Q2 2023 AMC Entertainment Holdings Inc Earnings Call
Mhm Mhm [noise].
[music].
Mhm.
Ooh Ooh.
[noise].
Good afternoon, ladies and gentlemen, and walk into the M. C Entertainment second quarter of 2023 conference call.
At this time, all lines are and listen only mode and following the presentation, we will conduct a question and answer session.
If any time during this call you require immediate assistance. Please press start zero for the operator.
This call is being recorded on Tuesday August 8th 2023, I would now like to turn the conference call over to Mister John Mary Mother. Please go ahead.
Thank you Kelsey good afternoon, I'd like to welcome everyone to AMC second quarter of 2023 earnings webcast.
With me. This afternoon is that I'm, Aaron our chairman and CEO and Shawn Goodman, our Chief Financial Officer.
Before I turned the webcast over to Adam living room 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 noon.
Numerous risks uncertainties and other factor 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.
This is your cautioned against relying on these statements company undertakes no obligation to revise or update any forward looking statements, whether as a result of new information or future events.
On this webcast, we may reference non-GAAP financial measures.
Such as adjusted EBITDA constant currency free cash flow operating cash generated among others.
For a full reconciliation of our non-GAAP measures to GAAP results. Please see our earnings release posted in the rest of your life Relations section of our website earlier this morning.
After our prepared remarks, there will be a question and answer session.
This afternoon webcast is being recorded in a replay will be available in the Investor Relations section of our website at AMC theaters dotcom later today.
With that I'll turn the call over to Adam.
Thank you John .
Good afternoon, everyone.
And thank you for joining us today.
When I think of our second quarter 2023 results.
And our start to the third quarter.
I Wanna share this with all of you.
In plain English.
AMC blew it out of the water.
In the second quarter of 2023 and.
And I might add that the third quarter of 2023.
Starting out to be Roaring hot too.
Around here.
The metaphors, we often used to describe our circumstances.
Involve famous movie quotes.
A recent results in Q2, and so far and.
Q3 of 2023.
Brings in my mind.
Rus Willis.
Lieutenant John Mcclain, and a diehard movies when he would say.
<unk>.
He was in and out of colorful expletives that I cannot repeat on this call.
I think the closest I can get to it.
Would be <unk> mother darker.
So yeah, that's the second quarter of 2023 without being too dramatic.
The stakes are high.
And we are surrounded by some uncertainty and risk.
But it's certainly encouraging for us all to take a moment this afternoon.
And celebrate or.
Are immensely positive results in.
And the most recently completed quarter.
Amc's results in Q2, 2023 were well ahead of last year's second quarter.
Well ahead of the market's expectations.
Indeed.
C exceeded consensus market expectations across the board.
Generating post pandemic records.
For revenue adjust.
Adjusted EBITDA <unk>.
Net income and earnings per share.
We know we're posted three consecutive quarters of positive adjusted EBITDA.
This quarter for the first time since Q2 of 2019.
That's four years ago, we generated positive earnings per share.
Yet another milestone in our path towards ongoing recovery.
While we still have much work ahead of us on this front.
Amcs glidepath to eventual recovery.
Continued with significant pace and.
In the second quarter of 2023.
Our results set new records.
And represent Amc's strongest second quarter.
And four full.
Following an impressive start to the year in the first quarter of 2023.
The second quarter, yet again.
Great progress.
AMC saw more than a 12% growth in attendance more than a 15% growth in total revenue.
And is 71% increased 71% increase and adjusted EBITDA compared to the second quarter of 2022 last year, Indeed adjusted EBITDA.
In the second quarter of 2023.
Was $182.5 million.
The highest such quarterly figure.
For AMC since the fourth quarter.
Of 2019.
Our ongoing progress is obvious.
And ever so encouraging.
Combining amc's commitment to innovation.
With a notable increase in both the number and the quality of movie titles from our studio partners.
Movie theaters are once again captivating audiences and driving it's audience and attendance back to theaters in general and especially at AMC, we're driving audiences that attendance back to AMC theaters.
Our theaters across the globe.
Welcomed more than 66 million guests in the second quarter of 2023 up 12.2% over the prior year's Q too and it was our highest quarterly attendance number.
Also since the fourth quarter of 2019.
Let's use the second quarter domestic industry box office.
The proxy.
For the size of the improving health.
Of our industry overall.
Looking at domestic entry box office for the second quarter ticket sales grew by nearly 15% compared to the same quarter last year.
Benefiting from six movies.
That grows more than $100 million each.
Hankered by Super Mario Brothers.
And franchises such as Guardians of the Galaxy Spiderman fast and furious Transformers and the little Mermaid.
These titles provided compelling moviegoing experiences.
Year to date.
Through today.
In 2023, 19 films Cross the 100 million dollar Mark and gross ticket revenues.
