Q3 2022 AMC Entertainment Holdings Inc Earnings Call
Greetings and thank you for standing by welcome to the AMC Entertainment third quarter 2022 earnings conference call. During the presentation, all participants will be in a listen only mode and afterwards, we will conduct a question and answer session at that time. If you have a question. Please first a one followed by the four on your telephone.
If at any time during the conference you need to reach an operator. Please press star Zero today's call is being recorded Tuesday November eight 2022, and now I would like to turn the conference over to John Meriwether. Please go ahead.
Thank you Scott good afternoon, everyone I'd like to welcome everyone to Amc's third quarter 2022 earnings webcast with me. This afternoon is Adam Aron, our chairman and CEO and Sean Goodman, Our Chief Financial Officer.
So before I turn the call and webcast over to Adam Let me remind everyone that some of the comments made by management. During this webcast may contain forward looking statements that are based on management's current expectations.
Numerous risks uncertainties and other factors may cause actual results to differ materially from those that might be expressed today.
Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K and 10-Q.
Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict.
In light of the uncertainties inherent in any forward looking statements listeners are cautioned to not place undue reliance on these statements.
The company undertakes no obligation to revise or update any forward looking statements, whether as a result of new information or future events.
On this webcast, we may reference non-GAAP financial measures such as adjusted EBITDA constant currency.
Operating cash burn 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 Joe and good afternoon, everyone and thank you for joining us today.
Even with the third quarter financially being flattish with.
We join you on this call today brimming with confidence that the recovery of AMC Entertainment.
Is well underway.
AMC welcomed more than 53 million guests to our theaters around the world in Q3 of 2022 a third.
33% increase compared to the third quarter of 2021.
On our last quarterly webcast, we were encouraged that the July industrywide domestic box office was down only 12%.
From the pre pandemic July of 2019.
But we also did predict quite correctly.
That there would be a dearth of big movie titles being released in August and September of this year.
Even so we also were bullish about the movies coming out in the fourth quarter of 2022 and in calendar year 2023, and that is precisely our view again today.
Despite a lackluster August and September .
We're seeing that the industry wide box office is already on a rebound both domestically and globally clawing and climbing its way back.
And looking at the fourth quarter of 2022.
It's worth noting that Warner brothers Black Adam released in mid October had the highest domestic box office opening weekend gross of all time for any movie featuring Dwayne Johnson as a leading man.
I also can confirm today.
That our advanced bookings at AMC and Odeon for Black Panther will conduct forever are frothy and robust.
We are about as certain as we can be.
But the so called Black Panther too.
We'll be one of the biggest movies of the year.
And then it's ticket sales might even cause it to rise as high as the second biggest movie of 2022.
Behind only top gun Maverick.
And of course Q4 will continue.
With Disney's Strange World.
With James Cameron's Avatar, the way of water.
And with Damien's yourselves Babylon.
Anchored by our strengthening fourth quarter of 2022.
Let's get a better sense of this recovery bye.
But briefly going back.
So at the beginning.
Recall that when the pandemic hit the scene in early 2020.
The industry wide domestic box office, which is the basic measurement of the size of our industry.
Well by more than four six for the full year of 2020.
Leading to the lowest box office grosses.
Since 1981.
But in comparing to 2020.
The domestic box office more than doubled in.
In 2021.
Our expectation for the full year of 2022.
When this year is all over.
Is that the domestic box office will have dramatically risen and increased yet again.
By not quite but almost by 75%.
And while no one's crystal ball is perfect as far in advance.
Based on our analysis of the movie titles currently expected to be released in 2023.
We think that next year's box office should grow yet again.
By between 15% and 25% and possibly but even more.
Our confidence in looking ahead stems not only from a growing industry wide box office.
But also because of the demonstrated agility.
The AMC board and management team to skillfully navigate our way through crisis.
Since the beginning of the pandemic.
We have taken bold and decisive steps to ensure a recovery for AMC entertainment.
By taking action after action after action to enhance our marketing appeal and our operating profitability while at the same time brilliantly raising capital.
Over the last two and a half years.
AMC took in some $2 $2 billion of new equity proceeds and another $2 6 billion.
Of debt financings.
In addition, we were able to amicably amicably negotiate almost 1 billion $5 of further benefit from asset sales government support and concessions from both our lenders and our theater landlords.
Accordingly at the end of the third quarter AMC at just under $900 million of liquidity.
Having ample liquidity is a bedrock of strength.
We will use ours, both to continue to grow but also to continue to delever.
