Q2 2022 AMC Entertainment Holdings Inc Earnings Call
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 this webcast, we may reference non-GAAP financial measures such as adjusted EBITDA constant currency free cash flow operating cash burn and 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 earlier today.
After our prepared remarks, there will be a question and answer session.
This afternoons webcast is being recorded and a replay will be available in the Investor Relations section of our website at AMC theaters Dot Com later today with that I'll turn the call over to Adam.
Thank you John Good afternoon, one at all.
Thank you for joining us.
Today, we are tremendously exciting news to share with you.
First.
Our results for the second quarter, which were massively ahead of last year's second quarter.
And exceeded market expectations for revenues adjusted EBITDA and net income and second our plan to issue later this month, a special AMC preferred equity non dilutive.
<unk> dividend.
As it will all be going and only be going to.
To our shareholder base as of the dividend date. This is a move that fundamentally are deeply strengthens our company.
And we will give us enormous flexibility.
As we go forward.
These are exciting times for AMC.
And for our investors.
I'll start this webcast by talking about the business I'll, then pass the call over to Sean Goodman, our CFO to talk about our financials in more detail and then I'll come back to talk about our special dividend announcement and the significant benefits that it brings for our shareholders.
I cannot begin to put into words.
How much progress <unk>.
<unk> Entertainment made.
In the second quarter of 2022.
Thank you to Dr. Stephen Strange.
Tom Maverick crews to Elvis Presley and to all of those hungry people, leading Jurassic dinosaurs.
Because they all graced our big screens at AMC.
The second quarter was quite a success and our best second quarter in three years.
Whats more.
And this is very important they boosted hollywood's confidence.
And theatrical exhibition and they boosted Hollywood's commitment.
The <unk> exhibition.
Just as we predicted.
Our improving second quarter results.
Our spirits and server served to further convince.
That we indeed are making great strides.
On our path towards pandemic recovery.
As you can see in our press release.
AMC exceeded expectations as people came back to movie theaters in droves.
Some 59 billion moviegoers came through our AMC theaters across the world in the second quarter up 168%.
From the same quarter, a year ago thats more than two five times.
They are taking us to new highs in our high margin food and beverage business.
Thanks to their patronage, we generated positive adjusted EBITDA of $107 million in the second quarter of 2022, a $258 million improvement.
Over that figure in Q2 of 2021.
We generated positive operating cash too in the second quarter of 2022 of $52 million that was a $178 million improvement.
From the figure of the same quarter a year ago.
The second quarter marked the strongest North American box office since 2019.
Numerous film shined brightly in the second quarter.
But none shine brighter than.
And then top gun Maverick.
I've seen it myself four times now.
Top gun Maverick is now approaching.
One 3 billion in worldwide box office receipts.
And holds the number one box office position, thus far in 2022.
Maverick also broke all time records.
By becoming the highest grossing movie of all time to open and Memorial Day weekend. It also is becoming the highest gruesome grossing movie ever both for Paramount Pictures.
For a movie starring Tom cruise.
I have said all along.
That people would come back to theaters and eye popping numbers.
And that.
He is exactly.
What they did in the second quarter of 2022.
And what they've been doing.
To the naysayers, who foolishly in our opinion have been predicting a secular decline of theatrical exhibition.
All I can say is.
Well you have seen my feisty hashtags on Twitter.
You know what I say.
The second half of this year promises to be equally exciting with a great mix of family friendly Har action drama and comedy genres to please everyone from young to old, including Warner Brothers DC Comics based Black Adam starring Dwayne The rock Johnson.
And three Disney films.
The animated strange World and two very highly anticipated Tentpole Disney sequels.
James Cameron's Avatar, two the way of water and Marvel's Black Panther will conduct forever.
Just last week.
Powerful and poignant trailer for Black Panther too will conduct forever was released and converted a staggering.
172 million views of the trailer.
In just the first 24 hours.
Becoming one of the Marvel cinematic universe is top ever trailer debuts.
As Nicole Kidman reminds us in Amc's now iconic and revered advertising campaign.
Given that Hollywood has great stories to tell.
It's clear that.
That movie fans are ever so eager to.
To enjoy those dazzling images.
On AMC is huge.
Solar screens.
And speaking of Nicole Alright.
Our AD campaign was so effective that we signed her to be our spokesperson.
For another full year.
The success of the second quarter has continued into the start of the third quarter.
But two examples of let the good times role.
Attendance in the just completed month of July 2022.
So the highest number of guests visit Amc's U S theaters since December of 2019.
And our preliminary July food and beverage revenue numbers.
Appear to be the biggest single month figure.
And our U S theaters in our company's entire.
102 year history.
For full transparency.
There is a dearth of new Big movie titles being released in August and September .
So things were slow for several weeks.
Don't expect too much of us.
For all of Q3.
But then.
Comes the fourth quarter of 2022.
Talked about star power showing itself in movie theaters.
These movies and more will all grace our screens in just the 13 weeks of the fourth quarter of 2022.
