Operator: Hello, and Welcome Everyone joining today's AMC Entertainment Holdings Q3 Earnings Webcast. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session.
Operator: To register to ask a question at any time, please press star and 1 on your telephone keypad. Please note, this call is being recorded. We are standing by should you need any assistance. It is now my pleasure to turn the meeting over to John Merriwether, Vice President, Capital Markets, and Investor Relations. Please go ahead.
John Merriwether: Thank you, Leslie. Good afternoon. I would like to welcome everyone to AMC's third quarter 2026 earnings webcast. Joining me this afternoon is Adam Aron, our Chairman and CEO, and Sean Goodman, our Chief Financial Officer.
John Merriwether: Before I turn the webcast over to Adam, I would like to 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.
John Merriwether: Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed Form 10-K and Form 10-Q.
John Merriwether: In light of the uncertainties inherent in any forward-looking statements, listeners are cautioned against relying on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events.
John Merriwether: On this webcast, we may reference non-GAAP financial measures such as Adjusted EBITDA and free cash flow, among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the investor relations section of our website earlier this afternoon.
John Merriwether: After our prepared remarks, there will be a question-and-answer session. This afternoon's webcast is being recorded, and a replay will be available in the investor relations section of our website later today. With that, I will turn the call over to Adam.
Adam Aron: Thank you, John. Good afternoon, one and all, and welcome to the Q3 2026 AMC Entertainment quarterly earnings webcast. This just completed July to September quarter can only be described as the quarter to beat all quarters.
Adam Aron: The best quarterly results on revenues and Adjusted EBITDA since our company's founding in 1920. Let's cut right to the chase with AMC's stunning financial results. Here are AMC's consolidated global numbers for Q3 2026. Revenue up 31.6% to $1.711 billion, some $411 million better than last year's third quarter. Net earnings, $109.3 million compared to a loss of $298.2 million in the same period a year ago, a $407.5 million improvement. Adjusted net earnings of $116.9 million, a $227 million improvement over last year's third quarter. Adjusted EBITDA up 183.7% to $347.5 million, nearly triple last year's third quarter result of $122.5 million.
Adam Aron: Net cash provided by operations was $176.6 million, a $191.5 million improvement over last year's Q3. Free cash flow in the quarter of $109.3 million, also up more than $190 million over Q3 2025. Our cash reserves at the end of Q3 were $751.9 million, not counting the $40 million in restricted cash, up 105.5% compared to the same period last year. Let me reiterate just one of those numbers, $347.5 million of Adjusted EBITDA for AMC Entertainment in Q3 of 2026. How about them apples? Last quarter, the second quarter of 2026, we also broke revenue and Adjusted EBITDA records for AMC that had stood for seven and nine years respectively. This quarter, Q3 of 2026, for the second consecutive quarter, we broke those records and set new records yet again.
Adam Aron: It's no wonder today, therefore, that we all are all smiles in Leawood, Kansas. When you realize that we showed progress in the first quarter of 2026 and set new records for each of the second and third quarters of 2026, our nine months, January to September, global results also are so extraordinarily encouraging. Revenues of $4.353 billion, up 22.3%, an increase of $793 million over the same period last year. Net loss was $19.2 million compared to a loss of $505 million, a $485.8 million improvement. Adjusted net earnings of $26.9 million, a $387 million year-over-year increase. Adjusted EBITDA for the nine months of $707.2 million. Let me say that again, $707.2 million, up 178.1%, an improvement year over year of $453 million.
Adam Aron: It just makes me so happy to say again, because it just feels so good to do so, AMC's Adjusted EBITDA for the nine months was up $453 million. Also, net cash provided by operations of $284.5 million, a $530 million improvement. Free cash flow for the nine months of $124.7 million, which gives us confidence to say to you today that we expect that AMC will be free cash flow positive for the full year 2026. We posted these satisfying results because of so many disparate accomplishments all coming together. A resurgent industry-wide box office that started producing hit movie after hit movie in March of 2026 and every month since. The appeal of AMC's and Odeon's industry-leading loyalty and subscription programs. The vast and growing number of our premium large format, extra-large format, and laser projection-equipped screens.