Our smart financing activities include the recently announced refinancing just a few weeks ago of our $400 million Odeon term loan in Europe .
The debt paid off to $144 million so far this year in total.
And.
There is also the introduction of our preferred equity units.
Or apes in August and.
And launching them, we said that the creation of apes was nothing nothing less than an all defining moment in amc's future.
As it gave us a new currency.
To help AMC to grow.
To delever and to raise capital.
We also said at the time to those who feared mindless dilutions that we would treat our new AAM a preferred stock.
So we would treat it as precious.
And we will continue to do so.
So far.
We have raised only $37 million of equity proceeds from the sale of <unk>.
Into the markets, we have indeed been careful.
As to <unk> specifically.
Each AMC preferred equity unit was designed to have essentially similar economic and voting rights as an AMC common share.
But markets are markets They act on their own accord.
We are out of our direct day to day control.
Even so we continue to be convinced that over time, the availability of apes will serve their purpose for AMC entertainment well.
To help AMC to grow.
To delever.
And to raise capital.
Taken together.
All of the actions that we've taken have allowed AMC entertainment to successfully navigate our way through the impact of the Covid pandemic.
By contrast, we did so while several of our competitors, both big and small.
We're forced into bankruptcy protection or some other form of reorganization or liquidation.
In 2021 and 2022.
We write wisely pruned our circuit.
By adding theaters, where it made sense to do so and by aggressively shedding.
7% of our theaters indeed <unk>.
M C and Odeon permanently closed older tired buildings with marginal or negative profitability that had reached the end of their productive life cycles.
At the same time, though we also have been able to grow our network by profitably, adding attractive theaters.
They're built from scratch and appealing locations or those picked up from our competitors who may have stumbled.
I should point out that with $900 million a quarter ending liquidity.
Our eyes are keenly open.
The new such opportunity as it may arise.
Tempered only by my previous comment that preserving ample liquidity.
And Delevering are also high priorities for us.
We also have a number of bold ideas about how we can broaden our business, which I will talk about specifically later on this call.
So that's where we are two and a half years into our COVID-19 journey.
We're not out of the woods, yet while the box office is unmistakably on the rise.
It's still falling short of pre pandemic levels, adding to all that inflation has ramped up and interest rates are marching upwards.
In summary, though as I said at the beginning of this webcast.
Are brimming with confidence.
No what we're doing and we will manage AMC with all of our skill and determination.
As we strive to rise to the challenge.
With that I'm going to pass the call to Sean Goodman, our CFO after that I'll come back to talk about some key developments and answer your questions.
Thank you Adam and thank you to everyone for joining us this afternoon.
While the third quarter has started off strong August and September as we expected relatively quiet.
Nonetheless, the quarter still saw revenue growth of 27%.
And that number is 32% in constant currency when compared to the third quarter of 2021.
Comparing Q3, 2022% to the prior year's third quarter the growth in revenue was offset by box office concentration with the resulting increase in film exhibition costs, a reduction in government assistance and inflationary cost pressures. The result for the quarter was a small consolidated adjusted EBITDA loss of 12.
For $9 million compared to a $5 $3 million loss a year ago.
Note that our domestic adjusted EBITDA in Q3 of $1 $2 million was an improvement of $31 3 million compared to the prior year.
While the international business, which enjoyed meaningful government assistance in 2021.
<unk> adjusted EBITDA loss of $14 1 million compared.
Compared to adjusted EBITDA of $24 $7 million a year ago.
Now, let's just step back and look at our recovery over the last nine months.
Year to date consolidated adjusted EBITDA is a positive $32 million compared.
Compared to an adjusted EBITDA loss of $450 million for the same period a year ago.
That is approaching half a billion dollars of.
Adjusted EBITDA improvement so far this year.
As has consistently been the case in this recovery period.
<unk> performance metrics remain markedly better than pre pandemic 2019.
For Q3 2022 on a consolidated basis total revenue per patron was $18 and 21.
Approximately 21% higher than Q3 of 2019. This was driven by admissions revenue per patron growth of 12% food and beverage revenue per patron growth of 30% and other revenue growth per patron a 48% all compared to the third quarter of 2019.
Taking a closer look to the domestic business admissions revenue per patron increased by 15% compared to Q3 2019 to $10 90.
In our international business achieved a 2% increase to $8 60.
Normalizing for the strength of the U S dollar compared to 2019 international admissions revenue per patron increased by 10% in constant currency.
From a food and beverage perspective, we continue to enjoy exceptionally strong food and beverage revenues to patrons.
Domestic markets food and beverage food and beverage spend per patron in the third quarter was $7 and 11.