Jamie Lee Curtis and Halloween ends Julia Roberts, and George Clooney, and ticket to Paradise, Dwayne Johnson, Pierce Brosnan, and Viola Davis and Black Adam Jessica testing and halfway answer Anthony Hopkins, and Armageddon time, Margot Robbie Christian Bale, and Robert de Niro, and Amsterdam, Tom Hicks in.
A man called auto, Tom Hanks, and EMEA, and Colorado, Brad Pitt and Margot, Robbie and Babylon, Oh, and don't forget the ever so much anticipated sequels.
Back to Black Panther.
Suzanne and avatar.
So to the movie slate for calendar year 2023 should also make us all smile.
Our current internal forecast.
Is that the 2023 domestic box office, the basic metrics, suggesting the health of theatrical exhibition both in the U S and globally.
Is likely to be billions of dollars larger than that of calendar year 'twenty two.
Billions of dollars ahead.
We look forward to Q4 of 2022.
And we look forward to calendar year 2023.
With absolutely.
There were other strides forward made at AMC in the recent months since our last quarterly call.
We have started the installation of the biggest environmentally friendly green initiatives in our company's history with the introduction of laser projection technology coming over the next few years to almost half of our U S screens and laser projection will make the pictures on those screens so much.
Brighter and so much sharper.
That is certain to excite movie buffs going forward.
We're already in test market in Chicago in Kansas City, with our partner over each for home delivery of AMC perfectly popcorn.
And other concession items from our theaters.
The early results are favorable so we expect to rollout nationally in Q4 of this year.
Similarly recipe development for microwavable and ready to eat popcorn is well underway going extremely well and.
And we look forward to be able to sell our popcorn products.
In grocery stores <unk> convenience stores next year.
We're also in active dialogue with a credit card issuer and hope to introduce a co branded AMC credit card.
That can be launched nationally.
In early 2023.
Or possibly.
As early as late 2022.
And at the specific urging of our shareholders.
We are stepping up our game mightily on AMC branded and movie branded merchandize.
As for high Cross mining.
Hi, crop just announced its largest exploration program in about a decade rich.
Remember that heretofore high crop has explored only about 2%.
Of its 71000 acre mine site.
We have every confidence.
That are high crops investment will pan out excuse the pun.
To be quite lucrative for AMC.
Speaking of investments.
Our board of Directors also has authorized us.
To establish a fund of up to $100 million.
For additional transformative investments where AMC AMC.
Can seek to add value and thereby create meaningful additional value.
For our shareholders and.
Indeed, as I've, often said previously we are absolutely committed to transforming AMC Andrew.
Andrew a bigger book.
<unk> stronger.
And more successful company than even the one.
That existed prior to the pandemic.
With that said I'll now turn the call over to Shaun to discuss our financials in more detail Shawn.
Just one for Sean.
Yeah.
And you may begin.
Yes.
Thanks, Adam and thank you everyone for joining us this afternoon.
As Adam said Q2 was a terrific quarter for US we welcomed 59 million guests to our theaters around the world and this is well ahead of the 22 million guests that we entertained during last year's second quarter, and the 39 million guests that visit us in the first quarter.
Of 2022.
This attendance resulted in revenue of $1, one 7 billion.
This is more than two and a half times the $445 million of revenue. We had in Q2 of 2021 and it's almost 50% ahead of the $786 million of revenue that we recorded in the first quarter of this year.
But even more importantly, we achieved positive adjusted EBITDA of $107 million, a very meaningful improvement over the EBITDA loss recorded in both the prior year's second quarter and also the first quarter of this year.
All financial results clearly reflect the ongoing recovery of the industry and our business.
As has been our practice during the recovery period, we believe that it is helpful to look at our financial performance metrics relative to pre pandemic levels to best benchmark, the dynamics and profitability of the business as our recovery progresses.
This analysis shows that our per guest performance metrics during the second quarter will universally substantially superior to pre pandemic levels in 2019.
For Q2 of 2022 on a consolidated basis total revenue per patron was $19.73. This is 27% higher than Q2 of 2019.
This was driven by admissions revenue per patron growth of 19% and food and beverage revenue per patron growth of 32%.
And other revenue growth per patron of 65%.
This is all compared to the second quarter of 2019.
And the domestic business admissions revenue per patron increased by 22% compared to Q2 2019.
And in our international business, the increase was 12% and when we normalize for the strengthening of the U S dollar compared to 2019 international admissions revenue per patron increased 16% measured in constant currency.
The admissions revenue per patron growth was driven by guests choosing to upgrade to the very best possible sight and sound experiences that I've found that our premium large format offerings, such as IMAX Dolby cinema at AMC Prime.
Premium large format tenants represented 15, 6% of domestic attendance in Q2, and this can be compared to 10, 9% in the second quarter of 2019.
In our international markets Q2, 2022 premium large format attendants represented 10, 4% and this compares to six 4% in the second quarter of 2019.
In addition, the second quarter admissions revenue benefited from an overall favorable showtime mix, coupled with pricing adjustments, including blockbuster and opening weekend pricing.
