Q3 2021 AMC Entertainment Holdings Inc Earnings Call
Seeing exactly that.
The increased box office has been meaningfully increasing each and every quarter. Thanks.
Thanks to improved vaccination levels.
And in an increasingly appealing film slate.
Add to that.
<unk> commitment to robust health and safety protocols through AMC safe and clean and our stepped up marketing activity.
And our numbers for attendance at admission ticket revenues at AMC.
Also continue to rise.
When we reported second quarter 2021 numbers.
I said on that quarterly earnings call in August.
The quote AMC crusted unquote.
I didn't say that because we were yet profitable or because we were out of the pandemic woods at that point.
But rather.
Because our results were so much better than market expectations and also because Q2 results were so much stronger than Q1 results.
In that spirit.
The just announced Q3 results for AMC.
Once again are encouraging.
Our numbers for attendance revenues adjusted EBITDA and net loss continued to markedly improve.
And continue to be well ahead of consensus market expectations.
Looking at our industry.
For the third quarter of 2021 posted the largest domestic industry box office of the year and nearly $1 4 billion.
66% higher than that of Q2, 2021, and 486% higher.
Than that of Q1.
2021.
And as for AMC more specifically.
Here are just a few snippets.
Of the improving performance.
So that we reported today.
The global attendance count for AMC in Q3, 2021 was 40 million people.
No we would not normally be smiling at attendance level, there was not even half of what it was two years ago.
But again this attendance count of $40 million in Q3 of this year is still very much larger than the 22 million guests, we have with us in Q2 of this year or the 7 million guests. We had in Q1 of this year and for that matter.
The 40 million guests in Q3.
So much higher than the $8 million, yes, we had in Q4 of 2020, the $6 5 million guests. We had in Q3 of 2020 and the Mir 100000 guests we had in Q2 of 2020.
40 million AFC gas in Q3, 2021 was up 81%.
Our Q2 2021 attendance.
And up 488%.
From our Q1 2021 attendance.
And look at this positive trend another way.
Q1, 2021 attendance at AMC.
Only 9%.
Of that from the comparable pre pandemic first quarter of 2019. However.
Q2, 2021, AMC attendance was 23% of the comparable Q2 2019 and Q3 at AMC just completed was 46% of the comparable Q3 of 2019.
Importantly, these positive trends continue as the fourth quarter of 2021 begins.
The venom bond Halloween kills in June four different film titles that each one of the first four weeks of October respectively.
Last week, we announced that October 2021 was Amcs biggest months for attendance and admission revenues since February of 2020.
And we can tell you now that our attendance in October 2021.
Was 72% of that of October 2019.
And admissions revenue was even stronger.
Almost 90% of that of October 2019.
The upward trend is clear and unmistakable.
The story is similar we compelling for Amc's total consolidated revenues.
$763 million in Q3 2021.
Was up 72%.
Over 2021, Q2's $445 million.
It was up 414% from 2021 Q1's $148 million.
And if you want a year over year comparison seven.
$763 million.
Of consolidated revenues in Q3 of 2021 was up 539% over the $120 million of revenue AMC had in Q3 of 2020 a year ago.
How about we looked at adjusted EBITDA.
We essentially broke even on EBITDA on.
On the EBITDA line in Q3, 2021 with an adjusted EBITDA loss for the combined three months period of only $5 million.
That number is much better.
Consensus market expectations.
And it is $145 million.
Or 96% better.
Then the Q2 2021, adjusted EBITDA loss, it's $329 million better or.
Our 98% better than the Q3 2020, adjusted EBITDA loss for the same quarter a year ago.
But let's also look beyond the numbers.
There were many bright spots for AMC during the third quarter of 2021, and the first five weeks of the current Q4.
Hi notes that are of interest to consumers generally.
We're our shareholders tell us makes them proud.
To be the owners of AMC.
Here are nine examples of.
A variety of positive developments going on inside AMC right now.
One.
We upped our game on alternative content.
So in concert movies in live sports sporting events, including UFC WWE Heavyweight Boxing Championship fights and professional football games on Sunday afternoons.
In Q3.
Two.
We introduced open captions showtime's each week in hundreds of our U S theaters.
Specifically for the benefit of the hearing impaired and for those where English.
As a second language.
Great.
Recognizing the success of our promoting artist driven curated movie releases through our artisan films effort that was launched in the summer of 2019, we just now launched AMC thrills and chills.
Our unique promotional spotlighting a hard movies.
That is showing at AMC.
Four.
We similarly launched $5 band Faves, So we can bring back popular movies.
That were released in prior years.
Five.
Having a charitable event.
Around the 20th anniversary of 911 in September.
AMC again screen.
Paul Green grass movie United 93.
And donated the ticket proceeds to the flight 93 National Memorial.
On veterans day.
Thursday of this week.
We will show Clint Eastwood's film American sniper and.
And we will donate our ticket proceeds to the wounded Warrior project.
And we could never forgets September 24.
Which is world Gorilla day.
Where the ticket proceeds.
Of gorillas in the mist, showing at our theaters and the ninth planet of the apes movies showing on the AMC theaters on demand were donated both to the Diana Faucet Gorilla fund and to the Wildlife Conservation Society.
Thanks.
We started accepting crypto currency for AMC gift cards and are in coding right now to accept crypto currency for online payments on our website and mobile app.
Bitcoin and Ethereum lifetime Litecoin dogecoin among other crypto currencies are all of the work.
And we are exploring now how we can take Sheila IMU as well.
While we will accept crypto currency, we will not hold it on our balance sheet, and therefore will not face increased.
Balance sheet risks.
Seven.
We introduced a new program called AMC Investor connect.
