Q1 2023 AMC Entertainment Holdings Inc Earnings Call
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Ladies and gentlemen, once again, we thank you for your patience and please continue to standby the AMC Entertainment conference will begin shortly again, we thank you for your patience. Please standby.
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Greetings and welcome to the ADT Entertainment's first quarter 2020 earnings conference call.
At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference.
Please press Star then zero on your telephone keypad.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host John Merriwether. Please go ahead Sir.
Thank you operator, good morning, I'd like to welcome everyone to Amc's first quarter 2023 earnings webcast.
With me this morning is Adam Aron, our chairman and CEO .
Sean Goodman, our Chief Financial Officer.
Before I turn the webcast over to Adam Let me remind everyone that some of the comments made by management during this webcast.
It 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 against relying on these statements.
The company undertakes no obligation to revise or update any forward looking statements.
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.
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 this morning.
After our prepared remarks, there will be a question and answer questions.
This morning 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 Ed.
Thank you John good morning, everybody.
Thank you for joining us today.
As we sit here this morning.
I could not be more optimistic.
How about Amc's future.
Because to vital developments.
In the first quarter of 2023.
First.
Is the clearly growing industry wide box office up in North America.
29% quarter to quarter versus last year.
Growing to more than $1 $7 billion in the quarter.
Okay.
She was attendance and movie theaters in our markets across Europe .
Is this an even closer to pre pandemic levels higher too.
Prepaid debit norms than even the surge in North American box others Gabe.
Incidentally.
Clearly growing industry box office.
It continues.
April and so far in May.
The April domestic box office was up about 58% for example.
And there is a one a potential hit movies don't.
To be released in the remainder of 2023.
We had previously indicated.
We expected the 2023 industrywide domestic box office.
15% to 25% or more.
Is that a 2022.
Well no.
With the big start this year, we now believe in 'twenty three domestic box office.
The up 20% to 30%.
Over the last year.
The second development in Q1.
Is that our shareholders.
At our March 14th Special meeting.
Loaded by an enormous margin.
Fully 80%, 88% in favor totally 12% opposed to abstaining.
So our proposal to combine our AP preferred units.
AMC common shares.
Of the AMC common shares that were voted.
72% voted yes.
Of the $8 that were voted 91% voted yes.
As a result.
Aam's sales should be able to raise significant equity capital.
Oh, Wow Pandemics lingering aftermath.
I think our cash reserves to help us pay down debt corporate attractive M&A opportunities.
As well as for other growth initiatives.
AMC is unique and singular ability to raise capital since 2020.
One of the key reasons for our success.
It is avoiding the fate of other movie theater chains Big and small.
That didn't make it.
Our continued ability to raise capital.
What gives us unbridled cognitive and amc's future.
We thank our shareholders for their real wisdom shouldered their votes of March of 2023.
We are also aware that there is angst amongst some of the holders of a considerably smaller number.
With voted against our proposal.
We hope to convince you over time.
The majority of the shares that were cast.
Voted in favor of strategies and actions, which will generate the best long term results for AMC.
Let's turn back to the box office.
First.
There were many movies that were in theatres in Q1.
<unk> had extraordinary appeal.
Above all the James Cameron for Avatar.
<unk> as a way of water.
At the current growth of $2 $43 billion globally.
It's the third highest grossing movie.
History of silver.
Neither I remind any of you.
So we are a mere 19 months in 14 days away.
Avatar three great thing of our AMC Odeon screens.
It will be a very Christmas indeed.
In 2024.
But it wasn't just an Atari <unk>.
Resonated with consumers in Q1 nine different movies, one day a week.
The highest grossing films.
Cross the week of Q1.
And the news is not only that they were more big movies of our theatres in Q1.
There were more movies period.
Q1 proved out to be precisely through.
What we have been predicting.
The quantity of films now coming up the ethylene is rising.
If you look at wide releases.
Slides his films grossing $5 million of more domestically.
With 35 movies in Q1 2023.
This was only 26.
Q1 of 2022.
34, 6% increase in the supply of <unk>.
We released films, regardless of their ticket sales numbers and dollars.
As we look at the whole of the year.
We continue to expect a similar substantial increase.
And the total multi count dropped.
Throughout the remainder of the year.
Movie being released.
We attribute.
Okay.
For more context.
Back to Q1. This year was the best first quarter domestic box office.
So.
March 31 2020.
And while still in a recovery mode.
At 72% of 2019 pre pandemic first quarter.
The first quarter of 2023 represents a significant improvement.
Compared to last year's first quarter.
Which was only 56%.
2019 levels.
56% a year ago, 72% this year.
Still rising.
As for AMC.
The first quarter's box office success for the industry.
Translated into Amc's strongest start.
In four full years.
AMC say exceeded consensus market expectations for revenue.
We exceeded consensus market expectations for adjusted EBITDA.
And exceeded consensus.
Market expectations for adjusted adjusted net income as well as exceeding consensus market expectations for adjusted EPS.
