Q4 2021 AMC Entertainment Holdings Inc Earnings Call
[music].
Thank you for standing by this is the conference operator.
Welcome to the AMC entertainments fourth quarter of 2021 earnings Conference call.
As a reminder, all participants are in a listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions.
To join the question queue you May Press Star then one on your telephone keypad.
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I would now like to turn the conference over to John Merriwether, Vice President Investor Relations. Please go ahead.
Thank you and good afternoon, everyone I'd like to welcome you to Amc's fourth quarter year end 2021 earnings webcast.
With me. This afternoon is Adam Aron, our chairman and CEO and Sean Goodman, our Chief Financial Officer.
Before I turn the webcast over to Adam Let me remind everyone that some of the comments made by management. During this webcast may contain forward looking statements.
That are based on management's current expectations.
Numerous risks uncertainties and other factors may cause actual results to differ materially from those that might be expressed today.
Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K.
Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict.
In light of the uncertainties inherent in any forward looking statements listeners are cautioned to not place undue reliance on these statements.
The company undertakes no obligation to revise or update any forward looking statements, whether as a result of new information or future events.
On the webcast, we may reference non-GAAP financial measures such as adjusted EBITDA free cash flow operating cash burn and operating cash generated.
Others.
For a full reconciliation of our non-GAAP measures to GAAP results. Please see our earnings release posted in the Investor Relations section of our website earlier today.
After our prepared remarks, there will be a Q&A session.
This afternoons webcast is being recorded and a replay will be available on the Investor Relations section of our website at AMC theaters Dot com later today.
With that I'll turn the call over to Adam.
John Good.
Good afternoon, everyone. Thank you for joining us today.
The fourth quarter of 2021.
AMC, putting up on the board significant milestones of progress.
Ending a crystal clear message to one and all that.
At AMC is moving well along the path to recovery.
For the first time in.
In the two years since COVID-19 descended upon us all in early 2020.
In the fourth quarter of 2021.
AMC achieved positive EBITDA.
And we generated positive operating cash flow.
And this is not a situation.
Where we only narrowly achieved these important markers.
Our positive EBITDA in the quarter was almost $160 million up a breathtaking.
$487 million.
Over the fourth quarter of a year ago. This led to non-GAAP operating cash generated of more than $220 million.
And it just completed quarter.
Okay.
In addition.
We ended the year with a record setting year end liquidity.
Of approximately $1 8 billion.
Enough to provide AMC with more security.
In case, the return to normal box office levels, it takes longer than some might expect.
And importantly it.
It also gives us the flexibility to go on the offensive.
As we work to create the AMC in the future.
2021 was another year of sequential and continuous recovery and improvement as was the case after COVID-19 forced the closure of all of our theaters in March of 2020.
The industry at especially AMC box office grosses improved each and every quarter of 2020, and each and every quarter of 2021 as theaters reopen as the number of release film titles increased as the overall film slate became more varied appealing.
And especially throughout 2021 as Covid vaccination counts soared.
With the industry and Amc's box office growing each quarter, so to our financial results at AMC improves.
Each quarter as well.
As I look at the recently completed fourth quarter.
<unk>.
Especially pleased there.
We hosted roughly 60 million guests.
At our theaters in the U S Europe and the Middle East.
60 million people and.
Enjoyed watching a movie.
At AMC in Q4.
60 million people.
I am similarly pleased that our average total revenues per patron at AMC.
In the quarter were $19 63.
Some 25, 5% higher.
Then the same statistic in our pre pandemic Q4 of 2019 it's.
It's our understanding that this is considerably higher than that of any other major theater operator.
None of this is accidental.
We worked our tails off to get people back in theaters and our job is not yet done.
We are not yet, where we want or we need to be.
That will continue to take time and it will continue to take sustained and imaginative effort on our part.
But even so.
You can see and you can taste and you can feel it.
That AMC seems to be on a positive glide path.
To recovery.
There is so much conventional wisdom floating around that movie theaters cannot coexist and cannot thrive in a world of streaming.
What a load of.
Cal Doug fir, I cleaned that up nicely, what a load of Cal done.
In a world, where the consumer's appetite for content.
<unk> did it seems to be sufficient to let us all prosper.
It's our view at AMC.
That movie theaters, and especially our company as a leader as the leader in the movie Theater industry has a very bright future.
The problem with conventional wisdom.
Is it conventional wisdom.
So often.
Just utterly wrong.
Remember the breath was reporting that AMC would file for bankruptcy in 2020.
Sean.
Remember that otherwise highly respected experts, we're calling for the AMC share price to fall to $2 $1 or even a penny by February or March of 2022.
Now for all the lawyers listening in I'm, making no prognosis for the future.
Looking only retrospectively.
But those experts gravely underestimated AMC.
And with the full benefit of hindsight.
We can now happily say because now it's a simple matter of fact.
They were wrong.
They were wrong.
They were wrong.
Reflecting on the remarkable success of Sony's Spider Man No way home currently the third highest grossing movie of all time think about that for a moment the third highest grossing movie ever.
Even though it was released at a time.
When people were battling omicron fears no less.
But it wasn't just spiderman then in bond internals Ghostbusters.
We're all part of the highest North American box office that we've seen in two full years.
I had more than $2 $1 billion in the quarter.