From a food and beverage perspective, we enjoyed extremely strong food and beverage revenue per patron as our guests continue to participate in the full in theater entertainment experience in our domestic markets food and beverage spend per patron in the second quarter was $7 52 since that is 35%.
Higher than the average spend in pre pandemic Q2 2019.
And in the international business food and beverage spend per patron was $4 43, that's 22% higher than Q2 of 2019 and 26% higher on a constant currency basis.
Our significant food and beverage outperformance continues to be primarily driven by an increase in the proportion of guests choosing to enjoy.
Industry, leading food and beverage offerings combined within purchasing more items per each order and both of which have made easy and convenient through our AMC apps.
Compared to the second quarter of 2019 domestic other revenue per patron increased by 65% and international other revenue per patron increased by 63% and 69% in constant currency.
This reflects an increasingly higher percentage of guests choosing to reserve seats and order their food and beverage using our industry, leading websites and apps together with the benefit of growth and diversification initiatives such as renting out our theaters during off peak times and revenue from various <unk>.
Promotional and marketing initiatives.
During the recovery period, we have been very agile in adjusting our payroll hours and flexing showtime's to reflect market demand and optimize efficiency.
Q2 domestic attendance represented 65% of Q2 2019 attendance.
That 85% of Q2 2019 as attendance per show.
Let's move to cash and liquidity.
We ended the quarter with a strong liquidity position of approximately $1 8 billion.
Comprised of $965 million of cash and cash equivalents and $211 million of Undrawn credit facilities.
The strong results for the quarter led to non-GAAP operating cash generated of $52 million. That's operating cash generated this is $178 million.
<unk> compared to Q2 of 2021.
Recall that this non-GAAP operating cash generated measurement represents cash generated before debt servicing costs at before deferred rent payback.
Looking ahead, we would expect a return to non-GAAP operating cash burn in Q3, as we experienced a seasonally strong softer box office together with working capital pressures relating to the strong Q2 box office. However, we do expect a return to positive non-GAAP operating cash.
In Q4 of this year.
Regarding capital allocation.
We continue to pursue a balanced and disciplined approach to capital allocation.
Our main priorities remain unchanged one ensure 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 and.
And three investing in our business to enhance the guest experience.
Finally for Opportunistically pursuing value enhancing initiatives, including those that lead to diversification and growth of our business.
As previously reported during the quarter, we quietly strengthen our balance sheet by repurchasing through the open market approximately $72 $5 million about 10% second lien subordinated secured notes that are due in 2026, we did the street purchase for approximately $50 million.
And this represented a 31% discount to the face value of the debt.
As a result of this transaction.
We recorded a gain on debt extinguishment this quarter of $59 million.
And our annual interest cost will not be reduced by $7 million to $5 million.
During the second quarter of 2022, we also strengthened our balance sheet by repaying approximately $53 million of deferred rent, reducing our deferred rent balance to approximately $219 million.
Recall that back in March 2021.
This deferred revenue balance was more than $417 million and over the last 15 months, we have lowered the deferred rent balance by more than $250 million.
We expect to further reduce this deferred rent balance during the second half of 2022 by another approximately $70 million.
Actively managing our theater portfolio continues at AMC as we add new high performing locations and at the same time eliminate low performance all with the goal of improving guest satisfaction and enhancing our profitability.
During the quarter, we added another 12, new theaters and we closed three.
This brings the total number of locations closed since the beginning since the pandemic began to 98 and the total new locations opened to <unk> 45 for a net reduction of 53 locations.
And I can tell you that the combined 45, new locations are not only substantially outperforming the 98 closed locations, but they are also nicely exceeding our underwriting expectations.
Capex net of landlord contributions was $36 million in the quarter.
And for this year is separate and apart from any M&A activity, we expect net capex to be in the range of $150 million to $200 million.
Finally, before handing the webcast back over to Adam I would like to share with you just how enthusiastic.
Im excited myself and the entire leadership team at AMC is about the groundbreaking special dividend at Adam will now talk about in more detail.
Adam.
Thank you Sean.
We will open up the call to questions in just a few minutes.
But before we do that.
Like to talk about the decisive and bold action, we took earlier this afternoon.
After months and months of work to get to this announcement, we broke the news in the last hour.
That we will be issuing a one for one stock dividend.
Other new AMC preferred equity unit.
Two our existing common shareholders as of the dividend date of August 19 later this month.
This is a major step forward for AMC.
In my view, probably the biggest favorable development for our company.
In all of calendar year 'twenty, two both looking back and looking ahead.
Looking at the long term future of our company.
We believe this is truly great news for AMC.
And not such good news for those profits of Doom.
Who may be rooting against us.
Indeed.
I spoke with someone I greatly respect of the Wall Street Journal, who saw our stock dividend announcement.
He told me it was a quote genius move unquote.
Somehow I don't think that journalists can actually print that.
But that is what he said.
Earlier this year.
That AMC intended to take important and bold steps to strengthen our company.
And to address some of the grievances.
Many of our shareholders voice repeatedly in social media and in other forums I also said, though that the.
Art form of leading the company is complex.