AMC enjoyed a 21% growth.
Mobile revenues.
$954 million.
And the $69 million improvement in adjusted EBITDA.
Up from a $62 million loss in EBIT, a year ago to positive $7 million this year.
Q1 of 2023.
With Q4 of 2022.
Mark the first two consecutive quarters.
A positive adjusted EBITDA.
Since March 2020.
More than 47 million guests.
This is an AMC theater worldwide in the first quarter of 2023.
47 million guests.
Sales in Stark contrast.
So the naysayers is doomed pillars.
Therefore wisdom.
Loudly, but wrongly predicted.
Movie theaters were dead.
And the anachronism.
Bygone days.
Those 47 billion people.
Tell us as we have known for years and years.
That movie theaters are very much alive.
And.
Very much.
Center of the cultural fabric of these.
Got it.
For years and decades to come.
Also.
That was the 47 million guests came into our theaters.
Boy did they eat and drink.
Our food and beverage revenues per patron.
Eye-popping.
At $6 90 per patron globally.
$7 99 per patron in the United States.
This is so far above prepaid debit consumption and.
That is occurring in a very high margin business for us.
When they walk through our doors.
AMC guests also continue to seek out.
Premium large format screens or pls as they're known.
Where AMC already has a commanding competitively.
Competitive lead.
AMC is the largest IMAX operator in the world.
China.
And about half of the IMAX screens in the United States.
Can be found at AMC theaters.
Similarly exciting.
The only operator of Dolby cinema screens in the United States.
And continue to have contractual exclusive.
Dolby cinema going forward in the U S market.
Our premium large format screens.
Often over index fiber sixfold in box office revenues or more.
In the box office grosses that they bring to AMC.
Compared to a non CLO amc's great.
So over the next one to three years you.
You will see us continue to invest in our pls.
We intend to upgrade a significant number of IMAX screens.
IMAX with laser and.
And we intend to increase the number of our Pls.
By adding more IMAX screens and by adding more Dolby cinema screens.
We also expect to significantly grow the numbers of our private label House brands and feel up screens called prime at AMC in the United States.
And middle East.
And I sense in Europe .
Okay.
We're not only making AMC a more compelling experience for moviegoers through more and better appeal upstream.
We have also contracted to install laser projectors.
About half of our U S screens.
Over the next three calendar years.
Laser projection increases the light levels on our screens.
50% to 100%, which makes the pictures much.
Brighter much sharper and more vivid.
It's also our biggest green initiative ever.
In our company's history.
As laser projection consumes far less energy.
And there are no xenon bulbs.
To throw away in landfills.
Iteration of laser at AMC started back in 2022.
And it is going extremely well.
Yeah.
The fact that I'm talking about the investments, we will be making in upgrading and enhancing our product.
Is in itself.
Enlightening and revealing.
During the height of the pandemic.
When we were fighting for survival.
Long term planning around here it was like a week from Thursday.
But now as well.
He becomes ever so much more confident and amc's vitality we.
We can actually look forward again to our longer term future.
Specifically.
We can improve the appeal of our theaters and how would you grow and transform AMC.
For M&A activity.
Make no mistake we.
We are not out of the woods yet.
The box office, while elevated.
Is not yet back in 2019 levels.
As I previously indicated that I believe COVID-19 will be a five year detour.
The movie industry.
We just started the fourth year.
Our ramp up to.
The eventual normality.
But we are indeed on an improving rep.
Domestic box office revenues is the basic placeholder of size for our industry.
Was above $11 billion for five years in a row.
2015 and 2019.
So it was only $2 million in 2020.
And then $4 5 billion in 2021.
Seven $5 billion in 2022, and no guarantee easier, but we believe the domestic box office revenues are likely to be $9 billion or considerably more than that in 2023.
That also is an upwards ramp.
We're looking at AMC EBITDA.
Which was $771 million in 2019.
Incredibly seemingly overnight.
It's eight to minus $999 million.
In calendar year 2020.
Minus $292 million a year in 2021.
Okay.
Positive, but Paul $3 $46 million in 2022.
And if you combine first quarter actual results for 2023 with analyst consensus estimates for quarters, two three and four of 2023 that EBIT not EBITDA number would be hundreds of millions of dollars higher in.
In 2023.
That was the case in our 2022 results.
Look at the trend.
$771 million pre pandemic.
The negative 999.
Negative $2 92 positive 46, hundreds of millions of dollars higher than that now.
Again, that's a confidence building.
Encouraging upwards ramp.
In summary.
We just posted encouraging an excellent Q1 results.
We have excellent things coming down the pipe.
Our moviegoers as we go forward.
I'll be talk I'll be back to talk briefly.
A few other important topics after short selling goes into more detail.
About our operational and financing results our CFO John .
Goodbye.
Thank you Adam and thanks, everyone for joining us this morning.
2023 is off to a really good start with.
With consolidated revenue up 21, 5% or.
Or 24% in constant currency compared to the first quarter of 2022.
