Q1 2022 AMC Entertainment Holdings Inc Earnings Call
Update any forward looking statements, whether as a result of new information or future events.
On this webcast, we may reference non-GAAP financial measures such as adjusted EBITDA operating free cash flow operating cash burn operating cash generated among 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.
After our prepared remarks, there will be a Q&A session.
This afternoons webcast is being recorded and a replay will be available in the Investor Relations section of our website at AMC theaters Dot com later today.
With that I'll turn the call over to Hap.
Thank you John Good afternoon, everyone and thank you for joining us today.
Following on the heels of our progress throughout 2021, Amc's first quarter of 2022 marked yet another milestone. Thanks in part to Sony's Uncharted and Warner Brothers. The Batman. It was our best first quarter in two years.
And we exceeded market expectations.
With a more than fivefold were $637 million improvement in revenue.
And is almost 80% or $233 million improvement in adjusted EBITDA compared to the same quarter of a year ago, what a difference a year mix.
We are especially encouraged that when they did come to our theaters. Our guests have been spending like never before with revenues per patron through the roof at AMC up 34%.
<unk> pre pandemic norms and meaningfully higher than was seen at our largest competitors.
During our last earnings webcast. We noted the timing of when Big movies were released this year not.
Not because of the streaming and not because of Covid appears among patrons, but rather solely because of what titles with open win.
We told you on our last call that the first quarter of 2022 would be the softest quarter of this year and that box office numbers would improve sequentially as the year progressed.
This view remains exactly how we see this year unfolding with an improving box office and improving financial performance at AMC, each and every successive quarter.
But the real news of the day.
Is the 187 4 million domestic opening and the $450 million global opening of Disney's Doctor Strange.
This one was the biggest movie opening of 2022 and the second biggest opening of the pandemic pandemic era second only to Spider Man No way home.
Let me say it again.
So all of those who doubted the consumer appeal of movie theaters.
Doctor Strange Doctor Strange Doctor Strange Doctor Strange.
And not only is the movie clearly a big hit.
I'm also absolutely pleased to report to you that AMC over performed for this movie on opening weekend with a 26% domestic market share.
Considerably higher.
Then our historic 22% domestic market share share norms.
Given that AMC is the largest movie theater company in the World.
We can say to our shareholders with some glee and delight.
That the resilience of movie theaters is right now on clear display.
And that the future of the cinema is bright.
Indeed, we have already kicked off the second quarter with Sonic who raised its way to the highest domestic opening weekend of all time for a video game at adaptation and has thus far generated nearly $350 million of worldwide box office revenue.
And as I said, just a moment ago. This past weekend Doctor Strange Doctor Strange.
Doctor Strange Doctor Strange.
But we believe this is just the tip of the iceberg for what's to come in the summer and the balance of 2022.
What an array of compelling and exciting film titles lies ahead.
For the rest of the year.
We are just $2 five weeks away from the Premier of my personal favorite Paramount in top on top and Tom cruises long awaited and highly anticipated top gun Maverick I saw the movie and a private screening for exhibitors a few weeks ago. It is just.
Stunning.
In my view, it's a cinematic masterpiece and one why are we going to sell tickets for top gun Maverick.
M C.
The second quarter also will include such crowd Pleasers as Universal's Jurassic World Dominion.
For audiences young and old back from Infinity and beyond Pixar light year.
Later in the year in the second half we have one amazing title after another especially including bass <unk> brilliant biopic of Elvis starring Tom Hanks as Colonel Parker.
Along with Illuminations minions the rise of grew.
<unk> store <unk> Thunder, Jordan Peels latest original edge of your seat hard flick, Nope, and Brad Pitt's action packed thriller.
Train.
The movies keep coming in 2022, we will finish the year with Warner Brothers DC Comics based black.
Black Adam starring Dwayne the rock Johnson.
And three more Disney films.
Which is sure to be monstrous hits, including the animated strange World and two highly anticipated tent pole Disney sequels.
<unk> Black Panther would conduct forever.
And James Cameron's Avatar two.
The sequel to Avatar at the time of its original release, the highest worldwide grossing movie of.
Of all time.
I've had the privilege of spending some time with a brilliant James Cameron and is producing partner, Jon Landau and have seen actual footage from avatar, two which is just glorious I can tell you with certainty that movie audiences are going to be mesmerized.
By their return to Pandora.
As a result, the entire movie industry is going to end 2022 and Grand style.
It's just so very clear in our eyes.
Just as Nicole Kidman proclaimed in our ever so successful TV advertising, which has attained a cult like status.