One as much in the spotlight as AMC.
Knowing what to do.
And knowing what not to do.
Knowing when to do it.
And knowing when not to do it.
I commented previously that in my opinion, we should patiently wait until at least the posting of Amc's second quarter 2022 financial results.
I did know after all the top gun Maverick and Jurassic World Dominion, we're coming.
While we posted those results today and in our minds those results are incredibly encouraging.
As we show dramatically, increasing attendance and increasing revenues.
With positive adjusted EBITDA, so very much improved versus the same quarter last year.
As I said before on this call.
Thank you Tom cruise.
So as a result.
AMC shareholders.
I am happy to report to you.
That today.
We pounce.
With a backdrop of Amc's Q2 favorable earnings in the second quarter. It is now time for us to take decisive.
And even valorous action.
If that were the dictionary.
<unk>.
Today.
We announced that later this month AMC will be creating a new class of securities.
And we will be issuing an AMC preferred equity unit stock dividend.
Payable only.
The holders of our $516 million 820005.
595 issued and outstanding <unk>.
Company issued common shares. This includes all of our U S and all of our international shareholders as well.
We will issue these new AMC preferred equity units on a one for one basis investors will get one AMC preferred equity unit for each AMC common share that they own as of the record date in mid August .
Along with our common shares.
Which trade now and will continue to trade in the New York stock exchange under the symbol AMC.
This new AMC preferred equity unit.
Also will be a tradable securities.
It also will be listed on the New York stock exchange.
Starting on August 22, 2022.
Under the ticker symbol.
A P E.
Yes.
APE.
E as in <unk>.
M C.
A preferred.
<unk> <unk>.
Equity.
<unk>.
AP.
<unk>.
And informally we will now refer to our two New York Stock Exchange listed Securities.
Shares for common stock.
And as apes.
The AMC preferred equity units.
For a variety of reasons a dividend distribution in just about any form.
Has been a long standing request.
From our Investor base.
Today.
We answered that call.
So to this issuance of $516 million 820595, new apes will essentially serve the same purpose.
As of March voice request for a quote share count unquote.
As the new AMC preferred equity units will only grow.
The holders of company issued in outstanding ALC common shares.
Again today.
We answered the call.
Because the dividend is only being distributed to our current shareholder base as of the dividend record date.
There also is no dilution.
From this initial issuance of the apes associated with a stock dividend.
Because these new apes all gone.
And only go to.
The holders of company issued AMC common shares the number of issued and outstanding AMC commercial shares.
We will remain unchanged at $516 million 820595.
After the dividend is paid.
But of course, each shareholder also will own one eight for every share of AMC common stock held so as of August 22, there also will be another $516 million 825.
595 apes.
Issued and outstanding.
Think of this as being very similar.
Two a two for one stock split.
Except in a stock split and.
An investor would get two shares of new common stock for each one old common share owned.
The AMC case.
Being announced today however, given that this is a preferred equity stock dividend on.
An investor would on one share and one eighth.
In lieu of owning just one common share.
Okay.
Since this stock dividend, we announced today is like a stock split.
It's logical to assume that once the dividend is issued on August 22nd the price of our common shares will fall.
Vitally however.
And I cannot repeat this enough.
For each one share.
Investors would not own only a single share.
But we don't instead of share and in APE.
So their economic interest and AMC, which is now just one share would instead be the price of a share plus.
The price of an APE.
Both of which will trade on the New York stock exchange.
And while no one's crystal ball can accurately predict stock market swings or volatility.
The economic interest.
That our shareholders.
We will have in both shares and apes.
We will be in a company that.
We believe to be considerably stronger.
Then AMC is now prior to this announcement being made this afternoon.
The issuance of Apes is made possible given the previously and repeatedly announced approval by AMC shareholders back in 2013 that the creation and issuance of AMC preferred stock could occur solely.
At the AMC Entertainment board of directors future discretion.
While each APE is designed to have the same rights as a common share and can convert into a share of common stock.
That conversion decision.
It's still solely up to our shareholders.
Version can only take place.
Is that a future stockholders meeting.
The company proposes and shareholders, including April orders vote to approve the authorization of additional common shares.
That is still our shareholders call to make down.
Down the road.
We're not.
It's up to them.
But here is probably the most important thing of all.
And this announcement about the creation of <unk> today.
With the creation of Apes, AMC is deeply and fundamentally strengthening our company.
We already have shareholder approval in hand, such that our board to decide we can issue more <unk> in the future above and beyond those going out with this initial dividend.
Given the flexibility there.
But being able to issue more <unk> will give us.
We believe.
That we would handily be able to raise money if we so choose.
Which immensely lessens any survival risk.
As we continue to work our way through this pandemic.
The recovery in transformation.
Rather than having to worry about survival.
The flexibility accruing to us.
From apes can.
Ken instead, let us continue our efforts to try instead.
For AMC.
Thrive and to soar.
This new AMC preferred equity provides AMC with a currency that.
That can be used in the future to further strengthen our balance sheet.
Including by paying down some of our debt and other liabilities.
