very special Thank you for.
For the Sony Pictures.
For enabling our first such advanced screening in July.
Ahead of the scheduled theatrical release of escape room.
<unk> of champions.
Items 7.
Also the heightened the information exchange with our new shareholders as.
As well as with the public at large and.
In April I started actively tweeting again.
Which I had not done since my days when running the Philadelphia 70, Sixers back in 2013.
When theatre when Twitter was my social media platform of choice to.
To interact with sports fans.
My Twitter followers of more than coupled since April and now exceed 150000.
So it kind of blows my mind us that according to Twitter analytics.
My tweets, which I write personally.
So far have been read.
More than 72 million times.
In addition, I'm actively following almost 2000 people who appear to be interested in AMC.
To get a better sense of what they are saying and thinking.
I would also make it a point to check in Reed.
The inbound Twitter feeds personally.
There are hundreds and hundreds of replies to any tweaks that I published.
Which I find gives you a more sophisticated and better understanding.
Of what's on the minds of.
Of Amc's new owners.
Items 8.
With labor costs going up in some places around the country.
Our costs are rising in the United States.
We've also noticed.
That theres appear to be little price resistance to the increase prices currently being charged at our U S. Theaters. So just last week, we imposed an approximate 5% of.
Admissions ticket price increase at.
At many of our U S theaters on.
On average that's about 50, or so and an increase admissions ticket price.
We think consumers will find that palatable.
But hopefully that will meaningfully strengthen the AMC bottom line.
Item 9.
There is a lot of talk currently about exclusive theatrical windows.
For the lack thereof.
You all know that AMC was way ahead of this issue reaching of landmark and historic agreement with Universal.
In July of 2020.
On their concept of premium video on demand.
We were pleased then and we're still very pleased now with the outcome of the Universal AMC agreement.
And in our mutually working through that.
Initially contentious issue.
AMC and Universal are now very close.
In fact, I think we of the best working relationship that we've had together in many years.
In the same vein I'm also pleased to announce today.
The AMC just reached formal agreement.
With our friends at Warner Brothers.
So all of their movies in calendar year 'twenty 2.
Importantly, respecting and.
An exclusive theatrical window of 45 days prior to home release for all Warner Brothers films.
It's no secret that AMC was not at all happy.
When Warner decided in December to take movies for the home.
On HBO Max simultaneously with.
With the African release.
Therefore, it is especially gratifying.
Debt Warner is yet again embracing it exclusive theatrical window.
And for Us at AMC is especially pleasing to be working so harmoniously with Warner brothers once again.
We actually are in dialogue active dialog with every major studio on this very important topic.
We are hearing considerable support.
In Hollywood that an exclusive theatrical window.
As an important way to build big and successful movie franchises.
Clearly, though this whole subject.
Us quite topical.
It's very much of a work in progress.
We will keep you posted.
As things turn out.
And finally Ted.
I'd like to thank the board of directors of AMC for electing me in July to serve as chairman of the board as well as CEO of AMC Entertainment you know all of that and you've also heard that former U S. Ambassador of the United Kingdom fill later was elected to serve as the board's lead director.
So we know surprise any of you that.
We are of highly able experienced and dedicated board.
Feel fortunate to serve with the mall.
But the news on this point.
Is that at our first meeting.
Of the board in my New role I discussed with the board that I think it is extremely important.
The company insiders maintain a significant financial ownership stake in AMC.
Through owned <unk> granted shares.
So the insiders have financial interest that are directly in line.
With those of our shareholders.
Our board members already have of policy in place.
That they must hold any granted shares for at least 1 full year.
But there was no such plan currently in place for.
For the company's 19, most senior executives.
Therefore.
I will be recommending to the board.
The new policy.
Without going through all the nuances and us.
Kind of complex.
But the simplify it and break it down I will propose.
That I as CEO.
The required to hold a number of owned or granted shares at least equal to 8 years of my salary.
In my case.
8 years of my salary would mean that I would be required 2 of at least a $12 million ownership stake.
In AMC.
Of owned or granted AMC shares.
Sean are.
Chief Financial officer will be required to hold 6 years.
Of his salary.
Our executive Vice Presidents will be asked the hold for years.
Of their salaries in owned or granted shares and our senior Vice presidents.
We will be asked the hold 2 years of their salaries and owned or granted shares.