Compared to only 12 during the same period in 2022.
That is a 58% increase.
And the total number of wide release films grossing more than $5 billion also continues to rise.
From 24 in Q2 of 2022.
The 36 and Q2 of 2023, that's a 50.
50% increase.
One area that has far exceeded pre pandemic norms.
Has been amc's per patron revenue.
AMC moviegoers are consistently seeking out the most immerses sight and sound experiences.
Especially important to AMC.
As we offer more premium large format screens.
Than any other exhibitor.
You know a premium large format screens are IMAX Dolby cinema.
And our various house brands, including private AMC and I sense in Europe .
Among others.
Demonstrating how significant.
These premium large format screens are to AMC success.
The so-called Pls <unk>.
Represent only 5.3%.
Of our total screens globally.
But an astounding 19%.
Of our second quarter ticket revenues.
Amc's imagine an imaginative offerings at our concession stands and in our dining theaters also helped AMC to generate in the second quarter for food and beverage Brevard beverage revenues per patron.
$7.36 a head.
That is within one penny.
Of our all time high watermark.
For food and beverage spending per patron.
Considering the enormous operating margins.
In our food and beverage business.
This is contributing meaningfully.
The AMC is improving profitability.
But to me, perhaps the most surprising second quarter statistic of them all.
Is this one.
Because of our determined and sustained pandemic, Eric cost reduction efforts.
Along with ticket pricing initiatives, and sore and food and beverage revenues.
Comparing Q2 2023.
Two Q2 of 2019 four years ago pre pandemic.
Amc's overall profit per patron.
After the cost of goods sold improved by unimpressive, 40% four zero percent in the United States.
And 22 per cent internationally in constant currency.
Put those together that's a.
36%.
Total global increase.
And our profitability per patron in constant currency.
And if the queue to domestic industry box office.
Wasn't enough.
To lift our spirits and bolster our path to recovery.
The month of July .
The first month in Q3.
Was the highest grossing month for AMC in 12 years.
And it was the second highest grossing box office month ever.
103 year history.
As you know.
This performance in July was driven by the resounding success.
Titles, such as sounds of freedom <unk>.
Mission impossible dead reckoning part one.
Oppenheimer.
And for all of you dressed in pink.
Barbie.
Hung other titles.
And the United States. The July box office represented a 5.8% increase compared to the pre pandemic July of 2019, and a 20% increase.
Compared to last year's July .
For AMC globally.
These milestones translated into July of 2023.
Being the highest revenue month.
For our company and our entire.
103 year history.
The first week of August is continuing with an incredibly strong showing with a domestic industry box office about double.
That of last year.
This all speaks.
We at AMC have said time and time again.
Studios are masterful at storytelling.
And when they have great stories to tell.
They are best showcased in the words of Nicole Kidman as.
Damn dazzling images.
An hour a huge silver screens.
Here at AMC.
Those stories are perfect and powerful.
And audiences are flocking.
To our AMC theaters in the United States, and our Odeon cinemas in Europe , and our AMC sentiments in the middle East.
As a result.
Looking forward to the rest of 2023.
We have a slew of exciting movies.
Yet to be released this year.
They are common.
And barring complications to the timing of film releases.
Due to the uncertainties arising.
From the writers and actors strikes currently well underway. Unfortunately.
We have good reason to believe that the second half box office will continue to show.
Real strength this year.
Even so we will not get to 2019 pre pandemic levels for this full year 2023.
But there is a clear trajectory upwards.
Our hope is.
The COVID-19.
But her dad ancient memory.
By 2000, 2004 or 2025.
Even though as much as 70, you hate it when I say the words covered.
We are still dealing with the aftermath of that pandemic.
Now at this point I'll pass the webcast over to our <unk>.
CFO Shawn Goodman.
To provide more details on our financial results after which I'll return to talk about some of our ongoing initiatives and Amc's plans for the future as well as taking some of your questions Sean.
Thanks, Adam Thanks, everyone for joining us this afternoon.
So before I begin my comments on our second quarter financial performance.
I would like to just take one moment to provide a little bit of context behind our earnings release and 10-Q issuance. This morning, rather than a customer <unk> after the market issuance.
As you know the Delaware Court is currently in the process of reviewing all proposed shareholder litigation settlement.
A ruling by the court prior to the issuance of our 10-Q could constitute at post balance sheet event that might require an adjustment to our financial statements and thereby a possible delay in our regulatory filings and earnings release.
So to avoid any such risk of a delay in the possibility of thereby missing filing deadlines, we decided to release our results for the second quarter before the market opened this morning.
Okay. So now onto our results for queue to our strongest quota post pandemic and a clear sign of our ongoing recovery.
2023 has continued has continued to see box office recovery $1.7 billion in Q1, and now 2.7 billion in Q2.
