Q2 2019 Earnings Call
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host John Merriwether, Vice President Investor Relations. Please go ahead.
Thank you Sandy good morning, I'd like to welcome everyone to AMC second quarter 2019 earnings Conference call.
With me this morning, as Adam Aron, our Chief Executive Officer, and President and Craig Ramsey, Our executive Vice President and Chief Financial Officer.
Before I turn the call over to Adam Let me remind everyone that some of the comments made by management. During this conference call may contain forward looking statements, which are based on managements current expectations.
Numerous risks uncertainties and other factors may cause actual results could differ materially from those that might be expressed today.
Many of these risks and uncertainties are discussed in our public filings, including our most recently filed 10-K and 10-Q.
So all of the factors that will determine the company's future results are beyond the ability of the company to control or predict.
In light of the uncertainties inherent in any forward looking statements listeners are cautioned to not place undue reliance on these statements.
The company undertakes no obligations to revise or update any forward looking statements, whether as a result of new information or future events.
On this call we may reference measures such as adjusted EBITDA adjusted free cash flow constant currency, which are non-GAAP financial measures.
For a full reconciliation of our non-GAAP measures to GAAP results. Please see our earnings release issued earlier this morning.
In conjunction with our earnings release, we encourage you to review the supplemental financial information for the 2019 second quarter that we published this morning on our web site in tandem with the earnings release.
After our prepared remarks, there will be a question and answer [laughter].
This morning's call is being recorded and a webcast replay will be available in the Investor Relations section of our website at AMC theaters Dot com later today.
With that I'll turn the call over to Adam.
Thank you John good morning, everybody.
Thank you for joining us this morning.
For a review of AMC as a result for the second quarter of 2019, and a progress update on several key initiatives in support of achieving the product.
Customer engagement and financial targets, we laid out for you at our Investor and Analyst day in April of 2019.
The second quarter of 2019 with a superb one for AMC.
We posted strong above consensus results for the quarter and later during this call today I'll be announcing new positive actions looking forward that you may not be expecting.
<unk> of which we are quite proud.
Let's start with a look at the industry is impressive performance in the second quarter and AMC outperformance well ahead of the pack over the same period.
The domestic industry box office for the second quarter of 2009 team came in as you know at $3.2 billion.
Which was 34.2% higher than Q1 of 2019.
Reading all the articles from journalists.
Who continually seemed to be obsessed by l. screaming concepts can or cannot coexist with brick and mortar movie theaters. It would be easy to miss that not only was 2018 a record year for AMC had a record year for movie going generally.
But also the Q2 of 2019 represents the second largest quarter for domestic movie theater revenues of all time.
Let me say that again.
Over the 400 calendar quarters over the last 100 years, the domestic industry box office for Q2 of 2019 was the second best quarter ever not the second best Q2.
The second best quarter of all of them.
Admittedly this years second quarter industry revenue performance was 3.7% shy of last year's Q2, but remember that that quarter Q2 of 2018 was itself up 23% over Q2 of the year prior.
And was the single highest quarter instead of my history.
Indeed, the domestic industry box office in Q2 of 2019 was fully 19% higher than that of Q2, 2017, and fully 15% higher than that of Q2 2016.
Why was Q2 2019, such as mass yes.
All studios contributed.
And often with a welcome return of a greater number of family friendly films in the quarter.
But special praise must go to Disney.
For vendors end game.
In the U.S. April was the highest grossing April ever and May was the second highest grossing may ever.
Thanks to the formidable straight to the vendors end game now standing at $2.8 billion globally.
The highest grossing film ever.
In Europe too.
The industry box office showed real strength in the second quarter of 2019 up 16.6% in the countries served by Odeon and up 11.1% in the countries served by Nordic on a constant currency basis.
It's not just the Q2 look good already in the third quarter. The industry is off to a great start.
Sony's Spider man far from home and Disney is the Lion King helped drive the domestic industry box office for July to be some 6.7% ahead of last year July and as you know just three weeks into its run the Lion King is already the second largest movie of the year.
All in all the cadence of the industry box office in 2019 is tracking exactly as we had AMC predicted.
A weak first quarter, followed by what we believe will be an impressive stretch in quarters, two three and four it's a cadence that we've previously noted.