The board will consider this proposal.
New policy at its next regularly scheduled meeting.
At the same time of Xyrem emphasizing share ownership.
I'd like to remind you that I.
Have not sold 1 share of AMC stock.
And the 5 full years I've been running this company, even though it represents more than 3 fifths of my annual when I say, yet when stock.
Represents more than 3 fourths of my total annual compensation.
Other than gifting of small percentage of my AMC ownership stake to my 2 adult children.
Earlier this year I also did not sell any AMC shares in March when I could have I did not sell any AMC shares in June when I could have in 2021.
Similarly, we will commit that I do not intend to sell any AMC shares in September of 2021, when I am legally permitted to do so.
Yes.
But as much of this pains me to admit.
In September.
All of the celebrating my.
67th birthday.
I'm going to be of young vibrant 67.
But hey at 67 Nonetheless.
2 months ago more than 85% of my net worth was in AMC stock and proper state planning for a 67 year old suggests.
I should diversify my assets a bit.
But I don't want any of you ever to think that I have anything, but full confidence and amc's future.
So I will do so under the auspices of the parameters of what is called a <unk> 5.1 plan.
Where ipass off all of the share trading control.
Of the shares that I owner of granite.
To an independent third party back based on parameters of the plan.
The I only partially set.
The plan would not go into effect until towards year end of the earliest.
And only a small percentage of my owned or granted shares could get sold in any 1 month.
And that would then be repeated over a period of at least several months.
This way I really have passed on the decision making for someone else on this important topic.
Additionally.
Whatever is sold or not sold by an independent third party.
I still will have millions of AMC shares.
Debt either are owned by me personally or had been previously granted to the personally.
My economic incentives are very much aligned with yours to increase shareholder value.
For all of the owners of AMC.
What's more ISO fully believe in transparency.
Then I'm letting you all know this well in advance.
Even the current U S law does not require me to make this or even any public disclosure now at.
At this time or at anytime soon.
Any shares actually being sold.
Well there you go that's the quarter.
Ted items of news.
Our second quarter was the very encouraging 1 for AMC we.
We believe we are in a road to recovery.
And wherever so grateful to our friends and allies, who share our passion that AMC is best days should be those that are coming.
You can take comfort that our deeper financial reserves allow us to stay the course to innovate again and to capitalize on the opportunities that we see around us we fundamentally believe that ours is the future that is bright.
Because there is nothing is magical.
As seeing dazzling images.
On a huge silver screen.
We're now going to turn.
This call to the questions that were submitted and up voted with the greatest shareholder interest on the stay technology platform.
And then we'll take some questions from analysts if we.
If you all in the <unk>.
<unk> of the time.
I should point out that this is an experiment this stage technologies platform for us.
It works really interestingly, but it only works with some brokerage firms not all of so many of our U S shoulders, and especially many of our international shareholders may not have had a chance to ask their questions. On this call still we've had quite of bountiful array of questions posed to us to answer.
Sean what's the first question.
Thanks, Adam.
First question, we have is from Timothy and the question is do you have any plans to offer a dividend again, thank you Timothy.
We appreciate the question.
If you look at our past since going public in 2013, the AMC paid.
<unk> quarterly dividend.
Every quarter.
Until we got closer to the pandemic.
And.
Realizing debt.
Our liquidity would be stretched.
We ceased the offering of dividend.
There are some.
Hi.
The commitments that we've made in some of our debt instruments.
That we cannot pay a dividend.
Until at the earliest.
About a year from now.
Having said that.
We do know that dividends are very much on the minds of our shareholders.
So we'll take that interest quite seriously.
When we have the ability to make dividends once again, we'll balance those shareholder desires against the other competing uses of our cash.
What opportunities are available and M&A.
How much do we need for liquidity.
What can we do and the way to deleverage the company.
All of the priorities that Shawn talked about previously.
Previously.
Great. Thanks, Adam and the next question is from David. The question is will AMC consider partnering with Gamestop to offer more data experiences by local and national gaming competitions. As I said in my remarks, just a few minutes ago, the only way.
I can count the number of times people have asked the.
If we could partner with Gamestop.
We're certainly willing to do so.
It seems to me, it's 1 of the news interesting ideas that for.
<unk> from our individual investors.
We're happy to reach out the Gamestop and CFA of any interest.