For the first half of 2023 the box office is now approximately 20% from the same period last year.
I remember the first half of 22 was up almost four times from nine period in 2021.
With attendance growth of 12.2% and revenue growth of 15.6% compared to the second quarter of 2022, we grew our adjusted EBITDA by 71% to a post pandemic record of $182.5 million.
This illustrates the operating leverage that is inherent in our business model.
For the quota we achieved positive earnings per share for the first time since Q2 of 2019.
Now granted it's a small positive number.
For those of US who have been working tirelessly for AMC to recover from the damage. The pandemic is yet another milestone along recovery.
And the North American business total revenue increased by 19.8% compared to Q2 of 2022.
This was driven by an attendance increase of 15% admissions revenue per patron increase of 2.2% and food and beverage revenue per patron increase of 9.2% to a record all time high of $8.22, surpassing the previous record.
It was sent just last quarter.
And the amount that is 47, 3% above pre pandemic Q2 2019.
And the international business on a constant currency basis total revenue increased by approximately 1% compared to Q2 of 2022.
This was driven by the tenants increase of 4.6% admissions revenue per patron decrease of 1% and food and beverage food and beverage revenue prepared for an increase of 6.5%.
International food and beverage revenue per patron for the quota was 34.5% above pre pandemic Q2 of 2019.
Swift, noting in the international business that during the quarter, we saw a 27.6% decline in other revenue this.
This decline is associated with relatively high levels of gift card and package ticket explorations and also relatively high theater rental income all in the prior year period and associated with the impact of the COVID-19 pandemic on our business.
As the industry box office continued on his recovery trajectory Ah revenue growth in the quarter was advanced as guest responded favorably to targeted marketing campaigns and increasingly adopted industry, leading at an addition, or create a food and beverage options such as movie theater cocktails and unique collectible items.
Encouraged frequent visits to the concession stands or contributing to both revenue growth and overall profitability of the business.
Furthermore, visually stunning in action packed phones inspire audiences to experience our premium large format offerings premium large fullback revenue, including three D represented 31% of domestic admissions revenue in Q2 of 23 compared to 26.7% in the.
Second quarter of 2022.
And in international markets premium format revenue represented 16.3% of admissions revenue compared to 15.7 in the second quarter of 2022.
Moving to the balance sheet.
We ended the quarter with liquidity of $643 million comprised of $435 million of cash and cash equivalents and $208 million of Undrawn credit facilities.
Operating cash generated this as a non-GAAP measure representing cash from operating activities after deducting capital expenditures and before that servicing costs and deferred rained payback was it positive number of $100 million for the quota.
This is almost double the operating cash generated and Q2 of 2022.
Our top two capital allocation priorities remain one of liquidity and to strengthening the balance sheet.
During the second quarter will continue to make progress in this regard we raised $34.2 million of gross equity capital, we repurchased $42 million of data to an average discount of 34%.
And we repay $27.1 million of deferred red.
The different balance at the end of the second quarter was $96.5 million.
And we plan to reduce this balance by another approximately $40 million by the end of this year.
So this year to date, we've raised $189 million of gross equity capital, we've lowered the principal value of our debt by $245 million through Dec repurchases of exchanges of date for equity and we have repaid $61 million of different rent <unk>.
Adding that all up we have reduced our liabilities by $306 million, thus far in 2023, and a total of $689 million since the beginning of 2022.
In addition, we began the third quarter of 2023 with a purchase of yet another $24 million update during the month of July at a discount of approximately 28%.
Capex for the coordinator of landlord contributions was $46.6 million and we expect net capex in 2023 to be in the range of $150 million to $200 million.
During the second quota. We also continue to actively manage update a portfolio. We added two new theaters and we closed 16 theaters. So this brings the total number of locations closed since the pandemic began to 152 locations and the total new locations opened 250.
Seven four net reduction of 95 locations and.
That's a combined 57, new locations continue to outperform the 152 closed locations prior to their closings.
The pandemic almost crippled our business.
Since then we have made enormous progress in enhancing the moviegoing experience at AMC since resulted in very meaningful improvements to our per patron profitability metrics.
At the same time, we have also maintain strict cost and capital expenditure discipline and.
Because of our actions and a rapidly recovering industry box office.
Revenue and adjusted EBITDA have shown strong growth.
And we have also been very active in the capital markets, we've taken opportunities to strengthen our balance sheet and to prepare AMC for a bright future.
With the post pandemic record breaking second quarter behind us a recovery to date is clear.
However, we are not yet ready to declare victory.
The box office remains around 16% below pre pandemic levels and there's some downside risk with the ongoing screen writers and actors strikes.
And with our fixed cost structure and relatively high debt servicing costs. These exacerbated by interest rate increases over the last 17 months, we continued to burn cash on the bottom line.