Adam Aron: Increased market share, both domestically and in Europe. The creativity displayed in our food, beverage, and merchandise offerings. Our keen understanding of pricing strategies, both in leveraging times of peak demand and providing options to satisfy bargain hunters when appropriate. Also a key driver, our disciplined cost management, both with respect to operating costs and capital expenditures. You could sum it all up by saying that AMC and Odeon have superbly executed department after department at our various headquarters locations and in our theaters, leading to compelling contribution per patron metrics. Over the past several years, we've tried to convey to you that there is considerable operating leverage inherent in our business at AMC. When our revenues rise, our EBITDA can soar, and that clearly has been demonstrated this year in 2026.
Adam Aron: For the first 9 months of 2026, approximately 57% of our incremental revenues flowed through to the Adjusted EBITDA line. Indeed, in Q3 of 2026, revenues increased 32%, Adjusted EBITDA increased 184%. For the first 9 months of 2026, our revenues increased 22%, our Adjusted EBITDA increased 178%. Our 2026 operating results obviously have been stellar, but importantly, we have made strides in righting our balance sheet as well. Not everyone realizes that since 2020, AMC has repaid around $2 billion of debt and deferred theater rent obligations. On 5 October, AMC also completed another balance sheet action that was nothing less than transformative for our company. We refinanced 97% of our debt, greatly simplifying our capital structure, lowering our cost of capital, gaining credit rating agency upgrades, and extending maturities to late in 2031 and 2033, 5 to 7 years away.
Adam Aron: What does this all mean for AMC? In our opinion, it means this. After 6 long years of navigating AMC through uncharted waters, we can finally say with relief that we have brought our ship into port. While others in our industry suffered financial collapse, AMC instead has persevered. AMC is now in an industry-leading position, currently producing free cash flow, enjoying sizable cash reserves, and while not yet rising all the way to the ultimate target for our desired leverage levels, nonetheless possessing a more normal balance sheet. While we will continue to strive to pay down debt and further reduce leverage, we believe that any future press article referring to our being overly debt-laden is mindlessly in error.
Adam Aron: While we will continue to wisely utilize equity financings when it makes sense going forward, groundless fears of endless share dilution will come only from those looking in the rear-view mirror, not the front windshield of the AMC auto. In its simplest terms, AMC functioning in a $10 billion plus box office environment is a very different animal from one that was trapped in a $7 to $9 billion box office environment, as was the case in the past 4 years, or for that matter, a $2 to $9 billion box office over the past 6 years. What you are seeing now is a company proving quarter after quarter what it can achieve when an inspired movie slate combines with a powerful fleet of movie theaters.
Adam Aron: Add in our years of perseverance, preparation, innovation, and disciplined execution, and we believe that our financial results demonstrate that AMC is in a class of its own. We realize that for years now, the skeptics have been repeating the conventional wisdom and writing of AMC's final chapter, but they were wrong. Time and again, our team at AMC and at Odeon have adapted, delivered, and prevailed. With that, I am now going to pass the call on to Sean Goodman, who will discuss our financial results in more detail, and then I will come back to further address the brightness of the picture at AMC. Sean?
Sean Goodman: Thank you, Adam, and good afternoon, everyone. As Adam noted, for the second quarter in a row, we get to announce the highest quarterly revenue and Adjusted EBITDA in our 106-year history. The results were driven by more than just a surging box office. They also reflect the thoughtful steps that we've consistently taken over the last few years to really enhance our loyalty programs, invest in premium auditoriums, grow our food and beverage business, optimize our theater portfolio and cost structure, and strengthen the balance sheet. During the Q3, nearly 75 million guests visited our theaters around the world. In the US, admissions revenue grew by 29.9%, and that's approximately 300 basis points ahead of the impressive industry box office growth of 27%.