The next question is from Ryan. The question is would AMC ever consider reestablishing driving theaters with current state of the world. It would bring a lot of revenue with little worry for people trying to social distance.
Ryan that's of Great question of the reason I say it's of Great question as I asked that same question.
Last July.
And we went through an exhaustive analysis.
Of driving the theaters and.
And honestly, we came to the conclusion that there of bad economic idea. It sounds appealing for you to stay in your car, but there are 2 problems.
Go into a parking lot.
And look at how much.
The asphalt.
As needed.
To put a lot of cars and a lot the viewing experience at of driving theatre.
It is not necessarily great because many people are quite far from the screen. Additionally.
Driving the theaters are very seasonal.
They're not popular in the winter and colder locations in the United States.
And in the summer and most of the United States. It doesn't get dark before 8 or 9 o'clock P. M.
Which means that you really can only.
The use the driving the screen for 1 Showtime of Knight.
The economics aren't there it's unlikely that we would go forward it sounds like it's a great idea.
But it isn't actually.
Thanks, Adam and the next question is from payroll. The question is how is the AMC preparing for the possible large scale COVID-19 surge that could potentially shafted us dawn again.
When I think back over the last year.
I think the thing that I'm most proud of us.
As debt.
We prevented.
The catastrophe at AMC with so many are predicting.
But right there right up there along with it.
I am so proud of the safe and clean protocols that we developed in partnership with the Clorox company.
And current and former faculty of Harvard University's prestige of school of public health.
To our knowledge there has not been of single transmission of Covid to an AMC guests over the last year.
And so the first thing that we're doing is staying.
Very strongly committed to.
Through our safe and cleaning protocols.
To continue to operate our theaters safely and cleanly as we go forward in addition to that.
I think we also can hope.
That there may not be.
The a.
Large scale of Covid surge that would force the kind of locked down or shut down that we saw in the United States and countries abroad.
We're back now.
The most scientific experts will tell you that the virus will increase in the winter.
Compared to the summer.
But the.
The big change.
Between this winter than last Winter's vaccination.
And Fortunately.
The number of vaccinations, especially among the most vulnerable population.
<unk> has been so extensive.
Debt.
We are optimistic.
That we won't see the kind of locked down of society. This winter that we saw last we also hope the vaccination continues.
There is no more important thing.
That any of you can do.
To protect yourselves.
Of our families.
Your friends.
And the country as a whole.
There is nothing more important than you can do that to get vaccine and I know that many of our shareholders of younger.
Who.
Think that they're invincible.
It is true.
Net older people are more susceptible to COVID-19 and younger.
But no 1 is totally.
Invisible against this virus the.
The solution for AMC as vaccination.
I would remind each of you of the solution for each of us vaccination too.
Next question.
Our own asks are there ways you are considering to reduce the company debt without issuing new shares yes.
Some of our debt is trading in the discount we.
We might be able to buy it back at a discount.
Some of our landlords, where we have deferred rent obligations that stretch out for years and years of indicating to us that they might be willing to take a reduction in <unk>.
We all of them.
Willing to pay them in cash now Unfortunately, we do have this $2 billion of quarter ending liquidity.
Once we have satisfied ourselves that we have liquidity to get through Covid no matter, what COVID-19 throws at us.
Then we'll be turning to the debt reduction.
And see if there is opportunity there.
Next question is from Mike.
My costs, how does the AMC plan to combat Dan data releases of movies on streaming platforms and it as well.
Well this.
This is such an important topic and I addressed it earlier in my remarks.
Net.
<unk>.
We're especially pleased.
That Warner Brothers.
Has decided to move away from day and day releases and commit to an exclusive theatrical window as well we are having private conversations with every major studio in Hollywood.
On this very important topic.
And we're seeing a lot of consensus emerge.
Net.
The exclusive theatrical window.
Is.
A good way to build major motion picture franchises.
It's a fluid situation a lot of studios that have experimented with day in day say that theyre doing it only been sort of pandemic times, we'll all see how together this plays out but we know.
Debt studios are going to do what's in their financial interest.
Not going to just help out AMC charitably.
So.
We are also making sure.
Debt our marketing programs.
Our is vibrant.
And powerful and as potent.
As they can possibly be.
AMC has been of marketing leader.
In this industry for the past 5 years.
And we've got a few tricks up our sleeve coming.
We intend to continue.