Moviegoers are so eager to return to the magic.
At AMC theaters.
They want dazzling images on a huge silver screen they want to immerse themselves in stories that are perfect and powerful.
They want to enjoy comfortable recliner seating a bucket of buttered popcorn and coke.
They want more IMAX and Dolby cinema screens at AMC than are offered by any other movie exhibitor.
And for just a few hours.
They want to escape.
Let us keep the news the Internet war politics inflation interest rate hikes their phone and.
The interruptions that inevitably come when at home.
So there is no confusion at.
At AMC, we are very optimistic about the outlook for the 2022 box office.
That we believe could be close to double that of 2021 and four times that of 2020.
No one has a perfect crystal ball, but our hope and current expectation is that the fourth quarter of 2022 will finally reach or will get close to pre pandemic levels of revenue.
Some on Wall Street, and some in the press have been filling our heads for two years now about the rise of streaming and the corresponding end of theaters.
This won't be the first time or the last time that conventional wisdom will be proven to be filled with so much Bali and so very wrong.
Movie theaters have been central to the cultural fabric of America, and the world for more than a century.
And their promise and potential remains resilient and real.
Many of US on this call can remember the revealing in clarifying language that came out of the $19 92 presidential campaign.
When James Carville said, it's the economy stupid.
Well for the movie Theater business, it's the movies stupid and.
Oh do we have his movies now coming to an AMC theater near you.
I'll be back in a few minutes to provide some strategic updates and take your questions, but now.
I'll turn the call over to our CFO , Sean Goodman, Sean.
Thank you Adam and thanks to everyone for joining us this afternoon.
During the first quarter, we welcomed 39 million guests to our theaters around the world.
This is a very significant increase from the 7 million guests that we entertained in the same period last year.
And our Q1 2021, sorry in Q1, 2022 attendance generated revenue of $785 $7 million.
This is more than five times, the $148 $3 million of revenue that we had in Q1 of 2021.
In addition, our Q1 'twenty two adjusted EBITDA improved by $233 million.
To a loss of $61 7 million and this compares to a loss of $294 7 million.
In Q1 of 2021.
Clearly, we are making meaningful progress along our recovery path.
While Q1 revenue and attendance were well below pre pandemic levels. This is precisely as we predicted in our most recent quarterly earnings call.
Knowing that the timing of when the big movies would be released this year. We said then that the industry box office would rise markedly in calendar year 2022, but that most of this strength would occur in the second half of 2022.
In Q1, we saw that the box office momentum both as the quarter progressed and Q2 has started off strong John .
Just this past weekend was look at the robust Doctor strange opening.
Indeed consumers all flocking to the theaters once again.
We're very encouraged by the compelling upcoming film slate and are consistently very strong post pandemic operating performance that reflects our laser focus on both the guest experience and profit improvement initiatives to grow and enhance the business.
First quarter consolidated revenue per patron was $20 in 11.
That's 33, 7% higher than pre pandemic Q1 of 2019.
Consolidated admissions revenue per patron was up 23, 9% and consolidated food and beverage revenue per patron was up 40% both of this as compared to the first quarter of 2019.
In our domestic business admissions revenue per patron increased by 28, 5% compared to pre pandemic Q1, 2019, and our international business achieved a 15% increase.
The admissions revenue per patron growth was driven by case increasingly choosing to upgrade to the very best possible site at sound experiences that can only be found at our premium large format offerings, such as IMAX Dolby cinema at AMC Prime.
Therefore premium large format tenants represented 16% of our domestic attendance in Q1 of 2022% compared to 13% in the first quarter of 2019.
And then the international markets Q1, 2022, Pls attendance represented nine 5% compared to one 1% in the first quarter of 2019.
In addition, we also benefited from an overall favorable showtime mix, coupled with pricing adjustments, including blockbuster and opening weekend pricing.
From a food and beverage perspective, we continue to enjoy exceptionally strong food and beverage revenue per patron as our guests to enjoy the full outside the home entertainment experience that is offered at AMC.
In our domestic markets food and beverage spend per patron in the first quarter was $7.52.
That is $43, 7% higher than the average spend and pre pandemic Q1 2019.
And in the international business food and beverage spend per patron was $4 40.
And that is 35% higher than pre pandemic Q1 of 2019.
Our significant food and beverage our performance continues to be primarily driven by an increase in the proportion of guests choosing to enjoy industry, leading food and beverage offerings that are made easy and convenient to purchase through the AMC app.
Consolidated other revenue per patron in Q1 2022 increased by 82, 4% compared to the same period in 2019 with.