That's 33% higher than average spending pre pandemic Q3, 2019 and in the international business.
Average spend per patron was $4.10.
That's nearly 15% higher than Q3 of 2019, and nearly 24% higher on a constant currency basis.
Finally, domestic AD revenue per patron increased by 54% and international other revenue per patron increased by 37% and 48% in constant currency.
Going forward, we are focused on continuing to drive strength in these key performance metrics through one ongoing development of our industry, leading AMC app website and loyalty programs to enhancing the guest experience, including our innovative food and beverage offerings.
Three providing the very best possible sight and sound experiences through premium offerings, such as IMAX, Dolby cinema, and IMC crime and full growing revenue through diversification initiatives, such as renting out our theaters during off peak times marketing and promotion initiatives all of the above to be achieved.
Paying very close attention to our operating efficiency.
Note that premium formats attendance represented 14, 9% of domestic attendance in Q3 2022 compared to 12, 6% in the third quarter of 2019.
And in our international markets premium format attendance represented 9% compared to eight 4% in the third quarter of 2019.
Let's talk about the balance sheet we.
We ended the quarter with liquidity of $896 million. This is comprised of $685 million of cash and cash equivalents and $211 million.
Of Undrawn credit facilities.
As anticipated and discussed during last quarter's earnings webcast cash burn this quarter was adversely impacted by the relatively quiet box office in August and September together with seasonal working capital requirements or working capital will naturally come under pressure in a relatively strong quarter is followed by a weaker quarter.
In Q3 was no exception.
Operating cash burn for the quarter represented cash burn before debt servicing costs and before deferred rent payback was approximately $179 $2 million.
Looking ahead, we expect our cash burn to improve in Q4 with a return to positive operating cash generation.
Regarding capital allocation.
Priorities remain unchanged, one maintaining sufficient liquidity to manage through the recovery phase of our business.
Two strengthening our balance sheet by extending maturities, reducing debt and reducing associated interest costs three investing in our business to enhance the guest experience.
And for Opportunistically pursuing value enhancing initiatives, including those that lead to diversification of our business.
During the third quarter of 2022, we strengthened our balance sheet by repaying approximately $23 million of deferred rent, reducing our deferred rent balance to approximately $196 million.
Recall that back in March 2021, this balance was more than $417 million and over the last 18 months, we've lowered our deferred rent liability by nearly $275 million.
In 2022 alone deferred rent has been reduced by approximately $119 million.
We expect to further reduce this deferred rent balances during Q4 by another approximately $50 million.
In addition to the reduction in deferred rent.
As Adam noted we have taken further actions during the year to extend debt maturities and reduce our debt balance.
Net result.
Is it approximately $144 million reduction in the principal amount of interest bearing debt outstanding and an extension of debt maturities through to 2026. All told if we include the decrease in deferred rent is actually reduced our debt liabilities total.
Of approximately $263 million so far this year.
Capex net of landlord contributions was $44 million quota and for 2022, we continue to expect capex to be in the range of $150 million to $200 million.
Actively managing our theater portfolio continues to be a priority.
During the third quarter, we added four new theatres and closed eight this brings the total number of locations closed since the pandemic began to 106 and the total new locations opened to 49 for a net reduction of 57 locations.
The combined 49, new locations continued to substantially outperform 106 closed locations and also outperformed our underwriting expectations. We've.
We continuously seek opportunities to strengthen the balance sheet.
Tenuously Wayne the liquidity needs of our ongoing recovery.
And as the steps that we've taken to date show, we are ready to take action as attractive opportunities arise and with that I'll hand, the call back over to Adam to review some exciting recent announcements and provide an update on our strategic initiatives.
Sean.
Before we head to your questions.
The bulk of few minutes.
But also to address what I think is the single most important topic facing the movie theater industry of today.
As well as several operational environmental and business development concepts directly on the horizon as we continue to innovate at AMC.
Since the pandemic first arrived.
The press has been filled with three concerns the conventional wisdom has repeatedly insisted would be existential threats to moviegoing and theaters.
Year of infection of the coronavirus disease.
The rise of streaming services and the collapsing of exclusive theatrical windows.
On the disease risk.
Thanks to vaccines medicines to deal with Covid like packs.
Medicines to deal with Covid like <unk>.
And the fact that so many people have antibody protection because they already experienced the COVID-19 infection dealing.
Dealing with Covid now as transitions from pandemic to endemic its now more like the seasonal flu.
Which has been with us for more than a century since it was a killer pandemic.
