Q4 2024 AMC Entertainment Holdings Inc Earnings Call
John Merriwether, Adam Aron, John Merriwether, John Merriwether, John Merriwether, John Merriwether,
Adam Aron: Greetings and welcome to the AMC Entertainment Holdings Inc. fourth quarter and full year 2024 earnings webcast. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad.
Adam Aron: The company undertakes no obligation to revise or update any forward looking statements, whether as a result of new information or future events.
Adam Aron: On this webcast, we may reference non-GAAP financial measures, such as adjusted EBITDA constant currency and free cash flow among others.
Adam Aron: For a full reconciliation of our non-GAAP measures to GAAP results. Please see our earnings release posted in the Investor Relations section of our website earlier today.
Adam Aron: After our prepared remarks, there will be a question and answer session.
Adam Aron: This afternoons webcast is being recorded and a replay will be available in the Investor Relations section of our website at AMC theaters Dot com later today.
Adam Aron: With that I'll turn the call over to Adam Thank.
Adam Aron: Thank you John.
Adam Aron: Afternoon, everybody and thank you for joining us today.
Adam Aron: One a superb quarter AMC, just completed, especially so in November and December of 'twenty 'twenty four thanks to hit movies like Gladiator to weekend, and Moana, too, which pushed Thanksgiving patronage at AMC across the United States to the highest to AMC.
Adam Aron: As ever seen in our 105 year history.
Adam Aron: Move faster the Lion King along with numerous other titles gave US results in December that we're just stellar as well.
Adam Aron: AMC revenue in the fourth quarter was up 18% year over year and our adjusted EBITDA.
Adam Aron: $164 $8 million was more than triple.
Speaker Change: No I'd say that again, our adjusted EBITA was more than triple the adjusted EBITDA that was reported for the fourth quarter a year ago.
Speaker Change: We handily beat consensus estimates for both revenue and for adjusted EBITDA in the fourth quarter of 2024.
Speaker Change: Importantly, a.
Speaker Change: AMC generated more than $200 million of cash from operating activities and $114 million in free cash flow in the fourth quarter. It was our highest quarterly cash flow post pandemic.
Speaker Change: These results underscore the continued progress that AMC has been making as we continue on our road to recovery.
Speaker Change: Buttressed by a growing lineup of consumer appealing movies opening exclusively in movie theaters.
Speaker Change: More than 62 million guests.
Speaker Change: Visited an AMC theater worldwide AMC here in the United States Odeon in Europe, and our operations in Middle East in the fourth quarter of 'twenty 'twenty four marquee a post pandemic fourth quarter record for us and an impressive 20% increase in attendance compared to.
Speaker Change: The fourth quarter of 2023.
Speaker Change: Complementing this fourth quarter attendance milestone movie.
Speaker Change: Moviegoers enthusiastically embraced the variety and quality of our food and beverage offerings.
Diving food and beverage revenue per patron to $7.15.
Speaker Change: All time fourth quarter record.
Speaker Change: For AMC ever.
Speaker Change: All of those quarter over quarter improvements.
Speaker Change: Are especially noteworthy.
Speaker Change: AMC is incredibly high market share and the resulting strong financial performance that AMC enjoyed in last year's fourth quarter spin.
Speaker Change: Specifically due to our distributing Taylor Swift the eras tour movie.
Speaker Change: I'd say its Renaissance filmed in October November and December of 'twenty 283 to great acclaim.
Speaker Change: Looking at the full year of 2024.
Speaker Change: AMC welcome some 224 million moviegoers to our theatres across the globe.
Speaker Change: And those movie goers gravitated towards our premium experiences.
Speaker Change: Two our largest screens our best projection technologies are most immersed himself systems and our luxurious ceiling. Accordingly, we are pleased to report to you that for full year 2020 for AMC achieved all time per patron result records on several key metrics.
Speaker Change: And all time record for admissions revenue per patron and all time record for food and beverage revenue per patron.
Speaker Change: All time record for total revenue per patron.
Speaker Change: Another crucial accomplishment during 2024 with Amc's continued successful strengthening of our balance sheet.
Speaker Change: Sean will provide more details in just a few minutes, but suffice it to say that our balance sheet is meaningfully stronger today.
Speaker Change: As a result of the significant actions that AMC took during the year to reduce our debt to lengthen our debt maturities and to bolster our cash reserves.
Speaker Change: 'twenty 'twenty four was truly a year of two halves.
Speaker Change: The first half was heavily impacted by Hollywood's long strike so the 2023.
Speaker Change: By resurgent second half driven by an increase in new releases and an overall stronger film slate.
Speaker Change: The domestic industry box office, which is kind of the basic measure of the size of our industry.
Speaker Change: Which was only $3 $6 billion for.
Speaker Change: For the first six months of 2024 stored.
Speaker Change: $5 $1 billion in the second six months of 2020 for much much stronger.
Speaker Change: In the first half by orders of magnitude. The second half turnaround was certainly eventful with a number of long standing box office records being shattered notably.
Speaker Change: In the second half.
Speaker Change: The industry saw the highest grossing animated film in history.
Speaker Change: The most successful R rated film of all time, it's all of the highest grossing musical film adaptation of our Broadway musical of all time.
Speaker Change: And as I said earlier.
Speaker Change: Weird AMC enjoys the biggest Thanksgiving weekend box office ever.
Speaker Change: Sure.
Speaker Change: Looking at all of the progress made in the latter half of 2024.
Speaker Change: It seems to us.
Speaker Change: That it's clear.
Speaker Change: That our industry.
Speaker Change: Finally is getting healthier.
Speaker Change: We're still not where we want to be we're still not where we need to ultimately be.
Speaker Change: But real progress has been and is being made.
Speaker Change: And looking into 2025.
Speaker Change: The current year that started less than 60 days ago.
Speaker Change: At AMC, we are highly optimistic that the box office for this new current year, we will feel much more in line with that of the robust revenues of the second half of 2024.
Speaker Change: As compared to the anemic revenues.