And that was more than 50% higher.
Then the industry box office, just one quarter earlier in Q3 of 2021.
Looking to 2022.
2022 film slate is expected to be significantly stronger than 2020 ones with Warner's the Batman opening later this week.
For which advanced bookings are very strong.
The second quarter slate also includes Marvel's Doctor Strange Universal's Jurassic World Dominion, Paramount and Tom cruise are blessing as with the long awaited top gun Maverick.
And then Theres pictures light year later in the year, we have titles such as minions. The rise of grew Thor 11 Thunder.
And I fully expect.
Disney literally to dazzle us.
Both with Marvel's Black Panther would conduct forever.
And James Cameron's Avatar, two the sequel to an inflation adjusted dollars the single highest grossing movie.
Of all time.
Couple of Great films with much of the industry coalescing around an exclusive 45 day theatrical window in the United States that is infinitely better for AMC.
Then when the movie industry flirted with day and date simultaneous release of films to theaters in the home experimentation in 2021.
As we look forward to the full calendar year of 2022.
And <unk>.
<unk> no one has a perfect crystal ball.
But we think that the overall domestic industry box office, which is a good placeholder for the size of our industry. Both here in the United States and abroad could be nearly double that of 2021.
And that makes us at AMC.
Bullish.
About our continued progress.
Two notes of caution.
Obvious inflate.
Inflationary cost pressures labor shortages and potential supply chain disruptions continue to exist.
And if you watch the news you are well aware sadly that there is a war in full bloom.
On the continent of Europe .
These challenges all will need to be carefully managed.
Additionally, a year ago, we spoke to you about our sequentially improving year in 2021 with each quarter expected to be better than the previous one and that is exactly how 2021 turned out.
Merely because of the timing of big movie releases in 2022.
We expect that 2022 could follow a similar path with the first quarter being the low point of the year and meaningful sequential improvement being achieved as the year progresses in short.
Our expectations are for a Q1 that is well above.
2021 Q1 levels.
But nonetheless, it will be a relatively weaker Q1.
Coupled with a strong and reassuring full year performance for all of 2022.
As you look at AMC.
Note that we remain focused on recovery and transformation.
We remain focused on innovation and managing through change.
We are determined to continue with bold and dazzling marketing initiatives, all the while maintaining our disciplined cost controls as well as cash conservation.
Cash raising strategies.
I'll be back in a few minutes to provide some updates on specific key advances.
For AMC to take your questions, but right now I will turn the call over to our Chief Financial Officer, Sean Goodman, Sean.
Thanks, Adam and thank you to everyone.
Joining us on the webcast this afternoon.
The fourth quarter represented a very important landmark along a path of recovery.
The 60 million guests that we welcome to our theaters around the world during the fourth quarter.
Resulted in consolidated revenue of $1, one 7 billion.
That's up 53% from Q3 of 2021, and it's more than seven times, the $162 $5 million of revenue.
Q4 of 2020.
This resulted in two very important accomplishments during the fourth quarter.
First.
We generated positive adjusted EBITDA for the first time in two long years of $159 2 million.
This represents a $164 6 million improvement over Q3, 2021, EBITDA loss of $5 $4 million at a $486 $7 million improvement over last year's fourth quarter EBITDA loss of 327 five.
Okay.
This positive EBITDA was achieved in both Europe at $61 3 million and the U S at $97 9 million.
And second we achieved positive operating cash generated a non-GAAP measure up $224 4 million.
This represents average operating cash generated of approximately $75 million per month during the fourth quarter and this compares to an average operating cash burn of approximately $75 million.
During the first half of 2021.
The fourth quarter proved to be a very good illustration of the working capital dynamics of our business with growth in the business is also accompanied by working capital benefits.
Note that operating cash generated in operating cash burn. These are measures meant to represent total cash flow before debt servicing costs and before deferred rent payments to GAAP reconciliation tables included in today's earnings release.
The strong results in Q4 were driven by consolidated revenue per patron of $19 63. Since this is 25, 5% higher than Q4 of 2019.
And at.
Our resulting solid contribution dollars per patron of $13 44 things. This is 32% higher than Q4 of 2019 note that I'm defining contribution dollars per patron as total revenue less film exhibition cost in food and beverage costs on a per patron.
Basis.
This tremendous growth in both revenue and contribution dollars per patron was across both our domestic and our international markets and reflect strength in average ticket prices food and beverage spend and other revenue per patron.
The strength in average ticket price has been helped by a high.
<unk> of our premium large format offerings, such as IMAX and Dolby cinema.
This reflects our guests increasingly wishing to experienced going to the movies as a special immersive event and thus they are more and more selecting to upgrade to the best possible sight and sound experience is available.
The percentage of tenants at premium formats with 17% in Q4 2021 compared to 12% in Q4 2019.
In addition relative to 2019, we benefited we benefited from a favorable Showtime mix with a higher percentage of evening and weekend shows coupled with pricing adjustments that we were able to take during the course of 2021.
From a food and beverage perspective throughout the year, we have enjoyed exceptionally strong food and beverage revenue per patron as our guests chose to enjoy the full outside the home entertainment experience offer today AMC.
Overall, our consolidated food and beverage spend per person in the fourth quarter was $6 37.