In the early 19, hundreds people will still come down with COVID-19.
But it's no longer the commerce, destroying thing than it was back in 2020 and 2021 life is returning to normal risk one dealt with.
On the streaming services risk.
We have long said that.
The consumers voracious appetite for content is big enough for movie theaters and streaming services to coexist harmoniously together.
The results from Spider Man, No way home last winter.
From top gun Maverick this past summer.
And from the expected Big Grosses. This weekend from Black Panther, We're concept forever will again remind us all that movie theaters can thrive even with the consumer having a multitude of streaming services.
That our choices as well.
As opposed to streaming services being a threat.
We think there are potential ally for AMC Entertainment. This month for example, we're showing our first ever Netflix movie at AMC, the sequel to knives out.
We recently announced that we will be showing Paramount pluses smash hit yellow stone in our theaters last December we played Amazon's being the Ricardo.
Let's start our very own heroin, Nicole Kidman and.
And of course MGM also of course, Amazon also now owns MGM, whose movies appear prominently on our AMC big screens theaters and screamers can thrive simultaneously and can thrive together risk to dealt with.
And as for the risk of collapsing windows.
During the height of the pandemic several studios experimented with going to simultaneous home on theatrical release or found themselves forced to sell off movie titles that originally were bound for theaters, but which went elsewhere instead.
Fortunately for US studios appear to realize how much boundless money they can make by taking their films to movie theaters first.
While there may be an occasional exception here there are industry has coalesced around an exclusive 45 day window for theatrical release, hopefully that will turn out to be acceptable for studios and acceptable for theaters to both do well.
Risk three dealt with.
At this point there is only one topic.
It should be on the top of all mines and the tip of all tongues.
It's not the coronavirus, it's not streaming it's not windows. It is this.
Movie theater operators need more movies.
Because of the pandemic induced production delays the number of big movie titles being released by the major studios is still down considerably down 20% to 30% versus pre pandemic norms.
Eagerly await more film product to show.
But I also can report to you today that.
That we are seeing considerable progress on this front.
Every few months I had the opportunity to meet in person to the leaders of all the major studios in Hollywood.
Over and over again.
I am hearing from them that they are doing all of their power to pick up the pace of the number of movies that they will be releasing theatrically going forward.
That's the major challenge facing the movie industry right now above all else and there can be optimism that more movie titles rather than fewer movie titles are in our future.
Let's turn back to AMC initiatives.
There are seven.
I'd like to address directly and.
And update you on.
One.
Given the financial struggles of many other companies within our industry. Our eyes are wide open to opportunity that may arise for AMC.
There is nothing further to report to you today on this subject, but know for sure.
That we are paying close attention.
Two.
At our existing theaters, we're doing an enormous amount of business on our premium large large format screens. So we're doing all that we can to renovate existing screens and increase the number of IMAX Dolby cinema, Prime and <unk> screens at our AMC.
See and Odeon theaters.
Three.
We have started the multi year installation of laser projectors broadly across thousands of auditoriums.
In the AMC system.
They dramatically brighten and sharpen the images on our screens, thereby greatly improving the moviegoing experience for our guests.
Laser projection is also the biggest single Green initiative that AMC has ever launched.
As they decrease energy consumption and they eliminate the need to dispose of depleted halogen bulbs and landfills.
Four.
Just yesterday.
We announced a truly exciting partnership with zoom.
Our view of the World, leading video communications platform.
To enter into the multibillion dollar meetings market.
For corporate and other meetings.
With this new partnership we are able to offer meeting organizers the best of both worlds the spectacular communications technology Zoom <unk>.
Combined with the comfort size scale and state of the art sight and sound capabilities of Amc's centrally located theaters these new zoom rooms at AMC.
Or an all new product that will be available in as many as 17 major cities across the United States.
<unk> sometime in 2023.
Using zoom room at AMC meeting and event organizers will be able to bring together decentralized workforces or customer basis and significant numbers of people from different markets, but together at the same time for a cohesive both virtual and in person.
<unk> experience.
It is not a well known fact, but already right now AMC does about $20 million a year of meetings business and that's limited.
One movie theater at a time without the cross opportunity.
To link up through zoom technology theatres.
Theatres in multiple markets simultaneously.
We are optimistic about the growth in revenues that we can generate from the very substantial medium market.
Additionally.
We're in the final throes of developments.
Of an AMC branded credit card.
So item five on my list of seven.
I am pleased to tell you today that we firmly expect that our new AMC branded credit card will be launched in the first quarter of 2023, if not sooner.