Communication and rewards program for our shareholders.
Already with more than 385000 people enrolled in AMC investor connect since its inception in late June of 2021.
Next.
We opened the Grove in Americana theory theaters in Los Angeles to great success.
Under Amc's management.
And benefiting from the power of Amc's marketing programs.
Few weeks ago.
These two theatres had already climbed.
To become the eight and 34th highest grossing movie theaters in the entire United States.
And we're not done.
As we sit here today, we have signed three signed leases.
And five signed letters of intent on particularly appealing potentially successful movie theater pickups around the U S. Seven of the eight are coming to us from Arclight specific theaters.
Which has ceased operations as you know.
Beyond these eight new theaters, we are continuing to review additional new theater opportunities that are coming our way.
Okay.
And finally.
There are seven new.
In our opinion simply stunning.
Kidman television commercials for AMC theaters in the United States also being used for all of our theatres across Europe.
Which debuted in September of 2021 in Q3.
And in which Nicole Kidman reminds us all how wonderful it is to see.
In her words.
Gasoline images on a huge silver screen.
And that at AMC theaters.
We make movies better.
Our financial results have gotten stronger and stronger.
And our company is doing good things innovative things in area after area after area.
One can see and one can feel that our industry and our company AMC entertainment are on a path of recovery.
And improvement.
From this hard global pandemic that.
That is occupied at all.
Since early in 2020.
Therefore, no surprise are.
Our spirits are upbeat.
However.
Even amidst such good news.
We're not yet where we want and where we need to be.
We wish to emphasize that no one should have annual loosens. There is more challenge ahead of us still to be met.
The virus continues to be with us we need to sell more tickets and future quarters than we did in the most recent quarter.
And adjusted EBITDA is still well below pre pandemic levels.
But also clear.
We are making progress.
<unk> progress.
Sean.
Over to you.
Thank you Adam and thank you everyone for joining us this afternoon.
For the first time since the fourth quarter of 2019.
<unk> all of our theaters around the world were opened for the entire quarter.
Much has been written about the impact of the Covid pandemic on the theatrical exhibition industry and AMC and particularly.
Recovery takes time, but with all of our theaters not open.
And looking at how our financial results have progressed over the last nine months.
And considering the strength of the upcoming film slate it really feels like we are moving towards a more normal theatrical exhibition environment.
The numbers clearly show a recovery trajectory.
Adam has already highlighted some of this information.
In Q3.
We achieved 140 million global attendees, representing an 81% increase over Q2 and a nearly five fold increase over Q1.
Two consolidated adjusted EBITDA of negative $5 million.
Very close to breakeven at $145 million improvement over Q2's, EBITDA loss of $151 million and a $289 million improvement of Q1's, EBITDA loss of $295 million.
And finally operating cash burn representing operating cash flow before interest payments payback of deferred rent and nonrecurring rent prepayments and after capital expenditure was approximately $10 million per month and this compares to approximately.
$42 million per month in Q2 and $107 million per month in Q1.
And we continue to expect sequential improvement as we go into the fourth quarter.
Indeed, as Adam noted the fourth quarter got off to a very strong start October 2021 admissions revenue was almost 90% of October 2019 admission revenue levels.
And this just in this last weekend's total AMC revenues exceeded the 2019 comparative periods.
So while we have more room for improvement ahead, the comparisons of our performance now to that.
Two years ago pre pandemic AMR.
Much improved over where they were during the past five quarters.
As you just heard the 40 million guests that we welcomed at our theaters during the third quarter represented 46% of attendance in Q3 of 2019.
That was also 66% of attendance per show time during Q3 of 2019.
This difference between having 46% of Q3 2019 attendance versus having 67% of Q3 attendance per show time.
Illustrates our continued ability to flex capacity and therefore flex operating costs.
Patiently beat the level of demand.
This effective management of our cost structure is one of the key reasons we.
We're able to achieve the sort of strong results that we saw this quarter results that were considerably better than many expected from AMC.
As we are still in a ramp up phase comparison of our results to prior periods. In 2020 in 2019 is often not particularly meaningful. However, there are some important performance indicators.
Discussing.
Our consolidated revenue per patron for Q3 was a very strong $19 <unk>. This compares to $15 12.
In Q3 of 2019, a 26% increase.
In the domestic market revenue per patron was $20 in 15.
Up $4 and 28 or 27% from Q3 of 2019.
This was driven by a 39% increase in food and beverage spend per patron from $5 35 in 2019 up to $7 41.
In 2021.
With a 16% increase in average ticket price from $9 45 in 2019 up to $10 98, and 2021 and a 64% increase in the revenue per patron from $1 seven in 2019 up to $1.
76, <unk> and.
In 2021.
In our international markets revenue per patron was $16 95.
$3 60, or 27% from the third quarter of 2019.
This was driven by a 41% increase in food and beverage spend per patron.
$3 59 in 2019 up to $5 seven <unk> in 2021, coupled with a 17% increase in average ticket price from $8 45 in 2019 up to $9 91, and 2021 and 50% <unk>.
Kris and other revenue per patron from $1 31 in 2019 up to $1 96 and 2021.
Clearly across all of our markets, we continue to see significant strength in average ticket prices food and beverage spend and other revenue per patron.
The strength in average ticket price has been helped by pricing actions taken during the third quarter.
As a high utilization of our premium large format offerings, such as IMAX and Dolby cinema.
Guests view going to the movies as a special occasion, and they increasingly choose to splurge on the best possible sight and sound experiences available through our premium offerings.
Likewise, the increase in our food and beverage revenue per patron is a reflection of guests' enjoyment of the full theatrical experience at AMC. The significant outperformance compared to 2019 is mainly driven by an increase in the proportion of case choosing to our choosing to enjoy.