Of the first half of 'twenty 'twenty four.
Speaker Change: Early projections indicate that the number of wide release films in 2025 could increase by approximately 17%.
Compared to the number of wide release films in 2024, representing yet another significant step.
Speaker Change: Towards ultimately getting to pre pandemic output levels and another cause for our optimism that the box office will materially rise in 2025.
Speaker Change: During this current new year, we anticipate the box office will strengthen with each successive quarter.
Speaker Change: Historically.
Speaker Change: Q1 has been the quietest period of the year and this year is likely to be no exception to that long standing trend driven by seasonal consumer behavior and studio release patterns.
Speaker Change: But following Q1, we believe the box office is set to heat up with Q2 poised to significantly outpace the first three months of this year.
Speaker Change: As we transition into the heart of the Big Summer movie season, Q3 looks to be a vibrant summer.
Speaker Change: For movie going.
Speaker Change: And importantly to us for AMC.
Speaker Change: And then we hope to close out 2025.
Speaker Change: <unk>.
Speaker Change: With a wave of highly anticipated franchise sequels <unk>.
Speaker Change: Including the second part of Universal's highly successful Wicked Disney.
Speaker Change: Disney <unk> Zootopia too.
Speaker Change: And what can you say about this film.
Speaker Change: Next installment of James Cameron's mind Boggling successful.
Saga.
Speaker Change: It's hard.
Speaker Change: With the potential for each quarter in 2025 to build upon the last.
Speaker Change: We currently estimate that 2025 domestic industry box office could see a half a billion dollars to $1 billion growth.
Speaker Change: Compared to 2024.
Speaker Change: I remember that given the Amcs historic market share levels.
Speaker Change: About two nice of any heightened box office should flow straight in.
Speaker Change: In the direction of.
Speaker Change: AMC Entertainment.
Speaker Change: Okay.
With that as a preamble and im going to come back a little bit more to talk about some initiatives now underway at the company and some thoughts on our recent performance and the markets. Let me turn the call over to our Chief Financial Officer, Sean Goodman, Sean.
Sean Goodman: Thanks, Adam and thanks, everyone for joining us this afternoon. Indeed, the fourth quarter. Once again did prove that movie going demand is robust when compelling content is available on the big screens.
Sean Goodman: During the quarter, we welcomed $62 4 million guests throughout theaters around the world.
Sean Goodman: This is a post pandemic fourth quarter record that exceeded the prior year by some 20% and.
Sean Goodman: And not only did we achieve an attendance record. We also achieved all time fourth quarter record.
Sean Goodman: And beverage revenue per patron of $7 15.
Sean Goodman: And our second highest fourth quarter admissions revenue per patron of $11.76.
Sean Goodman: As a result of this we registered fourth quarter post pandemic records for both total admissions and total food and beverage revenue and our overall revenue grew 18, 3% compared to the fourth quarter of 2023 to hit a post pandemic fourth quarter record of one three.
Sean Goodman: Billion.
Sean Goodman: Our results showed that the continued focus on enhancing the guest experience growing profit per patron and overall operating efficiency are indeed, yielding results.
Sean Goodman: Our revenue per patron is now approximately 34% higher than it was in pre pandemic 2019. This is driven primarily by growth in food and beverage revenue per patron of 51%.
Sean Goodman: The success in food and beverage revenue per patron is a result of our market leading initiatives, including collectible movie themed merchandise specialty cocktails menu enhancements and mobile ordering technology.
Sean Goodman: When comparing our results to the fourth quarter of 2023.
Sean Goodman: Important to note that comparisons may not really provide the full picture.
Sean Goodman: This is because you may recall that in the fourth quarter of 2023 AMC distributed the highly successful concept movies Taylor Swift, the Arris tour and Renaissance at fault by beyond tax.
Sean Goodman: These concept movies had special event ticket pricing and generated higher than usual food and beverage revenue per patron associated with high demand collectible concession items.
Sean Goodman: So while the fourth quarter admissions revenue per patron declined by approximately two 4% compared to Q4 2023.
Sean Goodman: When we normalize for the impact of the concert movies admissions revenue per patron actually increased by three 2%.
Sean Goodman: Likewise food and beverage revenue per patron appears to be only slightly ahead of the fourth quarter of 2023.
Sean Goodman: However, when we normalize for the impact of the concept movies food and beverage revenue per patron so an increase of approximately two 8%.
Sean Goodman: And while we are discussing the impact of last year's concert movie events.
Sean Goodman: We should note that AMC recorded domestic market shares in excess of 35%.
Sean Goodman: Movies 2023, and this makes market share comparisons somewhat difficult.
Sean Goodman: Now when you couple our fourth quarter 2024 revenue records with our focus on efficiently delivering the best possible guest experience adjusted EBITDA increases from $47 9 million in the fourth quarter of 2023 to $164 8 million. This yet.
Sean Goodman: Is an increase of more than 240%.
Sean Goodman: And these results were achieved in both the domestic business, where adjusted EBITDA more than tripled to $123 million and the international business, where adjusted EBITDA increased more than four fold to $41 $8 million.
Sean Goodman: These results are a clear indication of the operating leverage inherent in our business.
Sean Goodman: Revenue increased by 18, 3% this led to an adjusted EBITDA increase of 244%.
Sean Goodman: This operating leverage is another reason to be optimistic about amc's future as our industry continues along a recovery trajectory.
Sean Goodman: Okay, let's now move to a discussion of our cash flow and the balance sheet.
Sean Goodman: A highlight of this quarter is cash flow.
Sean Goodman: We generated $203 $6 million of cash from operating activities and $113 9 million.
Sean Goodman: And free cash flow.
Sean Goodman: These are our very best cash flow numbers since the fourth quarter of 2019.
Sean Goodman: And we ended the quarter with cash and cash equivalents of $632 3 million.
Sean Goodman: It is worth noting that historically, we generate cash from working capital during the second and fourth quarters and.
Sean Goodman: And we tend to use cash from working capital during the first and third quarters.