To the bold pioneer and lead the industry in marketing hopefully driving audiences to our theaters hopefully selling more tickets, which then in turn hopefully convince us our studio partners debt. The smartest thing for them to do give us their movies first and let us help them build.
Their brands.
Next question would you consider selling AMC merchandise at theaters and online platforms I think it will be profitable.
We would consider.
This is again 1 of these ideas I've gotten I've received the <unk>.
Lot of commentary about in the last few weeks.
It's intriguing.
It's complicated set of merchandize the 600 retail locations.
We have to make sure that sales or we can get stuck with.
Inventory.
That makes it a little of less profitable business than you might think but we're going to take a hard look at it.
The next question from Amy could live theater in concert events the street to hit US based on the streaming success of Hamilton I expect this would be of Ctrip drilling success, yes, yes, yes.
And yes.
Amy but.
But not on Hamilton because thats.
Already come and gone.
But.
We are experimenting right now.
With these 2 concert movies by.
The rapper and all of the ease of movement of the huge falling.
And.
We're already in discussions.
With.
Major.
The musical.
Entities and talent.
About whether this could become a us.
The permanent line of business for AMC to have this kind of intriguing alternate alternative programming at our theaters.
Adam.
It's not such a new concept there is something that the company called fathom events that we own a third of.
And they have been.
Showcasing some kinds of auditors turn of content.
The movie theaters for.
For decades.
The Metropolitan Opera being the biggest example, but I think theres, a real opportunity here and we're going to chase. It the same with sports the same with gaming. There is there's really there's really a possibility here.
To find a new source of revenue that AMC has not passed before.
Petra us Ken the AMC partner up with the Gamestop for gaming competitions on the Big screen I think that question was asked and answered.
Thanks to the Tango, we're willing we have not reached out the gamestop yet.
<unk>.
We intend to do so.
Marc asks do you plan on reinstating dividends they tend to mean, a lot to sit and type of investors that could potentially help draw non AD for investors and larger holders, we've touched on that too mark and.
The answer is we know it's important.
Sean just shareholder too on the shareholder to we'd like to get those dividend checks if we could.
But we do have to us or we do have to adhere to are the commitments in our debt instruments and we do have to use our cash wisely. That's the decision for next year is not a decision for today.
Aaron the us I promise not us for cancer question, but can you guys make the AMC mascot officially a gorilla.
Well the AMC has been around for 100 years, we don't actually have a mascot.
This is the interesting question I don't know.
I know why you're asking.
The.
I think we're probably going to go without a mascot, but I will tell you the series a tremendous amount of branding work.
Going on at AMC right now I said, a few minutes ago that we intend to be the best strongest marketer around.
Watch what we're doing with our marketing programs over the coming weeks and months and years I think youll be pleased when you see.
The AMC, leading the way yet again.
Next question from body has AMC considered partnering with the movie studios in order to produce that's 1 folks.
Yes, we have.
And recently.
And the.
The.
The notion.
Of making the exclusive content.
This is an interesting 1 some of you may not know this but about 5 years ago. We were in a joint venture 6 years ago, We had a joint venture.
With the.
Another operator theatre, operator to co fund something called Open Road films Open Road films made of movie called Spotlight, which 1 of the Oscar as the best movie of the year.
A few years ago.
So we have some experience with us.
The the making of movies is of risky business.
Movies are cheap to make.
They.
They do they do take capital.
I've made no secret of the fact.
Debt I personally thought it would be very wise for AMC.
2 of sold more shares.
To raise more equity to build up our war chest.
So that we could entertain some of these more capital intensive ideas.
<unk>.
It was very clear to me in.
Following social media as I do that our shareholder base was quite split on that issue a lot of people thought of the great idea of a lot of people didn't want to touch it and.
And I didn't want to go forward with an idea that important.
For our shareholder base was.
The split and not unified so K.
Cable debt debt motion and.
Did not have a shareholder vote on it but some of these more capital intensive ideas will require that the company have more capital.
So we're watching it but again the priorities right now Sean.
So I mentioned before.
Have liquidity to get through Covid day.
The leverage improves the quality of what we offer look for opportunistic.
The.
Of possibilities.
Content is 1 of the possible business on our list.
But I don't know that were going to rush into it.
Our next question from Jonathan what AMC keep holding viewing parties for main street and the sporting.