Our industry, leading food and beverage offerings.
Moving over to the balance sheet.
We ended the quarter with $1 billion and $825 million of total liquidity.
This is comprised of $1 billion and $613 million of cash and cash equivalents and $212 million undrawn under our revolving credit facilities.
Regarding capital allocation, we continue to pursue a balanced and disciplined approach to capital allocation.
Our priorities remained one ensuring that we do have sufficient liquidity to strengthening our balance sheet by reducing our debt and associated interest costs.
<unk> investing in our business to enhance the guest experience.
And for Opportunistically pursuing value enhancing initiatives, including those that lead to diversification of our business.
With respect.
Spec to strengthening our balance sheet as discussed during our last webcast. We continue to choose to pay cash interest rather than payment in kind or pik interest, thus avoiding any increases in our position.
During the third quarter, we exercised an option to repurchase $35 million of Ah ha.
Highest cost debt that carried a 15% cash 17% payment in kind coupon.
While this may seem like a relatively small amount. It is yet another step that we're taking on the path to recovery.
And will result in a reduction in our annual interest cost by approximately $5 million.
Similarly during the quarter, we repaid approximately $45 million of deferred rent, taking our deferred rent balance down to $376 million.
In total during Q2 and Q3 of 2021, we have reduced our deferred rent obligations by approximately $100 million.
For now we continue to focus the substantial majority of our capital expenditures on maintenance spend capex.
Capex for the third quarter was $17 $5 million net of landlord contributions.
Our net capex for the whole of 2021 is now expected to be in the range of $80 million to $100 million.
As part of our ongoing efforts to optimize our theater portfolio <unk>.
During the quarter, we opened seven new theaters and closed four this brings the total number of locations closed in 2021 to 17 and the total number of new locations opened to 18 for a net add of one location as we continue to effectively manage our portfolio.
By adding new high performing locations and eliminating lower portfolio.
Looking towards the fourth quarter and 2022 as Adam noted, we have reason to be optimistic base.
Based on a Q4 domestic box office full costs of approximately $2 billion.
We currently believe that our adjusted EBITDA.
And our operating cash burn is likely to turn positive in the fourth quarter.
While we are buoyed by our Q3 results and the momentum going into the fourth quarter. We do recognize that there is much work still to be done. We are very focused on the task at hand, and we are confident that we are well positioned to capitalize on the improving and increasingly more attractive industry box office.
As we close out 2021 and head into 2022.
And with that I'll pass the call back over to Adam.
Thanks, Sean.
Before we open this up to your questions.
I'd like to talk about our strategy going forward for a moment.
It goes without saying.
That we're going to do all in our power.
To bring back AMC as you used to know it pre pandemic.
Our biggest and most successful movie theater company in the World and true to our company's heritage, we will strive to be as creative and innovative as we possibly can as we do so.
But you don't drive a car by looking only in the small rearview mirror and only ponder where you've been in.
Instead, you also look through the much larger front windshield, you look forward you gaze at where you're headed.
In addition to where you've been.
When some people have looked at AMC.
They've made the mistake of only looking back.
Two the company that we once were.
Pre pandemic.
They don't factor in that our enthusiastic news shareholders have armed us with our war chest currently has more than one 8 billion.
And liquidity.
We intend to be extremely careful with that liquidity using it first to get to the other side of this global pandemic.
At the same time. However, these monies should allow us to think hard and boldly.
About how we might transform AMC.
And to a new and different company that does a lot more than just show movies incentives.
You've already seen for example, our announcement of last week.
At AMC, we will be entering the multibillion dollar popcorn industry in 2022.
There are two significant advantages.
That AMC enjoys in that regard.
First our brand <unk>.
AMC theatres perfectly popcorn has credibility.
After all.
Our company has been selling popcorn for 101 years.
And on a peak day.
We already sell some 50 tons of this stuff.
And I ask you.
Is there anything that tastes better.
Then real movie Theater popcorn.
Is there anything that tastes better.
<unk> popcorn from AMC.
And second.
We have terrific long standing business relationships with our biggest and best mall operators around.
So.
AMC starting in 'twenty two.
We'll open kiosk counters and stores and retail malls around the country.
We also are in discussions with manufacturers and co Packers to introduce and AMC theatres line of ready to eat and microwavable popcorn to be sold in grocery stores and convenience stores.
Under the AMC theaters brand again, hopefully commencing later in 2022.
And given that we are now cooking popcorn right now is very good at.
At nearly a 1000 theaters in a dozen countries. We also intend in 2022 to introduce new to go packaging. So we can offer pickup and take out options.
And partnering with existing home delivery services to offer home delivery as well.
On a completely separate idea.
AMC has also been speaking publicly in recent months.
Crypto currencies.
<unk>.
I can confirm today.
That we have been exploring with third parties over the past few months.
How we can accept crypto currency.
And if it is feasible.
For AMC to consider even launching our own crypto currency.
Similarly.
I can confirm to you today.
We are now.
Conversation with multiple major Hollywood Studios.
The concept of joint venturing commemorative eminence in Ftes related to major film titles that show in our theaters.
This is the 21 century after all.
And it would seem that there may be real opportunity for AMC in.
In these areas.
But so there's absolutely no confusion on this score some of these conversations are only preliminary in nature.
The regulatory climate is fast moving and could affect our thinking and there can be no assurance how winter if we will proceed.
Still the whole concept.
Is quite intriguing to us.
But popcorn crypto currency and non fungible tokens are only three ideas of several we are actively thinking about within AMC.
We will say more publicly about them when and if we know more.
Our point, though.
Is that when you think about amc's future.