2019 is expected to be a backend weighted year, culminating in what we believe will be an exciting fourth quarter.
To end the year large.
As always.
Well, we were especially encouraged by the industry performance in April May and July of 2019 and optimistic for the balance of the year.
It's important to remember that there are natural fluctuation the box office between weeks months and quarters within the year due to the timing of film releases, our management team tends to focus on our full year results and our performance against our medium and long term financial targets rather than on any particular film or intra year timeframe.
We would encourage you to do the same.
Now, let's turn to AMC strong performance with our second quarter results.
I've just reviewed how very pleased we were with the industry box office performance in Q2.
Well, what matters more to us than anything else.
His are delivering solid results within our own company at AMC.
This is why were even more pleased.
To be taking you through AMCC.
As a result.
And U.S. markets.
AMC had an excellent quarter.
Outperforming the industry once again.
AMC set a new record in U.S. attendance of 3.1% this quarter to nearly 72 million theater visits.
And for the fifth consecutive quarter AMC handily outperformed the rest of the industry.
The rest of the industry being the fine.
As the approximate 75% of the industry that excludes AMC.
On an attendance per screen basis.
AMC beat the rest of the U.S. industry by approximately 800 basis points.
Can I repeat that statistic, we beat the packet by some 800 basis points.
That attend this growth came from conscious decisions on our part, which we widely discussed starting last June July and August to create incremental demand by driving attendance through marketing programs like a less than discount tuesday's among others.
Even with the modest intangible sacrifice on pricing per ticket.
With such a substantial attendance gain we still also outperformed the industry on admissions revenue per screen basis by approximately 400 basis points.
Market share has been moving our way.
At AMC continued outperformance is clear evidence that our carefully crafted strategic initiatives.
In customer engagement are working.
The story is similar.
In our international markets.
Not only were the industry revenues strong because of the vendors and game and the large family friendly slate.
But AMC performed very well internationally too with attendance up a whopping 16.6% year over year in the second quarter.
On a consolidated basis.
AMC generated generated 1.5 or $6 billion of total revenues, an increase of 4.4% compared to last year and up 6.0% on a constant currency basis.
We also set a global attendance record this quarter of 97 million guests.
Up 6.3%.
Versus the year ago quarter.
Notably.
We continue to see strong growth in concession spend in our theaters.
With second quarter, consolidated food, and Bev and beverage revenues per patron growing 3.9% to $5 an eight cents.
Or up 5.1% on a constant currency basis at eclipsing the five dollar threshold on a consolidated basis for the first time at AMC in company history.
Food and beverage revenues in the United States increased to $5.58 per patron.
Which was an all time high for AMC.
For sure, we're spreading our food and beverage expertise to Europe , where food and beverage spend at Odeon and Nordic theatres was impressive.
With per patron revenue growing by 9.1% quarter over quarter to an all time high on a constant currency basis.
In addition to our ongoing food and beverage initiatives. This strength was supported by strategic pricing actions taken back in 2018 and again in 2019.
And the food and beverage friendly slate of GE and P.G. rated films in the current quarter.
As we've said previously.
Well, we tend to outsell all other mass cinema operators.
We believe that we are still in the early to middle innings.
Of capturing increased food and beverage opportunities.
I would expect to continue improving food and beverage spend in both the United States and in Europe .
Over the coming years.
Accordingly.
As a result of achieving company wide attendance records on strong food and beverage spend growth.
Also record setting.
AMC generated second quarter total adjusted EBITDA of $237.6 million, which is up 7.3% from the year ago quarter and up 8.6%.
On a constant currency basis.
Adjusted for the impact of ASEAN 42.
Furthermore.
This year over year growth is even more impressive when you remember that Q2 of 2018 last year benefited from it says $10.8 million rent adjustment related to a lease modification that did not recur this year.
So.
In Q2 of 2019.
AMC generated $100.1 million of adjusted free cash flow of 68% year over year after adjusting for assay 842.
In the year ago quarter.
Our strength in particular attendance growth.
It is being driven by a combination.
Of our experience will theater initiatives enhancements.
Innovative use of technology.
And smart promotional pricing globally.
Deserving of particular mention.
In the United States.