The highlight of this being food and beverage revenue.
Food and beverage revenue is up 30% or 32% in constant currency versus the same period last year.
Overall, all attainment increased by almost 22% of Q1 2022.
Revenue per patron was in line with the prior year or up one 7% in constant currency at $20 and 45 states and it's worth noting that this revenue per patron is some 36% higher in constant currency than pre pandemic in 2019.
<unk>.
In the North American business.
Total revenue increased by 25, 1% compared to Q1 of 2022.
With admissions revenue per patron decreasing by one 5% to $11 87.
And food and beverage revenue per patron, increasing by six 2% to $7 and 99 six.
This is an all time record.
Note that admissions revenue per patron in the quarter was impacted by an increased proportion of this comp tickets during our Tuesday discount program.
A list subscription member attendance.
Yeah.
In the international business.
On a constant currency basis total revenue increased by 21% compared to Q1 of 2022.
With admissions revenue per patron, increasing nearly 6% to $10 and 61.
And food and beverage revenue per patron, increasing by 12, 5% to $4 and 96 states.
<unk> is another all time record.
And this growth is further supported by increased premium format or pls penetration.
With Pls revenue, representing 29, 2% of domestic admissions revenue in Q1 2023, and this compares to 21, 7% in the first quarter of 2022.
19, 9% in Q1 of 2019.
And then our international markets premium format revenue represented 24, 1% of admissions revenue compared to 13, 1% in Q1 of 2022 and 10, 6% in Q1 of 2019.
Clearly gas.
Increasingly appreciating the premium experience offered by our IMAX, Dolby and AMC prime offerings.
Our strong revenue growth.
Patron is being achieved as guests increasingly choose the premium auditoriums and indulge innovative food and beverage offerings, including movie themed cocktail and collectible items.
Initiatives to optimize revenue, including blockbuster pricing are yielding positive results and the increased adoption of our industry, leading AMC app and targeted marketing initiatives are all helping to drive revenue growth.
Looking forward, we will maintain our focus on the overall guest experience in order to drive our key performance metrics, including one our loyalty programs in the AMC App too.
Our food and beverage innovations three sight and sound experiences through advanced laser projection technology and premium offerings and for diversification initiatives such as the successful launch of the AMC ready to eat and microwave popcorn and AMC branded credit card.
All of the above of course to be achieved while paying very close attention to our overall operating efficiency.
Before moving on to talk about the balance sheet I do want to just point out that our consolidated statement of operations.
Includes a charge of $126 million related to the potential settlement of litigation in the Delaware Court sports by the Allegheny County employees retirement system at all.
$10 million of this charge represents estimated legal fees net of estimated insurance recoveries and is included as a reduction.
Adjusted EBITDA for the quarter.
If excluded the adjusted EBITDA would have been $17 million.
And $116 million represents a noncash estimates of the value of the settlement, which is subject to court approval and this is included in net income, but excluded from adjusted net income.
Yeah.
Moving to the balance sheet.
We ended the quarter with liquidity of $704 million.
This is comprised of $496 million of cash and cash equivalents and $208 million of.
Undrawn credit facilities.
During the quarter net cash used in operating activities was $119 million.
And non-GAAP operating cash burn, which.
Which represents cash from operating activities after deducting capital expenditures and before but its debt servicing costs and these good payback was $139 million.
This compares to a non-GAAP operating cash burn of $224 million in.
In Q1 of 2022.
Note that our cash burn in the first quarter was as anticipated.
Adversely impacted by normal seasonal first quarter working capital needs.
We are anticipating an improvement in cash flow during the remainder of 2023.
During the quarter, we made significant progress in strengthening our balance sheet.
We raised $155 4 million.
Gross equity capital.
Unit issuances, we repurchased approximately $103 5 million.
Debt at an average discount of 45, 4%.
And we reduced the principal amount of our debt by an additional $100 million through a debt for equity exchange.
The net result of all this in the first quarter is at $285 million reduction in the principal amount.
Just bearing debt during Q1 of 2023.
During the quarter, we also strengthened our balance sheet by repaying approximately $33 6 million.
Deferred rate, reducing our deferred rent liability to $123 6 million at March 31st 2023.
Why might recall that back in March of 2021, this deferred rent balance was $473 million.
And so over the last 24 months, we have lowered the deferred rent liability by nearly $350 million.
All told.
<unk> the decrease in deferred rent, we have reduced our liabilities by a total of $242 million.
Thus far in 2023 alone.
And.
If one goes back to the beginning of 2022 the reduction in liabilities is $620 million.
Strengthening the balance sheet is an ongoing priority.
And to that end so far in the second quarter, we have already raised another $34 2 million of gross equity proceeds and we have bought back another $9 million of debt.
And during the remainder of 2023, we plan to further reduce the deferred rent patents by another $50 million to $70 million, reducing this liability to approximately $50 million to $75 million by the end of this year.
Note that we have fully issued.
Eight units that were available for issuance under the most recent September 2022 at the market equity program.