Sean Goodman: In Europe, our attendance increased by a remarkable 41.5%, or approximately 1,000 basis points above Q3 industry attendance growth in our European markets. We set new Q3 records for consolidated admissions revenue per patron, food and beverage revenue per patron, and total revenue per patron. These records helped drive total Q3 year-over-year revenue growth of 31.6%, with domestic revenue growth of 29% and international revenue growth of 40%. Thanks to our ongoing initiatives and the operating leverage inherent in our business, our Adjusted EBITDA margin for the quarter increased by more than 1,000 basis points to a record of 20.3%. We saw strength on both sides of the Atlantic, with US Adjusted EBITDA growing 147% to $275 million, while Europe delivered Adjusted EBITDA of $72.5 million for an impressive increase of 542%.
Sean Goodman: Through the first nine months of 2026, AMC generated a record $4.35 billion of revenue, and Adjusted EBITDA reached a record of $707.2 million. We've said before that we don't need the box office to return to pre-pandemic levels in order to get back to pre-pandemic levels of Adjusted EBITDA, and that is because of the work we've done over the last few years to make AMC a significantly more profitable business. To illustrate the transformation, let's compare the first nine months of 2026 to the same period in 2019. In 2026, the North American box office was approximately 7.5% lower, and our global attendance 26.5% lower than in the same period in 2019. Yet, despite significantly fewer guests, a lower box office, and seven years of inflationary cost pressures, we delivered 51.6% or $241 million more Adjusted EBITDA in 2026 than in 2019.
Sean Goodman: We're continuing to take actions to optimize the business. During the Q3, we closed another three theaters, and at the same time, we introduced 10 new premium large-format auditoriums and 24 XL or extra-large format auditoriums. Since 2020, we've now closed 228 locations and opened 66 for a net reduction of 162 theaters, or approximately 16% of our global circuit. This optimization of our fleet is highly beneficial to our business and our shareholders, because not surprisingly, the 66 new theaters in desirable locations generate far more theater-level cash flow than the 228 theaters that we've closed. Over the same period, what we've done is added 72 premium large format and 217 XL or extra-large auditoriums, increasing the premium or enhanced auditorium options available to our guests by more than 50%. Let's now turn to our financial position and the balance sheet.
Sean Goodman: Our balance sheet priorities remain to maintain sufficient liquidity, reduce our borrowing costs, lower financial leverage, and provide capital to invest in high-return projects that enhance the theatrical experience even more. During the Q3, we repaid $125.5 million of our 6.125% senior secured notes that were due in 2027. After that repayment, we ended September with $751.9 million of cash on hand. As you know, quarterly cash flow is significantly impacted by the level of working capital, which will fluctuate with the timing of the film release schedule, studio film rent payments, rent, and other vendor payments. As Adam noted, we do expect to generate positive free cash flow for the full year 2026, and this would be after net capital expenditures of between $200 million and $235 million. Which brings me to the refinancing that we just completed on 5 October.
Sean Goodman: The new debt consists of three components. First, $2 billion of first-lien senior secured notes bearing interest at 8.875% and maturing in October 2031. Second, an $850 million first-lien term facility priced at SOFR plus 450 basis points, and this also matures in October 2031. Third, a $1.12 billion senior secured loan bearing interest at 11.25% and maturing in October 2033. These transactions substantially extend our debt maturities, they simplify our capital structure, and reduce the average interest rate on our debt. In summary, three things define this quarter. First, record financial results. Second, free cash flow generation and the expectation of being free cash flow positive for the year. Third, a strengthening balance sheet. Nearly all of our debt now matures in late 2031 or 2033.
Sean Goodman: Our capital structure is simpler, our cost of debt is lower, and our leverage today is significantly lower than it was at the end of 2025. With that, I will hand the call back over to Adam.