It also gives us the ability to seek additional.
Shareholder value enhancing and potentially transformative investment opportunities.
I believe.
That all of this makes AMC vastly and I mean vastly stronger.
And anything.
That moves AMC, so far forward in a single step.
Is bad news there.
Bad Bad news.
For those who wishes harm.
Yes.
Having said all of that there are a myriad of details and caution related to our announcements today, so I strongly urge investors.
Carefully read our press releases.
And our SEC filings on these matters, which are incorporated herein by reference.
To celebrate this milestone and as a token of our appreciation for our shareholders continued support we.
We also will be offering a free.
One eight.
<unk>.
To all existing AMC investor connect members.
And to new members joining by August 31, 2022, Incidentally, we have some 765000 people who have joined AMC investor today.
In the past 13 months.
Likewise.
Based on the popularity of the original ion AMC NFC.
That we issued back in January to ALC investor elect members.
To those who are in AMC investor inaccurate to those who joined by August 31, 2022. They will also be entitled to receive a free updated version.
Of that I own AMC NSP make it appear.
When I think about.
This pandemic.
And the journey, we have all been on together.
For the past two and a half long years.
I I'm ever mindful.
Of our shareholders dedication to AMC entertainment and.
And if I can speak personally for a second.
Of their trusted me as CEO .
I want everyone listening to this webcast today.
Or on replay later.
To know once again.
My every decision and every action.
Is it tended to work with a long term benefit.
Of all of our shareholders.
I Act and think like a shareholder because.
I too am a shareholder.
And a big one at that.
At the current AMC share price.
I know I now own outright.
Approximately $15 million of AMC stock.
And counting in also my previously granted but Unvested shares.
Assuming they've asked that so called target vesting levels.
I have more than $50 million economic stake in AMC.
This is pretty obvious stuff.
But that is a powerful incentive.
For me to do what is right.
For all of our shareholders.
All throughout this effort.
<unk> always been candid.
I have always tried to keep my word to our shareholders.
Always.
I promise only a few months ago.
We would be bold.
And to that end a few months ago.
I promise that.
That at the right time.
We would pounds.
Well.
Today.
We pounced.
John let's move to questions both from shareholders and from analysts.
Yes.
Great.
Adam There's a question that just came in.
And agreed this follows et.
It says I saw in the press release that you said that this safe dividend will fundamentally strengthened AMC and has tremendous potential to create meaningful value for both AMC and for shareholders.
Is this really as big and important.
As you claim it is.
Thank you for the question Sean.
I didn't put in the press release, if I wouldn't believe it.
Sure.
Lawyers read those press releases pretty carefully.
They make sure that I want to I'm able to back up what I say, but I'm actually going to surprise, everybody and I'm going to say on this call right now no.
It's not as big and as important as I've said in the press release.
It's bigger and is more important than I said in the press release.
As I mentioned in my prepared remarks, I think this is the biggest single step forward that AMC is going to take in 2022.
It essentially takes near term survival risk off the table you can never say never in the world. There are always uncertainties, but I believe that the flexibility that we will get.
The creation of this new preferred stock.
We will allow us to raise cash if we need it.
It will allow us to reduce our debt.
It will allow us to do intriguing M&A opportunities.
This is a an.
An enormous step forward for AMC. This is very good news for AMC and we all know there are a lot of people.
Out there in the world, who are not rooting for AMC.
This is not good news for them.
Thanks, Adam.
And there's actually another one that just came in through the Twitter.
It's from the international shareholder thing will international shareholders get the chance to fully participate in this dividend.
The answer that question is absolutely yes, it's one of the things that we made sure would be the case.
One of the things that.
As bothered me over the past.
Year and a half.
Is that we've gone forward with a lot with lots of offers to our shareholders.
Often through investor connect but offer and separate and apart from investor connect and often we are giving benefits at our U S theaters.
That's because we have one it system across all of our U S theaters, we operate in a dozen countries and we have a different system and operate and with different brand names all across Europe , and the middle East.
It makes it very difficult to make global offers because we can't necessarily program through all of these disparate.
Yes.
Information systems. In addition to that with respect to voting rights there.
There is something Thats quite.
Odd to us in the United States.
Which as many international brokerage firms.
Don't have the capability to facilitate shareholder voting.
And so many of our international shareholders.
Feel somewhat either different franchise, because they're not getting the offers.
The free popcorn, a free ICU free Cup of coffee.
<unk>.
Or early advanced screenings that we've offered to our U S investor connect members or they've been comprised of their chance to vote, because theyre not because we are the private number because there are brokers are.
And so we made absolutely sure.
That when we issue.
AMC preferred equity unit.
It will go into the accounts not only of our U S shareholders.
But our Canadian shareholders, our European shareholders, and our shareholders scattered all over the world.
Received so many comments on my inbound Twitter feed from so many different countries, where we have AMC shareholders I must say I enjoy your devotion to our company and appreciate reading your comments to me. So yes, this new APE.
AMC preferred equity unit will be available to our international shareholders as well.
Adam I'll just read the next question because I think it's quite self explanatory as yet.