AMC is reaping enormous benefit.
From the popularity of our website and smartphone apps.
Currently on a pace.
To be visited some 1 billion times annually.
Our voluminous outbound movie Goer communications.
Currently at a pace of around 1.5 billion outbound customer communications annually.
And.
Our AMC stubs loyalty program now, reaching more than 21 million.
With member households, which includes our new a list subscription tier of AMC stubs.
As we've noted during our Investor and Analyst day in April and in previous earnings calls this combination for us what we call the AMC platform.
By delivering a personalized and targeted endeavours.
And the experience for our guests leveraging modern technology interfaces data driven insights innovative consumer engagement practices and the state of the art theater experience.
We're creating a positive flywheel effect that encourages incremental attendance and ultimately drives incremental value for our customers for our studio partners.
And for AMC.
[noise] looking in the rearview mirror that is our second quarter report.
Before moving on to some AMC news that we will make today.
As we look at the volatility and am share price over the past few months.
We would like to call out to you yet again.
The new lease accounting standards, they see a 42.
As all of you know on May eight we reported our first quarter results, which for the first time included the impact of assay 842 on lease accounting.
Those impacts.
Which were all non cash, including among other things the capitalization of our operating leases onto our balance sheets as operating right of use assets an operating lease liabilities.
The guidance from says be was clear.
These operating leases were operating in nature and not.
To be considered as debt.
Unfortunately.
And as many on this call I've already noted in your thinking and then your reports.
The financial data provider services, including by name Bloomberg Capital like you in fact set in our view Iranians, we categorize these operating leases as debt.
Given the importance of these data providers.
Often serving as the primary source of truth.
For algorithmic trading platforms as well as for traditional human asset managers. This caused significant confusion.
In the marketplace.
What's more.
What we believe is this mistaken reporting by these data services made it appear that the 842 impact doubled our reported debt.
Literally overnight.
Even though there was no corresponding adjustment to our cash flows.
No change in our interest obligations.
No change to our adjusted EBITDA.
But the service has made it appear that our leverage ratio increased again literally overnight from about five times to over 12 times.
Additionally, there are mis reporting an increase in our debt.
Had the optical and erroneous impact of inflating, our total enterprise value and consequently, our Vic our valuation multiples.
In other words.
As viewed on the data streams of these providers.
AMC became wildly over levered at AMC or AMC shares became stunningly expensive. All this despite no change in cash no change in interest payments and no change.
In the operations of AMC is business.
This is not a problem unique day in C.
As they as C. 842 is brought in Prac brought impact across industries, but we have been unnecessarily and significantly impacted.
As you would expect.
We have been in contact with the various data providers seeking that they rectify their reporting.
Based on our conversations it seems clear that they are in fact intent on resolving these issues that said any fix will take time.
As it impacts not only AMC, but also thousands of other public companies.
In the meantime.
Before corrections can be reported correctly.
We would encourage investors to take one of two approaches.
When looking at AMC is leverage and valuation ratios to ensure a like for like comparisons.
Either.
Debt, excluding operating leases should be compared to our reported adjusted EBITDA.
Or.
Debt, including operating leases should be compared to our reported adjusted EBITDA plus adding back on top to EBITDA.
Our rent expense.
I would now like to call your attention to seven specific AMC strategies and developments.
That deserve to be highlighted.
First.
Let's start with Atlas.
And as we have done over the past year, giving you each quarter.
A fairly specific updates.
We have just now lapped the one year anniversary.
Of the program, which launched on June 26 of 2018.
As of yesterday, we had more than 900000 a list members. That's about 300000 members have joined in 2019 since we instituted a considerable price increase and more than 100000, new members. Since we last spoke on the first quarter conference call back in May.
Compared to our initial 12 month goal of 500000 members.
We have far exceeded.
Our own and all expectations.
As for the frequency of movie going, but hey, lessors.
You'll recall that in the first quarter of 2019, a listers, averaging 2.6 movies per month.
In admittedly a slow box office quarter.
With the second quarter domestic box office being some 34% bigger than that of Q1.
Some observers feared that a less frequency might similarly rise by 34%.
In Q2 to about 3.5 visits per month.
It should be no surprise there for that we are pleased to inform you.