This is 35% higher than the spend in Q4 of 2019.
Our significant outperformance in this area compared to 2019 continues to be primarily driven by an increase in the proportion of guests choosing to enjoy our industry, leading food and beverage offerings made easy and convenient to purchase through that through our app that allows one to order food and beverage when purchasing tickets.
In advance of arriving at the theater.
Our total revenue.
Total other revenue in Q4 2021 decreased by only 6% decreased by only 6% compared to the same period in 2019. This despite a 36% decrease in the number of guests sift.
Other revenue primarily represents fees associated with online ticket purchases screen advertising and theater rental revenue.
Online ticket revenue per patron benefited as an increasingly higher percentage of our guests choose to reserve their seats and order food and beverage in advance utilizing our industry, leading website and app.
Screen advertising revenue also continued to increase during the course of 2021 as the box office improved and we also benefited from revenue diversification initiatives such as renting our theaters during off peak times for businesses and government organizations for meetings and other events.
In our domestic markets revenue per patron in the fourth quarter was $20 46 up 24, 5% from Q4 of 2019. This was driven by a 35% increase in food and beverage spend per patron coupled with a 17% increase in average ticket price and a 40% increase.
In other revenue per patron.
International markets revenue per patron for the fourth quarter was $17 90.
Up 28% from 2019, this was driven by a 32% increase in food and beverage spend per patron.
With a 20% increase in average ticket price and a 55% increase in other revenue per patron.
In an ongoing effort to enhance efficiency, we have been extremely deliberate and adjusting payroll hours and flexing showtime's to adjust to the market to market. For example, our Q4 attendance of 60 million guests represents 65% of Q4 2019 as attendance, but 87%.
<unk> of Q4 2019 as attainments showing this.
This increase in attendance per showing enhances our efficiency and allows us to effectively manage cost precious.
Moving over to the balance sheet.
We ended the quarter with a record year end liquidity of $1 8 billion.
This is comprised of $1 $5 $92 billion of cash and cash equivalents and $209 million of Undrawn credit facilities.
During the fourth quarter of 2021, we repaid approximately $61 million of deferred rent, reducing our deferred rent balance down to $315 million.
In total we have been able to reduce our deferred rent balance by approximately $155 million. During the last nine months of 2021, we expect to further reduce the deferred rent balance during 2022 by approximately 150 to 200 million.
Yeah.
Looking closer at the balance sheet, and particularly our debt position.
It is worth noting that last month, we completed a highly successful capital raising we issued $950 million of 7.5% first lien notes as a result of this transaction we were able to fully repay high interest debt that was raised at the height of the pandemic.
The end result is a reduction in our annual interest expense by approximately $13 million and extension of our debt maturities by between three and four years as the new debt has a maturity date of 2029.
And enhanced financial flexibility.
Overall this was a really terrific transaction for AMC and we continue to actively pursue attractive opportunities to further strengthen our balance sheet lower interest costs and increased operating and strategic flexibility.
Regarding capital allocation, we continued to pursue a balanced and disciplined approach to capital allocation.
Our priorities remain unchanged, one ensuring that we have sufficient liquidity to strengthening our balance sheet by reducing our debt and associated interest costs and extending maturities.
Three 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.
During 2020, and 2021, we focused our capital expenditures expenditures almost entirely on maintenance of the existing fleet.
Net capex, including landlord contributions was $132 million in 2020, and it was $74 million in 2021.
These are significantly less than in 2019, when capex included spend associated with the enhancement of our fleet predominantly through seating upgrades for 2022.
And apart from any M&A activity, we expect capex to be in the range of $150 million to $200 million.
As we begin to invest in the growth enhancement and extension of our business.
As part of our ongoing efforts to optimize our theater portfolio during the quarter, we opened or added three new theaters and closed five. So this brings the total number of locations permanently closed during the last two years to 83 and the total number of new locations opened to 34.
Net reduction of 53 locations.
Both actions closures and openings serve to increase our adjusted EBITDA collectively the oldest somewhat tired theaters that were closed were money losers, while the beautiful new theaters that we are bringing into our system I expect it to be extremely strong performance positively impacting overall profitability.
Going forward, we will continue to actively manage our portfolio, adding new high performing locations and eliminating lower performance.
All with the goal of improving guest satisfaction through improvements to the inherent quality and appeal of our fleet of theaters as well as optimizing our overall profitability.
The operating improvements and efficiency optimization initiatives implemented over the last two years have allowed us to nicely capitalize on the box office growth in the fourth quarter.
We're very pleased with our results for Q4, we are in no way complacent as we begin 2022, we are still in a recovery phase and we will continue to focus on revenue growth efficiency and enhancement initiatives to build our business and ensure our success in a post COVID-19 environment.
And with that I'll pass the call back over to Adam.
Thank you Sean.
Before we open up this webcast to your questions.
I would like to update you on recent actions, we've taken to enhance our business and highlight some strategic initiatives that will that will better position our company as we hurdle into what we believe is a much more promising future for AMC.
Our strong current of innovation runs deep throughout Amc's DNA.
We have led in the elevating a movie going to a truly unique and desirable out of home experience and.
And we set the standard for so many transformative changes in our industry.
We'll continue to do so.
But in 2022 2023 and beyond.
We also expect to transform our company.