Adam Aron: Thank you, Sean. I want to touch on five key topics before turning to your questions. First, as proud as we are of our Q3 results, I should also point out that we are also quite excited by our prospects for Q4 of this year. For the month of October, the domestic industry box office was up approximately 35%, and the majority of the quarter's box office is still ahead of us. There are a flood of highly anticipated movies being released in November and December. Some of my personal favorites are "I Play Rocky," "Wild Horse Nine," "The Further Mis-Adventures of Cliff Booth," and "Mr. Irrelevant." Then there is the blockbuster holiday slate, including Warner Bros.' "Dune: Part Three," Disney and Marvel's "Avengers: Doomsday," Lionsgate's "The Hunger Games: Sunrise on the Reaping," and Sony's "Jumanji: Open World," among others.
Adam Aron: These titles will cap what is sure to be the best domestic box office in 7 years, one that we would expect will easily cross $10 billion and potentially wind up mostly much more than that. Second, it was fortuitous that as a key aspect of our AMC Go plan, in which AMC got off our heels and started playing on offense again, that AMC aggressively embraced the offering of premium experiences in our theaters. In the US, our premium large-format screens and extra-large-format screens represent 8% of our total US screen count. In Q3 of 2026, those 8% of our US screens generated fully 31% of our US admissions revenues, and those PLF and XLF revenues grew by an astounding 62% year-over-year versus Q3 of 2025.
Adam Aron: We did well across the board, but our hats off especially go to our friends and partners at IMAX, who have been enjoying such enormous success this year. With AMC having about half of all the IMAX screens in the US, and for that matter, more than 90% of the Dolby Cinema screens in the US, not to mention our Prime and XL screens in addition, no one else in our industry comes close to the count of premium screens that are offered by AMC. Add to that AMC's further embrace of laser projection. In the US, AMC now has 3,976 laser projection-equipped auditoriums, 58% of our total US screen count. Talking about premium offerings, everything worked well in Q3 of 2026. Our US 3D admissions, which carry a price premium, their revenue grew by 43% versus Q3 of last year. Globally, it is the exact same story.
Adam Aron: In the US and Europe combined, AMC and Odeon now have 226 IMAX screens, 187 Dolby Cinema screens, 146 house-branded PLF screens, primarily Prime at AMC in the US and iSense at our Odeon Cinemas in Europe. We have deployed 19 CJ SCREENX and 4DX auditoriums and 217 XL screens. AMC and Odeon now offer nearly 800 PLF and XLF screens. That is more than quadruple the number of premium screens offered by AMC Entertainment when I joined this company 10 years ago, and none of our competitors are anywhere close to us. Third, let me turn to an industry development of real consequence to the movie business. Earlier in October, Skydance, the owner of Paramount, completed its acquisition of Warner Bros. Discovery. The combined company brings together two storied studios whose movies have entertained generations and generations and generations of audiences.
Adam Aron: As you know, AMC has been a vocal champion for this transaction. Earlier this year, back in April, we were one of the very first entities to make our support of Skydance clear. We did so because we valued the sincere commitments being made by David Ellison and his Paramount team. More movies coming to theaters and longer exclusive theatrical windows, which translate to more time for those movies to appear exclusively in movie theaters on the big screen. We are confident that Skydance will do everything in its power to create and deliver appealing movies under both the Warner and Paramount brands going forward. Third, it is not just Skydance's Warner and Paramount who are committed to releasing quality movies in movie theaters. Disney and Universal continue to shine.
Adam Aron: Sony is still euphoric about its staggering success with "Spider-Man: No Way Home," as is Lionsgate happy with "Michael" and its coming film in "The Hunger Games" franchise opening this month. Amazon has a full slate of movies now. They started the year big with "Project Hail Mary," and I predict they have another winner on their hands with the soon-to-open "I Play Rocky." I loved it, and I encourage every single one of you to see it. We have been so impressed too by the films of smaller players, including A24, Angel, Black Bear, Neon, Bleecker Street, Falling Forward, GKIDS, and Fathom, among others. I am encouraged as well by AMC's growing partnership with Netflix.