Based on what we know today, we're optimistic about the remainder of the year and we believe that the 2000 twenty-three box office could exceed 2022 by more than 20%.
However, if the stripes are prolonged or <unk>.
Our ability to access the capital markets is constrained than our ongoing recovery glide path and our ability to continue to take the next reactions to strengthen our balance sheet and to ensure a full and sustained recovery may be in jeopardy.
And now I'll handle webcast back over to Adam.
Thank you Sean.
I'd like to give you all a brief update on seven specific items.
Related to some of our thinking.
As well as our exciting ongoing initiatives and.
And our current plans.
First on liquidity.
We've made many public statements throughout this year and again in recent weeks that.
That AMC has skilfully charted our way through turbulent waters at a time when several of our most important competitors failed.
And then we watch our liquidity position.
Very closely.
We've made it clear that our strategy first is to survive.
And then.
Thrive.
Of course, we are heartened by the fact.
We had $643 million of liquidity at.
At the end of the second quarter of 2023.
But some will follow as closely nonetheless, underestimate the potential for cash burn.
In the seasonally weaker winter months.
This is especially true given the uncertainties of.
Of the writers and actors strike.
Since no one knows when.
When they will end.
We intend to make sure.
That AMC does not run out of cash by.
By continuing to seek the flexibility to raise fresh capital on the best possible terms.
Our highest obligation.
Stakeholders.
Is to avoid the pit bulls that sank others in our industry.
Into financial ruin.
Second on balance sheet management.
In the second quarter, we methodically raised $34 million of equity and retired $42 million of debt.
Sean and his remarks gave us a lot of other statistics various timeframes of.
How much equity, we raised and how much debt we retired.
I am, particularly intrigued by this statistic with you haven't you heard yet on the call.
Since the creation of the APE preferred equity units.
In August of 2022 about a year ago.
<unk> raised $418 million of equity.
And retired $548 million of debt.
Including deferred rent.
Needless to say.
This is very helpful.
As we contemplate.
Our current liquidity profile.
Third.
On so-called Peel off screens premium large format screens as I mentioned earlier.
POF screen.
Grosses about four times.
A regular non pls screen.
So it's kind of obvious.
They were happy that we have more appeal of screens than any other movie theater company in the world.
And assuming that we have sufficient cash reserves.
To invest in growth initiatives in a big way, which at the moment, we do not.
But we could.
Looking a little further forward.
Assuming we have sufficient cash reserves to invest in growth initiatives.
We would intend to add a significant number.
Of additional premium large format auditoriums.
Our system.
Fourth.
An innovative theater programming.
Over the past two years.
We have experimented with sports programming.
And is featured great musical artists on our big screens.
We will continue to look for opportunities to expand.
Those innovative efforts.
Fifth.
On popcorn.
Our new lines of ready to eat and microwave popcorn.
For the home.
Are literally flying off the shelves.
At Walmart stores.
Throughout the United States.
And on Walmart Dot com.
They were launched in March and April of 2023.
And we would describe sales as being brisk.
And pleasantly ahead of our expectations.
So much so that we are now looking seriously to.
To expand into other grocery chains and other retail outlets.
Once we get to a full national rollout in multiple channels.
Which could take a while to be fair.
But based on the early results so far.
I would not at all be surprised.
If this turns out to ramp up <unk>.
Perhaps becoming up to 100 million dollar per annum revenue source.
For AMC Entertainment.
Ness.
On.
Premium gourmet candy.
Our popcorn line has been so successful.
That.
We are now confident that we should keep going.
In the area of food.
So much so that I expect that later this year or early next.
AMC will definitely introduce a private label that line of various AMC theaters branded pre.
Premium gourmet chocolate candies and gummies.
Eating some samples right now as we speak on this call.
The taste and the packaging are wonderful in my opinion.
And speaking of the taste.
These chocolate covered pretzels.
I would like to die for good.
Like John like move them away I can't no more calories calories galleries.
We believe we will be successful with the candy lines.
As we've been successful with the popcorn line.
It goes without saying of course.
That we will still sell hershey's and Nestle products.
An hour theaters.
But just as a year or so back.
We asked.
The Lake Oroville Renbarger to make some room on shelves for our popcorn.
So too.
We will ask.
The long gone Milton Snavely Hershey.
And the long gone Heinrich Henri Natalie.
For their understanding.
Premium AMC candies.
Coming to AMC theaters are.
Are now in the works as well.
And the last item on merchandise.
Early in the period, where retailer retail shareholders took control of AMC.
Which basically started in earnest.
In January 2021.
Through suggestions that came out on Twitter and other channels.
Retail investors directed our attention to the possible profits that can come from the sale of movie C merchandise and AMC branded merchandise.
We've had meaningful successes in this area.
Especially.
With our collectible popcorn vessels.
Sold almost weekly.