Our capital allocation priorities. These remain unchanged, one liquidity to reducing financial leverage and strengthening the balance sheet three investing in our existing business and for investing in value enhancing growth and diversification initiatives.
Capex net of landlord contributions was $41 million in Q1 of 2023.
And consistent with our previous guidance, we expect net capex for 2023 to be in the range of $150 million to $200 million.
Actively managing our theater portfolio also continues to represent a profit enhancement opportunity.
During the first quarter, we added one new theatre and we closed 21, which includes the 13 Saudi theaters.
This brings the total number of locations closed since the pandemic began to what Harris 36, and the total new locations opened $2 55 for a net reduction of 81 locations.
Combined 55, new locations continued to substantially outperform the 136 closed locations prior to their closings.
And then also continued to outperform our underwriting expectations.
Looking forward, we are optimistic about the future and the opportunities to strengthen and diversify our business, while continuing to enhance our financial position as we progress along our recovery glide path.
With that I'll hand, the web Com cross back over to Adam to provide an update on our strategic initiatives.
Yeah.
Thank you Sean.
Our goal with leaders of AMC.
Is to increase the value of the company over the long term for our shareholders.
We do this by efficiently managing our operations.
And taking decisive actions to provide the best products services and experiences for our guests, which in turn drives revenues.
Profit growth.
At the same time, we seek to invest in the development of our business.
None of our theater footprint.
And the growth through value, creating diversification initiatives.
Over the last three years.
We have operated in an extremely challenging environment.
You all know.
Survival was our primary focus.
That is changing now.
It is finally starting to be tied together.
When AMC can focus not only on severity.
Instead.
It's thriving.
Thus far this morning, you've heard about the progress we're making.
Our ongoing recovery.
I'd now like to provide an update on some of the key strategic initiatives.
Letting the transport of AMC.
Pandemic operating environment.
In that way.
I'd like to highlight four other recent developments first.
Our retail popcorn loss.
On March 11th.
The day before Oscar Sunday.
We launched AMC ready to eat perfectly popcorn.
For exclusive six months of engagement.
At about 550 locations of the nations largest retailer.
Walmart.
As you know.
AMC perfectly popcorn hit special I'll end caps with three varieties of ready to eat popcorn.
Classic butter extra butter slightly fallen.
Sales were brisk.
In fact, so much so that.
Most of the Walmart sold out.
Of their initial supply.
Not only are we very pleased.
The initial positive consumer reaction.
But so to Walmart is pleased.
Importantly.
The second phase.
Of our exclusive Walmart launch.
Began on April 29.
When we scale up the supply chain with the distribution of Amc's worthy popcorn hitting the shelves.
At approximately 2600 Walmart stores.
And for shipping nationally in the United States.
Walmart Dot com.
Amc's microwave popcorn was also introduced.
At that time.
At Walmart across the country as well.
As was the case back in March again in the early days sales are brisk.
We think that our home popcorn is good it turned into a substantial business.
For AMC.
We are already currently exploring opportunities for.
Towards eventual expansion.
And the other grocery store chains, and other e-commerce and other channels.
Walmart's exclusively.
Second development.
We kept our promise to our shareholders and largely in the AMC Entertainment branded credit card.
In partnership with visa a world leader in digital payments.
And deserve.
A leading mobile first fintech credit card platform, the rewards, which AMC entertainment visa card is the only growth driver that earns in theater rewards.
Whenever its use.
AMC Entertainment visa cardholders earn extra AMC stubs points.
They can use those currency rewards they get.
With the repurchase made on their AMC entertainment visa card.
That card exemplifies amc's ongoing commitment.
To delivering tangible benefits both to our guests and to our shareholders.
While reinforcing our Bud.
Our devoted.
Moviegoing patrons.
Third development.
The creation of eight units.
In August of 'twenty two.
Vital for AMC.
It resulted in our being able to raise.
$418 million of.
Of much needed gross cash proceeds, allowing us to boost our liquidity and reduce debt.
Including deferred rent by more than $470 million.
Indeed, AMC is unequivocally.
So naturally a stronger company today.
As a result of.
Our having created APE units.
Nonetheless.
Despite having the same economic and voting rights of our AMC common shares eight.
Eight units have consistently traded.
Stansell discount.
AMC common shares.
That discount creates inefficiencies that increase our cost of capital.
Cause unnecessary and preventable dilution.
Therefore after careful thought.
The AMC board presented proposal to amend our corporate charters.
To simplify our capital structure via a reverse stock split.
<unk> of eight units in the AMC common shares please.
Based on your vote on March 14 to approve such amendments we thank our shareholders overwhelmingly agree.
With the importance of doing this.
However in response to litigation about this similar vote.
We worked with the plaintiffs.
Found common ground to <unk>.
Settle our differences, which if approved will.
We will allow the charter amendments to be implemented in accordance with the affirmative shareholder vote.
Because that proposed settlement is currently under review by the Delaware Chancery Court we.
We do not intend during this call to discuss this litigation further.