Adam Aron: In Q4 2026, AMC will play four different Netflix movies in our theaters: "La Bola Negra," "The Mosquito Bowl," "Ink," and "The Further Mis-Adventures of Cliff Booth." In 2027, we have two Netflix movies already on the calendar, and importantly, they both carry a full theatrical window in "Narnia" and "Charlie vs. the Chocolate Factory." We are actively working harmoniously with Netflix to do more together with them in 2027 and beyond. Fourth, on this webcast, I have declared that AMC has finally emerged from the storm cloud created by COVID. So it makes sense to take a moment just to step back and reflect on the extraordinary journey that AMC has traveled since then. I take you back to March of 2020, when the world as we knew it changed. Our theaters were all shuttered.
Adam Aron: In a week, our revenues totally evaporated and disappeared, and AMC suddenly faced a crisis unlike anything that any of us would ever have envisioned. The record of what happened thereafter is remarkable. We figured out how to slash costs and came up with new ways to drive revenue growth. Since March of 2020, the capital markets history of AMC reflects more than 130 separately dated actions, including nearly 100 debt transactions and more than two dozen equity transactions. We raised capital, we refinanced debt, we exchanged debt, we repurchased debt, we extended maturities, we sold assets, we created new securities. At various points along the way, we repeatedly found innovative and sometimes unconventional solutions to problems that others said were unsolvable. Some of those decisions were difficult, some were complicated, some were unpopular. When liquidity was paramount, we raised capital.
Adam Aron: When maturities needed to be addressed, we addressed them. When opportunities existed to reduce or restructure debt, we pursued them. When entirely new solutions were required, we created them. AMC did not have an option to take an easy road. Over and over again, we took the difficult road, both because we always believed it was the right road, and also sometimes because it was the only path forward that looked to us to be workable. Take it all together, in short, at AMC Entertainment, we successfully threaded the needle. Finally, fifth, I would like to conclude by saying this, that my confidence in AMC is resolute. For no company is it always a sheer straight line upwards, but looking ahead, I could not be more bullish about the long-term prospects for our company. Moviegoing begets more moviegoing.
Adam Aron: Attendance at our theaters increased by 19% for the first 9 months of 2026, January to September, year-over-year. In Q3, it increased by 28% compared to the third quarter a year ago. The sources who I trust in Hollywood also are confident about the movie industry's rebound. Analysts are forecasting 2027 to be another box office year around $10 billion or so domestically. Many of those in the know in the movie industry are especially optimistic about the 2028 movie slate, one that we believe has every possibility of eclipsing that of 2026. Accordingly, given my confidence, I own and have a financial interest in a meaningful, in a truly sizable number of AMC shares, and I have not sold a single AMC share since January of 2022.
Adam Aron: To the contrary, many of you will recall that earlier this year, back in the spring, I bought additional shares of AMC stock, as I said, my confidence in AMC. With that, Sean, let's turn to questions from security analysts and some of our shareholders.
Operator: Thank you. If you would like to ask a question at this time, please press star 1 on your telephone keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. We will take our first question from Mike Hickey with StoneX. Please go ahead.
Mike Hickey: Hey, Adam, Sean, John. Great quarter, guys. Great job on the financing, and congratulations, Adam, on the completed turnaround.
Adam Aron: Thanks, Mike.
Mike Hickey: I think my favorite data point from your incredible preamble is positive free cash flow for 2026. I mean, given what you guys have gone through, the industry has gone through, that is one hell of a statement. Again, congratulations. I guess now that you sort of debunked any idea that you would not be a going concern, Adam, how does your strategy change now, if at all, and how do you see the next chapter of AMC unfolding over the next 3 to 5 years?