In quantities of between 25000, and 100000 units almost each weekend at.
At prices and a range from.
I'm about $20 to about $65 each.
We plan to significantly expand our merchandise efforts in 2024 and beyond.
With a greater variety of items and.
In a larger available quantity.
Items for sale.
It is not uncommon today.
For us to sell out of some of our movie seeing merchandise in.
In the opening weekend.
Of of movies release.
Movies run a lot longer than the first 72 hours.
And I think our merchandise business would expand.
If we have greater supply to sell.
In closing these remarks.
I'd like to address directly.
The millions of our AMC shoulders.
So many of whom pay attention.
To what I say on Twitter.
And to these earnings calls.
In a tweet yesterday.
I expressed my.
My sincerest possible gratitude.
For all of your support.
If you read my Twitter feed, though as I do.
You'll see there's a lot of like.
But also a lot of heat.
Directed my way.
That's okay, I have broad shoulders, and a variety of views comes with the territory. When there are so many voices.
And so many opinions.
As I read these inbound comments I see that <unk>.
Some.
Who care about our company deeply.
Still don't get the nuance.
Of our current circumstances.
Or wish that I would just cheerlead only the good news.
But that's not.
Let's see he owes are supposed to do.
The success, we have seen this year at our theaters.
Especially in queue, including Q2, and Q3 results so far.
Is what makes us optimistic.
That we are on the right road.
And then by 2024 2025.
We will look back on the decade of the 20 twenties.
With amazement and pride.
And how well and.
An AMC, we dealt with the most challenging hands of cards ever director our company's way.
In the century plus.
Ah this long existence.
But despite that medium term confidence.
In the short term.
We don't like to hear this.
In the short term AMC has some serious liquidity issues to solve.
We should not oversimplify.
That it will be easy to overcome the obstacles and hurdles in our path.
However.
This AMC management team has proven over the past few years.
That AMC is highly able.
And liquidity management.
So I have every confidence.
That we will continue to execute well.
To do what is needed.
To the extent humanly possible.
I am determined.
That an AMC.
We will rise to every and to any challenge.
Thank you for listening Sean left now moves to questions both from shareholders and from industry analysts on the call.
Thanks, Adam.
So quite a few questions from shareholders. Yeah first question relates to our strategic direction.
The question is what are the top priorities for AMC buds today and in the future are we considering M&A opportunities.
So.
So you've asked me on Twitter.
Like.
Why are we still talking about COVID-19.
And that's because we are because in the movie theater industry.
The industry wide box office, which is the basic sides of our industry.
It's still below 2019 levels.
And that's a lingering problem because if you look at the box office 2017, 2018 2019 this industry with sized.
For about 11, and a half billion dollar box office.
And.
And 2020, there was 2 billion Twenty-twenty, while I was four and a half million 2022 75 billion.
This year I hope it is 9.5 billion might hit more might hit less.
We won't really know until the end of the year.
There'll be a lot more than 2022.
But we are still down.
Below pre pandemic norms.
And.
I remember when we shut our theaters.
In March of 2020.
And people were predicting we'd be back to normal at four to six weeks.
I think it is reset for five and a half months Silva.
Some of our theaters are shut for almost a year.
In the box office.
Fell by more than 80% that year.
It's still.
Was you know.
Way below <unk>.
Pre pandemic levels.
Even now.
Three full years later.
So we've had to adjust our strategy because the movie theater industry has come back slowly and so our strategy has become survive then thrive.
We have had to take the steps.
To make sure this company survives.
And.
Not all companies in our industry can say that.
Other companies with Big brand names, both Big James change that you would recognize and small change that had a cult following.
In some markets in Texas, and California they.
They went bankrupt.
And a lot of their theaters didn't reopen.
So first we have to survive.
And as I said you know.
We like the results in April May June July and August of this year Fabulous.
So I think we're going to start to move.
From the survive phase.
That thrive phase.
To make sure we get there.
And you've been hearing me say this as a broken record.
For two years, now, but especially in the last year.
We must be able to raise capital.
If we need to.
Because the dumbest thing, we could ever do with the company.
Is run out of cash.
And other companies in this industry.
I've run out of cash.
And some of the Iron Shack Corked armchair quarterbacks on Twitter, who gives me advice everyday.
If I followed their suggestions.
We would have run out of cash a long time ago.
Or if I followed their suggestions now will run out of cash soon.
So the most important thing as part of the strategic direction. This company is.
Is make sure that we have ample cash reserves.
To out last the.
The aftermath of the pandemic because I've already said.
You know in 2024 2025, it's gonna look pretty bright.
But if we ran out of cash before we get to 2024 or 2025.
That would be a disaster and.
And that's a disaster.
That I simply will do everything in my power.
To make sure that this company avoids so when we talk about strategic direction.
I think that we've got to make sure that we put this company in a position.