Especially securities analyst for major firms, who sometimes published long treatises about various exhibitors, including AMC.
You should be thinking broadly about us.
Because at AMC.
We are thinking broadly about our future.
Before we head to your questions.
I would like to end our prepared remarks with a personal comment if I can.
I believe the chief executive officers recoveries should own company stock and.
And I believe in transparency.
So I want to repeat today comments that I made on our last earnings call three months ago.
I was one of my first acts the summer as the new chairman of the board of AMC.
Now, it's my intention to recommend to our full board of directors, a new executive stock ownership policy.
The board approve that recommended that recommendation.
Of the new policy at its most recent meeting it applies to 19 of our most senior executives without taking you through its many nuances and complexities.
The new stock ownership policy generally requires that I as CEO.
The required to carry.
Years of my salary.
And fully owned or board granted AMC stock.
The goal is for our company as CEO.
Inc, and act like a shareholder because I am a shareholder.
I want my interests.
We aligned with yours.
Separately on the last call I pointed out that much of my annual compensation is not in cash, but it is in AMC stock.
Each year 62, 5% of my compensation is in AMC stock not cash to be exact.
In the almost six full years I've led AMC.
With the caveat that I did get some shares to my two adult children and I forfeited some granted shares in some years, but not others to cover to cover federal and state income tax withholding obligations.
Have not sold a single AMC share.
When AMC stock was rising in value earlier this year I did not sell even one AMC shares.
In March not in June not in September when I could have done so.
But on our last call I also pointed out to you that in September of 2021, I would turn 67 years of age.
Our uniform vibrant vigorous full life 67, I might add.
But 67 nonetheless.
Prudent estate planning suggests I should diversify by assets a bit, especially with Congress, having been discussing imposing potentially soaring capital gains tax rates and significant changes to what can be passed on to one's arris. So.
Even though I was not required to make the public disclosures that ive made back in August.
No to be transparent I made those public announcements public announcements anyway, nor online.
Required.
Make any public announcement today.
Although to be transparent.
Repeating those same public announcements today.
I said, then that I expected to sell some AMC shares before year end and then I would do so under the auspices of a so called <unk>, one plan, where I give up stock trading control and turn it over to an independent bank in my case Jpmorgan Chase Mike.
My plan, though which I did put in place back in August as several parameters.
<unk> that the plan to be set up several months in advance and that any stock sale be spread over at least three different calendar months.
So you should expect to see some stock transactions shortly.
On my behalf.
I can only imagine the naysayers and others, who wish AMC harm.
We'll try to spread spread fear uncertainty and doubt.
In this regard.
But here's what they probably won't tell you.
Even after this brief wave of selling Thompson, and hi, Adam Aron still will have well more than 2 million.
2 million fully owned or granted AMC shares in mining in.
If you do the math you will see that with this much current and future ownership of AMC.
Have an enormous personal stake in the future.
Of our company of your company of AMC Entertainment.
I firmly believe in AMC and my interests are very much aligned.
With our broad sure sure broad shareholder base to care very much about the value of your ongoing investment in my ongoing investment in AMC Entertainment stock.
So.
That's our thoughts coming out of Q3, Sean Let's turn first to the questions that were submitted to us from our shareholders. What's the first question.
Thanks, Adam So the first question is will AMC consider various promotions associated with the new popcorn sales such as perhaps a golden ticket.
So.
I have to admit.
Surprise.
I think I'm following.
Almost 2500 of our shareholders on Twitter.
And I receive.
Hundreds sometimes thousands of inbound messages every day on my Twitter feed.
Tend to read as many of those as I, possibly can every single day, because I've learned so much from what our shareholders, telling me and what they think.
And what's happened this year.
As we've been deluged.
My suggestions.
From our shareholder base.
Over and over again since the popcorn announcements, which was just <unk>.
The last week.
I've seen suggestions that we include in the boxes of popcorn.
That we sell in supermarkets for example that we include in AMC discounts certificate or occasionally there is a random surprise, maybe a free ticket even a free private theater rental at our theaters.
I can't tell you, it's a great idea.
If you look at just turn on your TV and looked at other companies advertisements. These days Domino's as a major promotion right now subject surprise freeze, where theyre, giving up things along with.
The pieces that you order from them, it's not exactly a new idea.
All my life Cracker, Jack has put a surprise.
Very good one, but they bought a little surprise.
And every package a crackerjack.
And I think.
We have a great opportunity.
<unk>.
Bring down.
The perceived cost of buying AMC theatres pop theater popcorn perfectly backward by putting in either.
<unk> significant if you go to a theater or a previous of some kind and similarly, we have an enormous commercial opportunity.
To let people know that they should go and give them incentives that they should go see a movie in some cases it may be a particular movies, some cases or maybe all movies at a nearby AMC theater. So I think it's a great idea.
And write it down folks we're going to do it.
Thanks, Adam So the next question is where do you except shave.
So Sheila.
<unk>.
Again shareholder suggestions from shareholders.
Theres just been a tidal wave of inbound messaging to our company and to me personally.
That we ought to.
To get much more active in the spirit of crypto currency.
And that there was real opportunity for AMC.
And in a groundbreaking announcement.
Back in August or September, we announced with some bravado that we're going to accept bitcoin.
By year end for online payments.
Either on our website.
Or our mobile app.
It was very well received so we figured out a way to that.
Increase the currencies that we would take.
Growing it to include a <unk> <unk>.
<unk> Cohen and Bitcoin cash. We then received so many messages.
About those point.
We took a quick look.
I did a Twitter Paul.
A lot of you voted.
A lot of you voted yes.
So we're in the process of figuring out how to take those points.
More recently.
Once the dose credit answer was out there we announced.