With domestic other revenue per patron, increasing 93, 5% and international other revenue per patron increasing by 61, 9%.
These statistics reflect an increasingly higher percentage of guests that are choosing to reserve their seats and to order their food and beverage in advance using our industry, leading website and app.
Together with the benefit of diversification initiatives that we've deployed such as renting of theatres during off peak times to businesses and government organizations for meetings or other <unk>.
Vince.
In an ongoing effort to enhance efficiency, we continue to be extremely agile in adjusting payroll hours and flexing showtime's to reflect the market demand and to optimize our efficiency. For example, our Q1 'twenty our Q1 domestic attendance of $25 8 million guests.
<unk> represented 46, 9% of Q1 2019 attendance, but it also represented 71% of Q1 2019 attendance per Shelly.
Moving to cash and liquidity.
We ended the quarter with a liquidity of approximately $1 4 billion.
Comprised of one $1 $65 billion of cash and cash equivalents.
And $211 million of Undrawn credit facilities.
As anticipated and as discussed during last quarter's webcast.
Cash burn this quarter was adversely impacted by normal seasonal Q1 working capital needs.
Our working capital almost always comes under pressure during Q1, following a strong Q4 holiday box office and this year was no exception apo.
Operating cash burn representing cash burn before debt servicing costs and before deferred rent payback was $223 9 million and this compares to $321 6 million in Q1 of 2021.
Looking ahead.
We expect our cash burn to improve sequentially through the year.
With Q2 being better than Q1, but still relatively weak, but with the second half of 2022 being substantially better than the first half with positive operating cash generation by the fourth quarter.
Regarding capital allocation, we continued to pursue a balanced and very disciplined approach to capital allocation.
Our priorities remain unchanged, one ensuring that we have sufficient liquidity to manage through the recovery phase of our business.
To strengthen our balance sheet by reducing our debt and associated interest costs.
Three invest in our business to enhance the guest experience.
And for Opportunistically pursue value enhancing initiatives, including those that lead to diversification of our business.
So far this year, we have been very active in allocating capital to enhance shareholder value.
As we previously reported earlier this year, we completed a highly successful capital raising issuing $950 million of 7.5% Firstly nuts.
As a result of this transaction, we were able to repay high interest debt that was raised at the height of the pandemic and thereby reduce our annual interest expense.
At the same time, we extended our debt maturities by between three and four years.
During the first quarter of 2022, we also repaid approximately $45 million of deferred rent, reducing our deferred rent balance to approximately $272 million.
We expect to further reduce this deferred rent balance during 2022 by another approximately $125 million.
And we continue to work on other attractive opportunities to strengthen our balance sheet and enhance our financial flexibility.
Actively managing our theater portfolio is ongoing at AMC as we add new high performing locations and eliminate a low performance all with the goal of improving guest satisfaction and optimizing our overall profitability.
During the quarter, we added three new theaters and we closed 12. This brings the total number of locations closed since the pandemic began to 95 and the total number of new locations opened to 33 for a net reduction of 62 locations through Q1 2000.
'twenty two.
In addition in early April we announced the acquisition of seven formerly Bowtie cinema locations in Connecticut, Upstate New York and Annapolis, Maryland.
And last month, we announced a significant investment to dramatically upgrade the sight and sound experience at AMC through the installation of laser projection equipment at 305000 auditoriums in the U S through 2026.
This equipment has a value of approximately a quarter of a billion dollars, although our upfront capital investment is minimal based on our agreement with our partner <unk>.
And this new projection equipment is also environmentally friendly and comes along with meaningful operating cost benefits.
Net capex, including landlord contributions in Q1 was $34 $2 million and for 2022 separate and apart from any M&A activity.
Expecting net capex to be in the range of $150 million to $200 million.
Finally in mid March we announced our investment in high cost mining.
As a result of this investment of $27 9 million, we recorded a mark to market gain of $63 9 million in the first quarter of 2022. This is based on the share price of high cost on March 31.
The theater operating enhancements and efficiency optimization initiatives implemented over the last two years have positioned us very well and we continue to focus on initiatives to grow our revenues increase our efficiency enhance the guest experience and diversify our business all of the.
<unk>.
Growing shareholder value and ensuring 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 the questions I'd like to update you on some of our key strategic initiatives to enhance value for AMC and for our shareholders.
Let's start with our strategy at AMC, which can best be described with three unmistakable words.
Recovery agility.
<unk> transformation.
Youll hear this almost as a mantra a lot from us as we move forward.