To be able to raise capital that's what the shareholder vote in March towards unmarked 14 was all about.
Next.
As we have sufficient cash.
To survive to the glory days of 2024 2025.
There are a lot of things that we can do with that cash.
Because right now I'm, Sean said, we've taken our capex spending down to $150 million to $200 million a year three or four years ago, we were investing $500 million of Capex a year.
Our business.
Right now it's prudent the husband in cash.
To save cash.
So that we don't run dry.
But there will be a time that we have much more cash reserves that we have currently.
Either because we will generate it from operations.
Or because of a razor.
And then the question is what do you do with that cash.
And here's my list.
First.
We need to spend some money too.
So.
Ah effect with alcohol deferred maintenance on some of our theaters.
We got you know.
We we pulled our capex spending way down.
During the Covid impacted yours.
And we've seen examples of leaking roofs, and breaking air conditioners and.
Boilers that provide heat in the winter.
That are towards the end of their lifecycle and they're just breaking they need to be repaired.
We have.
Thousands of our screens.
Where the movie projectors are getting towards the end of their useful life.
And we're going to need to invest capital.
To replace those projectors.
Good news of that however.
As we've already made the decision.
That when we replace these projectors.
We're putting in laser screens a laser projectors.
And laser lighting.
Is but it's a much brighter sharper picture on the screen.
And it's.
Quite an environmentally friendly initiative to.
Next.
There are growth initiatives within our theaters.
I've already mentioned on this call premium large format screens.
In the state of New York.
So.
Just recently like in the past 12 months.
It was illegal for movie theaters, most movie theaters to sell alcohol.
The New York Legislature recently changed that law.
But that means that we have a whole bunch of theaters, where we probably should bill full.
Full alcoholic bars.
Into our theaters.
One of the things I'm interested in is putting more variety.
Food items into our concession stands which might because our food and beverage sales are at a record high.
That might require.
You know putting in.
10 to $20000 <unk>.
Equipment.
And the concession stand now.
$20000 does it sound much like much on table as we got to put them in 575 theaters.
All of a sudden.
Oh, it's $10 million.
Next.
We've had some circumstances.
Where we've been able to add theaters.
To our network.
And we were able to bring them into our system very inexpensively.
When I say very inexpensively I'm, saying.
We've been we've been all in purchase price transition costs we've.
We've been able to bring some theaters into our system.
At three to four times expected EBITA.
That is such a bargain.
We ought to do that all day long.
We can find opportunities.
To bring good theaters into our network.
Personally.
There is M&A opportunity.
And there are two kinds of any opportunity right. There's there's just buy some movie theater chains. If we can do so and I want to emphasize this.
If we can do so at a bargain basement price.
I have no desire to pay up.
To bring movie theater changed into our network.
But we get cheap price.
[noise] value creation for our shoulders.
And we were raised a lot of cash.
Maybe we can do some transformative M&A as well.
Where we can look to expanded.
Being something more than just a pure movie theater play.
So that's sort of the strategic.
Roadmap.
Of where we might invest.
Our monies.
If we have more money than we have today.
Yeah. Thanks, Adam.
That addresses that question very nicely.
There are some questions here about our theater footprint.
What are the expansion opportunities of that footprint, but the U S and internationally and what are the opportunities to continue to closeted is underperforming theaters and improve our overall.
Profitability and also how does premium large format that into those plans. So on the theater footprint we've managers.
Like maniacally.
Over the last three and a half years.
You gave the stats and.
Earlier that we open 50, something theaters, we close to 150 something theaters.
We didn't open any of the 50 lately, we didn't close any of the 150 lately.
We have.
When you look at a company that has.
Almost a thousand theaters globally.
We got some theaters that are brand new we got some theaters or twenty-five years old we got some buildings in great shape. We've got some buildings sort of at the end of their useful lives.
We've got theaters, where we've got great rent deals with landlords and.
And we've got theaters, where you had a terrible rent deals with landlords, we've got some theaters and unbelievably successful malls.
And other theaters and unbelievably unsuccessful malls.
<unk>.
And.
And so we we have a whole department here, our real estate Department Development Department.
That's paying attention to every single one of these theaters every single one of our landlord relationships.
And where the success went where the theaters are successful we cheerfully pay the rats.
Where the theaters are not successful.
We enter into cooperative dialogue with the theater landlord.
To see if they're willing.
To lower our rent to keep their surroundings continue to drive traffic to there.
Other properties nearby.
And in many cases, where quite successful.
In getting landlords, we're just rats in addition to that.
I would say we have spectacular relationships.
With.
All of the large mall operators the United States.
Simon's Brookfield Westfield a whole slew of.
Other theater owners.
And I could name another probably 10 reads.
Who have you know anywhere from five to 50 of our theaters.