Yeah.
Oh.
And the fourth development.
We are so appreciative.
The Hollywood Studios again seem to recognize the incredible value creation.
Theatrical exhibition.
In recent years.
Some studios, we're prioritizing their streaming services.
Other theaters.
Today.
The talk in Hollywood, it's flipped.
Movie makers know there is money being made in theaters.
Studio after studio.
Is rushing to increase the number of movies.
The date of the lease first.
The accurately.
Traditional studios are the only was interested.
And launching films on the big screen.
Amazon Studios, just be absolutely released their wonderful movie about the true story of Nike introducing the air Jordan Sneaker.
Hey, Aaron.
Sorry, Ben Affleck and Matt David.
As we enjoyed more than $70 million up $47 million.
Of domestic box office success as.
Is it received far greater consumer acclaim and awareness.
And then it would have had had been released directly to streaming without a theatrical release first.
And we look forward to Apple theatrical releases.
Later this year.
The highly anticipated silver to the flower Moon.
Distributed by Paramount directed by Martin Scorsese.
Starring Leonardo Dicaprio and raw.
Robert Zero.
In addition.
The riveting movie Napoleon distributed by utility directed by Ridley Scott starring Joaquin Phoenix.
These initial leases by Amazon and Apple.
It could be just the tip of the iceberg.
Of new content.
For AMC.
There have been numerous press reports.
These two tech Giants export plan to spend about $1 billion per year.
Our movies that will be held in Paris to theaters.
Prior to going.
On screening platforms. This means.
So you'll be able to watch in the friendly confines of an AMC theater or Odeon cinema or <unk>.
Our big screens Evans.
Amazon and Apple released that's potentially $2 billion of new content annually headed for theatrical release.
We can't wait to see.
Okay, Sir films.
No.
Conclusion on this call.
We could not be more optimistic.
About the prospects for the movie slate.
Films coming out during the remainder of 'twenty three.
Only to say that.
2024.
It's even better.
The 2023 Q1 financial results.
Coupled with a strong start in the second quarter.
Make us confident about the path we're on towards the ongoing recovery for AMC.
In 'twenty, three 'twenty four and 2025.
And as I conclude our special final word.
Yes.
I have greatly enjoyed meeting so many of you in our theaters.
I personally hosted.
23 movie screens in 22 different cities over.
Over the past 18 months.
And I do my next one in Berlin.
In Germany on May 13.
I also greatly appreciate you're communicating with me on Twitter.
As I think many of you know.
All of my tweets myself.
They devote about an hour a day.
Kimberly to reading the voluminous inbound comments from you about AMC.
It is illuminating.
For me to hear what you have to say.
I am a better educated and.
Better able CEO .
Because I get to hear your views.
<unk>.
And all children.
Thank you for your ongoing support.
Thank you for your passion and.
And enthusiastic commitment to AMC.
And I look forward to your seeing any.
A number of great movies that will be the big screen of our AMC theatres in the Odeon cinemas in the weeks months and years.
Theres ahead.
Let's now move to questions.
From shareholders and from industry analysts.
Thanks, Adam.
Start with a couple of questions.
From our shareholders.
The first one here is are there any plans to enhance or expand our AMC loyalty programs.
Yes.
What has surprised yes.
No.
Two of the most important marketing programs that we have.
Oh, it's let's say three of the most important market growth we have.
A list of course, our subscription program that tight.
Titles people to see up to three movies a week for <unk>.
$25 a month plus tax.
Others AMC stubs.
Which we have two cheaters insider and premier.
That allow moviegoers at our theaters.
To earn discounts Eze breeze.
When they return to AMC theaters in future.
Our reward for their current spending at AMC.
And third is.
Just an enormous amount of outbound communications.
By email push notification text that.
We said two members of our loyalty programs.
Talk about the movies that will be appearing in our theaters.
And other benefits that could accrue to them.
As a result.
Their support of AMC.
<unk>.
As you might expect.
Cohort all of those programs they are grinding halt or themes, we shop for almost six months and the volumes and all of those three programs started back into a much lower number.
Then where they were.
Just before the pandemic hit us.
So we've been on a build back log ever since we reopened.
And I'm pleased to say that the numbers are starting to look good again.
We have a significant number of AOS members.
There are a lot of possible enhancement to the analyst.
When we're thinking about and talking about.
For 2023 and beyond what are the most interesting of them.
Is.
There's something called churn.
Where.
A list members, a small number but each months some of them drop out.
And we don't want to lose those people as AMC customers.
So one of the things, we'll be aiming to do is to.
So communicate directly with former a listers who for whatever reason have not tried to continue with the program and tried to keep them loyal to us.
Turning to the stubs program.
There are a whole host of initiatives that are now have been.
<unk> tested them.
Some markets will.
We will see which of these tests.
Meets with positive consumer appeal.
And we're going to be interesting new things both for inside of our members and for Premier members.
I said, we're testing a variety of options right now in small quantities.