We could not be more excited about the progress we've made in getting to this point full details to come.
When we launch.
Six.
Much also has been written about amc's coming entry into the multibillion dollar popcorn market.
Our food and beverage and marketing teams have made great strides in product development.
In packaging and in our distribution plans.
Fully expect that in partnership with a major national retailer.
AMC perfectly popcorn will be on the shelves at grocery stores around the United States in the first half of 2023.
Our AMC brand is credible residents amongst consumers of popcorn and we can't wait to see the smiles on your faces.
You get to see AMC popcorn in a store near you.
And lastly update number seven.
Let's briefly tell you about developments recently at high crop mining.
Just last week.
Hi, Kraft reported the second round of results from its drilling exploration program. The biggest plus exploration program on the Hycroft mining site in northern Nevada in nearly a decade.
As was the case when the first round of exploration results were announced.
Hi, Kraft uncovered.
More gold and more silver in them there hills.
And a vital importance high crop has been finding or deposits that are of significantly higher grade.
We made the high crop investment recognizing the vast potential of the Hyatt crafts asset if the company were appropriately capitalized.
The results to date are extremely encouraging.
I have to admit to being amused, how receptive are shareholders were to our investors and high crop and.
And by contrast, how astounded wall Street professionals were to that same announcements.
Accordingly, while Theres no certainties in life.
Nothing would give me more pleasure someday well down the road then to report to you the degree to which we can monetize our high cross investment hopefully.
Eye-popping numbers.
In closing.
We didnt see very much appreciate the support that we continue to get from our passionate shareholder base.
And let me say personally that it's been a particular honor for me to meet with many of our shareholders. One on one at the movie screenings I've personally been hosting around the country and as of next week across the globe.
My 11th such screening will be for the movie of the hour the much anticipated Black Panther, where condo forever at the <unk>.
Odeon Luxe Halloween cinema in London, This coming Monday Night November 14.
Sean let's now move to questions, both from our shareholders and from industry analysts.
Let's start with questions from our shareholders. Thank you to them for submitting their questions now.
Questions into three categories.
This category Adam is innovations and the first question there is where do you see and see expanding in the future and what categories of innovations in the pipeline to enhance the business.
So.
These items were sort of address in my <unk>.
Earlier prepared remarks.
Number one.
Within our existing theaters.
The amount of business that we do.
And our premium large format screens is significant.
Sometimes on our opening weekends.
Even though our premium format screens.
Represent only 10% of our auditoriums.
Sometimes they are producing as much as 50% of the growth.
Of our films across the network so it makes sense.
For us to increase the number of premium format large format screens.
In our system.
And that we're doing we're going to introduce.
More IMAX screens more Dolby cinema screens more screens and more prime screen, so thats happening.
Second.
In terms of innovation.
Again, I mentioned it in my prepared remarks, but.
I can't say enough how big it is.
We are deploying about a quarter of a $1 billion of resource to introduce laser projection.
And about half of our auditoriums.
This is a technical term, but the so called light levels.
Inside a movie theater.
With laser projection of contrasting with the housing bulb.
It goes up by between 50 and 100%.
It means the pictures on the screen are sharper there are brighter.
And therefore, the movie watching experience is that much better.
We're always going to want to.
To create an environment in our theaters.
That makes the consumer want to get off their couch at home and come out to a theater.
And brighter sharper pictures, especially doing so in an environmentally friendly way is a good way to do that.
And then the third major item of innovation for AMC has only been doing away from our theaters.
Things like the branded credit card things like perfectly popcorn things like zoom rooms, which is in our theaters, but away from movie watching per se.
These are all areas where.
Where we think AMC will shine.
Going forward and it.
It's not exactly innovation.
But.
You talked in your remarks about how we closed a 100 plus marginal theaters and opened 50, new ones in the 50, new ones or maybe a lot more money than the 100 that we closed.
I do continue to think.
That is the rest of the industry stumbled financially.
We're going to see increased opportunity to grow our network and take advantage of our various strengths.
Next question here is a request for an update on AMC on demand.
AMC on demand, which we introduced several years ago before the pandemic.
<unk> has always had kind of a low.
Usage.
And candidly.
Sure.
While it is a good little products.
I think our money is better directed elsewhere and so the money that we have been investing.
To grow AMC theaters on demand is money I think that instead, we ought to be putting in.
Placing a significant number of branded credit cards or taking popcorn to the home popcorn market. So I think that as we look to 2023.
We're going to look to.
Either phase out AMC theaters on demand or alternatively joint venture with another party.