That we'd already figured out a way.
For people to buy AMC gift cards right now.
Using all of these currencies that I've mentioned here to fore.
And we are on track right now to accept.
As we promised bitcoin a.
<unk> lifeline between cash and others prior to year end.
Next month.
We believe that will be in a position that for online payments.
Directly with us on our through our website and App, we think we'll be able to launch the acceptance of those growing in the first quarter of 'twenty two.
Just a few months now.
Again on our website and smartphone app.
And as we made those announcements which was <unk>.
Making a lot of you happy.
These Florida commentary came in about <unk>. So again I did a Twitter Paul and again a lot of the regulatory a lot of you voted and a lot of good yes, and we are now figuring out how we can take <unk> as a currency.
That's the next one on our crypto currency hit parade I might add that we believe we have figured out ways, where we do not have to hold crypto currency on our balance sheet. So we're not taking increased our balance sheet risk with all of this potential acceptance of crypto currency and as I said in earlier in the remarks.
<unk>.
As we learn more and more about the opportunities available to AMC with crypto currency.
It does really raised the question in a serious way and we are engaged in serious thoughts and discussions with third parties on this subject.
So we just accept crypto currency or do we issue an AMC crypto currency of our own.
Whether it that way that might hold on the balance sheet, because we might own a lot of that.
And the interesting to see what value creation could occur for the benefit of our shareholders. If we do.
Thanks, Adam and the next question is what are the opportunities for AMC with respect to <unk>.
Yes.
Here again.
Sure.
Our inbox is filled with ideas from our shareholders.
About <unk> <unk>.
I remember reading the first tweet.
That came to me was there a tweeter at DM a direct message.
That said you really audit launch.
<unk>.
The issuance of commemorative movie tickets.
The format of an entity.
I instantly thought.
That's a really smart idea, it's just a really smart idea and then.
I realize that kept reading that wasn't the only inbound messages I got about entities or about to member of tickets and the more I saw this.
Cavalcade of advice from our shareholder base.
That we should explore commemorative movie theater tickets as in Ftes.
The more they set us down this path.
We have already commenced.
Serious discussions with multiple Hollywood Studios major studios.
About launching entities.
In conjunction with some of the major titles.
Movies that are playing in our theaters.
As I said the premier prepared remarks.
There is nothing to report today.
But stay tuned.
This space is very intriguing to us.
Thanks, Adam and the next question is will AMC offer a method by which people can buy retail AMC merchandise.
Well you seem to be on the hit parade of suggestions from our shareholders.
Over and over and over and over and over again.
People are telling me that we ought to launch various lines of AMC merchandize.
It's a whole variety of things.
Gary the AMC logo, whether it's.
Golf shirts, or coffee bonds or hats, or a lot of other things.
And.
Again, it seems like a good idea to us.
Especially if we can connect it to a major movie titles that are playing in our theaters.
And so we're going to be exploring this area very carefully.
As we enter the new year 2022.
Well AMC of esports and gaming in the theaters.
Esports and gaming this is something we've looked at repeatedly over the six years that I have run AFC.
There are reasons to think it might be one of these many ideas, where we could branch out our company and do something.
Different going forward than we.
We have done in the past.
Hopefully, creating shareholder value in the process.
Or living up to the shareholder value that's already implied in our share price.
Interestingly for us.
On our board of directors.
As another Adam Adam Sussman, who is the president of epic games.
And.
Not a week goes by that I don't receive suggestions.
Suggestions in my inbound Twitter feed that we form some kind of partnership with a company called Gamestop, which.
Apparently many of you have heard of.
So, we'll we're going to take a look at what opportunities available to AMA AMC through gaming and esports.
As of the year it comes forward.
Next question is what theater locations are you looking to expand into.
Yes.
I'm really proud of.
The caliber of talent.
In our development organization.
Development is our name for our real estate group.
Sure.
They have ownership of the.
Whatever it is the leases on almost 1000 theatres that we have.
They are in active dialogue with with.
<unk>.
Proprietors in the commercial real estate industry.
Small operators.
Other commercial space.
<unk>.
AMC.
Over the past several years has really become what we think is the clear undisputed leader in our industry and what we're hearing from landlords.
The United States.
As well as across Europe.
As.
That where a.
A company of choice.
<unk> gets first crack.
A lot of superb movie theater locations.
That may come our way. So in addition to the eight theaters that I mentioned are in the pipeline right now either signed leases or signed LOI is to go to the next step with those leases.
Our development group.
Is.
Out there looking at and fielding.
Proposals like every week for a new theater here, a new theater there.
Based on.
The intriguing commercial real estate opportunity that's in front of us.
I think it was in your marks on the call earlier, Sean you talked about how we're adding high high performing theaters like the Grove in Americana in Los Angeles, which.
A month after we took them over where the $8 34th highest grossing movie theaters in United States at the same time, we're pruning out of our network of almost 1000 theaters low performing theaters.
<unk> essentially make no money at all or even lose money.
We'd love to be in a position, where we can refine our fleet.
So that we can continue to add high performing profitable theaters and chase away.
The leases that are far less attractive.
Thank you and what about issuing AMC branded credit cards.
It's another great idea although.
I don't remember seeing that from.
On Twitter I think that came from within our company.
I thought about doing that when I joined AMC.
Back in 2016, because earlier in my career.
What I was the chief marketing officer of United Airlines.
United Mileage plus reporting to me.
And therefore.
United is co branded credit card reported to me and back in 1990.
Which I hate to admit 31 years ago, United was doing about $10 billion of volume.
On that branded credit card $10 billion of volume or more.
I didn't launch a branded credit card at AMC.