Certain markets around the U S.
As we learn which of our.
Initiatives or test the well.
And producing good results, we will start to roll that out nationwide.
I would ask for the communications program.
It's ramping right back up.
And again.
Moviegoers at AMC can continue to expect we will communicate to them.
Based on their specific movie going preferences, we do after all know of movies you wait to see.
So it makes sense to talk to you about the tightened movies that use stock and we've liked.
As new similar movies come out in the future.
Thanks, Adam.
Great.
The next question here.
Asks about well the AMC expand the distribution of retail popcorn to grocery stores than perhaps in international markets and also is it possible to arrange for the shipping of AMC merchandise internationally.
So the only question is almost definitely yes, mostly so.
Definitely yes.
We would like to expand where AMC perfectly popcorn can be bought in the United States.
Yeah.
The reason we were so.
Eager to give Walmart a six month exclusive.
Okay.
Walmart is one of the great retailers of the world.
And it's very rare that.
There are product launches.
Start at 2600, Walmart stores across the United States.
They show a great enthusiasm for our products.
And therefore, we were willing to give them a head start but you can be sure that we'll be talking to just about every major grocery store in the country.
We'll be talking to convenience stores in the country.
We're looking at other possible places to buy AMC.
AMC perfectly popcorn through e-commerce.
It has been suggested to us.
We only sold on Amazon Dot Com for example, it's been suggested to us that we have to sell it on AMC theatres Dot com.
In addition to its being available at Walmart Dot Com. We're also going to look at other unconventional places.
Potentially to.
Showcase AMC perfectly popcorn like for example.
Sports stadiums.
Company Cas Securities.
That are privately catered.
When I say, probably captured I don't mean like fancy, primarily Canada right now.
The company is a big gap becomes a big opportunity.
And hopefully we can get in there too.
Might just be the best.
It sounded.
Again, Gary Sugar.
So there are a lot of places that we.
<unk>.
Ken.
Take it after the six months Walmart exclusive IP.
I've heard a lot of times on.
Twitter.
Afternoon, we take it to Canada.
And we take it to the U K.
And Continental Europe .
It's a little harder.
Because.
Right now we've only four pounds.
Manufacturers.
Steaks and the cost of.
Shipping that perfectly popcorn overseas for example, with <unk>.
Raises price to be able to.
Sell in Europe , we'd have to find a European manufacturer, who could meet our very high.
Quality standards, what's really fascinating.
In my mind about AMC perfectly popcorn.
People don't realize this but.
We spent almost a full year.
In our flavor testing.
Both the ready to eat popcorn in the microwavable popcorn.
Because we wanted it to taste as good.
As the popcorn does in our theaters.
And we.
We do buy a much higher greater popcorn.
And many other.
Much of our great of corn.
There's other popcorn makers by.
One of the reasons why our popcorn and theaters are so good.
And we've been sold it for 100 years.
We do know how to prepare it.
And we tested a whole variety.
Of flavor protocols to make sure the product we were taking the home was just as good as what we serve in the theaters.
The reserve Fabulous.
In the early weeks.
So to take it overseas even to take into Canada.
We probably are defined.
Manufacturer who could.
Live up to the highest standards of what we're doing at launch here in the U S as for shipping the merchandize internationally.
I don't see any reason why not.
<unk>.
Sure.
So we're on the case, we don't have it sorted out yet.
It does raise another question we have a very successful program.
For AMC shareholders called AMC Investor connect.
We have almost a million members of AMC investor connect.
These are people who have self identified to us.
They have one AMC shares.
Since we launched the program.
You would have that.
We've made offer after offer after offer.
To our U S members of AMC and bunch of connect.
Because we're in a dozen countries in Europe , because we have a dozen different systems, because we're in different languages across Europe .
We've not been able to easily make an offer.
Pan European the way, we can make an offer that's.
Pan United States, So to speak that's good across United States.
So I think that our European shareholders have taken short shrift in investor connect.
We communicate with them just as much as we do with the U S shareholders.
But the offers have been like.
And it's a high priority for me in 2023 to come up with ways.
To make AMC investor connect offers.
Two our international shareholders.
In Canada in Europe .
In the Middle East.
Where we have theaters.
That's very exciting thank you.
And the next question here is talking about Amc's plans to expand theaters, but the new markets within the U S and perhaps in other countries as well.
So we.
We.
We do have plans going forward.
And it's impressive the plans that we've already implemented.
We've done.
A tremendous amount of work.
Addressing what we call our fleet of theaters.
Since the pandemic hit in.
March and hit Us in March of 2020.
And we've actually closed like 150.
Of our roughly 1000 theaters.
Because they were money losers.
Or because they were in terrible shape on their end of their lease or some other good reason to close.
At the same time.
We either acquired or built from scratch.
66, new theatres.
And interestingly the 66 new theatres.
Yeah.
Greenlee out produce.
And profitability.
100, plus that we close.
Yeah.
We're going to continue.
To look at our theaters every single year.