To offer that same capability to our guests, but not only but not necessarily to investment spend to.
To build it up ourselves so.
It takes me to the point that at a time when dollars are precious.
Because the recovery of the movie industry has taken a considerable time.
You and I agree Sean but.
But we need to.
Be laser focused.
On making sure that every dollar counts cut every dollar of expenditure increase every possible dollar revenue back.
Back the best ideas.
Or walk away from the ideas that may be intriguing, but maybe a lower grade priority.
Two questions, yes, thanks, Adam two questions yet you did mention in your prepared remarks, but.
And people are asking when can I expect to see AMC branded popcorn on the shelves and what is the long term potential of the partnership with zoom. So maybe you want to add a little bit.
Sure.
No.
Sean I've been at many of taste testing of one recipe after another.
For our ready to eat popcorn and our microwavable popcorn.
Thats going to hit shelves.
And the first half of 2023.
We've seen the packaging, which I think is beautiful.
We've had numerous conversations with major national retailers.
And are getting.
Really favorable response.
People want to carry this product on their shelves.
Youre going to see it in the first half of 2023.
I was supposed to caveat everything because you never know.
What can go wrong, but.
My firm expectations is on the shelves first half of the year.
<unk> zoom.
I was in the hotel industry for.
A good chunk of my career.
The meetings market is a multibillion dollar market.
And for any of you have gone to a hotel for a meeting.
And sat in their ballrooms or in their breakout rooms there.
Chairs are not comfortable when you compare the comfort.
Of an AMC signature recliner seat.
So what you might get at a hotel we beat them.
Uh huh.
Traditionally.
We've only been offered to offer meetings.
At our theater as a standalone entity now thanks to our partnership with zoom.
We're going to be able to link up.
Theaters city after city.
So that people who want to have a nationwide meeting.
And selling they have to get everyone to fly on a plane.
Go to a convention city.
Can do sell simultaneously at our theaters.
I saw some.
Reaction to the press announcement yesterday.
Zoom why would people go to a theater.
Well, they just signed in on zoom.
Zoom is an amazing thing as you know, we like we run our whole company on zoom for like two five years now.
But the answer is when you've got.
50, or 100 people in the city.
And you've got those 50 or 100 people in a dozen different cities.
It's not the same thing.
To have 500 or 1000 little mini pictures on a zoom screen, where everybody is.
Loan either at their desks in the office or maybe at home or somewhere else.
Mining and resumed one by one by one by one.
This gives us the best of both worlds because people can still gather in a medium sized group.
In a city.
And be hooked up through really sophisticated zoom technology.
In another city or in another city in another city University, because we can hook up.
Multiple cities with no no problem and I got to tell you.
This idea.
Was the idea of the CEO of zoom.
Who literally called us up.
And wanted to share with us his idea.
Hal zoom could.
Make AMC theaters, a compelling entry into the meetings market and the second we heard the idea.
We're all for it and we think the financial opportunity is big remember, we already do $20 million a year of meetings business.
And thats without the ability to Lake city after city at the same time.
Don't want to give a specific goal, but hopefully the revenue opportunity is large.
Thanks, Adam.
Question about our operations, especially.
Looking into 2023 in the current environment. The question is we're all seeing the impact of inflation on our daily lives.
Also impacting AMC.
So.
<unk>.
Yes.
Yes.
For those of you who are under the age of 35 on this call you probably don't even remember what.
Inflation is.
But for those of US who are old enough to remember Jimmy Carter when he was president of that states.
We lived through inflationary periods.
And.
They stress the system.
Because costs rise.
And if.
If you want to know how much they raised cost just look at what the natural inflation rate is that tends to be the cost of everything goes up in the country, what's particularly so in terms of a starting point.
When you hear inflation statistics being reported nationally.
You should assume that amc's costs are going to go up by a similar amount having said that what is.
Very unusual in <unk>.
Amc's case.
Is that.
Because the box office is on a path of recovery.
The volumes that we're seeing in our theaters.
The volumes of customers that we're serving.
Is rising dramatically.
And as a result, we pick up operating efficiencies.
And increased operating productivity.
Because the number of guests coming into our theaters is coming down essentially because we're spreading our fixed costs.
Over more people.
So we are in the enviable circumstance.
That we've got a mitigating offset to inflation.
The increasing productivity that comes from being able to spread our fixed cost over a larger customer base.
Is offsetting a big chunk of the inflationary costs that would otherwise not be mitigated.
Without this increasing volume of customers.
For productivity gains.
And in the next section here is a couple of questions about the stock.