As for recovery over the last five quarters, our financial performance is clearly indicated that AMC is on a glide path to recovery.
From the impact of COVID-19.
For sure in 2020, Covid took AMC to our needs.
But like the plot in any great fight movie in 2021, AMC got up off the canvas dusted ourselves off steadied ourselves and started to play on offense again.
We get stronger and stronger as each day passes and pretty soon will be.
Back to normal.
Punching away as you would expect from the number one player in theatrical exhibition.
We're not where we want to be or need to be yet.
But we now see it in our future.
2021 was a better year than 2022.
<unk> 2022 will be a better year than 2021, and we already believe that given the expected movie slate 2023 will be a better year than 2022.
Our focus remains sharp.
On guiding AMC to a successful and lasting recovery.
From the impacts of the pandemic.
At the same time as we're working to produce that recovery, we recognize that our industry is filled with change so we must be agile.
And nimble in managing through that change.
If 2020 in 2021 have demonstrated anything.
It's at the management team at AMC is expert in navigating our way through unchartered waters no matter what the world is thrown at US we have risen to each and every challenge.
Therefore, I have every confidence looking forward.
That AMC will continue to cope well as we Bob and weave and adjust our course as may be required.
No matter what change May lay ahead.
Our agility is the bedrock of which our solid foundation is built.
In which in the end should see us through.
Taken as a whole AMC has demonstrated a remarkable ability.
And achieved a remarkable track record.
Of navigating successfully through change.
At the same time.
Armed as we have been by our shareholders with more than $1 billion War chest.
We also will be looking for a transformational and value, creating metamorphosis of what AMC is.
It's not enough for us just to bring back the AMC of pre pandemic 2019.
Several of US on this call are noted that AMC shares have traded above historic fundamentals of that old AMC.
But you under Ace underestimate us and you underestimate us mightily.
If you did not think we are looking to change AMC to make it a bolder and grander enterprise you.
You did not understand.
If you do not think we are seeking out new.
An exciting opportunity.
Our high cost mining investment is a perfect example.
Some were stunned by our announcement because it did not align with their preconceived notions about AMC or what they thought where our core competencies.
But during the pandemic AMC demonstrated a keen insight into how companies could rescue themselves from liquidity challenges.
That is the expertise that we brought to high crop and so far so good at a time when the NASDAQ was up 9% and overall value our investment in high crop mining has increased by more than 30% as of Friday's closing price.
As I've said before those who think of AMC just in terms of the company that existed pre pandemic.
Are looking through a rearview mirror to the past.
Instead of looking through the front windshield towards the future.
There is a myriad of opportunity out there as we build a new AMC and grow our way through value creating initiatives.
There will be more high crops ahead, not gold or silver mining per se, although I must say that gold and silver mining was a fun way to start.
But we will also be looking for more value, creating investments, where AMC can continue to share our expertise and talents.
For sure, though we plan to be deliberative and disciplined in investing in opportunities to enhance our existing business or to diversify into previously unexplored markets or in the industries, where we can use our bold thinking pension for innovation and capital raising experience to unlock value.
<unk> for AMC and for our shareholders.
In addition to talking about our strategy also would like to share a quick update on a few previously announced initiatives first popcorn.
We continue on the path to enter the attractive multibillion retail upward industry expected for later this year.
Move aside Orville Redenbacher, you have a new competitor right.
Right now we're in the midst of focused research and product testing.
Among other popcorn related concepts later this year, you'll be able to order and have delivered to your home or AMC feature fare in classic menu items.
Including of course, AMC perfectly popcorn Flatbreads pretzel bites and other snack items. This service will be piloted in key markets.
Such as Chicago This summer.
With plans to launch system wide in the United States in the fourth quarter of this year.
We are also developing as you know in line of microwave and ready to eat popcorn products to be sold at grocery stores and other outlets. So that customers can enjoy our unique and differentiated popcorn offering in the comfort.
Of their homes again, hopefully launched to consumers before year end.
Second our comment on our branded credit card.
Discussions are now underway by AMC with potential bank partners about the launch of our co branded credit card aimed at AMC shareholders and moviegoers within a year of today.
We will aim to place a significant number of these cards into the market or hope to is that this can be quite lucrative business opportunity for AMC.
Third on.
<unk> and crypto currency.
We have eight different NFC programs that either already have been launched or are in the works.
They have already helped us to stimulate the sale of movie theater tickets for movies like Spider Man the way home dune in the Batman or to increase the effectiveness of other AMC programs like AMC Investor connect which now has some 665000 enrolled members.