And if there is dead weight in our fleet of.
And over 900 years.
Throughout the world.
We will take them out of our fleet at the same time, though we're going to continue to add theaters.
And where we've added theories we have been very successful.
We bought it.
Just under half of the Arclight specific circuit.
Mostly in California.
The growth theater.
And the Americana at brand theaters to the Arclight.
Typically I guess, where I'd like to feel like they were pursuing.
While we picked up.
The growth was routinely in our five to seven most highest grossing theaters in the entire United States. The Americana at brand is routinely in the dozen most highest grossing here.
States, we opened the new theater, just a couple of months ago.
As a new Westfield mall in Topanga.
Sort of above <unk>.
And we shot.
Nearby theater with a mile or two away.
We've also made a Westfield mall.
But what you will.
Well the old Westfield theater was big email by.
The new Westfield theater, the water to panga.
Beautiful theater by the way with an incredible food court, that's opening up this week at that mall.
That new theater is among the two highest grossing theaters for AMC in the United States.
And the list goes on and on where we've added theaters they've done really well.
The bowtie theaters that we bought mostly in Connecticut.
It looks like we bought when we bought more than we bought more than half of the blood type circuit.
When you look at the purchase price that we paid.
And if you look at the EBITDA in those theaters.
It's looking like we acquired those theaters at three times current EBITDA.
That's a bargain.
Compared to where we currently trade.
Movie theaters historically of training.
We think there are any number of opportunities to continue to add theatres into our network.
That will perform well in our network.
That either are built from scratch theaters.
Or come to us from failing circuits.
We've had difficulty surviving COVID-19.
And.
Uh huh.
At any given time.
We're talking to a half a dozen different movie theater chains.
About possibly acquiring.
Some are a significant number of their theaters and bring them into the AMC on attractive economics.
And that's true not only in the U S. But also internationally in Europe .
Okay.
Questions, Yes, we've all seen the news.
Can you comment on the possible impact of the Hollywood Writers' strike on AMC, and particularly the availability of new movies, perhaps in 2020 for sure.
Look we were very sympathetic.
So the real problems that exist.
For members of the writers Guild.
Streaming has changed the landscape of television.
Change the economics of what writers earn.
We are hopeful that.
The Hollywood producers and writers Guild can.
Work in good faith to craft a solution that's good for all parties.
As.
Far as its impact on AMC in the movie industry.
It gives us a short strike.
I will actually be the short selling days.
I mean months.
Its impact will mostly be felt.
On television programming.
Because the middle East for 'twenty, three and 'twenty four pretty much been written for.
In many cases, they've already been films.
And.
I think only a very prolonged writers strike.
Would have impact.
Material impact.
On the movie theater and three are in AMC.
Right.
Yeah can you comment on the take up of the <unk> credit card and the sale of AMC branded retail popcorn.
What other initiatives are planned.
So.
We only lost once a credit card a couple of weeks ago, we only want to.
Popcorn at home a couple of weeks ago.
We've said that.
Sales for the popcorn are brisk.
Have you been out publicly we're not if I didn't we'll announce it here with.
With 80000 people signed up on the waitlist.
To be notified when the agency credit card is being launched.
The AMC cards that have been provision.
At this point are ahead of our expectations.
That's about 80000, obviously, but the number of cards that have already been out provisions are ahead of our expectations.
Very pleased with both initiatives as for other new initiatives in the works there are many.
I'll reveal one for the first time today.
Which I'm, particularly excited about.
We noticed recently as a result of the pandemic.
And with supply chain shortages.
The candy manufacturers.
Had increased their price to us.
By a huge amount.
Some candy makers, increasing your cost for Kandi wholesale Kennedy as much as 33%.
In a one time bump.
Yeah.
That kind of thinking very hard about our candy.
And we realized that.
We can manufacture.
A private label brand of Candy.
Two very high quality standards.
Price of less expensively.
Then our current candy is priced and have a higher profit margin.
Because our cost to manufacture the private label brand is so much less.
Then the normal brands that you've seen in our Q3 years. This doesn't mean, we're going to discontinue.
Our branded Kelly of course, we'll continue it.
But I would expect at some time in late 2023.
Early 'twenty four of our purchasing department doesn't get offered keister.
But I'm going to I'm going to hold out for late 2003.
So that we can introduce a private label brand of.
A popular candies enter theaters offer them to consumers at a lower price.
And and achieve a higher profitability and do it yourself.
For the people who won the Brian <unk> of course, we will showcase that will all there.
Beloved Norwegian.
Hello, I like that one.
We're running out of time.
Uh huh.
I would now like you know I've been.
So the answer all these questions for over a year now.
I'd like to ask you one for change.
And then let's turn to Investor.
Questions.
In your presentation on this call there were a lot of numbers.
And I would just like you to highlight too.
How much cash would.
Were we able to generate.
From the sale of equity.
Since the eight for created in August of 2022.
And if you go back to January one 'twenty to.
All the way to today.
Much debt that we've been able to pay off.