Sean Goodman: This pattern will of course depend on the timing of former leases in the pattern of audience attendance during holiday periods.
Sean Goodman: But during the fourth quarter, we benefited from strong cash generated from working capital that we expect will largely reverse in the first quarter of 2025, when many payments related to the successful fourth quarter Amit.
Sean Goodman: Talking about cash flow Capex net of landlord contributions was $83 9 million in the fourth quarter and this brings the total net capex spend to $213 7 million for the full year 2024.
Sean Goodman: We expect Capex in 2025 to be in the range of $175 million to $225 million.
Sean Goodman: From a theater footprint perspective.
Sean Goodman: During the fourth quarter, we added another one new high performing theater and we permanently closed three underperforming locations. So this brings the total number of locations permanently closed since the pandemic began to 192 and the total new locations opened to 62. So this represents.
Sean Goodman: That's a net reduction of 130 locations or approximately 13% of our locations at December 31 2019.
Sean Goodman: And we continue to see that 62, new locations very significantly outperform the 192 closed locations.
Sean Goodman: Going forward as we review and rationalize the theater portfolio at every opportunity we will continue to invest in assets it to enhance the guest experience.
Sean Goodman: Not that the deferred rent balance at the end of 2024 was approximately $37 $6 million and we plan to reduce this balance by another approximately $8 million during 2025.
Sean Goodman: From a capital markets perspective, we were once again active during Q4, continuing to strengthen our balance sheet to position the company for sustainable long term success.
Sean Goodman: During the course of 2024, we have reduced the principal balance of our debt and finance leases of $375 9 million.
Sean Goodman: We have extended the maturity of approximately $2 4 billion of debt that was due in 2026 to 2029 and beyond.
Sean Goodman: We have raised approximately $262 million of gross proceeds from the sale of our class a common stock.
Sean Goodman: And in addition last month January we received $171 $7 million as initial cash proceeds associated with the establishment of board positions for 30 million shares of our common stock plus aftermarket offerings of $17 1 million.
Sean Goodman: Hence leases by more than $1 billion, and we also repaid 277 5 million of deferred leases.
Sean Goodman: This brings the total debt that we've reduced the period to $134 billion.
Sean Goodman: These actions have been made possible by our ability to raise equity capital, which has been essential to our survival and is undeniably strengthen our balance sheet and position the company to capitalize on future growth opportunities as the film exhibition industry recovers.
Sean Goodman: The outlook for the industry box office in 2025, and 2026 appears to be increasingly promising and we are confident that the strategic and operational actions that we've taken and will continue to take position us very well for the future.
Adam Aron: And now I'll hand, the webcast back over to Adam.
Adam Aron: Thank you Sean.
Sean Goodman: Yeah.
Sean Goodman: On our last quarter's call.
Sean Goodman: We introduced the notion.
Sean Goodman: After four grueling.
Sean Goodman: <unk> pandemic years. It was finally time for AMC to get off our heels defensively and instead.
Sean Goodman: Play on offense once again.
Sean Goodman: So on this call I want to give you an update.
Sean Goodman: The activity already underway for AMC to go on offense.
Sean Goodman: Specifically Amc's go plan G O go on offense.
Set in motion a series of initiatives designed to leverage our strengths and accelerate our recovery.
Sean Goodman: Aligning with our expectations for a rising and more consistent box office over the next several years to come.
It makes sense to try to grow your revenues when revenues are in fact growing.
Sean Goodman: Yeah.
Speaker Change: With a central theme of improving the guest experience inside our theaters.
Speaker Change: AMC go plan is multi dimensional and designed to drive additional profitable attendance.
Speaker Change: Our theaters to AMC in the U S and Odeon abroad.
Speaker Change: With our industry leading per patron metrics.
Speaker Change: As you know hit record levels in 2024.
Speaker Change: What's so important about disk drive to increase and bolster our attendance.
Speaker Change: Is that every incremental guests in our theaters.
Not only values, but it drives a huge percentage of their incremental revenue down to the EBITDA line.
Speaker Change: As more capital becomes available to AMC to invest in growth initiatives. One key aspect of the AMC go plan is to add more premium experiences.
Speaker Change: Capitalizing on the fact that AMC today is already.
Speaker Change: Without question, the global leader in offering premium large format screens.
Speaker Change: I can say to you today.
Speaker Change: That in calendar year 2025.
Speaker Change: And again in calendar year 2026.
Speaker Change: We currently expect.
Speaker Change: Upgrade more of our IMAX auditoriums.
Speaker Change: This is a very popular IMAX with laser.
Speaker Change: We intend to add more Dolby cinema screens, we intend to add more prime at AMC screens, or so called house brand Pls format.
Speaker Change: We also intend to bring our successful XL or extra large screen concept.
Speaker Change: Was launched in Europe last year to the United States.
Speaker Change: We would hope to introduce between 50 and 100 <unk> screens in the United States. This year.
Speaker Change: And add another 150 <unk> screens.
Speaker Change: In addition in 2026.
Adam Aron: Our rollout of laser at AMC screens with their brighter and sharper picture on the screen, resulting from laser projection continues at pace. It has already been installed in about one third of our U S screens.
Adam Aron: And we will be adding a great number more of laser projections to AMC theaters.
Adam Aron: Both in 'twenty five and in 2026.
Adam Aron: Another part of the AMC go plan is to improve the seeding comfort and appeal.
Adam Aron: And more of our theaters.
Adam Aron: Especially ones that are already quite profitable and well attended.
Adam Aron: Recent luxurious.
Adam Aron: Replacements at AMC, Burbank, 16, and Los Angeles, along with AMC Lincoln Square 13, and AMC Empire 25 in Manhattan.
Adam Aron: Have led to dramatically improved guest satisfaction scores.
Adam Aron: And importantly for US Hi theater gross seats.
Adam Aron: In fact, just a couple of weeks ago on a Saturday night out of the <unk>.
Adam Aron: $550 theatres in the entire United States.