And to becoming something much greater than solely a movie theater operator.
Let's quickly look at several of the initiatives and innovations already or soon to be underway.
One <unk>.
During Q4 AMC became the first theatrical exhibition company to collaborate with a studio partner to offer an exclusive non fungible token or NFC to reward moviegoers for their AMC attendance AMC work closely with our partners at Sony to launch the Spider man in Ft.
And the success was undeniable.
86000, ftes were fully subscribed within hours and ultimately.
These <unk> have been sold on secondary markets. Some of them that is but some of them been sold on secondary markets for as much as $17000. No. You did not hear me wrong $17000 for a single Spider man and ft.
By now and just a few months from our first effort was Sony in November we have already launched.
<unk> separate NFC programs.
One of which is supporting.
What is sure to be the new blockbuster movie Batman, which opens this week in.
In total <unk>.
More than 800000, Ftes have already been made eligible by AMC.
Our consumer collection.
And just.
Three months or so.
And if these are not just interesting to crew member of collectibles, but are also seen as drivers of attendance.
For AMC at our theaters and growth in box office revenues for our studio partners, we expect to continue.
Jointly with studios and separately by ourselves on our own.
Create future NFC offers to enhance the overall engagement with our guests.
And importantly in 'twenty two.
We will look to further monetize some of what is now our nascent NFC activity for example, selling some of these entities in addition to giving away free.
And getting a commission on the transfer of our entities.
When and if they are later resold.
Two.
Crypto currency.
We continue to explore opportunities to both provide convenience.
And to create value for our guests.
Through the use of crypto currencies last year, we introduced last year being 2021, we introduced the capability to accept payments in bitcoin ethereum, bitcoin cash and light coin using our website and mobile app.
Later this month in March we will introduce the ability to transact and to make AMC online payments in dogecoin and Sheila <unk>.
That on our website with mobile App functionality following a few weeks thereafter.
We continue to explore how else AMC can participate in the burgeoning crypto universe and.
And we remain quite intrigued by the potential business opportunity.
We've been looking for some time at potentially issuing our own crypto currency, but that will depend on how the regulatory frameworks surrounding crypto currency unfold.
More to come.
And when we have something more concrete to share.
As a side note.
Benefit of our having the program crypto currency functionality for our website and mobile app.
AMC also picked up the capability.
To accept Apple pay Google pay and Paypal online.
Incredibly.
And just a few months.
These latter three forms of payment along with crypto currency already constitute more than 15%.
Of our online ticketing activity as we've seen in the fourth quarter of 2021.
Three variable pricing.
A few years ago.
At some of our U S theaters.
<unk> successfully raised weekend in pricing.
Above mid week levels.
Currently our prices for the Batman.
<unk> opens this week are slightly higher than the prices, we were charging for other movies playing in the same theaters at the same time.
This is all quite novel in the United States.
But actually AMC has been doing it for years.
In our European theaters, indeed in Europe , we charge a premium for the best seats in the house.
As to just about all other sellers of tickets and other industries think sports events concerts and live theater. For example that is not commonly been a practice here to four in the United States.
If you look at our year over year pricing success as was demonstrated in the Q4 numbers you will see that AMC has been a bold thinker in the area of pricing.
Who is willing to take risk and one is willing to lead and one who sees considerable upside opportunity for us ahead.
If we continue to be imaginative.
Four.
AMC perfectly popcorn.
Our foray into the multibillion dollar popcorn industry during.
During 2022 is on track.
Remember AMC knows something about popcorn on a peak day, we saw 50 tons of this stuff.
We plan to make our freshly pop popcorn.
Available through food delivery to home services, allowing consumers to enjoy a slice of the AMC experience while entertaining at home. We also plan to sell to go packages of popcorn at our theaters for takeout <unk> for pickup.
Beginning later this year, we will begin selling freshly made real AMC theatres perfectly popcorn and other movie treats at select mall retail locations around the United States.
And I think the biggest opportunity here at all.
Is that AMC is working actively and opportunity.
Tougher pre packaged Andrew we are ready to pop microwavable, AMC theatres perfectly popcorn in supermarkets and convenience stores and in other food service venues around the country.
As we recently announced.
We recruited Ellen Copenhagen to fill the newly created position of Vice president of growth strategy.
She will lead our initiatives related to the sale of popcorn.
Outside the traditional in theater channel and assist with other initiatives to broaden and transform our company Elena has an outstanding track record and brand management and innovation at Pepsico and Frito landed hostess brands.
And our skill set combined with their significant grocery experience will be a tremendous asset to us as we rollout our <unk> initiatives and explore other innovations in 'twenty to watch out Orville Redenbacher baby.
A considerable competitor with a popcorn brand that truly resonates with consumers.
Its way.
Five.
Additional theater additions.
Additionally, that should've been additional theater locations.
During 2021 and early in 2022.
We acquired seven high profile and strategic theaters, including six former Arclight specific theaters.
That's about a third of their circuit located in major metropolitan markets like Los Angeles San Diego.
Cargo in Washington D C.
Adding the magic of the AMC product and marketing strategies to existing high profile theater locations has proven to be a winning formula.
Our mid 2021 acquisitions of the Grove <unk> thousand 14, and America Americana at brand 18.