Including the deferred rents, which we have worked out.
Because those two numbers how much cash we've generated.
But how much debt we've reduced.
Are extremely important.
<unk>.
The current state of the AMC balance sheet and the progress that we've made ensuring up.
That's that's a really as you say important question and the two numbers that I want people to take away from this is one since the creation of the apes and indication of how important that question was an impact that it has to AMC is one we've been able to raise.
$418 million of cash as a result of the creation of the X. So it's a significant impact on our.
Liquidity and cash position.
Maybe even more importantly is the debt reduction.
And if one goes back to the beginning of 2022 and just look over the last 18 months, we have reduced our debt balance by $620 million that includes the reduction in deferred.
Right, that's a significant reduction in our debt and I think I'll add one more number you asked for two but I'll add one more number that I think people, Doug recognize that as well.
Is that if you look at all of that net debt net financial debt position.
As of March 31st and you compare that to our net debt position.
Prior to the pandemic December 31 2019.
<unk> is actually our net debt is surprisingly less.
Then it was pre pandemic.
By more than $440 million does not more it's less than it was pre pandemic.
So.
Think that is a real indication.
The importance of the equity raises that we have done since the pandemic, particularly as a result of the creation of the <unk>.
Operator are there any questions from analysts that we should be taking.
Yes, we have.
One question from Qualcomm Rins Carrington.
Thanks.
Adam as Sean Congratulations on the strong results.
Turning to the positive adjusted EBITDA.
I wanted to focus on the structural improvements.
And the business that you've made over the past few years, given I think that those benefits may not completely be.
Understood I'm currently projecting that domestic industry box office revenues get back to pre pandemic levels by 2025, but on attendance.
We'll continue to lag that recovery.
As you talked about that that recovery is also being fuelled by consumers choosing the premium large format screens and driving up average ticket prices can you talk about the structural benefits of the expense reductions you've made about the corporate and senior levels, along with the benefit will be.
Higher per patron spending and if its possible that A&P could actually return to pre pandemic profitability, even if attendance remains below pre pandemic levels.
Sure I'll respond to that.
We had no choice.
We had to cut costs like crazy.
Because if we get we're going to run out of cash.
And.
Oh.
Nobody likes.
So you can think about job loss.
But.
The pandemic forces to be lean.
And if you look at our corporate headquarters.
It only has about two thirds of the people working here today.
That it had prepaid debit.
If you look at our theaters.
The management staff at our theaters is down about a third.
The amount of Madison staff, we had.
Prior to the pandemic.
We've learned to be more efficient.
And interestingly at the same time, we pay higher wages.
So our film crews are earning a lot more.
But there may not be as many of them in the theater at any one time.
And I know that so many of those people who work for us work very hard.
They like the fact.
That whereas we used to be.
Oh, a minimum will often be a minimum wage employer.
No we were routinely paying between 10 and $15 an hour depending upon the market.
For the line workers.
No.
Number one fewer manageable at headquarters.
If you're measuring in theaters.
Bob.
Higher paid with fewer employees.
And in our theaters.
And our guest satisfaction scores are all very high.
And the leader management team still running the company just fine on the revenue side.
Okay.
Sure.
Uh huh.
I guess I'm not supposed to tell you the second quarter numbers yet.
I'll just hit tiers.
Food and beverage per patron spending in April higher than what it was in the first quarter, we are killing it and F&B.
Slightly higher by the way don't get too excited.
But we are killing it in F&B.
And our.
F&B spending per patron.
Pre pandemic was around $5 60.
In the first quarter was $7 99.
That's up $2 40 per patron.
And 85% of that.
Drops to the bottom line.
That definitely changes the contribution per patron.
And the same is true with ticket price.
Our ticket prices.
Hum.
I have not risen by 20% since pre pandemic and actual facts.
But when you include the mix changes.
Because theres been such a surge.
Have a tendency to IMAX auditoriums and Dolby cinema auditoriums.
Our average realized price.
For ticket is up around 20% is that again.
Raw price increase that mix change.
Where there are appeal up screens as I talked about in our.
Our prepared remarks, our pillar screens are over indexing like five or six bullet.
In terms of productivity and we get a much higher price.
Which means again higher contribution per patron.
Which.
Part of your question means that we don't need as many attendees as going forward.
As we needed and the path to generate EBITDA.
With that big question.
We're over an hour and you all have busy busy and other things to do real it to go.
I want to end the call.
Bye.
Thank you all of you care about AMC.
And reminding you that there is just.
Incredible array.
Really great movies.
That are coming out.
We know and Christmas of 2023, you should spend a lot of time really theaters.
Do you will be amused and you will be entertained.
And as Nicole Kidman says.
You'll see dazzling images with a huge silver screen.
And you'll see storage.
Perfect.
Powerful.
Cause here at AMC. They are thank you for joining us today.
Thank you, ladies and gentlemen that can conclude today's conference. Thank you for joining US you may now disconnect your line.
Yeah.
Yes.
[noise].