Adam Aron: Under the AMC brand.
Adam Aron: Our three highest grossing theaters.
Adam Aron: We're Burbank Lincoln Square and Empire, the very three theaters, where we installed this new luxurious leather receipt, that's wider theres more padding that rocks and in many cases is more leg room.
Adam Aron: Okay.
Adam Aron: Knowing that this has been a successful initiatives to date, we've already identified several handfuls of important theaters.
Adam Aron: Theaters are profitable and well attended.
Adam Aron: That should produce even higher financial returns for AMC.
Adam Aron: We can introduce this new seat type in those locations.
Adam Aron: We aimed to deploy here.
Adam Aron: Again as soon as growth capital becomes available to us.
Such that we can invest.
Adam Aron: These theaters.
Adam Aron: With respect to Amc's go plan.
Adam Aron: It also includes our focusing on several exciting new innovations in our loyalty subscription and other marketing programs.
Adam Aron: To that end on January one.
Adam Aron: Just several weeks ago, AMC launched our fourth and newest AMC stubs loyalty program tier called Premier go.
Adam Aron: It offers heightened program benefits, it's free and this loyalty tier is designed specifically to incentivize our current AMC stubs insider tier members, who also enjoy free memberships.
Adam Aron: To patronize AMC more to buy more movie tickets in our theaters and buy more food and beverage or theaters.
Adam Aron: Premier growth status is earned when a consumer sees at least eight movies at AMC in a year or earns at least 5000 AMC stubs points in a calendar year.
Adam Aron: We started on January one 2025.
Adam Aron: With more than 300000 moviegoers already enrolled in the Premier go tier.
Adam Aron: As members.
Adam Aron: Because we base their membership on their purchase history with AMC last year in 2024.
Adam Aron: We have also announced.
Adam Aron: That will be enhancing other benefits for our AMC stubs members, especially those in our a list program.
Adam Aron: In this case, we intend to give more value.
Speaker Change: Two our most avid moviegoers.
Adam Aron: Moviegoers, who averaged somewhere.
Adam Aron: Between 24, and 32 visits per year.
Adam Aron: At AMC theaters in the United States.
Adam Aron: Or are we improving a list first we have increased the weekly movie limit for a list members. They can now watch up to four movies per week up from the current three when the new a list.
Adam Aron: Innovations take effect on May seven.
Adam Aron: Second to encourage more family movie going we will be lowering the minimum age to sign up for a list from the current 16 to 13 why do we fixed 16 previously.
Adam Aron: To prevent fraud, we needed a state issued.
Adam Aron: Which takes us to the third improvement to a list.
Adam Aron: To make a list membership verification easier and faster at our theaters a listers.
Beginning may seven will be able to upload their own photos to their AMC stubs profile and use this in a photo of themselves. The members in lieu of having to show a state issued I D.
Adam Aron: It is true children as well as adults. So we can lower the age of 13.
Adam Aron: We think more parents are going to cause more of their children to sign up in the program.
Adam Aron: Okay.
Adam Aron: In addition on a list.
Adam Aron: We have already announced in May we will launch a wholly new AMC a list classic program.
Adam Aron: Subscription program that.
Adam Aron: That provides the walk for the watching of one movie a week four movies, a week or three but one movie weak and not all of our theaters only at our AMC classic theaters.
Adam Aron: But in doing so with these limitations, we have the opportunity to offer this AMC classic tier.
Adam Aron: At a significantly reduced monthly subscription price.
Adam Aron: Atlas continues to be one of the most successful programs that AMC has ever introduced and we think it will get better still with these changes coming soon.
Adam Aron: We have much more in store for our moviegoing guests in the guise of more marketing programs designed to stimulate attendance, but we're not ready to announce them yet today. So look for more important marketing initiative announcements coming from AMC to be publicly announced in the coming months.
Adam Aron: Okay.
Adam Aron: For all the talk.
Adam Aron: About pursuing growth initiatives.
Adam Aron: Because in so doing we can drive increased financial returns and boost the value of the company for the benefit of our shareholders.
Adam Aron: It is imperative that I add.
Adam Aron: There is also of Paramount importance AMC and.
Adam Aron: And nothing has changed that continuing to focus on strengthening the balance sheet.
Adam Aron: To reduce our debt so lengthened maturities to keep our cash reserves robust.
Adam Aron: It remains an extremely important objective for this company.
Adam Aron: The fact that we strengthened our balance sheet over the past several years is why we are still here and we will not take our eye off the ball at the same time. We also believe there is enormous opportunity.
Adam Aron: To grow our EBITDA to improve our financial returns to benefit our shareholders.
Adam Aron: When we have access.
Adam Aron: The more growth capital.
Adam Aron: Yeah.
Adam Aron: That pretty much concludes the comments about the fourth quarter and some of the activity underway at the company.
Adam Aron: Before I close this call and move to questions.
Adam Aron: To.
Adam Aron: Close with just a special message.
Adam Aron: To our retail shareholders, many of whom thousands of whom will.
Adam Aron: We will be listening to this webcast.
Adam Aron: I want you to know that what I've said to you for years now remains true.
Adam Aron: Everyday I continue to actively read your social media commentary.
Adam Aron: As it gives me a great sense of your views.
Adam Aron: Let me read the room so to speak.
Adam Aron: Sadly.
Adam Aron: There is so much false information floating around the AMC on social media. Similarly, there are crackpot conspiracy theorists like one after another.
Adam Aron: That seemed to delight and speaking foolishly about AMC.
Adam Aron: So from the horses mouth.
Adam Aron: Here's some straight talk.
Adam Aron: Please no.
Adam Aron: That I am acutely aware of.
Adam Aron: The AMC share price decline over the past three years.
Speaker Change: And I am acutely aware of the pain that is cause for many of you.
Adam Aron: I am after all myself.
Adam Aron: I believe the largest single individual AMC shareholder.
Adam Aron: Yeah.
Adam Aron: I've been increasing my share position since 2021.
Speaker Change: And I am after all are with the January 'twenty, two as well.