Question is says that now that the box office is recovering from the pandemic how do you see the relationship between streaming movie Theater and film Studios.
How has it all changed compared to before the pandemic and where do you see things going in the future.
So this is not a new question or a new problem.
This has been this whole issue not screaming necessarily but windows in Hollywood studios commitments of theatrical exhibition.
<unk> has been alive topic really ever since the summer of 2017.
And we've been in active dialogue with studios.
Ever since.
Nothing really happened to change.
Theatrical exclusivity.
With all of that discussion in 2017, and 18 and 19, nothing really happened until the pandemic showed up in 2020.
And just as theaters were closed Hollywood could not distribute their movies.
So studio after studio.
Experimented.
With different.
Releasing strategies.
Of their movies they already in the can incur.
Including some other attempts.
Way from theatrical exhibition.
Some studios release films only the screaming some issued.
Movies to streaming and theater simultaneously some issued movies two theatres, but on a much shorter basis.
Well this experiment when it went on for two years.
But here's what I believe that everybody learn.
Especially starting with.
Sony's movie Spiderman, No way home that debuted in December of 2021.
If you look at what's happened over the past eight months.
With Spider man in uncharted and the Batman from Warner Brothers.
And then this big.
Our range of hits one after another after another Dr.
Doctor Strange and top gun, Maverick and dress world Dominion and elders.
Sure and minions.
Hollywood has realized again.
How much money can be made by releasing movies in theaters.
Exclusively first.
In addition to that it's kind of well known.
That share price.
Some major streaming companies.
<unk> started to take a hit.
And they started to lose subscribers.
And there is a lot of speculation that while the market might be big enough to support one streamer or to streamers or maybe even three seamless.
Could it support 10 streamers or more.
And I believe that you.
You take all this together.
And Hollywood is turning away from streaming Wall Street is turning away from streaming.
Leawood is coming back to theatrical exhibition, we have agreements now in place with every major studio.
To take their movies that are released in our theaters theatrical basis exclusively.
For a sufficient period of time, where we believe the studio and AMC can make money.
And if that new window, which is like a month and a half of exclusive theatrical access.
If thats too long.
We'll be willing to shorten with studios.
And if it's not long enough.
We'll be beating down the doors of studios, saying to lengthen it but you take all that together I think this is all very good news for AMC.
We have a parade of hits on our hands.
That either started last December or last March or last may depending on where you want to start I remember when I said looking forward.
It is going to be a pretty tough slow August September so don't.
Don't get it let's not get over our skis.
In being too optimistic about third quarter numbers, but look at the movies that are coming in the fourth quarter of 2022, it's going to be monster hit after monster hit after monster hit after monster hit and.
And if you think the box office is big in 2022.
It's going to be billions of dollars more in 'twenty three.
If our current estimates are accurate.
So again, we're quite bullish as we look to the future.
Thanks, Adam.
Question here.
From a shareholder and Investor connect Mamba, saying what are the bonuses inputs that are offered by AMC to its investors.
A lot well the first.
As the first purpose, we just announced we announced that you are getting in stock dividends at a couple of weeks.
And by the way if I can just add to my answer about our international shareholders.
Usually get one too, but if you don't get one definitely contact to broker.
To determine how you should get one because you are in you are entitled to one.
In addition to the new stock dividend Thats coming up.
We did set up the AMC investor connect program.
We got more than three quarters of 1 billion people, who signed up in.
It's first 13 months.
Thats available to U S and international shareholders.
One of the benefits of that as frequent communication from us about what's going on.
For our U S shareholders.
Look at what we've done and announced our Investor connect some free offers.
At our concession stands.
Had a new sort of major movie screening every months.
Almost every month in advance of its public release.
In the world.
Movies band the bragging rights of you can see a big important movie ahead of its general release.
That's good bragging rights, we've done that month after month after month.
Another fun one final one for me anyway.
As we've announced through Investor connect.
That.
As chairman and CEO of AMC.
Have been hosting movie screenings personally.
Scattered around the United States.
For a chance to watch a movie together with our shareholders.
700 cities like New York, Chicago, Kansas City, Dallas, Miami, and Washington DC.
I am expecting to do.
Many more in the fourth quarter.
And I can announce today with some delay.
That.
Sometime between September and Christmas.
Expect to hold my first overseas investor.
Investor screening.
Probably in London.
Although it's possible to go somewhere else in Europe as well.
And at these ones that I attend.
Now, let's take every hand in the room I'd take a selfie picture with everybody who wants one.
I have autograft everything from shirts.
Autograph to banana one of them.
It's a great opportunity to meet our shareholders individually one on one.
Seven of the happiest evenings I've had all year.
We will continue to look for more ways to reward our shareholders and especially on my plate.
As to figure out how to get some of these offers.
That we're routinely making it our U S theaters.
Available to our investors overseas as well.
Question, Adam about our expansion plans.
The question is will we see AMC theaters in Canada for example, or more expansion within Europe .
Well in Europe for sure.
Because as you said in your comments earlier on the call.