I think we maintain excellent relationships with each.
And.
One of the think because our relationship are so good.
As they build new malls, they often want us to come along for the ride.
Westfield just opened up a beautiful new mall.
And to panga to.
To the northwest part of Los Angeles.
In that theater that we opened there is already one of the 20th most profitable theaters, we have in the United States. It open in the past year.
A year and a half back actually I think it's two years back now.
We brought in the growth.
An American brand in L, a and in Glendale in Southern California.
Rick Crusoes retail establishment the.
The Grove.
Now the third most profitable theater and the entire United States framed.
For AMC. So that's an example of a theater that we brought into the network.
Just in the past two years and we continue to talk to.
Landlords all over the place.
That we're ready willing and able.
To bring theaters into our system.
If we can do so on good economic terms and as an example of that.
Literally just in the last two weeks.
We brought eighth.
Theater into our system in Redding, Pennsylvania not.
Not exactly as big a market in downtown Los Angeles.
But that's it the year, where the seats were already reclined.
In that theater enjoyed a 65% market share.
The surrounding communities.
And we got a very attractive price.
That brought that theater into our system quite reasonably.
So we are continuing to.
Look at pruning our system downwards.
Where we have underperforming theaters and can't renegotiate rents, we're looking to keep our theater network.
The same sizes today by renegotiating rich and we're looking to grow our theater network.
As our theater landlords wanted to take us where they go and then of course I mentioned, there's always M&A opportunity is.
As well, but there's nothing immediately on the horizon to report on that front.
Thanks, Adam, let's talk a little bit about food and beverage that quite a few questions about that because it's been enormously successful for us past pandemic question here about plans to potentially expand the menu offering at theaters or plans to up in restaurants at a theater would take food orders directly from the seats.
So like this is.
Some of this subject near and Dear to my heart I'm, an eater, if any of them.
See me sideways, you know I'm not the slimmest sky around although I weigh a lot less than I did.
20 years ago.
And yeah, no more chocolate covered pretzels.
Or or the chocolate covered almonds pretty good that's good anyway.
I think AMC was leading the way before the pandemic.
I think the biggest variety of our concession stands.
Remember, we introduce something called feature fair.
All across the system here in the United States, where we made a lot of a lot of progress and variety we put in as a brand standard for all AMC theaters in the United States co.
Coke freestyle machines.
I counted more than 140 flavors.
Come out of those coke freestyle machines.
I think that's an enormous advantage for us.
Over theater chains.
Which still are offering 812 or 14 flavor choices.
Those coke for each other things don't come cheap.
But I think that was a very smart investment for us, but then COVID-19 hit.
And when we came out of Covid.
We came back with a very limited menu.
Which we tried to.
Grow back just what are the feature for your levels.
But then came supply chain shortages.
And then came labor shortages.
And all of a sudden some of our more complicated items.
We are difficult for our staff at the concession stands.
To execute.
Which then would slow down delivery, which was linked in lines at the concession stand.
And you're always trying to balance variety of items against speed of purchase and a concession stand because no one wants to wait in a long line I don't blame him for that.
And I'd say, where we are today as we're back up to about.
80%.
Of the feature fair variety.
At the height, where we were in 2018.
And in talking with our food and beverage Department.
They'd like to see our a variety of items.
Expand up to feature fair levels.
You know within 12 months of today, but.
You know that was just talking to you about variety of menu items.
But when you look at the success of our food and beverage effort.
Remember.
Let's use the United States numbers.
Pre pandemic in 2019, we were doing $5, a head and per Patriot and food and beverage spending.
States were doing over $8.
Food and beverage spent.
Spending today.
Per head.
That is a staggering increase when you realize that if you.
Take out only cost of goods sold.
So this isn't the labor at the concession stand and not the capital cost equipment and stuff, but just like the cost of the.
The syrup and the cost of the corn and the cost of hot dogs in the roles and the nachos and all this stuff cant hear myself.
Like we have more than an 80% margin in our food and beverage business and for our food and beverage business to be up as much as it is.
736 was a number globally in the second quarter.
This is a staggering success for us so I really wanted to complement our F&B department.
Led by a guy named Hank Green.
We're just hitting that out of the park.
It happened to be spending and that's what's driving such a big increase in per patron profitability for AMC remember.
Remember the stat I gave.
Our per patron probably this is just food very this is total.
Per Patriot profitability, it's a combination of expense reductions ticket price initiatives food and beverages success.
Our food our favorite profit for papers up 40% of the United States. It's up 22% internationally. These are stunning numbers.
Adam.
<unk> shareholders are a bit of a uniformity very excited about the retail popcorn sales and on initiatives there and so they have questions about do we plan to expand this further and all the other potential revenue streams some of it to retail popcorn that can help grow the business.
So yeah I couldn't be more excited about the popcorn success.