Adam Aron: That is precisely what we talked about at our board meeting last week, Mike. Going back to your comment about free cash flow, it is so satisfying to be where we are today. When I look at our business, I think the prospects continue to be so bright. Look at the operating leverage that we delivered this year. In the quarter, as you know, revenue is up 32%, Adjusted EBITDA up 187%. Because we have been so tight on capital expenditures the last 6 years, so many growth opportunities within our theater network became obvious to us, but we were not in a position to pursue them. I think the first answer to your question is there is going to be an intense focus on continuing to unleash the earnings potential, the increase in earnings potential from our existing industry-leading fleet of theaters. I would say that is item one.
Adam Aron: Item two, we are just beginning to tap the benefits that AI can offer our company to make us more efficient and more effective. As just one example of many, we have a project underway in Europe right now where we are using AI to program which movies go into which auditoriums in our theaters. The financial implications of this, if it works, could be so significant. Let me remind you all, new movies come out every week, so we program movies every week. Not everyone realizes this, but in a typical movie theater, in a typical megaplex, there are 4 to 7 different screen sizes and seat count sizes in our auditoriums.
Adam Aron: When a movie opens up, when demand is at its highest, they tend to be in the largest auditoriums with the most number of seats, and over the course of their run, they trade down to medium sizes, smaller auditoriums. We have now and for the past century, have been doing all that programming of our theaters manually by humans every single week at 10,000 screens with the movies that they are showing. You would think logically that if programmed right, the artificial intelligence with machine learning, that we ought to be able to outproduce the programming on these auditoriums in their different sizes with even marginally better effectiveness than with a lot of people scattered all over the world doing that same work.
Adam Aron: Not only are there labor savings, but theoretically, the programming will be tighter, will marry the right movie to the right auditorium better, and our admissions revenues are so high that even improvements of a few percent will translate to significant increases in EBITDA. So, those are just 2 of the areas where we will be paying a lot of attention, and there also is other ideas that are at the tip of our fingertips that we will be exploring in the months and years ahead.
Mike Hickey: Adam, when you talked about 2028, I think, film slate, I think you said those in the know think it could be better than 2026, and we have heard similar things as well. I just wanted to sort of check in with you on 2027 and your confidence that, in fact, 2027 can grow over 2026, because I think you have noted before film supply, the cadence of spacing next year, expanded windows, and what you have, in the industry, particularly you, have done with Netflix in terms of partnering with them and getting product to the market when no one thought it was possible. With a window, it seems encouraging that we should look to growth for 2027 as well.
Adam Aron: The difficulty in predicting film slates, if you asked any studio on a Wednesday that is opening a new film on Friday how it is going to do by Sunday, they do not actually know exactly. What you are asking me to do is not forecast one movie 4 days out, but the entire slate 14 months out. What I am confident of is that 2027 is going to be a good year. I said in my opening remarks that most forecasters are calling it to be in the neighborhood of $10 billion, which is such a striking change from where we have been the last 4 years, trapped between $7 billion and $9 billion. Is it exactly what is 2027 going to be versus 2026? They will probably be pretty close to each other, but we do not actually know exactly how 2026 is going to end up.
Adam Aron: It will depend a lot on the December movies, whether there are four big ones coming out, as you know, in The Hunger Games, Dune 3, Avengers: Doomsday, and Jumanji. I can barely tell you exactly where 2026 is going to be, let alone where all of 2027 is going to be. But we do think 2027 will be a good year, a solid year. We ended the Q3 with a ton of cash. We are going to end the Q4 with a ton of cash. We are very confident looking ahead that 2027 will be an acceptable year, and I, for one, think 2028 is going to be a stellar year.
Mike Hickey: Nice. Thanks, Adam. Good luck, guys.
Operator: Thank you. We will take our next question from Eric Wold with Texas Capital. Please go ahead.
Eric Wold: Thanks, and good afternoon. Congrats to all you guys again for a great quarter. Sean, just a couple questions, I guess. One, you obviously talked about, you guys talked about the impressive operating leverage you had in the quarter, or I guess in the quarter and the year, as attendance and box office has improved. But I guess, thinking beyond box office drivers, where do you think you have additional expense levers that you can pull to drive further leverage as box office attendance continues to improve in the next couple years?