Both former Arclight Pacific theaters, both in the Los Angeles market.
Have under Amc's leadership and management, both ranked among the 30 highest grossing movie theaters in the entire United States out of some 5000 theaters of the country.
Since joining the AMC family in mid summer.
Theater landlords real estate owners around the country recognize that AMC is a theater operator of choice and we continue to be an active and constant discussions regarding potentially picking up additional highly attractive locations that can enhance our portfolio.
Transition costs can be modest and often subsidized by landlords.
Not always but sometimes we find opportunity to pickup theaters at a mere 1% to two times projected EBITDA, even counting in factoring in their transition costs <unk> <unk>.
Similarly, we have looked at buying some or all of several smaller movie theater circuits.
So some sellers have price expectations that make their approach who is dead on arrival.
On the other hand, we are seeing other opportunities, where we think we can grow our theater count attractively with quality theaters and <unk>.
Strong potential markets and do so at three to four times our projected cash flows. These are bargain prices, we will continue to be highly disciplined in our approach.
No.
But put it all together there is opportunity in them are hills watch this space for more announcements as AMC continues to grow.
Next.
Our branded credit card.
Some of you may have seen two completely voluntary and well earned executive retirements.
<unk> yesterday afternoon.
And that we are seamlessly back filling these two very talented executives with superb individuals to carry our legacy forward.
We'll have new leadership highly experienced already internal within the company to run our U S Theater operations. In addition.
In choosing our new CMO.
Elliot Hamlisch of Wyndham hotels, <unk> resorts, Starwood hotels, and resorts, Deloitte consulting and American express not to mention an MBA from Harvard business School.
We have someone bringing to his new AMC position considerable experience with co branded credit cards.
With approximately $4 million shareholders, and 25 million households in our AMC stubs program.
There is significant potential profitability for AMC, if we launch our own co branded credit card and that will become yet another high priority for AMC.
In 2022.
You may recall that back in the early 19 nineties.
<unk> marketing officer of United Airlines, and managed its co branded credit card with what is now chase.
I've seen firsthand the spectacular profitability.
That can accrue to accompany.
That has a successful co branded credit card launch.
And finally.
Sure.
Recovery.
Agility and transformation.
These three words are the mantra for AMC in 2022, and 2023 as our fourth quarter results indicate we continue to be in a state of recovery and our focus remains on bringing to fruition.
Successful full and lasting recovery from the impact of the pandemic.
At the same time.
We realize that.
We will need to be agile to achieve that goal because admittedly our industry is at a time of robust change.
But agility is something that we've demonstrated AMC is pretty good at.
Let's just say that at AMC, we have steered this ship through the most uncharted of unchartered waters.
In the recent years.
So we're not worried about the need.
For us to adapt our business model as we go forward.
To cope well as change unfolds around this.
But some people following us.
Look too narrowly.
They think our aim is merely to bring back the company that existed back in 2019 pre pandemic.
And they look at the value of that company.
And projected falling brace for us at AMC going forward.
But I want to make very clear to everybody on this call.
Our ambition is much more grand than that.
Our shareholders.
Have armed us with one 8 billion.
Of year ending liquidity.
And there may be creative ways for us to raise even more monies.
I keep on getting offers from our shareholders for example.
So if they want to chip in and help us pay down our debt.
I don't know exactly that thats in the cards.
But I do admire their passion and dedication to AMC Nonetheless.
They've shown it over and over and over again.
<unk>.
<unk> with $1 $8 billion of cash and Undrawn revolver at our disposal.
That can be used.
To outlast this endemic.
To pay down debt to innovate within our core and related businesses.
And for transformative M&A.
We encourage those of you who look at AMC.
To do so boldly.
Because within AMC.
We are thinking boldly.
Before turning the call over to Q&A I would like to make a few specific observations about our enthusiastic and avid shareholder base.
They really care about AMC and theyre not shy with their advice.
I believe it or not I tend to read a few thousand.
Of their short comments on Twitter each week.
And the feedback that we're getting.
Greatly helped me to run this company. It's greatly helped me to run their company.
I'm also pleased that more than 615000 individuals.
Have self identified as AMC shareholders.
Enjoining AMC investor connect.
Program that we launched in the last days of June of 2021, It's our special Communications and rewards program designed especially and only for our shareholders.
Also in the fourth quarter of 2021 I personally hosted two sold out early movie screenings for our shareholders in New York and Los Angeles.
More such screenings that I personally host and firstly, a 10 will be planned around the country throughout 2022.
At the la screening.
Back in December .
One of our investors scream from the audience.
We are not leaving you said.
And indeed, he appears to be right.
Right now.
There are several data sources to reconcile.
Best we can tell.
We have about the same number of individual shareholders now.
As we had a year ago at this time in.
In the neighborhood of 4 million individual investors, who care about amc's future.
If you exclude index funds.
We have no choice, but to own and hold AMC shares.
Individual retail investors.
Investors.
Would seem to own more than 90%.
Of our officially issued 516 million shares as of today Indeed.
As it is often said about AMC on Twitter <unk>.
Retail owns the float.
Our shareholders ask me every day on Twitter speaking and Twitter.
To speculate about their theories on the trading of AMC stock as well as on natural or unnatural pressures on it.
Exactly as we said last July .