I certainly hope so we've had very good luck with UFC.
And there is every indication that they'd like to see us continue.
We've talked before to some of the major professional sporting links.
And they have not yet been willing to grant rights the movie Theatre operators to show movies in theaters, so sporting events and theaters.
I do think the Holy Grail of this 1 would be if we could secure 1 of the for major leagues, the secure rights for 1 or more of the for major sporting leagues.
To show live Sporting of live professional sporting events at our theatre is also there are.
There are some collegiate football net.
The net draws of 100000 people in the football stadiums all over the country.
The college football will be something else, where I think would be a really powerful draw at AMC 2 years ago, we experimented showing some NFL games on our theaters at our theaters.
Just for 1.1 year and I can tell you categorically.
<unk>, an NFL game broadcast.
On our 40 foot high screen.
It's just amazing.
<unk> believable the <unk>.
<unk> so good of the NIH.
<unk>.
I know that.
If we can secure the rights.
Affordably I think of it.
The big hit.
Next question is have you considered expanding AMC to of family Entertainment Center experience you could include boating and arcade laser tag parties and family dining.
So.
This is actually an interesting question too and on some of this stuff.
We've already experimented a little bit obviously, we we have family dining.
At our dine in theaters or we have.
70 of them or something around the United States.
A couple of years back.
<unk> greatly expanded through what we call AMC feature fare the hot menu items that are normally serve that.
Our concession stands and our non dine in theatre is trying to get families better dining choices, we put in freestyle Coca Cola machines with there of 150 ish flavors.
At all of our theaters in the United States, including all of the Carmike theatres that we bought in the United States with the massive investment in.
Coke freestyle.
Similarly, we we've experimented with virtual reality through.
The <unk>.
Many of which we invested call dreamscape, we have of dreamscape virtual reality auditor auditorium experience.
At our 1 of our theaters in Dallas, 1 of our theaters of Columbus, Ohio.
For opening soon at 1 of our theaters in.
The.
The Northern New Jersey.
It'll be pretty inexpensive actually to decommission and auditoriums, we of surplus capacity and put in a laser tag.
Karla kind of fun.
But if youre talking about the full blown Entertainment Center is described in his question.
Don't underestimate how much capital that an idea of like that would need.
Especially if you want to do it not just in 1 theatre somewhere where you want to do it at 50 theaters of 100 theaters of 200 theaters and again its ideas like this 1.
I thought that AMC should range of our capital our shareholder base wasn't ready for that yet so honestly.
To do something as you envision.
That's going to have to come down the road.
When we have of larger capital base at this point, Sean I'm looking at.
The minus I think.
We've answered a lot of questions.
And I'm mindful of the time.
I'd like to thank our shareholders.
Sure.
Setting these in for voting all of them to see which ones we should answer.
<unk>.
This is an experiment for us if you like this idea of we'll do it again on future calls.
But let us, but let us now having said that operator, if we could see if any of our analysts have a question. We don't we are already over time.
6 o'clock in the east some of what we might only at the time for a single question.
Very good so that question comes from Chad Beynon with Macquarie. Please go ahead.
Hi, Adam Sean Thanks for taking my question. Thanks for all the commentary up to the point.
I wanted to ask about.
Some of the metrics you were talking about with respect to industry admission revenue Adam you talked about.
The first quarter of 13% of 2 years ago, and now we're up to 45% of 2 years ago. So maybe just kind of a broad question on if you have an updated view on where this can get too whether it's 2022 of 2023 whats changed in your Crystal ball.
Is it 80% 90% of can we get back to peak levels as you put all of these things in your blender. Thanks.
Thank you.
Debt to 64000 dollar question.
And.
Net.
Nobody knows the answer for sure and we're all going to learn it together we.
We've already put out a number for.
2021.
That we hope the industry box office can get back the.
$5.2 billion.
In.
2021.
Which is actually a fairly sizeable recovery in the second half because of the industry box office.
Like a $1 billion.
Early part of the year very very very low.
If you look at the industry box office. This of this this for those of you don't know the term the domestic the domestic industry box office.
As the movie Theatre ticket grosses in the United States, and Canada is kind of the basic metric of measuring the size of the industry.
Well I won't look.
Pre COVID-19, meaning start going starting in 2019 net 2020 the.
The 5 years.
2019 going back all 5 of them.