Adam Aron: Lastly, I'll forget January 'twenty, one 'twenty two.
Speaker Change: Three years ago three years ago.
Speaker Change: A result of share in three years, instead I have increased my share position.
Speaker Change: And therefore.
Speaker Change: Our share price decline that hurts you.
Speaker Change: Hurts me too.
Speaker Change: My interests are completely and directly aligned with yours. They are not aligned with anyone else other than you.
Speaker Change: And that is exactly as it should be.
Speaker Change: So thinking about all of that I'm seeing what you can say.
Speaker Change: Here are two key thoughts.
Speaker Change: First.
Speaker Change: Do not allow yourself to be distracted.
Speaker Change: Our biggest problem.
Speaker Change: Is not various market practices.
Speaker Change: Some of you seem to detest.
Speaker Change: Instead.
Speaker Change: Quite simply.
Speaker Change: It's at the movie industry.
Speaker Change: The movie Theater industry has been in crisis for more than four long years.
Speaker Change: Stick industry wide movie theater attendance.
Speaker Change: Believe it or not.
Speaker Change: It is still down almost 40%.
Speaker Change: From full year 2019 levels that is a fact.
Speaker Change: And the fact that attendance is down.
Means our ticket revenues will be stressed.
Speaker Change: The fact that attendance is down means that we will be able to sell food and drink and merchandise.
Speaker Change: Your people.
Speaker Change: That is the problem.
Speaker Change: At AMC.
Speaker Change: But I would tell you that not as a bear of bad news.
Speaker Change: But it is a harbinger of good news to come because fortunately.
Speaker Change: As we have implemented one new idea after another.
Speaker Change: And as we have made our company more efficient over the past several years.
Speaker Change: Amc's profit per patron numbers are way way up.
Speaker Change: We often see our profit per paid per patron being as much as 50% higher.
Then it was in pre pandemic levels.
Speaker Change: So what that means is it for success.
Speaker Change: He does need the box office to be higher than it was in 2024, but.
Speaker Change: But we really do not need a decline all the way back up to 2019 levels.
And even more unfortunately than that.
Speaker Change: The box office finally.
Speaker Change: Looks to be growing significantly and materially again.
Speaker Change: We are absolutely convinced.
Speaker Change: Based on our expertise and our knowledge of what's coming.
Speaker Change: Blocks office industry wide box office in 2025 will be bigger than 2024 and at the box office in 2026 will be bigger than that of 2025.
Speaker Change: But of course, no one has a perfect crystal ball.
Speaker Change: That's our view that's our belief as of today only time will tell.
Speaker Change: The second thought I wanted to share.
Speaker Change: Is it some of the rail about the dilution of our stock.
Speaker Change: Or with a perfect hindsight that comes from being able to Monday morning quarterback the timing.
Speaker Change: The sale of our stock.
Speaker Change: Please no.
Speaker Change: That we have only raised capital.
Speaker Change: If the company truly and absolutely needed that cash.
Speaker Change: To be in the drawer.
Speaker Change: Remember.
Speaker Change: Many of our competitors.
Speaker Change: The big ones and small ones both the most important ones are the most unimportant ones.
Speaker Change: So many movie theater chains have been forced into bankruptcy.
Speaker Change: In the last four years.
Speaker Change: Because they ran out of cash.
Speaker Change: Not a M C.
Speaker Change: I repeat not AMC.
Speaker Change: We stayed strong we stayed alive, we stayed healthy we stayed on the path towards recovery.
Speaker Change: Because of the actions that we took.
Speaker Change: To bring cash in the door.
Speaker Change: Having said that though.
Speaker Change: Here is a pledge that I'm, making to you today.
Speaker Change: There will be no more cash raised from the sale of common stock in calendar year 2025, unless we first take that matter of authorizing more common shares to you our shareholders for you to vote.
Speaker Change: And help us make.
Speaker Change: Such a decision.
Speaker Change: In summary.
Adam Aron: The entire team at AMC is absolutely committed to do all we can to grow our revenues and to grow our adjusted EBITDA. We are constantly striving to enhance the value of our business, which after all is your company.
Speaker Change: AMC is the acknowledged leader of this industry we.
Speaker Change: We have kept AMC alive and relatively strong.
Speaker Change: In very troubled times, and we will continue to do everything humanly possible.
Speaker Change: To keep AMC moving forward.
And to that end, we just delivered one hell of a fourth quarter.
Speaker Change: 2020 for.
Sean Goodman: Sean let's move to questions both from our securities analysts and from our retail shareholders.
Speaker Change: Okay.
Speaker Change: Thank you, we'll now be conducting a question and answer session.
Speaker Change: If you'd like to be placed in the question queue. Please press star one on your cost.
Speaker Change: We'll keep that one moment. Please poll for questions Thats star one to be placed in the question queue.
Speaker Change: Our first question is coming from Chad Beynon from Macquarie. Your line is now live.
Speaker Change: Yeah.
Chad Beynon: On for Chad, Thanks for taking our question.
Speaker Change: So on the AMC go plan if.
Speaker Change: If the number of widely films and the box office growth materializes. As you expect is that when Capex will rise to the $375 million or so annual level implied by the high end of the Capex range or is there anything else you can share in terms of further visibility for the magnitude or cadence of the capex deployment. Thank you.
Speaker Change: I'm happy to respond Chad.
Speaker Change: Our capex budget is going to stay around $200 million plus or minus a little change.
Speaker Change: Until such time as we have access to growth capital.
Speaker Change: And how we have access to growth capital.
Speaker Change: That we are sorting through right now there are.
Speaker Change: A number of really creative ideas in place inside the company.
Speaker Change: While we might be able to get third parties to finance some of our growth.
Speaker Change: There are other opportunities.
Speaker Change: That are so obvious that growth.
Speaker Change: The returns on some of these growth initiatives.
Debbie: Hi, Debbie.
Debbie: We'd love to be able to convince people to trust us with more growth capital.