The average day less frequency in Q2.
Of 2019 was only 2.85 visits per month.
Actually 2.848 visits per month to be precise.
We really do watch an analyst analyze this program like a hawk.
This frequency of 2848 was well within our profitability sweet spot.
Between 2.5, and 3.0 visits per member per month.
Importantly, these frequency levels combined with both bring along attendance at full ticket prices and food and beverage spending on a significant increase in overall movie going.
As they list has clearly stimulated demand.
Accordingly.
Per our previous commentaries.
We continue.
And have increasing confidence to firmly believe.
That the a list program is driving incremental attendance for AMC.
And that this is one of the reasons, we are considerably outpacing the industry's attendance growth.
We similarly believe.
I'd have increasing confidence that a lift is already contributing.
To AMC is overall profitability.
In 2019.
I should note that we are aware that after spotting AMC, a 13 month first mover advantage.
One of our competitors Regal has finally launched a competitive program.
We have we fully expected them to do so.
And are not concerned.
By their effort.
Second.
At the end of June .
Starting with the clever University moved movie entitled Yesterday.
We introduced artisan films at AMC, a marketing effort by our company to highlight and promote more specialized movies with artisan films. We are cure rating and then promoting a collection of intriguing cinema product that might get lost in an era, where blockbuster movies are deservedly grabbing considerable attention and headlines.
At AMC, we believe that a wide array of storytellers are making great movies.
And we are focused on supporting their voices.
And on selling tickets to their films when they play at our theaters.
Indeed, we play hundreds of movies across the AMC footprint, each year and more of them will be more successful because of the extra love and attention.
That artisan films will offer.
Third.
Speaking of blockbuster movies.
On August 2nd.
That would be last week.
AMC started testing a new pricing initiative.
That will actually charge, a small premium for select movies.
That are of the highest appeal the movie goers.
And which would appear to have the highest consumer demand.
Specifically.
At 30 AMC theaters.
Across all three of our brands in four cities, Boston, Columbus, Indianapolis and San Diego.
We are test marketing.
A 50 cent.
A one dollar at a $1.50 cent per ticket surcharge for a handful.
Of high demand blockbusters.
Think of it being applied say to one or two movie titles each month.
Just as a couple of years ago, we instituted we instituted higher pricing on weekend days and lower prices on Tuesday.
This again is basic economic theory that goes back to the first microeconomic scores.
We all might have taken in college.
Charge more in peak periods and charge more for high demand products.
But charge less.
In the off peak.
These pricing strategies have been common place across our European theaters four years.
And industry observers have talked about this idea coming to the United States.
Also for years.
Moving from mere talk.
At AMC.
We are trying it right now in the United States to determine consumer response.
I should point out, though that are a listers and stubs members, who are discount Tuesday guests will be exempt from these nominally higher ticket prices, giving even more value to these two programs. So the concept be rolled out more broadly across the country. If the test market is successful.
Fourth.
We are very close to reaching final agreement.
On a concept that we have been working on.
For more than two years.
Starting this fall.
We hope and expect.
To be able to broadcast live sporting events.
A meaningful number of games on weekend afternoons.
At a select number of theaters across the country at AMC.
Across all three of our brands from one of the four major professional sports leagues.
Again.
If consumers respond favorably to seeing live sports broadcasts on say, a 30 foot or 40 foot screen as we think they certainly will.
This could be the start of considerably more live sports programming.
At AMC.
Fifth.
As you recall from our Investor and Analyst day in April .
We provided medium to long term financial targets as a helpful framework for thinking about our opportunity over time.
We set out a goal for you then.
To improve AMC is operating margins by up to 200 basis points and we ask you to hold our management team accountable to deliver.
Improving and increasing margins.
Accordingly.
We are announcing today.
The launch of a formal profit improvement plan that will go into effect essentially immediately.
Ramping up such that while there will be only modest impact in 2019, we believe we can add.
$50 million or more to AMC is operating income and 2020.
Specifically.
We've identified about $25 million.
Of ideas and possible revenue enhancements and some $50 million of ideas and possible cost savings.
Some ideas are big and some ideas or small, but together they add up while most of the ideas will be realized some will not.
Some of you May Wonder why now is there any specific significance to our aggressively going after revenue enhancements and cost Containments actually.