We have no reliable information.
Naked shorting or so-called fake shares or so called synthetic shares.
No.
Even as we are well aware of your thoughts legally we simply are unable to make any further public commentary.
On these topics.
One thing that I'm, particularly proud of.
We kept our word to our shareholders in 2021.
It is widely known that we're essentially out of more common shares that could be issued with public in any quantity.
Although a decade ago, our board did authorize the potential issuance of preferred shares if we so chose.
Some of you are anxious about this whole topic.
And so I gave you might word back in the early summer of 2021.
That we would sit on the sidelines for the balance of the full year 2021 on the equity issuance and that is exactly what we did.
We kept our word. So you then speculated that we would rush to immediately issue new shares to the public early.
Early in January as the new year started.
It is already March.
We have not done so.
Retaining your support.
Leading your company smartly and well keeping our word to you. These are extremely important to us.
They are extremely important to me at AMC.
That's the report.
The fourth quarter was a spectacular one for AMC the strongest into years, Sean Let's now turn to questions starting with questions from our shareholders I do hope, we will take some securities analyst questions as well.
Thank you Ed and then the first question is can you give us an update on the.
Corn initiative.
Sure.
But.
As I said in my prepared remarks, we saw 50 tons of it on a good day, we know something about popcorn our brand as credibility.
We'll have credibility in the market.
For people, who buy and consume popcorn. So we're taking this initiative very seriously.
Talked about hiring Ellen Coe pagan.
Who's got substantial brand management in English.
Innovation experience at Pepsico and Frito lay.
And at hostess brands.
<unk> got a lot of grocery experience.
As.
She is already on board she joined US in mid February she is in charge of this whole effort among other projects and we are going full bore.
I expect that hopefully with Uber eats we will launch a food delivery program.
In the beginning as early as the second quarter of this year, depending upon which city you happen to be in we'll roll it out around the country over the second and third quarters, primarily possibly the fourth quarter and some of our smaller markets.
As for grocery many of you may not know this but.
But grocery stores tend to restock their shelves twice a year in February and in September .
Honestly February is behind us so our our goal.
Is to catch the September reselling efforts and to get AMC theatres perfectly popcorn and a supermarket or convenience store near you in the fall of 2022.
Okay.
Thanks, Adam and the next question is are there other food and beverage initiatives in the pipeline for example expanded offerings concessions to Gov, etc. Absolutely.
We fancied ourselves.
As an innovator in F&B and.
And of the large theater operators.
<unk> has had the highest food and beverage sales per patron for years now.
That continues to be the case and part of it comes from doing it well and our theaters part of it comes from our innovation just a couple of weeks ago, we launched impossible Nuggets plant based alternatives to chicken Nuggets, which are selling briskly, we constantly are putting new menu items in our theaters.
We constantly are putting specialty movie themed drinks.
At our more than 350 bars.
Around our U S theaters themed a major movies that are coming out.
But beyond that some of you may recall that.
About four years ago, we launched something called feature fare and we were way ahead of the competition in our view.
As to the menu variety that AMC offered in vitro fare.
Cause of Covid, we had to strip that way back.
It was it was a challenge is to open our theaters, let alone to do it with a full blown.
Variety of menu items as we had when everything was going like a Swiss watch back in 2008.
2018, or so having said that.
We're building back up in terms of menu variety and our concession stands and in our dine in theaters, we're still challenged with labor shortages and supply chain disruptions. So we're picking and choosing very carefully what items, we bring back into our theaters. We wanted to make sure that we promised the guests.
The high quality F&B experience that the people are working at our theaters can deliver it.
Having said that.
We certainly seem to be succeeding.
Sean as you said in your prepared remarks.
Our food and beverage sales per patron are up 35% year over year, that's a stunning increase.
Im very proud of what our F&B organization is pulling off.
Your last asked about to go questions.
When we introduced the popcorn to go.
Products at our theaters will also have other to go items, including other delivery to home through rates and alike.
As well so it's all coming.
More big projects and more big goals for 2022.
Alright, Thank you very much.
Can you give us an update on alternative content.
Alternative content is something that we are very intrigued by.
We've dabbled in it so far to gauge consumer response.
Some of the people who track us closely know that we.
At WWE events, we had UFC events.
We show Directv Sunday ticket for two years over the last three showing professional football games out of market football games on Sundays, We've had several concerts one is recently.
Two nights ago.
Kanye West now.
Yeah.
In IMAX theaters around the country.
<unk>.
We've.
We are showing some old movies, we just had a very successful.
Re showing of the 50th anniversary of the Godfather I think that was in our Dolby cinemas.
And we've just agreed with Warner music.
To look really hard together.
Which of their concert artist, we can bring to AMC theaters.
But the big Kahuna era of sports rights and we all know.
That.
If AMC is going to make a real splash and alternative.
If we can secure the rights.
Four major professional and collegiate sporting events.
Not to mention these others like WWE and UFC.
That getting professional and collegiate sports is something that has great potential it's much easier said than done.
We have begun dialogue with <unk>, there's a lot to work out.
But it's something that we're looking at heart.
Next question.
What is the timeframe to bring premium formats to the recent theater acquisitions.
I'm so proud of the partnership that AMC has with IMAX and then it has with Dolby cinema.
<unk>.