We'll continue to explore how naft's can drive increased profitability for AMC going forward.
As for crypto currency with great fanfare, we now expect a wider rate we now accept a wide array of crypto currencies for online payments at AMC.
The same <unk>.
Programming that was required for us to accept crypto currency also enabled us to accept other payment types.
Using Apple pay Google pay Paypal, Bill pay and venmo among others.
Taken together these various new payment options impressively recently represented about 35% of our total online payments.
Fourth.
Comment on our pricing actions.
AMC has taken in the past a number of big smart and innovative steps on theatre ticket in food and beverage pricing.
Just look at our revenues per Patriot in Q1, which have been well into March with obvious positive result.
We've been guided in the past by a simple philosophy.
We charge more when there was peak demand and we charge less when demand was soft.
So far that rational view of the laws of supply and demand has worked well for AMC.
And fifth investments in our theatrical exhibition business.
During 2021, and so far during 2022.
We acquired one third of the former Arclight Pacific Theater Circuit located in major Metropolitan markets like Los Angeles, San Diego, Washington, DC and Chicago.
And we acquired about three fifths of Bowtie cinema locations, mostly in Connecticut.
Along with upstate New York in Annapolis, Maryland.
When we add amc's expertise unique guest offerings, an industry, leading loyalty programs. These new theater locations begin to soar as an example, our mid 2021 acquisitions of the Grove <unk> thousand 14 at Americana at brand 18, both in the Los Angeles market have consistently ranked.
Among the <unk> highest grossing movie theaters in the entire United States.
Since joining the AMC family and.
And we are not done yet we will continue to explore adding high profile interesting potentially profitable theaters to the AMC network.
But we're not just acquiring new theaters, we're also investing in upgrading our fleet of theaters.
AMC is committed to significantly grow the number of IMAX and Dolby cinema locations in the months and years ahead.
We are the leader in premium large format screens and.
And we intend to.
To keep our advantage, our advantaged position intact secure and growing.
In addition to Pls.
Our first major broad scale projector upgrade since the transition to digital.
It was announced three weeks ago by AMC as we introduced a new premium format.
Laser at AMC.
Where we will begin deploying the latest laser projection technology in our theaters and some 3500 auditoriums across the United States over the next several years.
With this upgrade AMC movie goers can expect improved picture contrast, maximum picture brightness and more vivid color in short.
A much better viewing experience that will get moviegoers off their couches at home and into our theaters.
Okay.
As I conclude.
I'd like to make a special comment to our avid enthusiastic and passionate retail investors, who have embraced the AMC with gusto over.
Over the past year and a half.
As an example, there is one group of particularly Covid at AMC shareholders.
Who sent me a binder.
Then followed up by an email.
That were filled with about 1000 different ideas.
For AMC.
Looking more broadly the ideas keep coming and keep flowing to AMC from our shareholder base.
I think it is well known that I write my tweets myself and I actively read by inbound Twitter feed so literally thousands and thousands of times.
Firstly seen your observations and advice.
I see your frustration.
With your perceptions of how the market works or does not work.
Your anxiety over the number of so-called failed to deliver shares or your alarm over something that by its very name it sounds ominous.
In dark trading pools.
And I hear the advice coming in Twitter post after Twitter post.
That comes from our approximate 4 million retail investors, who own the vast vast vast majority.
Of our $516 8 million issued shares.
Your ire in anger.
Record its short sellers is evident.
I hear your suggestions.
That we should call for more market regulation by government.
We should take more company action by issuing a cash gift card or NFC dividend.
Some of you actually want to donate money.
To help us build up our treasury and we pay down our debt.
And Thats just a few of the countless suggestions at pieces of advice.
We have received day in and day out.
Not surprisingly.
Much of the advice that comes in can flex with the advice that others of you share.
And while most comes in constructively.
Some comes in with hostility or laced with threats, most as well intended but some might be hold on it with an intent of actually harming me or the company, possibly even coming in from short sellers or others motivated by malevolent intentions.
All I can say to all of this.
Is this.
I greatly appreciate that you care so deeply.
So.
Running a company with such broad interest is as AMC as an art form not a science.
There is real wisdom required and knowing what to do and knowing what not to do.
And knowing when to do it and in knowing when not to do it.
Having said that you should not interpret silence as inaction.
We are constantly exploring the smartest courses of action.
And I promise you that.
That we will pounce.
But only when the timing is right.
In June we will not always thread the needle perfectly.
But for certain notice.
We're doing our best.
And even with my well disclose in advance stock sales.