Eric Wold: And kind of dovetailing on that, my second question is, as you look at the current theater portfolio, I know as you analyze each of them as kind of leases come up for renewal, any sense of how many theaters or screens right now kind of fall below that cash flow positive threshold that you would want to see, or return threshold you would want to see, that could be closed in a couple years to drive even underlying performance even more?
Sean Goodman: Thanks, Eric. On the theaters, we have about 10% of our theater leases come up for renewal each year. That is around 85 or so leases that come up for renewal each year. When that happens, we have an opportunity to renegotiate those leases. If a theater is loss-making today, can we renegotiate the leases to make that theater more profitable? Then we would continue to keep that theater. If we are unable to do so, then we would look to close that theater because we can rather reinvest our resources in more profitable theaters, new theaters. So we have that opportunity. We have not disclosed the number of theater locations that are cash flow negative, but that is not really the key driver here. The driver is, where can we renegotiate leases or close leases and open new locations to improve our overall profitability, to improve our KPIs, et cetera?
Sean Goodman: And we have been very effective in doing that, and we will continue to do that going forward. As you rightly mentioned, we have been able to show significant operating leverage as attendance has increased. We will continue to do that. Adam just spoke about some of the opportunities we have with respect to improving forecasting. As we get our forecasting more accurate at an individual theater level, then you get benefits in terms of staffing, you get benefits in terms of inventory for food and beverage, and that really improves our food and beverage profitability, and then improves our labor efficiency as well, and improves our ability to get guests to the concession stand. So, we are looking at that all the time, and I expect we will continue to see those operating leverage opportunities going forward.
Adam Aron: Yeah, Eric.
Adam Aron: Eric, I will just add, we have squeezed so much cost out of this business, but we are getting pretty good at squeezing cost out of the business. We have an exercise going on right now in Europe to reduce overhead above the theater portfolio, and that has potential to save more than $10 million of operating costs. There are just so many levers to pull, and we have been pulling them for years, and we are going to continue to pull them. I think you are going to find that we are going to continue to be a tight manager of our costs, both our operating costs and our capital expenditures going forward.
Eric Wold: Thanks. That actually dovetails into my second question on CapEx. It obviously sounded like you have been fairly conservative with your cash over the past couple years, and you have kind of navigated the balance sheet and the industry recovery. With the opportunities out there, are we looking at the possibility of net CapEx increasing in the coming years, or do you think it stays relatively flattish?
Sean Goodman: We have guided to $200 million to $235 million for 2026. We are still working through our budget and planning for 2027. I would expect, if the box office continues to perform at these levels, and given our operating profit and our free cash flow generation, we are likely to be in the mid to high end of that range in 2027. We have, as we have mentioned before, a significant number of very high return opportunities that we look at, and that creates real opportunities for the business and improves our profitability overall. Our CapEx levels, what I think we have been very good at doing is increasing CapEx when we are able to do so, when we find those high return opportunities, and really cutting back on our CapEx when we have needed to over the past six years or so.
Sean Goodman: We will continue to do that, but we will certainly be taking advantage of opportunities that exist within the business. One other thing I will mention is that is our net CapEx spend for AMC. In effect, we are spending quite a bit more than that because we do get incentives from our technology providers, from our landlords, that allow us to effectively be spending more than that $200 million to $235 million range. Actually, the amount of money going into the business in terms of enhancing the business is quite nicely higher than our net CapEx spend, and I think we will continue to have those opportunities.
Eric Wold: Perfect. Thank you both.
Sean Goodman: Thank you.
Operator: Thank you. At this time, there are no further questions in the queue. I will now turn the meeting back to Sean Goodman.