Where IMAX is I think largest customer in the world outside of China.
Certainly their largest.
Our partner here in the United States.
We have an exclusive relationship with Dolby cinema here in the United States.
We had 100.
50 years or so.
Pls.
Five years ago AMC globally.
Now has.
Over 400.
And we continue to want to grow it we're in active dialogue with eight with.
Both IMAX and Dolby right now.
How we can grow our business with each of those great companies.
Every expectation.
That we are going to increase the number of our pls.
And in the case of IMAX in particular increase the number of laser equipped.
<unk> around the AMC system.
One of the things that we've done as we've looked at bringing new theatres into our system.
See if we can add Pos.
To those theaters.
And for example, the growth in Americana at brand in La which already are in the 30 highest grossing movie theaters in United States. Neither one is either an IMAX or Dolby cinema auditorium, we're going to put in an IMAX and Dolby cinema cinema, and our house brand, which is called Prime at AMC, we are going to put three of them.
And to the growth three of them in the Americana at brand, we're looking at other theaters as well to see where we can add IMAX.
Dolby locations in terms of timing.
And once you get permitted it's kind of six to 12 months.
To get them constructed permitting can go fast or slow.
Building upon the locality.
So if I had to pick a date I would say about a year. After we add a theatre to our network.
We ought to be well underway with IMAX or Dolby or prime at AMC locations.
Great. The next question is what are the plans to monetize the opportunity from an FTE and crypto currency.
Look this is a big opportunity for us.
As I said in my prepared remarks about entities, we've already earned four programs since November .
Already 800000 Ftes.
Have been made available to consumers one with Spider Man movie one would do one with the Batman movie we offered.
And I own AMC in ft.
To our shareholders enrolled in AMC investor connect.
This is all good for us.
We've tended to give them away free so far we will continue to give some away free, especially if that drives a closer bond with the company or if it drives attendance to our theaters, where we'll make money selling tickets and concessions.
But I also think it's possible for for good and important and special and if these to sell them to the public.
And I also know for a fact that on some of these entity programs. We already are and will be on future programs collecting a commission on the resale of those ftes as they get resold as for crypto currency.
We're taking it now.
Start with dose point in <unk> and a couple of weeks.
We know there are a lot of consumers who are very keen on those crypto currencies, we expect that our market share amongst our audience will grow.
When we can take crypto currencies.
To that.
The one that you know well Shaun because we've talked about at great length. The one that has our biggest intrigue is whether AMC will be capable of issuing our own coin.
Our own <unk>.
Their currency.
We have to be careful how we do that the regulatory frame.
Regulatory framework surrounding crypto currency.
He is going to change dramatically I think during this calendar year.
We always believe and staying on the right side of the law.
So we want to make sure that whatever we do in this area, we fully comply with whatever regulations.
Governments send our way, but it is something we're looking hard at and there maybe an opportunity.
To create significant value for us.
Great.
The next question here is regarding our strategy for lowering debt and improving our leverage ratios.
Yes.
Well the best thing, we can do to lower that.
To grow our EBITDA, so that by definition the debt that we do have is a lower multiple of our rising EBITDA.
And that certainly was the case in the fourth quarter, where we actually had positive to us.
For the first time in two years.
But thats not enough, we also need to pay down debt.
And we're doing that right now we've made a great start by paying off a considerable amount of deferred rent.
That we owe from 2020.
And Additionally, there still is that out there that.
That we could buy at a discount.
And that is.
An intriguing use of cash that we are considering.
Yes.
Great next question.
The plans with respect to signature with client is Japan introduced fees at all screens.
We do not let's start with.
The branding of AMC, we have three major brands at AMC AMC theaters, AMC dine in theaters and AMC classic theaters.
Our dine in theatres are what they are with full blown restaurant menu items.
Mostly delivered a seat.
We have our normal mainline AMC theaters, and we have the classic brand the classic brand tend to be smaller less visited theaters.
The economics in a classic theater, probably would not.
Allow us to invest in putting in Recliners, it's an expensive proposition, we can spend as much as $5 billion or more a theater in doing it.
And the traffic at the classic theaters just doesn't.
Justify a return, but with respect to our AMC theaters.
We've already made great progress.
We've got a recliner seats.
In one or more auditoriums.
Somewhere around two thirds or more of our AMC theaters.
We're very well.
Populated with Recliners.
And one other thing that the pandemic throw at us.
To guard our cash very carefully.
And given that we already are well established with Recliners and given that it's really important to keep capex low.
And to hold on to that $1 $8 billion War chest.
To do with it as we described on the call earlier.
I think we're going to slow down the pace of our renovations now that doesn't mean that we will do none.
We will do some.
But at significantly lower levels than we were doing it back in 2017 and 2018.
We've got to be very prudent.
The best asset. This company has is this $1 8 billion cash and liquidity or we need that we need to be reverent.
Our shareholders have entrusted us with $1 8 billion.
We need to be very careful how we deploy it.
Thank you.
And the next question has give us can you give us an update.
To introduce AMC merchandize sure merchandise as well.
What are these other ideas that came pouring in from a retail shareholder base.
In 2021.
Sounds like they want to buy it.
And if they want to buy it we want to sell to them.
No.
We started to experiment.
Okay.
Back in November .