Over the last couple of years, we opened 45 theaters.
Most of those were in the us, but many of those were in Europe and.
And we keep one signing agreements.
On attractive pieces of real estate to open new theaters, we just opened a theater a couple months ago in Finland.
Already one of the most successful theaters in Finland.
And that is true.
They were looking for new opportunities.
In all the countries that we currently serve.
But for us to enter Canada.
Or other countries in Europe , where we're not present.
You pick up the Netherlands, Poland.
Wherever we may not be.
The best way to do it is not go into a country and opened a theater to an.
A relevant player in that country, the best way to do it would be to acquire something of some size.
And scale.
And prior to today.
Even though we had.
$1 billion of liquidity available to us at the end of this most recent second quarter.
Being very careful how we spend it and invest it.
Because we wanted to make sure that.
Our cash flows was always strong with this new preferred.
Stock currency that we now have.
We can get much more aggressive on the acquisition front.
And so it's conceivable.
<unk> there are no current plans, but it's conceivable.
That we could do some international acquisitions. This is not a new concept.
To AMC or to me all during the history of the AMC AMC has grown through acquisition.
Three years ago.
Six years ago, when I joined AMC six five years ago in my first year. We did three major acquisitions that took us from being the second largest movie theater chain in the U S. The largest movie theater chain in the U S. The largest movie theater chain in Europe , and largest movie theater chain in the world.
Recently.
Just in the last year.
We bought about a third of the Arclight Pacific Circuit.
Which should not reopen after the Covid pandemic.
And that's going very well so far the grove in the Americana theaters in La for example are already.
Two of the 30, most the highest grossing movie theaters in the entire United States under our management.
Just bought.
Five.
<unk> of the Bowtie cinema circuit.
In the northeast.
And that allowed us to double our presence in the state of Connecticut.
Which is a major a better.
A bedroom community to New York City, where we have a significant.
<unk> market share.
And already the theaters in our <unk> acquisition are performing about 20% better ahead.
The projections, we made in our modeling when we went forward with that acquisition.
So we know we're doing with acquisitions were good at it.
Now that we have a new preferred stock currency.
At our disposal.
<unk>.
We will keep our eyes open on acquisition opportunities as well.
Adam I have more investor questions, but why don't we take a moment to shift and see if there are any analyst questions at this point.
Absolutely.
Yes, we have a question from the line of Wallboard B Riley Securities. Please go ahead. Your line is open.
Hey, good afternoon, guys Eric Wold.
A couple of questions I guess one.
Obviously, the easiest new currency essentially.
Accelerate the deleveraging the company and kind of.
Pay downs on the debt that's been taken on in recent years.
Aside from any.
New actions can be taken major acquisitions of new MTO just the current state of the company what do you view as the optimal leverage for a company like yours right now and given your outlook into next year.
Eric the optimal leverage for our company is a lot less than we're currently leveraged.
And.
Throughout the pandemic.
We've taken action.
To reduce debt you may recall that in July of 2020.
We get a sophisticated bond exchange.
Where we traded equity for debt.
And we wiped out.
By memory I think it was $555 million of debt with the stroke of a pen gone.
Similarly.
Just a few weeks ago, we announced.
That in the second quarter.
Or July I forget the actual day I know when we announced it I forget the actual day, we bought the debt I think it was in the second quarter.
That we.
But $72 $5 million worth of debt for $50 million got a 31% discount on that debt now.
$72 million to $5 billion like <unk>.
In the Ocean.
Being able to get our debt back at a 31% discount that was that was certainly a good day for AMC and just as we did a sophisticated bond exchange.
In the summer of 2020.
If we have debt holders, who would like to give us our.
Sure.
Debt back at a discount in exchange for AMC stock.
That is a great trade for our shareholders.
Similarly.
You all have asked this on previous calls.
About the deferred rent obligations that we took on with landlords theater landlords.
Where we rent from calendar year 2020 or 2021.
This year next year year, 2024, and in the future we've already been in contact with several landlords.
Who said that they wouldn't mind getting paid early and they wouldn't mind getting paid early at a discount.
We could swing it but we've been very mindful of holding onto our cash hoard that war chest as I described it.
Because we wanted to make sure that we were always fundamentally in a strong position.
Liquidity at our side.
But we now have.
Our preferred stock currency.
We might be able to use to reduce some of that those landlord obligations again at a discount.
How quickly we can delever.
Eric I don't this is only we're in the.
First hour of having this new currency at our disposal. So I'm not sure. We can give you an exact number how much debt we can bring down.
Over the next three months six months 12 months 24 months 36 months.
What I can tell you.
So we're pretty creative management team.
He has taken on a whole host of challenges in 2020.
And.
Strengthening our balance sheet.
And getting a better.
Debt to EBITDA leverage ratio is very much in our in our valuation.
So.
It should happen.
And we'll be able to report more to you as we ourselves learn more.
Thanks, Kevin.
There are no further questions.
Sorry, operator.
There are no further questions from the analysts, but we're going to go back to Sean do you have any last ones from our shareholder base.
Yes, I do.