I still have an interest in $2 9 million AMC shares.
That is 793974 shares that I own outright.
And $2 million 170.
76 granted but Ames, but unvested am's share AMC shares in addition.
My every incentive.
As to think and act like a shareholder to maximize the long term value of AMC shareholders. Because like you. That's what I am I am an AMC shareholder above all else.
In summary.
Our first quarter of 2022 was encouraging.
Our liquidity position remains strong.
Film slate is compelling.
And we're playing on the offensive as we grow and diversify our business.
While we're still in a recovery phase the outlook is positive indeed in our view.
<unk>.
And one last thing.
Strange Dr Strange Dr Strange Dr Strange.
Go see it.
<unk> just put a very big weekend on the books.
And we're highly optimistic that it is a harbinger of things to come and if you want to know what's to come top gun Maverick.
Memorial Day weekend than Jurassic World Dominion, and then more and more and more and more.
22, 2022, as MISO with excitement.
Sean now, let's turn to questions starting with questions from our shareholders.
Thanks, Adam So we had a few questions to start relating to the upcoming shareholder meeting specifically there's questions about peoples.
People's voting materials when they will be received what is on the docket for voting at the shareholder meeting and there's a question about international shareholders be allowed to vote at this meeting.
Thank you for the question our shareholder meeting is scheduled for June 16th at two P. M. Central time, it will be held here in our offices.
In Leawood, Kansas, a suburb of Kansas City.
You are invited US those of you our shareholders anyway, those meeting where shareholders are invited to attend in person if you wish.
We filed all the proxy papers.
The SEC on April 29.
You can access those proxy papers, if you haven't already seen them by going to the Investor Relations section of the AMC theatres Dot Com website look at the financial performance tab, It's all there.
As for voting materials.
You should usually allow about two weeks or so for brokerage firms to get.
Sure.
The proxy materials to you as a shareholder at AMC. If you do not receive proxy materials by mid May you definitely should contact your broker or our proxy solicitor DF King.
There was a special toll free number for AMC shareholders at one 888.
625.
2588 that number again is one 880 865 to $5 88, there are three issues up for.
At the annual meeting.
One is the election of directors of.
Some members of our board or up for reelection.
The other is a nonbinding advisory vote on say on pay and the third is the ratification of our external auditors.
<unk> young as far international shareholders.
Any of them will be listening to this call today, we have a particular appreciation.
For those of you around the world who.
Who is still follow AMC.
Sure.
This is a matter of some consternation for us.
Whether you can vote at our shareholder meeting is entirely based on your brokerage firm.
I would encourage you to check with your broker internationally.
Hopefully year with one of the brokerage firms, who will allow you to vote your shares at our annual meeting if not changed brokers.
Thanks, Adam So the next question is about our entry into the retail popcorn business.
Specific question is when is popcorn likely to be available in stores.
As I said in my prepared remarks, our hope is that we can be there in the fourth quarter of this year 2022.
There is a lot of action behind the scenes, including discussions with various major retailers.
And.
The one thing I know is that our microwave and readied popcorn is going to be a strong competitor our brand resonates with consumers.
Known for Popcorn I've had lots of ideas submitted by shareholders that we should include something called a golden ticket.
With our packaging that's a great idea.
And I'm sure that we will.
Sort of like Cracker, Jack as a gift and every box.
I wouldn't be surprised if we have some benefit relating to AMC theater moviegoing in every box of our perfectly popcorn.
<unk>.
Let's hope we can get there in the last trimester of 2022.
One of the many questions that.
Sorry, one of the many suggestions that we've had is relating to AMC merchandize and there is a question of when can people expect to be able to purchase AMC merchandise. So the suggestion of AMC merchandize is also a good idea and we've tested some either at our theaters or.
On line.
We've had.
You may recall, we had.
Ah Ghostbusters ambulance that we sold out of we had Batman Cal popcorn owners that we sold out of.
And what's very clear to US is the merchandise is going to work for us.
We're in the process of figuring out now how to make AMC branded merchandize and moving teams merchandise available to our guests whether at theaters or online look for that to unveil a consumer's sometime in the second half of 2022.
So people are asking what sort of marketing and initiatives are being done when we acquire new theater locations.
Well I'll answer the question of what we're doing in a second but let me start by saying it sure is working look at what's going on at the Grove in Americana at brand.
Our MLA.
These were good and strong theaters for arc light is why we took them indoors and specific that's why we took them into our network, but their performance is sort in our watch.
There are like 5000 movie theaters in the country.
And these two have consistently been performing in the top 30.