Sean Goodman: Thank you, operator. Adam, we will just take one question because we are getting close to the top of the hour. We will just take one question from our investors, which question relates, and we have spoken about this a lot on the call, relates to growth opportunities. Where are the growth opportunities for us in terms of investing in our fleet and investing in the guest experience?
Adam Aron: Thank you, Sean, and thank you to our shareholders for the question. This is something that is quite exciting for me to talk about because there is so much opportunity to improve the experience that we offer to our guests. It has been our experience that when we make our product better, consumers reward us with increased patronage. As you know, like three-fifths of the incremental dollar flows through all the way to the Adjusted EBITDA line. We have already pushed the button on putting in new seating in around a dozen of our theaters in the US and Europe. These are some of our highest profile theaters, like Disney Springs in Orlando, The Grove and Americana in Los Angeles, among several others, where the theaters are enormously successful today, but we are going to be replacing traditional seats with our AMC Club Rockers.
Adam Aron: We put in these Club Rockers at Burbank in LA and Empire in Lincoln Square in Manhattan. Routinely after we put these Club Rockers in place, those three theaters, week in and week out, are often the three highest-grossing theaters out of the 535 that we have in operation in the United States. We are going to put those same seats into another 10 to 12 theaters in the US. On this call, we have talked about some of our theaters that are not very many anymore because we have closed so many, but we talk about theaters that have either negative cash flow or no cash flow. We have theaters that we manage right now that do $6 million of EBITDA, $12 million of EBITDA at a single theater location, and in many cases, those theaters are operating with 10, 15, and 20-year-old seats.
Adam Aron: The Club Rockers that are going in replacing them are wider, more padded, more comfortable, some cases hinged. We often put in more legroom. They look great because they have a black leather feel to them. These seats are going into a whole bunch of our highest-grossing, highest theater cash flow-producing theaters. That is only going to cause, in our optimistic view, it is only going to cause those theaters to be even more successful going forward. Another example of a growth initiative that I am so excited by. We have a theater in Manhattan, in New York City, Orpheum 7, that was a Loews theater that AMC bought 20 years ago. The only thing that we have done to that theater in the last 20 years is allowed 20 years of dirt pile up. We tried to clean it, but 20 years is 20 years.
Adam Aron: That theater right now is being gutted to the studs, and by February or March, it will reopen as the AMC Upper East Side 7. It will be an all-new interior. It will be like we are opening a brand-new theater, and we will be doing it 86th Street and 3rd Avenue. When Sean and I, when the two of us toured the theater with Dan Ellis, our Executive VP of Operations, a year back, we just walked out the front door of that existing theater and looked around. In every direction, in every little eyesight that you can think of, there is a 20 to 30-story apartment building surrounding the theater on all sides. Well, they have not been going to Orpheum 7 because it was not worthy of their patronage.
Adam Aron: But I can tell you that the AMC Upper East Side 7 will be very much worthy of their patronage, and I am expecting the attendance will soar, the theater-level cash flow will soar, and we have opportunities like this in many locations around the country. So, our attention to looking at our fleet of theaters, where can we improve, where can we offer the guests a better experience, and where in turn can that translate to higher attendance, higher revenues, higher Adjusted EBITDA? That is our keen focus and attention, and I think will produce great returns and be a key factor in our ongoing success in the years ahead. With that, I suppose we are at the end, so I would just like to tell everybody thank you for attending and participating on today's call. I can promise you that the execution at AMC will continue with keen focus.
Adam Aron: Our imagineering, as Disney famously called it over the decades past, will be very much in evidence at AMC. Our commitment to innovation and progress will continue at AMC, and we hope to produce the kind of stellar operating results going forward that were very much in evidence in Q3 of 2026. With that, thank you one and all. It is going to be a great couple of months ahead in the movies. Go see "I Play Rocky," and I bet just a few of you, a few million of you maybe, are going to be seeing 2 and 3 in "Avengers: Doomsday" in December. Thank you one and all. Thanks for joining us today.
Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.