Let me.
Take a quick look at there is a question here.
I think I'll just cover.
Three more quick questions.
From the shareholders.
There's a question here about high cost and what is your timeline for the investment and are there any anticipated interactions between hycroft in AMC.
So in terms of.
Hi crops.
I am so convinced that win.
Storey is finally written this is going to be.
A good one for AMC.
I put out kind of.
Macho tweet few months back that said when the dust all settles, we'll be a lot of CRO eating about the high quality investment I wasn't going to be wanting in growth.
I still believe that to be the case.
In part.
Because high crop has raised all the cash it needs to stay in business for years and years and years.
Second.
In terms of our interaction with high crop I hear that high crop has picked up a very smart new member of its board of directors that would be you Shaun.
Sean Goodman, our CFO is now a member of the high crop board.
But.
Third.
One of the things that was so intriguing about high crop.
Is.
It operates on 71000 acres of land in northern Nevada, It's mineral rich.
And is it only explored in the 40 years there was around 2%.
Of its 71000 acres.
Gold and silver doesn't just exist in a small place.
Spreads.
And high crop just announced.
In part because of the cash run in part because of the cash that we enabled it to raise.
Hi, crop just announced that its.
Starting the biggest exploration program.
More of it's land than it is done in a decade.
And while we won't know what the results of that exploration will be until they do it.
You and I are hopeful that they will find a lot more.
Mineral reserves that should be quite lucrative as far as the timeline for the investment.
We got in at a great low market price.
We got an amount of warrants.
In the same quantity.
As.
The number of shares that we bought.
So we basically double our economics without having to put up double the cash.
And when we went into high crop we didn't do it.
For a 90 day hit if we wanted to do a 30 day or 90 day hit we got it.
<unk> doubled our money in a couple of weeks.
But that's not why we entered into the high Cross investment we think there's much more there ahead of it for us and so I think our timeline with high crop just sort of like a private equity firm.
To.
Hold it for two years to seven years.
And see what kind of value we can create.
For AMC shareholders sometime in that timeline.
Is when I would expect we know we've got and that's what I would expect we would get out some number of years from now.
And a question here about amc's growth initiatives.
I am, particularly interested in branded merchandize retail popcorn credit cards NFC.
<unk> and alternative content.
I tried to mention in my prepared remarks and in the interest of time I'm, just going to say quickly that.
We're making progress on each of these fronts.
I gave some timing in my earlier comments.
I think whether it's our popcorn business, our credit card business, our merchandize business.
We're going to see increasing activity.
Beginning in the second half of this year in the first half of next year on all fronts.
And the final question.
That I will ask this afternoon is investors are asking for an update on our green initiatives.
So the buzzword in the corporate World. These days is ESG and the he stands for environment.
And with good reason.
Many of us are quite concerned.
About what's happening to the climate.
On this planet.
Here in the Midwest of the United States. It was over 100 degrees.
For a lot of time over the last few weeks.
Got.
And it would behoove all of us.
To respect our planet.
Wed like our kids and our grandkids to have a plan to live on.
The laser projection.
Announcement that we made is not a small announcements.
It represents putting in a quarter of a $1 billion of new projectors into our theaters.
And the benefits are numerous.
One of course is that for moviegoing can make for a much better moviegoing at.
It increases the light levels on screen slide.
By 50% to 100% makes the picture is brighter sharper clearer and crisper.
Moviegoers are going to love it.
But environmental and should like it too because laser projectors.
<unk> far less electricity.
We have thousands of them and they operate.
Half a day $24 seven.
Not 20%, but seven days a week.
They take a lot less energy.
And a little known factor of our.
Current.
10 year old projects and technology.
Is that they use halogen bulbs.
And housing bulbs burn out.
And they burn out often.
And so they need to be replaced.
Which happens to be expensive.
And laser lights don't burn out.
Anytime as quickly as housing bulbs.
But once you have a burn down of halogen bulb.
Yes, what you do with it you put it in a landfill.
And I think I've told it has a half life of about five trillion years.
Not really true, but the point is.
<unk>.
Not having to.
Discard I mean, it is true that they've got a long half life, it's about 5 billion years.
Not having to discard halogen bulbs.
Is very good for the planet.
We consume less energy.
It's an expensive step for AMC.
Good one environmentally it's a good one for moviegoers. So I think you said that was your last question.
Yes, and I'm going to wrap.
To all of you listening today.
Thank you for your affection.
And your passion for AMC Entertainment.
We have been.
Listening to all the things you've been telling us.
For the last year and a half.
We've taken a lot of actions.
That reflect your thinking.
And.
We took one today.
With the creation of <unk> that will trade on the New York stock exchange in just a few weeks under the symbol <unk>.
It's an enormous enormous positive step for AMC.
We're thrilled that we're doing it we think you should be thrilled that we're doing it.
Over the long haul we know that this company will benefit.
And so.
This.
As a very good day at AMC.
Because today.
We did pumps.
Thank you one and all we're signing off.
That does conclude the call for today, we thank you for your participation and ask you. Please disconnect your lines.