But until we have access to growth capital, we're going to keep capex.
Debbie: Tightly constrained.
Debbie: At the time will come when we can grow it.
Debbie: You'll know it way in advance we will flag it in advance we're not going to surprise you with big Capex expenditures without having told you but prior to doing so.
Debbie: Understood I appreciate that as quick follow up.
Speaker Change: <unk> recently announced a deal for the movie Narnia have an exclusive theatrical Brian and I think this is a film that otherwise would've gone direct to streaming. So just curious to hear your thoughts and your views on the potential for more deals like this to come through and how you see the dynamic between streaming and theaters evolving from here. Thanks.
Debbie: Okay.
Debbie: So.
Debbie: Yeah.
Debbie: They are streamers and then there are streamers.
Debbie: There are some streamers.
Debbie: So we've actively embraced.
Debbie: Theatrical releases, Apple and Amazon come to mind.
Debbie: And.
Debbie: We've had superb meetings.
Debbie: And conversations with both Apple and Amazon, We're highly encouraged for example.
Debbie: Amazon, which is a combination of Amazon and the old MGM.
Debbie: Announced a week or two ago.
Debbie: That they were.
Debbie: Staffing up.
Debbie: <unk>.
Debbie: Boosting their distribution personnel with significant numbers, because they would like to dramatically increase the number of films that Amazon is releasing.
Debbie: Okay.
Debbie: Doubling even potentially tripling.
Debbie: We're not quite tripling, but more than doubling the potential releases coming out of of the Amazon.
Debbie: Sphere.
Debbie: Similarly.
Debbie: Apple is so excited about.
Debbie: About the movie F. One.
Debbie: Is coming out in June.
Debbie: With their hopefully we're hopeful is going to be a major blockbuster gangbuster hit.
Debbie:
Debbie: It's directed by Joe <unk> director of top gun Maverick I believe it starts Brad Pitt.
Debbie: Apple is behind it completely.
Debbie: Distributed in the U S by Warner Brothers is behind a completely AMC is behind it completely.
Debbie: The notion that from some of these streaming services might actually.
Debbie: Embraced theatrical leases is something that's quite exciting to us.
Debbie: The.
Debbie:
Debbie: I think that one of the.
Debbie: Industry experimented with all sorts of different release patterns post COVID-19.
Speaker Change: Hi, General consensus has emerged in Hollywood.
Debbie: But by most.
Speaker Change: But the most successful movies on.
Debbie: On streaming platforms.
Debbie: Are those that go to theaters first.
Debbie: And those movies that have a great theatrical release, often wind up being the most watched movies on streaming services.
Debbie: All you noticed that there is another major streaming service that I talked about.
Debbie: That is not talking about yet.
Debbie: There is not as enthusiastically embracing theaters.
Debbie: That being Netflix, but we continue to reach out to Netflix.
Debbie: <unk> right now.
Debbie: Nardi is scheduled to play in.
Debbie: Amcs IMAX screens.
Debbie: We would love to be able to convince Netflix.
Debbie: That they're embracing theatrical releases.
Debbie: He is good for them.
Debbie: They did it with glass onion.
Debbie: Are doing it with Narnia, we'll see where this goes nordea is still two years away.
Debbie: But having said all of that.
Debbie: I've always believed that the.
Debbie: The world is there.
The consumer's appetite for entertainment amusement so voracious.
Debbie: And that it can support both a robust theatrical industry and a robust streaming industry side by side.
Debbie: Yeah.
Chad Beynon: That's perfect Thanks, Adam and congrats on a great quarter.
Sean Goodman: Thank you I'll turn the call over to management for a retail investor questions at this time.
Speaker Change: Thank you. So the first question that we have is about merchandise and movie themed collectible items.
Speaker Change: And how that is going and if you can give the investors an update on that.
Sean Goodman: Thank you Sean one of the things I said in my prepared remarks.
Speaker Change: Okay.
Speaker Change: Was that.
Speaker Change: AMC has been implementing one new idea after another.
Speaker Change: And.
Speaker Change: Not all ideas work, but one of them have.
Speaker Change: One is they clearly has worked and worked unbelievably well.
Speaker Change: <unk>.
Speaker Change: Movie themed merchandise.
Speaker Change: Three years ago is working by the way not only in the United States, but also in Europe.
Speaker Change: Three years ago.
Speaker Change: We didn't sell any movie themed merchandise in our theaters none.
Speaker Change: None.
Speaker Change: Yeah.
Speaker Change: In calendar year 2024.
Speaker Change: We sold about $65 million.
Speaker Change: Movie scene merchandize.
Speaker Change: From nothing three years earlier and.
Speaker Change: And the profit margin on this movie merchandize.
Speaker Change: Not exactly but it's in the neighborhood of 50%. These are good margins.
Speaker Change: Okay.
Speaker Change: Great margins.
Speaker Change: We're on shark tank.
Speaker Change: Is it really good margins and.
Speaker Change: And we're selling a lot of merchandize.
Speaker Change: And one of my goals for 2025.
Speaker Change: Is to see what we can do to significantly increase our merchandise sales for the fourth year in a row.
Speaker Change: It's actually it should actually be easier to accomplish that and they sell.
Speaker Change: Because.
Speaker Change: Yeah.
Speaker Change: Number one we've been increasing the number of movies that we do this when we see merchandize for.
Speaker Change: It started out that we're only doing a handful of these a year.
Speaker Change: And now seemingly every couple of weeks, we have a new movie themed product coming up but.
Speaker Change: But.
Speaker Change: People didn't want to get stuck with excess inventory.
Speaker Change: So, especially in the early phase of this merchandise ordering.
Speaker Change: You got to buy the merchandise from where it's manufactured like nine months before the movie comes out.
Speaker Change: So we would place orders for merchandise.
Speaker Change: And then have to get it to hundreds and hundreds of retail locations throughout the country.
Speaker Change: And there was no ability.
Speaker Change: To increase the supply of fast selling items.
Speaker Change: Whatever you ordered nine months before.