Ever since.
We took them over.
In terms of what we do the first thing that we look at is how can we upgrade the product.
Bring AMC service levels and amenities into the theaters that we acquire will be doing the same thing at the both type theatres in Connecticut.
State New York in Annapolis that we did out west.
In the case of.
Some of our theaters, we're going to be installing IMAX locations or Dolby cinema locations or both.
Beyond improving the products.
We're also bringing our loyalty programs to these theaters AMC stubs are frequent movie going program AMC Stubs a list our monthly subscription program. We're also then can be as we convert.
Customers from these theatres into our loyalty programs with them communicating with them.
Frequently certainly on a weekly basis to let them know what's coming at AMC, we are adding to all of this local marketing through social media.
Including paid media.
And as I said.
It's all working really well, so far and I might add.
I've done.
To add more high quality theaters to our network.
Throughout 2022.
Some questions about dividends Wynwood AMC pay a dividend.
Well I have seen suggesting that your suggestion.
That you'd like to see us pay a dividend.
I think we've announced publicly previously.
Our current debt documents prevent us from paying a cash dividend prior to June of 2023. So this is not really a decision for today. This is a decision for a year down the road.
Another one of the many suggestions.
Whoa AMC make its own movies.
This one is a particularly interesting topic.
Several years ago AMC owns 50% of open road films.
We did make our own movies and in fact got the Oscar in 2016 for the best picture of the year.
With spotlight.
And I have to say that there are a lot of conversations that are underway now.
With various movie makers.
About whether we should repeat.
Our activity in prior years of making our own content. It is something thats on the list.
We're thinking very hard about it we've had very serious conversations with some very well known.
Movie studio executives.
Major movie directors.
And it is something that has our attention.
With our recent guidance.
Just to add Australia, we're on the subject.
But even if we were to.
Make our own movies.
Now is a good time to put in.
A good word.
Through our long standing studio partners.
Hollywood is turning out great product again.
And it's finally being released exclusively.
In theaters.
For exclusive theatrical window and we're just I just wanted to say how grateful we are.
To the likes of you name it.
Disney Universal Warner Brothers, Sony Paramount Lionsgate, all the makers of movies.
And it does.
Raised the question.
Can we convince some of the streamers to.
To introduce their movies and some of their movies theatrically as well we have had conversations over the years with Netflix Amazon and Apple.
We continue to.
Make it very clear that we would be very pleased to show some of their bigger better movies.
But in doing so we have to respect our longstanding industry partners. The major studios, we can't have one set of rules for the major studios and a separate set of rules for streamers, but if we can convince the streamers that it's in their interest.
To show movies theatrically that might be another yet another way of getting more movie product into our theaters.
So with our recent acceptance of crypto currencies and other forms of payment and people want to know to what extent are these new forms of payment being accepted including dose coin bitcoin et cetera. So.
This was only put on our radar screen by our shareholders.
And.
There was just enormous interest in it.
And so we went down the path.
Doing the programming required to accept crypto currency and what we found is that.
The same programming that was needed to accept crypto currency.
Is the exact same programming that we needed to accept Apple pay Google pay Paypal, a whole bunch of other payment types.
And it's been a massive home run for us.
While crypto itself is modest in usage when you take all of those new payment types that we introduced for AMC as a result of our exploring crypto.
Again, it's in the neighborhood of a third of our total online ticketing is now being paid for in all of these various alternative payment methods. So I would say this whole endeavor has been a massive success for us and of course, the Holy Grail.
As.
Do we actually ever consider.
Launching a crypto currency of our own.
<unk> said publicly that we're intrigued by that notion.
Setting that notion.
Biggest issue that we want to make sure that we.
Get exactly right.
Is that we believe the regulatory environment around crypto currency will radically change during 2022.
2023, and we want to make sure that if we do embrace.
Issuing crypto currency, rather than just accepting crypto currency that we anticipate the new regulatory climate as well and we stay on the right side of the law.
People are interested in our plans with respect to Ftes up until now they've been largely using them for promotional purposes, there's questions as to whether AMC would look to sell in ftes in the future.
So that also is interesting question that also was put on the radar screen by.
By our shareholder base.
Said in my earlier remarks that we have eight <unk> eight NFC programs, either already launched or in the works.
And.
Once we historically slightly we only have four of these programs so far but.
Historically, we've been giving away these entities.
We did an interesting Paul of Twitter.
Should we continue to give them away free or should we sell them.
And the results of that polling very round numbers are.
Three vessels, two thirds said keep giving away free but a healthy percentage said, we should sell some in ftes.