And the first one here is please explain why you believe the stock has gone down.
And why management has been generally silent on this matter.
So.
So this is the biggest question of the day isn't it.
Let me start by saying.
I am a major AMC shareholder.
It is an enormous part of my net worth.
And I venture to guess that I personally own more shares than anyone listening on this call today.
So I assure you that just as you watch the share price.
<unk> share price.
Having said that.
<unk>.
In terms of decline there are a lot of factors.
These aren't the only reasons why the share price has fallen.
But look around at what's happened in the United States and for that matter of the planet.
Over the past several months.
There is a war going on in Ukraine.
Which is not good for global stability.
It's caused a surge in energy prices, it's caused dramatic inflation.
Which in turn has caused the fed.
To commit to raising interest rates.
These are all factors that have affected the market overall in.
In the case of the movie Theatre industry.
In early September Cineworld.
Also declared for chapter 11 bankruptcy protection.
Which also created a certain amount of agita around.
The movie theater industry.
And our share price.
It also does depend on what your timeframe is of course, because while the share price is lower than it was in let's say June of 2021.
It is still a lot more than it was in January of 2021.
But.
What I just said is about all you'll ever hear me say about our share price.
Cause you asked so like why is management silent on the subject.
There are things called securities laws in the United States.
And if you're the CEO of a public company.
It is much better for you to be talking about the state of the business.
Then the state of the share price.
And I know this is frustrating to some of you.
You'd like me to comment.
All the time.
But prudence says.
Our focus in our public focus should be what we're doing to bring back the health of the business.
Over the short medium and long term.
And that's what we should be talking about.
And so that in fact is what we have been talking about we said earlier in the year.
You should never interpret silences inaction or indifference.
We are aware of the subject is very important to you.
And to all of us as significant shareholders of the company, having said that.
Our focus.
And our public commentary.
Is usually constrained.
So what's in the best interest of the business, what's the future of the business what are the risks inherent in the business.
And that's what drives our public commentary.
Thanks, Adam and then as a follow up yet which is asking can we reverse split.
Sure.
But it's something that's legal to do.
But interestingly.
An.
An action like that would require a shareholder vote.
Which should remind us all.
Since there are many shareholders on this call.
This is <unk>.
Your company.
Day to day, we right.
We do our best on your behalf.
But on major topics of governance.
The shareholder vote is required.
And that would be one for example that we would have to take out to the shareholders for their opinion in their consideration and ultimately their decision.
Great and then a question on disclosure yet someone is asking what do you provide information on the number of shareholders and the number of shares that have been directly registered with the transfer agent Computershare.
So for those of you who don't know what the direct registration of shares is.
Our transfer agent Computershare.
And most of you hold stock through brokerages.
Some of you.
One stock that's directly registered with the company through our transfer agent.
A primary benefit I suppose.
For you.
When you registered your shares directly with.
Transfer agent.
Is the transfer agents.
Do not allow for shorting of shares.
Whereas.
Most brokerage firms do.
And so what we've heard from some of you is.
Debt to make sure that Youre assures cannot your shares cannot be shorted.
You want to register them directly with the company in a transfer agent, which is you're right.
Owner of a public security.
We haven't given any.
<unk> to any of you to do that or not is that entirely your call.
And I should point out it's a small number of people who have done it.
As best I can tell it's around 15000, or so of our millions of shareholders, who decided to directly registered shares.
I think they've registered in the neighborhood of 10 million shares or apes with our registrar.
And what we.
We decided that this is a number that.
Is one of these numbers that we should publicly release, so when we file our 10-Q for the third quarter.
We're going to announce in the Q, what the number of.
Directly registered.
Registered shares.
Excellent and then the last question that I have here.
And then we can go into questions from.
And this is do you have any comments regarding the acquisition of Twitter.
<unk>.
Uh Huh, that's quite a question.
So.
The funniest comment that I heard it on Twitter.
In the past two years.
Was the two great bienstock stocks or <unk>.
AMC and Gamestop.
Yeah.
And then there's musk.
The Guy who runs.
AMC is Adam Aron that begins with an a and Ryan Cowen that begins with the C is a runs gamestop and of course, there's only <unk> and.
Somebody is trying together that AMC was Erin Lusk and Colin.
Quite something similar holes.
But Mr Musk.
It's just taking control of Twitter.
And I have no comment really one way or another.
Whether he will do a fabulous job owning and running Twitter or not.
But what I can tell you.
Is that the asset that he block, meaning Twitter.
This is the most incredible communications tool.
That I've ever seen.
And if you just look back.