Anytime and all the time.
It's a good time for a company to think creatively about its revenues and its costs and we signaled to you earlier this year that we are serious.
About increasing our margin delivery.
Think of us as a leader.
But not a meter AMC.
This is a healthy exercise for organizations to undergo every few years.
And we will improve our overall operating efficiency at AMC as well as our baseline margin profile.
Six.
AMC has been saying for years now that our capital allocation strategy has been to continually balance among three competing.
And conflicting objectives.
Choice one.
Reinvest capital back into the business to drive growth.
We've done this hyper aggressively in recent years renovating more theaters with recliner seats.
More theaters with premium large format screens and more theaters with enhanced food and both hard and soft beverage options than anyone else.
Indeed, we have reinvested more than $2 billion back into our theaters.
Since 2014.
Choice too.
Returning cash to shareholders.
Through dividends and share buybacks.
Again since 2014, the time of AMC is first dividends a publicly traded company, we have returned well over $1 billion to shareholders, including among other methods through meaningful open market buybacks.
And our paying a handsome and unchanged regular quarterly dividend for 21 consecutive quarters, including announcement on Monday, just have this week.
That our dividend policy has continued unchanged once again.
We see no change that dividend strategy.
Anytime soon.
Choice three.
Hold on to our cash, thereby lowering net debt.
And as a result deleveraging.
While we have the option to actually pay down certain debt instruments.
We would note that we have already proactively managed our balance sheet to ensure financial strength and flexibility such that we currently have no maturities for the next five years.
Which is a significant advantage for AMC.
Again in our Investor day in April we addressed that de leveraging has become our has become our single highest current priority.
And the allocation of capital Accordingly, we are updating and issuing new net capex guidance for 2019 and for 2020, respectively.
You will recall the 2018 that capex was approximately $460 million.
And that we initially guided 2019 that capex.
To be around $450 million.
We now believe.
There'll be more prudent for our 2019 cap at net capex to be in the neighborhood of approximately $415 million for one five an approximate 35 million or doubt approximate $35 million reduction for calendar year 19.
More importantly, though.
We are currently driving our net capital expenditure budget for 2020 to be approximately.
$300 million.
A $150 million reduction.
Over the recent guidance for 2019.
We have not yet set a target for 21 2021 or 2022 that capex.
But this all is consistent with our saying at the April Investor and Analyst day that we wanted to bring down total net capex to $250 million to $300 million over a three to five year time period.
Even with our lowered capex budget.
Adding in landlord contributions.
There still will be ample monies in 2020 for maintenance capital as well as to invest in growth.
Funding technology initiatives further premium large format screen development more food and beverage initiatives and importantly to go after high return growth projects and renovating theatres across Europe , but especially in the United Kingdom as well as adding new built theaters in the United States in Europe and in the Middle East.
Fortunately.
We are after all nearing the completion.
Of the significant time cycle of reinvestment domestically, which organically lessens the capital need at home.
Theater renovation projects in the U.S. will not stop per se, but with so many U.S. theatres already having been done recently gradually moneys are reducing.
As to the quantity of U.S. theatres being addressed.
Starting in 2020 and in the years ahead.
Not only does this decreased capex spending help us to de leverage.
It also will have the effect.
Of increasing the magnitude of the adjusted free cash flow that AMC is actually generating.
We are aware of a mild debate over the years among some shareholders questioning how much of our current capital expenditure investments have been for maintenance purposes versus how much has been for growth.
Finally in 2020 that question should be off the table and any did and and any doubt.
And finally, the seventh bit of news I'm pleased to welcome Ambassador Philip later, and Adam Sussman to the AMC Board of Directors Ambassador later is the former US ambassador to the quarter St James's.
With four you non diplomatic officials is the United Kingdom.
He is also the former longtime chairman of WPP in the UK, the world's largest network of advertising and marketing agencies. His career as marked by abundance of business and diplomatic success and he brings with him a global perspective that we believe will be particularly insightful for our European operations, which are headquartered in London.
Adam Sussman.
Having served as the Chief Digital officer of Nike allows us to leverage the significant expertise.
Building digital experiences to help accelerate AMC is efforts to R&D to further engage our guests through technology.