Generate some funds.
So who knows exactly what we'll do going forward, maybe we will do a mixture of both some NFC programs, we will give away free and others, we will sell.
But we are exploring very carefully and thinking very hard.
About how to maximize the profitability.
Profitability possibilities that could accrue to AMC from our interest in entities that I would say that with respect to our competition, we're way out in front.
Of any other movie theater exhibitor anywhere on the planet.
We've issued literally hundreds of thousands more entities than anyone else.
His broad ranging question here about how we keep AMC relevant with the strength of streaming.
Well look I do think thats, playing out before our very eyes.
If you look at depend deneke.
Period when movie theaters were shut studios played around with.
Every possible variation.
Of.
Point of theatrical release.
<unk> taken some movies to the home simultaneous with theatrical release in other cases, just taking movies to the home and not releasing the theaters overall.
I think we've convinced Hollywood.
That the way to optimize their profitability is for them to support their streaming services, but also to support theatrical exhibition.
Theatrical window has returned.
It's good for the future and relevance of movie theaters beyond that though.
If you really look at that.
The darker times for revenue generation.
Over the past 24 months.
It's been because.
There just wasn't a lot of good movies coming out.
And it wasn't so much the quality of movies that was bad it was the quantity.
Of movies that was depressed.
What's happened of late.
It started in the fourth quarter of 2021.
Finishing up with a huge hit and Spider Man No way home third biggest movies of all time.
Then we saw unchartered in the vet NAND in the first quarter now, we're seeing doctor strange in the multi verse of madness.
Top gun Maverick around the corner address rural dominions around the corner. The summer is filled with movies. The fall Christmas comes Avatar, two I really do think that among the biggest things we can do to assure our relevance is to make sure that we have a steady parade in calendar <unk>.
A major movie titles with broad consumer appeal that are being released released by studios beyond that.
Then at AMC, we ourselves we have a further obligation on top of just having good movies at our disposal.
And we are absolutely committed.
To being innovators and theatrical exhibition keeping the quality of our theater as high as I said, we're investing.
Sufficient funds to get a quarter of a $1 billion of laser projection equipment into our theaters coming soon coming down soon.
Got more IMAX locations coming more Dolby cinema locations coming.
We are going to continue to make our food products.
More enticing at AMC as we look ahead.
So take all of that together.
Combined with the fact.
That people didn't go into movie theaters for a century.
I'm just certain of one thing in life.
The movie theater industry as an entry at AMC as a company.
We will be relevant and we will take whatever actions, we need to stay relevant as we look ahead.
And finally.
A question about our partnership with Dreamscape and our plans with respect to that partnership with AMC consider more dreamscape locations for example.
For those who don't know what dreamscape as.
Really innovative virtual reality product.
We opened up three dreamscape locations.
One in New Jersey, one in Ohio, and Texas to test them.
The product is spectacular.
The economic returns are okay, but not spectacular but theyre okay.
We're told that there are changes in the technology.
Coming with VR that will make it more affordable to introduce more.
Dreamscape low locations, so with respect to dreamscape, specifically, we will see but the fact that we are willing to embrace dreamscape.
Three or four years ago, I think is yet another signal.
Of Amc's willingness to embrace our alternative content.
And.
This summer we experimented with a variety of interesting concepts showing concert movies some live someone tape.
We showed WWE and UFC events in our theaters.
For two of the past three years, we showed NFL games on Sunday afternoons.
Our theaters.
Sure.
And.
Hi.
And I just had.
Our strong view that if we can obtain the rights to show professional sporting events or collegiate sporting events in our theaters going forward that would be very popular.
With our with our guests.
So all of this is in the works.
And.
The minute, we strike the right deal with a major league, we will put out a press release.
With that are there any other questions do we have time.
It's already 59 minutes, and we kind of promise people an hour. So maybe operator will take your question and then.
The call today.
Thank you.
We have reached our time limit for the conference. This concludes our question and answer session I would like to turn it back to you for closing remarks.
Okay.
Yes.
Alright, operator, I guess, we're done.
We tried.
<unk> remarks, very simple folks we had a good quarter.
We are on the March forward.
We're in the middle of a long road to recovery.
But if you ever want to get enthusiastic about where we are in that road.
Just look at the $187 4 million.
26% of it was ours from Doctor Strange in the multi verse of madness. This weekend.
Go see it at an AMC theater near you and.
I am telling you whatever you're doing life do not Miss top gun Maverick. It has won spectacular movie.
Thank you operator, thank you one and all for listening.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.