Over the last what is now a year and a half.
That I have actively been tweeting.
With our shareholder base.
We've been able to convey.
Hundreds and hundreds of important messages.
To you all about what's going on in our company.
And I've been able to read.
Literally.
Hundreds of thousands.
Of <unk>.
Inbound comments back to us.
Hum.
I spend about an hour a day on Twitter.
Uh huh.
Mostly reading what you have to say.
And I learned so much about what's on your mind and of course Twitter also.
Gives us the opportunity not only to learn by listening from you, but also to share information with you and share news with you and so.
I continue to be astounded.
How impactful and powerful.
Twitter is as the communications vehicle.
Yes.
And I hope that Allan Moss does good things with Twitter.
Because.
It's a very valuable national asset if it's run well.
With that.
I guess Scott the operator.
Can you see if there are any questions from our industry analysts who are on the call.
Absolutely. Thank you if you'd like to register a question. Please press the one followed by the four on your telephone you will hear a three ton prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three if you are using a speaker phone. Please lift your handset before entering your question.
Once again, that's one four to Russia for question one brief moment for the first question.
Okay.
Okay.
And we have a question from line of Jim Goss with Barrington Research. Please go ahead. Your line is open.
Good afternoon Adam.
Hello, Jim.
How are you doing oh goodness right.
Go ahead, I thought I'd ask you about the stubs a list that's been sort of not relevant for the past couple of years.
As the the.
The content and everything that has been under pressure, but I wonder if you might talk about whether you have a plan to revive it make them more relevant to us.
The amount in mix of content improves and where it might stand right now what is your starting point.
Sure.
The.
Yeah.
A list was for those who aren't totally familiar a list our subscription program up to three movies a week for.
For a fixed price.
<unk> 'twenty and $25 a month basically.
And when we launched the program in June of 18.
It instantly took off.
Hum.
And it popped up to as much as 15% of our total movie going in the United States and we have a similar program by the way in London.
Called limitless and are adding Germany.
At our Odeon theaters in the U K and R.
UCI theaters in Germany.
In Europe .
The limitless program has grown considerably.
And.
Back in either the pandemic when our theaters are all closed obviously.
There was nobody.
Paying is $25 a month.
Go see three movies a week because all the theaters shut so we put AMC a list on pause in the United States.
And cranked it up.
Last year.
The good news is we're already back.
So between 6% and 700000.
A listers up from zero.
During the pause.
And again, we're seeing depending on the title.
10% to 15% of our total moviegoing.
As coming from a list members. So the <unk> numbers have continued to rise.
The second that we <unk> the program.
<unk>.
If you look at <unk> as a percentage of our total moviegoers, it's it's kind of on par with where it was prior to the shutdown.
And we intend to be very aggressive going forward to continue to attract.
People to the program.
Okay, and then one might add yes sure go ahead Jim.
No I was thinking with alternative content, you've tried you've had an opportunity to try a number of things for the same reason the carriers have been under pressure I am wondering if there are any anythings you've shown on your screens that you think have some promise to be more than just a better than nothing else.
Yes is the answer to your question so.
Yeah.
We had good success with the concerts that we showed.
Whether they were liver or taped.
With good success.
With WWE <unk> and UFC events.
And we've experimented with some professional sporting events.
For all of those things concerts.
The.
The various sporting events we.
We need to secure.
What are called rights broadcast rights from the leagues are the owner of the IP.
And in all cases.
We are encouraged by the results and so we will be on a path to try to negotiate rates with the various IP holders. So that we can grow our alternative content going forward.
Alright, Thanks, a lot.
Thank you Jim.
Operator in mind correct Scott.
We are done with questions for the day.
Correct. There are no further questions at this time.
Great. So to all of you joining us today.
Thank you.
I think I'd like to close the call.
With two thoughts.
I said in my opening remarks that we're brimming with confidence as we look at the recovery path.
That AMC is on.
That's the first comment the second comment is.
To keep us continued to be continuing to be encouraged and brimming with confidence.
Black Panther, we're kinda forever Black Panther, what kinda forever.
Black Panther, what kinda forever, it's going to be a big weekend in the movie Theater business.
And we're excited to be talking to you today. Just ahead of this new very big movie being released theatrically. Thank you for joining us.
We will look forward to talking to you again next quarter.
That concludes the call for today, we thank you for your participation and ask you. Please disconnect your line.
Yeah.
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Uh huh.
Yes.
Yeah.
Uh huh.
Okay.
Sure.
Yeah.
Sure.
Yes.
Okay.
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