Speaker Change: Once it's sold out and we're sold out.
Speaker Change: We were finding ourselves in 2024, often selling out.
Speaker Change: On Friday or Saturday of opening weekend of everything that we'd ordered for a movie and when I say everything I don't mean small quantities I mean quantities in the hundreds of thousands of items.
Speaker Change: And so one of the things that we've decided to do for 25.
Speaker Change: To increase the quantity.
Speaker Change: Of the.
Speaker Change: Note that we order in advance.
Speaker Change: So that we have more supply in our theaters.
So that we don't sell out on Friday, or Saturday that maybe we have supply through Sunday or maybe we have supply through the second weekend.
Speaker Change: But I do believe that our ability to continue to drive our merchandize business.
Speaker Change: Is one where we ought to be able to succeed handily.
Speaker Change: I'm talking about.
Speaker Change: Before you go on before I go on this one.
Speaker Change: And your question about movie themed merchandising, but theyre not Louie themes.
Speaker Change: We also movie seem drinks now in our bars.
Speaker Change: And just like we have more than we used to have a few a year, but just like we have more and more movie scene merchandize into our theaters, we now have more and more movie seem drinks.
Speaker Change: Often they're our most successful item.
Speaker Change: At the bar.
And so we're also looking at ways.
Speaker Change: <unk>, new beverage pouring technologies.
Speaker Change: Where we can increase the number of movies seem drinks that we are available because people clearly are buying them and remember how important food and beverage numbers are to us our food and beverage numbers for the fourth quarter.
Speaker Change: Were the highest they've ever been and Amc's 105 year history. So this notion of being creative and imaginative and innovative in what we sell to our guests our theaters is of crucial importance because it drives increased profitability.
Speaker Change: And talking about food and ancillary revenue.
Question about popcorn.
Speaker Change: Popcorn.
Adam Aron: So I'm so proud of what we've done in taking let's called AMC perfectly popcorn into the home.
Adam Aron: This started only.
Adam Aron: Not even two years ago 22 months ago I believe.
Adam Aron: When we launched AMC perfectly popcorn.
Adam Aron: At.
Adam Aron: 600, I think close to it plus or minus 101.
Adam Aron: Walmart location, the United States for our ready to eat popcorn and about 500 Walmart locations.
Adam Aron: For our microwavable popcorn.
Adam Aron: Our our believe it or not as the movie Theater company, we have chefs both for our dine in theatres and even for a concession stands.
Adam Aron: And our chefs worked extremely hard and almost for a year developing the recipe for the home popcorn line. So that he would taste like theatrical popcorn that you get in our theaters. If you made it yourself at home.
Adam Aron: Or eight it yourself at home and.
Adam Aron: And they succeeded SaaS.
Adam Aron: Fast forward 24 months.
Adam Aron: In calendar year 2024.
Adam Aron: <unk> popcorn sales doubled compared to 2023, what's more.
Speaker Change: The distribution.
Speaker Change: Of our store counts greatly increased in 2024, we added Kroger and Publix and Meyer.
Speaker Change: For 2025.
Speaker Change: We've added what's called associated grocers, which wholesales food product to a regional and local markets and smaller chains around the country.
Speaker Change: As a result of all of that.
Speaker Change: Our home Popcorn line, which launched in <unk>.
Speaker Change: Round numbers 2500 stores.
Speaker Change: Just two years ago.
Speaker Change: At the end of next month will be in 11000 retail stores in the United States.
Speaker Change: Im, especially pleased Walmart is such an important.
Speaker Change: Player in the grocery space I'm, just so so pleased.
Speaker Change: At Walmart and formed a couple of months back.
Speaker Change: That they were going to more than quintuple.
Speaker Change: The number of Walmart stores.
Speaker Change: Carrying our our microwavable popcorn line.
Speaker Change: So I think we went from 500 Walmart stores carrying the microwavable line.
Speaker Change: 'twenty 700 by the end of April.
Speaker Change: This is all quite encouraging.
Speaker Change: The.
Speaker Change: It's very hard to launch a consumer product the United States and do so profitably.
Speaker Change: <unk>.
Speaker Change: I believe where we are now is cumulatively.
Speaker Change: Our perfectly popcorn line cumulatively is profitable and currently profitable and we are highly confident that it will continue to grow.
Speaker Change: In sales as we go forward. We've already established we are one of the best sellers in the popcorn category.
Speaker Change: And by the way, we just launched a new flavor.
Speaker Change: Cinnamon butter for those of you like it's slightly suite.
Speaker Change: Anyway, I think popcorn its been a smashing success.
Speaker Change: More to come.
Speaker Change: Christian about a CDN partners and window is do you see any opportunities to negotiate longer windows for our theatrical movie releases and how might that impact the business I sure hope that we can introduce longer windows.
Speaker Change: Because I think that the current.
Speaker Change: Industry experiment.
Speaker Change: On Windows as Phil.
Speaker Change: The.
Speaker Change: Just a little history for those who don't know prior to Covid.
Speaker Change: In the United States it varies by country outside the United States, but in the United States movies, typically does not get to the whole until 74 days.
Speaker Change: After initial theatrical release.
Speaker Change: The industry can say that Dan co became and everybody experimented with all sorts of everything.
Speaker Change: Movies, we're going to the home the same day, they will be taking the theaters they were being taken at all sorts of different dates big movies, maybe a little slower but.
Speaker Change: Not so big movies going to the home faster.
Speaker Change: The end result of all of that and it's not all because of windows.
Speaker Change: But if you look at our industry's attendance.
Speaker Change: Across the entirety of the industry.
Speaker Change: It's still 40% below pre pandemic levels not quite 40%. The last number I saw was 38% is still almost 48, 40% below pre pandemic levels that has stressed the EBITA generation of theaters that are stressed to profitability of theaters that are stressed the share prices of theaters and.
Speaker Change: It's a problem for theaters now.
Speaker Change: I said windows was not the only problem there were other issues, including the Hollywood was releasing fewer titles.