When Ghostbusters afterlife emerged.
We created a special merchandize item.
<unk> bluster ambulance.
It was like $40 something I think we sold 40000 of them in like days, we sold out which reminded us.
Our shore base and our customers are really interested in March.
We just this week are going forward with a big lump Batman popcorn holder.
It's about a six inch high that <unk> had with your popcorn will be served.
<unk> is also out.
And merchandise is going to be a big project for us in 2022, I would expect that towards the middle of this year.
The broad array of merchandise AMC branded merchandise that our shareholders and our guests can buy whether they do it online or possibly as many of our theaters.
Great and then the last question that I have yet.
Is what are your goals with respect to more theater or other acquisitions.
Look as I said in my prepared remarks, especially the section I called recovery agility and transformation.
We have cash.
There are theaters that I believe we can acquire.
Inexpensively.
One to two times cash flow.
It was really cheap even three to four times projected cash flow is really cheap.
And if we can grow by bringing in high quality theaters in strong markets into our fleet in.
Inexpensively.
Thats, a great opportunity for us beyond that though.
There is no specific company that we are yet ready to acquire.
But I really wanted to.
Say again and again and again.
The people who are watching and analyzing this company.
Should think hard about what a strong management content management team can do with $1 $8 billion of cash.
And we are going to be looking seriously at M&A.
<unk>, it's intriguing to diversify.
Our business away from the pure movie Theatre industry.
To diversify our risk and yet capitalized on our knowledge of.
Things like.
Food and beverage.
Entertainment selling tickets to things.
Running buildings that are far apart from each other.
Dealing with landlords with.
Hundreds.
And hundreds of leases.
This is all expertise that does not.
That AMC has.
That expertise is needed in other industries too and again I think for the people who are merely valuing the AMC of 2019, and suggesting that thats. All we can do going forward youre, making a mistake.
There are other lines of business, whether it's in Ftes crypto currency popcorn or that which we grow into through transformational M&A. There is opportunity to change this company's fortunes.
Lately as we look ahead.
Thank you Dan.
Yes, Sherri if you want to see if there is if you could repeat the Q&A.
Absolutely constructive.
We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
You will hear a tone acknowledging your request.
If you are using a speakerphone please pick up your handset before pressing any keys.
To withdraw your question. Please press Star then two.
The first question comes from Jim Goss with Barrington Research.
Please go ahead.
Alright, Thank you Adam.
Hey, Jim Nice to hear your voice again.
Yes.
Do you have a question a couple of questions. One I was wondering.
If you think there is any opportunity to maybe carve out some subset of your theaters, perhaps the AMC classic.
Some of them.
Create a sale that could create some.
The value that you could use for additional acquisitions or to pay down some debt.
Does the opportunity exist, yes is that our plan to do that.
I think that.
We benefit mightily.
From our size and scale.
And we give up some of that if we give up some of that size and scale. We hurt the rest of the company in the process.
You all know that there are other companies.
Who report their financials.
<unk> taken a look at our film rent costs in Q4 compare that to some other companies. That's a direct result of the relationships that we have in Hollywood, but also.
A result of the size and scale of AMC, and we would be giving up.
On a competitive advantage that we now have.
If we got smaller.
Okay, and maybe maybe also on the idea of.
Trying to reduce the debt load.
You have any thoughts.
Creative financial instruments beyond <unk>.
Common equity that's dominated by the retail investors that could improve your financial position.
And interest costs and also reengage.
Institutional investors and AMC.
So we do.
And we're not yet ready to share them publicly.
Having said that I would remind you.
That.
My new CFO sitting or not so new anymore, even or two years, but.
Who is sitting a couple of feet away from me.
Six feet away properly, but.
But we've been very successful in the capital markets and we just had this impress.
Impressive I think refinancing of $950 million of our debt, we lowered our interest cost.
By 300 basis points, we stretched out maturities.
To 2029.
And.
There are other tranches of our debt.
We're looking at very hard.
To see if we can do something imaginative and creative with them just as we did with our first liens a few weeks ago beyond that there are other things that we can do but as I said, we're looking at them carefully but as I said, we're not yet ready to share anything publicly but you're on to something.
<unk>.
Debt.
It would be nice.
David institutional investors embrace AMC.
But I want to be very clear.
I don't want to do that if it causes our individual shareholder base.
This new individuals' shareholder base.
<unk> has been very loyal to AMC.
Since it showed up on our door about a year ago.
We intend to be very loyal to it and return.
You've been very clear about that thank you very much.
Thank you Jim.
Once again, if you have a question. Please press Star then one.
Okay.
As there are no further questions from the phone lines I would now like to turn the conference back over to Adam for any closing remarks.
Thank you operator for all of you on the call today. Thank you for joining us.
The fourth quarter of 2021 was so encouraging for us.
AMC is on a glide path to recovery.
With bold exciting plans for 2022.
In an improving environment around us.
With that.
Don't hold us don't hold our piece of the fire too much for Q1, but where you're going to like Q2, Q3 and Q4, we're expecting 22 is going to be a very good year for our company. Thank you one and all we appreciate you joining us today.
Yes.
This concludes today's conference call you may disconnect your lines.
Thank you for participating and have a pleasant day.
Okay.
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Sure.
Yeah.
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Yes.