You know we spent over a year.
Food and beverage department working on the right recipe.
For home corn cause we whether it was in the bag ready to eat or microwave pouches that you'd microwave at all we wanted it tastes.
Tastes just like it tastes in a movie theater and by the way, there's a secret to our popcorn.
Not all popcorn is created equal.
There are different grades of corn.
And we buy the best there is so one of the reasons why our popcorn is so good at AMC theaters cause we buy the best corn, it's like graded.
And.
And so our corn at home tastes great.
And the sales like Walmart can barely keep it on the shelves and.
And they keep on reordering and they keep on selling out.
So yes, we we gave Walmart or.
Six months exclusive.
Two because they gave us so many store locations, we rolled out the AMC popcorn and like 2600 Walmartstores very.
Very few brands gets a roll out.
On day, one and 2600 Walmart's.
Normally you would get a fraction of that.
And you prove your way, but they believes in our brand and it's been a big success and we're happy to give them the full exclusive.
But yeah, we're soon as exclusive as up.
We will have conversations with all the major grocery chains with all the major retail outlets in the country.
I'd like to see take awhile, but I'd like to see AMC popcorn.
On ever.
Every shelf.
Where you can buy stock products.
There are other things too I've already talked about the candy products. That's next.
And there are a whole host of other ideas that we have.
To grow revenues for the company, but his interest at a time.
I'll either save those for.
Then another earnings color for our for charter.
Final question here about the trading of shares.
There's a few questions related to can you comment Adam I'm, a very high level of failures to deliver can AMC securities.
Yeah, I can sort of I mean.
There's a limit to what I'm supposed to say on this subject.
But.
Can say some things.
I know it's maddening.
For so many of our shareholders I read my Twitter feed guys. I know, what you think I know, what you say cause I get thousands of messages a day.
For those or you didn't send Elon musk is $8 a month for a blue checkmark since you're limited to a couple of hundred characters you can read between.
Pretty fast.
I know your <unk>.
Really frustrated.
By the high number of S T D's and as many of you not all of them you know as many of you know.
F T D as a failure to deliver.
Sure.
Within the normal trading.
Closing cycle, which is within two trading two business days of the trade.
And so.
You know if someone.
Ah.
Never delivers a sure they're breaking the law.
Well, if they deliver the sure three days late.
Instead, it would start one day late which is on the third day.
They show up as an S T D and your eyes.
But the trade did concinnate little little slow but had consummated.
If more than a half a percent.
Of our trading volume.
Is it an F T D status.
Then we'd go on something called the threshold list.
We've been on and off the thresholds list.
Many times.
In 2023 and for that matter in 2022.
As well.
And this drives some of you like out of your minds cause I read what you say.
And I see out of your minds in a nice way I don't mean and nasty way, but you you're angry about it.
Cause you think there's something wrong going on [noise].
And again I gotta be very careful what I say legally but I can tell you. This.
On multiple occasions.
Even multiple occasions this year.
We have gone to the New York stock exchange at very high levels.
To make them aware.
Of our status on the threshold list.
And similarly, we've gone to Federer.
Which is the regulatory body.
The public markets.
And we are voicing your concerns.
Unfortunately, I know many of you.
Like we'd like to see the results of what they sent us back.
It's not so easy for us to share that information with you.
But we are aware of the concerns were aware of them ourselves.
And we are taking them to the appropriate.
Regulatory bodies.
Kelsey that's gonna do it for the prepared friend for the prepared questions from the Internet can you give the instructions for even a.
Please.
Thank you.
Anyone that began the question and answer session. So do you have a question. Please press the snarky phones by the one on your Touchtone phone.
You won't hear a three tone prompt acknowledging your request and your questions will be pulled any other that the army seized <expletive>.
Did you wish to declines in appalling process. Please press the star.
And if you are using a speakerphone. Please at the handset before pressing any keys.
One moment. Please for your first question.
At this time there are no questions. You May proceed Mr Me right there.
We are after five o'clock.
Which is supposedly are cut off.
So I'm gonna think everybody.
For joining us today.
And leave you with a couple of thoughts one.
We had a fabulous quarter.
And the second quarter of 2023.
In July with Gangbusters in August is gangbusters, so far.
And for those of you around the country were listed in the United States.
It's really hot United States right now <unk>.
Most of our theaters are quite cool.
And.
They have some really good movies on the screen.
So if you haven't gone to see sounded freedom.
Our mission impossible dead reckoning part one.
Or oppenheimer, or Barbie or haunted mansion or all the other wonderful movies that are out.
Go to an AMC theater near you.
Love to see it.
Our theaters, thank you for joining us today.
Ladies and gentlemen, does conclude your conference call for today well. Thank you very much for participating in SA. Please disconnect your lines have a great day.
Participating in SA. Please disconnect your lines have a great day.