Back in 2016, because at the time I thought it was a small idea for us and that we wouldn't place a lot of cards, but something very dramatic has changed.
At AMC first in 2018 and now again in 2021.
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By 2% between 2016 to 2018.
We started dramatically growing the amount of participation in our AMC stubs loyalty program.
And we now have over 20 million households.
Who are enrolling in AMC stubs, just in the United States.
A lot of those people are very committed at AMC than in the summer of 2018, we launched a list.
And added another almost 1 million people.
Who we are.
Presenting with our subscription program committing to committing to.
Yes.
Payoffs each with each and every months for the opportunity to see as many as three movies a week for a fixed price.
That's another group of people, who are uniquely committed AMC and then there is what happened this year.
As you know.
Individual retail investors descended upon AMC.
What control of AMC.
And last time, we announced that we announced that we had some $4 1 million retail shareholders, who are very much invested in our company not just invested financing in our company, but invested emotionally with our company and Thats Another group of people.
Who are very interested in our company and very committed to AMC. So given these three populations now.
That are large in the millions.
That our community AMC.
I think at AMC branded credit card might work really well both for the holder of the card for us.
The company over the Cobra co branding partnership with a major bank, we have already started discussions.
With several of the major credit card issuing banks.
To see if we can't do something here in 2022. This is yet another one of these.
Ideas.
Where AMC going forward.
Could be a company that is.
Much more active and engaged in People's lives.
Then just being the repository of where they go to watch movies out a movie theater.
When they want to go save flick.
Next question yet is would you consider expanding further in Europe.
Well, we would consider expanding further in Europe, but I do want to remind everybody that.
<unk> already today.
Entertainment is the largest movie theater exhibitor in Europe.
We are either number one or two.
In the UK and Ireland.
In Portugal, and Spain, and Italy.
In Sweden, and Norway, and Finland and Scandinavia.
Number four in Germany today, so we have a significant position in.
In Europe.
The brand names that we use.
Are different in Europe.
It's odeon in the UK and in Ireland, So neysa in.
In Spain.
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UCI in Italy.
It's <unk>.
<unk> other names and local names in Scandinavian languages up in the.
The north.
But we're a big player in Europe, and we're always looking to.
See we take bigger and stronger still.
Well, the AMC consider making it sound movies.
Yet another interesting idea.
Come into us of late especially after we raised.
The build $1 billion to $250 million of equity capital in the month of May.
When our shareholders.
Facilitated our raising capital.
Equity capital.
That puts our company in a position where we can consider how to deploy that capital.
And do so to create value for our shareholders. This is not entirely a new subject for AMC.
Many years ago.
AMC became a 50% owner of something called open Road films I was the co chairman of open Road films back in 2016, and Youll recall that in 2016 Overrode Open road films.
One the Oscar.
For best picture of the year.
For one of them will be called spotlight.
And so we've made.
Content before.
I do think in this day and age when so much content is being created.
It is interesting to contemplate.
Should AMC fund.
Content.
Should AMC fund exclusive content.
Might only be seen at our own theatres.
These are all possibilities.
Again possibilities that we'll be exploring in.
In 2022 and beyond I've already had conversations with several of the best filmmakers.
In Hollywood.
A very experienced movie makers.
At.
Thanks to our shareholder base, who armed us with what I called earlier on this call a war chest of equity capital.
To think differently about our future than some of you look purely at our past.
Debt.
Possibly going into joint venture with movie makers is something that we can consider.
But again no promises no decisions have been made.
It's a decision we'll make later in 2022.
So the next question Adam has can you increased pay for loyal hardworking AMC workers.
So that is a fabulous question.
There are so many reasons.
Why AMC survive.
The year 2020, when the pandemic was at its height.
Our landlord community.
Sided with us.
And gave us a pass.
Not forcing us to be current in rent.
When our theaters were closed and we had no revenue.
In 2021.
Our new retail shareholders, who were so enthusiastic about AMC.
Literally gave us billions of dollars of additional equity capital.
To strengthen the companys reserves and its financial strength.
But there is another group of people.
Who you just can't say enough good things about.
And that's the people who work at our theaters.
We call them our film crew.
And these are in.
In some cases or the general management of our theatres in other cases, they are hourly workers, who are banning the box offices in the concession stands and cleaning up the theaters and keeping them clean and putting making sure that we institute all the AMC safe and clean safety health and safety protocols, which have made it.
Possible for butyl come back in big quantities to our theaters.
And.
<unk>.
I mean, you've all read about the so called labor shortages in the United States, you've seen that unemployment is now at the lowest rate.
That it's been since the pandemic started.
You can't go anywhere in America.
Without seeing help wanted and we are hiring signs at every retail store in every case and every fast food place.
We're all return.
People are looking for quantity workers quality orders.
And.
Among other things that means you have to pay them and so we already have taken a hard look.
At the wages that we pay around the United States.
And especially with the political currency of the country. There's a lot of talk about $15 minimum wages and you see rising minimum wages all around the country being instituted locally or in certain state jurisdictions, if not federally.
We actually have already taken action to increase our wages for our film crew.
<unk>.
I can say without equivocation.
They work hard they work well and they've earned it.
The next question yet is what are your plans to pay of Amc's debt and how long will attack.
With this question.
Really highlights.
Some of the flood.
Call fear.
Uncertainty and doubt that's thrown around our company.
The of all the things that have kept me up at night.
In the last two years.
Our debt load is not one of them.
And I'll tell you why.
Hi.
First of all.
Prior to the pandemic.
We have extended out our debt maturities.
And second.
During the pandemic.
We worked with our lenders.
Mostly our both our first lien holders and our second lien.
To again further stretch out our debt maturities.
When you look at how much money we have.