The box office was greater than $11 billion.
The 5 years before that.
It was $10 billion.
The I think it was.
Or may of a 6 years was.
$10 billion or more.
And the meaning.
6 of the 7 years before that.
It was.
Greater than $9 billion.
So literally for the past.
The 17 years.
The box office has been firstly was steady at between 9 and $10 billion and it was steady at between 10 and $11 billion. Then it was steady at between 11 and 12 billion and.
And nobody knows where it's going to be in 2023, Ive seen estimates all over the map I've seen people, who think it's going to the $8 billion.
We've seen people, who think it's going to be $10.5 million.
<unk>.
Nobody's Crystal ball is good enough for now.
So.
But obviously, it's a very important question, because we will be more profitable.
The higher the box offices.
So where we are.
We know that with the cash that we raised.
We could survive and an $8 billion box office for a year or 2 maybe.
The.
But we share being <unk>.
Much more healthily profitable if the industry box office rises back up to $9 billion $10 billion, even $11 billion of more.
In 2020.
3 in 2024.
2022, it's probably still going to be a transitional year.
Between the.
The very low 5 ish billion dollars numbers that we're thinking of will occur in 2021.
And whereas eventually going to settle.
In 2023 of 2024.
Okay, Great and then a quick follow up and then ill pass it off with respect to the food and beverage strength that you saw in this quarter and I think even in the first quarter from a per cap standpoint.
Can you talk about where that's coming from us that the mobile ordering initiative is that of mix of products.
And then have you taken prices up given some of the commentary that you made with respect to ticket pricing have you done the same thing for food and beverage yet.
Doug Thank you.
Hi.
Let me first tell you the what we think the reason is and then we'll tell you.
We're getting there.
It feels to us like.
People, who have been away from theaters for a year.
When they're coming back to the theaters after it's been a long wait.
And they are so happy and eager to be back of the movie Theatre.
That they want the whole experience they want the whole enchilada they are splurging.
And so there are for drivers.
That are causing our food and beverage revenues for the up so much I remember when I say up so much.
This is the food and beverage spending at.
And the movie Theatre 3 of Us quite a mature thing and AMC was producing.
More food and beverage revenue than any other major mass operator.
But we would've considered good the good quarter, if our food and beverage spending per patron was up 2% of 3% of 5%.
It's up 44%.
Over the pre COVID-19 levels.
And it is coming basically from for different things.
And it's kind of an equal contributor.
As to what's driving it.
1 mobile ordering is certainly.
Something that people like.
We only had mobile ordering in place Adam.
About 50 of our U S theatres for example.
The 2 years ago and during the shutdown of the theaters in Covid.
We have time on our hands. So we develop the technology to be able to roll out mobile ordering across the whole of our system is now in place at all of our AMC and all of our AMC dine in branded theaters.
We also thought it would.
It was very helpful for the AMC safe and clean protocols, because if people were ordering there.
F&B and advance there'll be less.
Contact back and forth on payment.
The mobile ordering is popular that's 1 of the reasons next we did raise prices.
1 of the reasons.
Next.
When people are going to theaters.
They are buying more items.
And we just we see the statistics every single day, and it's true all across the country.
They are buying more stuff.
Before they bought a soda and other buyer soda popcorn of before they bought a soda the popcorn now they buy of stone and the popcorn.
Kandi or the episode of the popcorn and of nachos or they are opting for our some of our.
More intriguing menu items that we've put in place through feature fare.
My favorite being the flatbread pizzas.
The.
And as the fourth factor, which is really encouraging for us.
Is that more people are actually going to the concession stand.
And buying.
From us of the concession stand.
There are there are many people a lot of people.
Who go to a movie theatre and when I say of a lot of people I mean like hundreds of millions of people a year.
The go to the movie theaters, not just the AMC, but go to movie theaters and don't buy anything at the concession stand they buy no food and beverage all of the volumes of the movie ticket and that's the experience they get.
What we're seeing what we've seen as people are returning to sort of us.
There is more and more people are going to the concession stand.
They are buying food and beverage product because they want the whole experience.
It's already 12 after the hour we've run long I would like to thank you all for joining us on this call and webcast today.
I have something very simple to say.
Ladies and gentlemen.
At the movies.
The other than AMC theatre sometime soon.
And that does conclude our call for today, we thank everyone for participating and you may now disconnect.
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