Speaker Change: That appears to be changing Hollywood releasing more titles.
Speaker Change: But as the industry experimented with a whole bunch of a variety of options what the industry coalesced around.
Speaker Change: Was that the old 74 day window become a 45 day window.
Speaker Change: So the movies would go to the home about six or seven weeks.
Speaker Change: After they hit theaters, not 10 or 11 weeks at theaters.
Speaker Change: And some movies have gone to the home even quicker 30 days 17 days in.
Speaker Change: In our view.
Speaker Change: 17 days on 30 days are too short.
Speaker Change: And we would like to convince.
Speaker Change: All the major studios.
Speaker Change: They should keep movies in theaters longer and this is a conversation that is front and center live.
Speaker Change: I was in the office of the CEO of one of the major.
Speaker Change: Five studios just two weeks ago.
Speaker Change: And he told me how important it was.
Speaker Change: To reestablish the 45 day window as being sacrosanct.
Speaker Change: With the president of distribution of another major studio one of the very largest one of the most important who is bragging to me that whereas other studios, we're keeping their movies in theaters only 45 days before going to the home.
Speaker Change: That studio is taking their big movies to the home only 60 days.
Speaker Change: After the movies were released theatrically. So these conversations are live right now between theater chains and studios we believe.
Speaker Change: The theater chains would generate more money of windows for longer, but we also believe that <unk>.
Speaker Change: Studios would generate more money it windows where longer why.
Speaker Change: Because they would gross more in theaters and the more successful they are running theaters the more successful run they're going to have when they finally take movies at home. So watch this space will continue to see what we can do to convince the industry there.
Speaker Change: It should be firm around this 45 day number.
Speaker Change: And once we get there maybe we can extend it to 60 days or 74 days. It was pre pandemic, we will all learn together, but this is a very live industry debate topic right now.
Speaker Change: Thanks, Adam and I think we've got time just for one more question gap, which is very related to what you were just talking about.
Speaker Change: When you think about the box office, how you're thinking about when the industry might reach more of a steady state.
Speaker Change: Example.
Speaker Change: And returned close to pre pandemic.
Speaker Change: So.
Speaker Change: Thank you all back in time.
Speaker Change: Prior to the pandemic.
For five years in a row the industry box office was between 11 and $12 billion. This is a scope so called domestic industry box office.
Speaker Change: This is all theaters all movie theater companies will all change all of the cases.
Speaker Change: I'd say, it's in Canada, the basic measure of our industry.
Speaker Change: We're five years in a row has been 11 and $12 billion.
Speaker Change: Were 11 years in a row.
Speaker Change: It was between 10 and $12 million.
Speaker Change: But we come to two 2 billion.
Speaker Change: That was 2020 than in 2021, it was $4 5 million.
Speaker Change: Then 2022, it was seven 5 billion.
Speaker Change: Net in 2023, if you exclude the Taylor Swift and beyond say movies.
Speaker Change: Which.
We sort of create out of thin air at the last second which were not expected.
Speaker Change: That come with studio were not expected to be moving some theaters industry box office was like 87% or eight 8 billion in.
In 2023.
Speaker Change: And it was $8 75 billion.
Speaker Change: 'twenty 'twenty four so.
Speaker Change: The box office was flat.
Speaker Change: It had been high for a decade winter next to nothing with Covid.
Speaker Change: It started rising again.
Speaker Change: It flattened out in 'twenty, three and 'twenty four why do you flatten out in 'twenty four.
Speaker Change: Does a five months of actors and writers strikes that crippled production of movies.
Speaker Change: The decrease in number of film releases in the first five months of 2024.
Speaker Change: But.
Speaker Change: That's the past, let's look at the future.
Speaker Change: Said in my prepared remarks, we think the number of wide release films is going to increase in 25 or 2024, we have studiously looked at this movie theater slate of the titles that are coming up.
Speaker Change: And it's one blockbuster film after another blockbuster film after another blockbuster film after another blockbuster film.
Speaker Change: We really do believe.
Speaker Change: And as I said Nobody's Crystal ball is perfect.
Speaker Change: But we really do believe that the box office will be in 2025 will be somewhere between half a $1 billion and $1 billion.
Speaker Change: More in 2025, and it wasn't 24 and we looked at the movie slate in 2026.
Speaker Change: And it also was wonderful so we think that the box office in 2026.
Speaker Change: It's going to be bigger again than it was in 2025, So honestly I hope that the movie theater.
Speaker Change: Industry box office does not.
Speaker Change: <unk> and go to a quote steady state what I'm seeing is that the industry box office is actually growing.
Speaker Change: And growing significantly.
Speaker Change: It's growing it's going to grow big and twenty-five report we hope.
Speaker Change: Nothing is so in February we'll we'll all find out by the end of the year, but we are pretty sure.
Speaker Change: The box office will be a lot bigger in 'twenty $5 24, a lot bigger than 26% 25, I would hope that it's bigger in 2007, there is still a 26% success breeds success.
Speaker Change: The more movie going there is the more profitable movies are the more profitable movies are the more that studios will want to make more movies. The more movies that studios make the bigger the box office becomes so there you go thats the circular loop.
Speaker Change: On the road to recovery.
Speaker Change: And I think thats all the questions. We have time for today. So everybody. Thank you very much.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: We had a very good quarter.
Speaker Change: The year 2024, it was very good if you only look at the second six months of the year.
Speaker Change: What's the second six months of the year.
Speaker Change: It looks to us to be a harbinger of what's coming in 'twenty five and again in 2026, So I have one simple request.
Speaker Change: So what are you doing this weekend, but why did you go to a movie theater and go catch a movie and when you do.
Adam Aron: We'd be happy to welcome you at AMC or if you're in Europe Odeon, Oregon in the Middle East Amc's illness. Thank you everybody for listening. Thank you for joining us today.
Adam Aron: Thank you that does conclude today's teleconference and webcast you may disconnect your lines five and have a wonderful day.
Adam Aron: For your participation today.