For sure we took on a lot of additional debt.
To make it through the pandemic.
But we did in a smart way.
And if you look at our maturities.
We don't have any debt maturities.
Before August of 2023, and that's only a few hundred million dollars worth.
We don't have we don't have big maturities until.
Until 'twenty debt maturities, which means that when you got to pay the debt back till 2026.
That gives us 2026.
Five years from now that.
That gives us a lot of time to build our EBITDA back remember that before the pandemic. This country. This company was routinely generating $800 million or so of EBITDA each year.
As the recovery moves to full blown bloom.
We ought to be bringing in a lot of EBITDA.
Now in 2026, we can use some of that.
That EBITDA to pay down debt.
If you look at what we've already done.
It is true that we took on a lot of additional debt between March.
2020 and January 2021.
To survive the pandemic, but.
If you look at what we've done since the end of January through to now.
We converted $600 million of debt into equity.
We paid off our.
$200 million balance in our revolving credit line, we did that in March.
Sure.
We've paid in the second and third quarters, we paid off $100 million of deferred rent which is that.
If you looked at US recently, we announced we clawed back $35 million of that high interest.
Interest rate expense of debt that we took on last December so we're already paying back debt, but here's why.
Don't lose sleep on this.
And why.
People, who don't necessarily wish AMC well.
Throw this debt load around to scare people.
Hi.
Companies will never pay off all of their debt.
Companies do want to manage the debt load down to a prudent level.
But every major company in America carries that may carry it almost in perpetuity and the reason they do so.
Is returns on equity are higher.
Remember shareholders own the equity returns on equity are higher.
You can borrow some debt at reasonable cost.
And so.
We will over the next.
But.
Three years when the first small maturity comes in the next five years when I guess two years when the first small maturity comes in the next five years when the large maturities come we will pay we will continue to pay down debt as we have over 2021, but we're also going to refinance our debt.
And we've done that three times.
At least.
Since I joined the company in 2016, where we us.
We get to that hopefully down to a more prudent level and then we stretch out the maturity pushing it out another two years three years four years five years.
Again.
Carrying a prudent level of debt.
So that we can increase returns on equity and by the way when we refinance that debt.
We borrowed some of that money.
We were right on our knees because of the pandemic in our theaters were all shot and the interest rates, we had to pay with very high like very high.
And I would expect it as we refinance our debt in 'twenty, three and 'twenty four 'twenty five 'twenty six that we'll be able to refinance our debt not only stretching out maturities.
Well out into the future, but also doing so at a much lower interest rate, which will save us a lot of interest expense.
As we go forward.
Thanks, Adam.
Final question from our shareholders.
Is what is the AMC doing to ensure exclusive theatrical releases.
The issue of exclusive theatrical releases the industry jargon is a window.
The window that movies are in theaters solely as contrasted with when they go to the home.
When there is still in theaters.
That's been one of the biggest issues that we've been tackling trends since when the pandemic started.
Some studio started taking movies to the home right away simultaneously.
And it makes it easier for people to watch at home instead of coming to one of our theaters so no surprise.
AMC as the largest exhibitor on the planet.
And having actually very solid relationships at the top of every major studio engaged in constant dialogue.
With studio Chiefs.
About.
How important it was for our business, but as we articulated to them how important we thought it was to their business.
That we both get the benefit of the monies that are flowing in the movie theaters in calendar year 2019.
$43 billion, a movie theater tickets were sold across the face of the Earth.
You don't really want to light a match if youre a major studio you don't really want to light a match to $43 billion of revenue, even if they share some of it with theaters.
And we've been making that point, we were making that point strongly.
They get strongly sometimes publicly some started making the point friendly privately.
And I'd like to report that of late we've had real success on this front.
You may recall that in July of 2020.
We launched a groundbreaking announcement.
With Universal.
That we were going to participate.
What you might take it was like a venture partner.
They took movies to the home.
Neither at the 17 day, Mark or the 31 day, Mark where AMC was going to get paid whether they.
People came to see our their movies in our theaters or their movies on their home catches.
In August.
Of this year.
We reached a very important agreement with Warner Brothers.
Who had been experimenting during the pandemic in calendar 'twenty one.
Taking moving simultaneously to the home.
And theaters, we think that decision may have helped HBO Max but we think it costs Warner Brothers Studios a lot of money, we think it cost us a lot of money and so we're very very pleased that were able to sign a contractual commitment with Warner brothers for calendar 'twenty two beginning January one.
That if it's a theatrical movie being made by Warner Brothers.
It's coming to theaters first and coming to theaters only.
For a essentially a 45 day window, where we have the movie exclusively we were similarly thrilled.
That Disney announced just right around labor day weekend.
That it too during the pandemic you might say Covid rules apply.
It was experimenting with different distribution models, including taking movies to.
Disney plus premier access they call it where they were charging a usually a $30 fee to watch a movie on Disney plus at the same time, they were taking limited theaters.
What Disney announced Labor day weekend was that for their four movies that were being released between labor day and nearest day.
They were gonna give theaters on exclusive theatrical window.
And now it's our burden.
To generate significant amounts of our I don't mean, just AMC I mean, all the exhibition to generate significant revenues for Disney and movie theaters.
So that Disney has confidence.
That when it's deciding how to release movies in 'twenty, two and 'twenty three and beyond.
That they put in place in respect of exclusive theatrical window and as I said the Disney announcement in September was a significant announcements for us what's more.
Disney has some amazing movie product coming out I had the privilege.
Last Monday.
Going out to Manhattan Beach.
And going to the studios of light storm, which is James Cameron's and Jon Landau production company. That's the company that made the incredible movie Avatar.
The most successful movie of all time.
Until Avengers endgame came out and I'm told.
Avatar, just re past Avengers endgame.
The number of liability of all time.
Avatar two is coming out at Christmas of 2022.
I've seen footage from it.
It's mind blowing.
Avatar two is going to be such an incredible movie and I can tell you right now there is one and only one place to watch avatar and it's not on your telephone and it's not on your tablet and it's not in your LTV is on a big screen to quote Nicole Kidman.
Gasoline images on a huge silver screen.
So I'm quite upbeat about whats coming about.
As Covid lessons.
The degree to which Americans have been trapped in their homes and apartments, and we start getting out and about again.
I think you're going to see.
Revival of an exclusive theatrical window.
And that clearly is to Amc's benefit having said all of that.
We werent exactly wallflowers.
As all of this was going on.
So if studios, we're going to experiment.
With Windows, we were going to negotiate hard about film rent terms.
And if you look at the third quarter financials.
That were released in.
A little over an hour ago.
Yes.
Our two hours ago I guess.
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Youll see that our film exhibition costs.
In the third quarter.
We're in the low 40 <unk>.
And I compared our film exhibition cost to those of Cinemark, We've just announced their earnings couple of days ago, and our film expense. Our film exhibition costs in the third quarter were 11 100 basis points lower than cinemark.
So.
Make no mistake AMC as industry leader knows how to negotiate hard for the benefit of our shareholders.
Thank you.
Okay.
Operator, we have no more questions from those who are on the call.
So I'm going to conclude.
We do if there is one I am sorry that concludes our shareholder questions.
And I guess there is a question that we have from someone on the call.
Yes. Thank you. Our final question comes from the line of Megan Brennan with Credit Suisse. You May proceed with your question.
Hey, guys.
So Sean I think you gave the October box office is there a way you can give us the idea of how that breaks down in the U S versus international and I think you said that based on a $2 billion of box office in the fourth quarter that youll be adjusted EBITDA positive is that total consolidated company is that U S and then as an intern.
National is it Jeff.
Just you asked number what exactly was that and then.
How are you doing with a list I think you talked about the almost 1 million.
Scrubbers, but are they still.
Driving because I think you turn that back on recently.
Yes Megan.
Couple of questions. There, let me try address firstly.
The expectation for Q4, what I said in the prepared remarks was assuming a $2 billion domestic box office and the expectation that is both positive from an EBITDA point of view adjusted EBITDA point of view that we disclosed and also from an operating cash flow.
Operating cash burn point of view as well.
So that's the expectation for Q4 when you look I think your question was on October.
Attendance numbers and.
And if you look at a high level at our October attendance numbers.
What youll see is actually the international Biz.
Business outperformed the U S business, a little bit but overall.
Pretty much in line.
The domestic business was from its tenants point of view was around 30%.
Hello.
19th level in the international business was around 25, 26% below 2019, but we also did refer on the call earlier to the box office for Q3 and the box office for October those numbers were all domestic numbers, yes, several domestic box up and asked for a list.
<unk> added.
Zenith.
<unk> had 900000 people.
Pre pandemic.
Who are paying us between.
$20, plus tax months and $24 a month plus tax a month.
See multiple movies.
Needless to say when all of our theaters were shut so it's probably a good idea to pause their memberships.
Keep them hanging around the hoop, so to speak and not having them all disappear.
And we did turn a lift back on and.
In the July August timeframe, just a few months ago in this quarter.
And we're already back.
<unk>.
At.
Right around two thirds.
I have a list members are back.
Subscribing as payments every single month.
That was ahead of our expectations and we're really pleased and as more remember the whole appeal of Atlas.
As you may recall pre pandemic on average those people were seeing two six movies a month.
If you look at the titles.
That were released early in 2021.
We werent always seeing two six movies a month, so if people want to see.
Or for that matter five movies, a month, you might want to say or eight movies a month I wanted to say.
But.
And.
Sure.
But things.
Starting to get Big win Chang Qi opened up Labor day weekend.
But then the new releases in September were a little light.
But if you look at October.
We're back to an old pattern.
Of Big New movies coming out every single week there.
Benjamin It was bond in no time to die and there was Halloween kills and there was dune.
I also got to see Ghostbusters afterlife.
You all need to go see Ghostbusters afterlife, what a movie if.
If you remember the original Ghostbusters movie.
Long time ago.
This this new Ghostbusters, which was directed by the sign of the director of the original <unk>.
Ghostbusters movie, it's just wonderful and I think it opens November 19, if I'm not mistaken Sony.
Sony movie and when you look ahead there are so many big movies coming out of tunnels just opened up.
A couple of nights ago.
We've got Ghostbusters afterlife, and we've got West side story, and we've got the <unk>.
Spider Man movie coming out at Christmas.
And.
We have a solid fleet starting immediately after new year's day for 2022.
There are this is enormous array.
Major franchise blockbusters that are going to hit theaters.
In 2022.
We've been waiting and waiting and waiting for the top gun Maverick movie, which again ive seen footage of that movie, it's going to be incredible.
Sure.
There is a mission impossible.
Yes.
At Christmas we have avatar.
Jurassic World coming out again in 2022 its movie after movie after movie the more movie releases that come out that are appealing the more people who will sign up for a list.
So we're quite pleased with where we are and we're expecting the analyst numbers to grow going forward, especially as we get into 2022.
Okay.
Okay. Thanks.
So with that operator that'll be our last question on this call.
I'm going to end.
The call.
By repeating something I just said.
There are some incredible movies.
Coming to an AMC theater near you.
Really soon there in theaters now and new ones are coming really soon.
So.
Luis.
Seeing an AMC theater thank.
Thank you for listening to our webcast today.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.