Both Phil and Adam.
I have attended their inaugural board meetings, both Telephonically add in person and no surprise each are already making contributions to the company I'm also pleased to note that with their appointments.
The majority of AMC is board.
It is now comprised of independent directors.
In summary.
AMC had a terrific second quarter, and we have exciting innovative plans and actions underway.
That will improve our company's operating performance as we look ahead, all the while ensuring that the AMC platform continues to deliver the best movie going experience for our guests and puts AMC clearly at the top and in the lead as the clear an undisputed leader among movie theater circuits around the world.
With that operator, we're ready to take questions.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad a confirmation cannot indicate your line is another question can you May press star two if he would like you renewed your question <unk>.
Sure participants using speaker equipment, it may be necessary to take out your hands satisfy pressing the star key.
One moment, please while the call for questions.
Your first question is from Eric Wold as B. Riley and company. Please go ahead.
[noise].
Eric Day list.
Eric We missed the first few words can you start again.
Yes, just.
Good morning, and foresee words, but then.
A few questions on unsteady list.
If you dig in a little more of a visitation trends equal to what you're seeing on on quarter subscriber maybe one came in initially versus the ones that come in on new this year since the price increase any large variability month to month and any comments on churn.
Sure.
We've been tracking this since June of 2018.
And we look at Everybodys first few weeks of the program than we look at their first calendar month in the program and then we look at their frequency and subsequent months.
We do the same not only on frequency, but also how many people they bring along with them how much food day by we have this Craig quite granular Lee literally down to an account by account analysis.
And really there hasnt been that much difference.
As you would think in the first few weeks upon joining the program.
There.
Frequency is intense and high.
It is a new toy afterall.
And very quickly it settles down.
Such that the average across the membership.
Is where it was in Q1, two six and where it was in Q2. It technically 2.8 since you had round down to eight for eight to two eight.
We haven't seen much different activity.
Amongst the new members, who joined with the price increases.
Since January 2019 than the membership that.
Joined in 2018.
Beyond that.
Yes, so we've given you frequency data.
We've told you this thing profitable we've told you its driving incremental attendance.
We've told you that our previous commentary are off which we've been talking about widely since.
In June of last year, all our operative.
But we are going to be careful how much more we say publicly than that because we don't want to be forced into doing GAAP reconciliation table, which is not so easy to do for the analysts population, but we've got a big hit on our hands.
That is clear we know.
Some of you were quite afraid of a list back in the second half of 2018, we did say that we are going to have to investment spend in the first few months.
Which we did although not nearly as much as we thought we might have to.
And clearly this thing as a winner for AMC.
We could not be more happy with the programs performance.
That's based on its Incrementality, that's based on its profitability. That's based on the contributions to our operating income that we expected to make going forward.
Yes, sure Craig would love to put together that that gap table.
And one quick follow on.
Now that Regals launch there.
Their plan, but that includes.
Three the imac consider for no surcharge versus your plan that I mean, they have a surcharge means your plan has no surcharge do you view that as a competitive advantage to FMC or more of an opportunity you equal playing field long form about potential price adjustment.
Well.
Look there the Regal program has launch we always knew that going along something remember that in the UK.
The two circuits that have unlimited program.
Our.
So in a world, which has regals corporate parent and Odeon, which is our European subsidiary. So we thought if anybody would mattress it would be Regal and we're kind of amazed they gave US a 13 month lead.
We track departures from the program very carefully.
We ask anybody who's turns out that program.
Why they're leaving us.
And where we are literally.
In.
Like such a low number of people who've.
Told us.
That they're departing our program for Regal.
It's like you know in the hundreds its a really small number we're just not worried by the Regal program.
We think their program will play more to their own clientele that into our clientele.
We've had a lot of people lock in their brand loyalty to AMC, what's more our program has.
Several significant advantages.
One.
We have more theaters too.
We're not charging a ticketing convenience fee they are charging 50 cents a ticket.
Three once you joined the program. That's the price you pay you don't have to pay a surcharge. If you then attend our better theatre is a couple of times three we're not charging a surcharge.
For.
IMAX, Dolby cinema, where three d. or our proprietary house brands.
Pls and I will tell you that a substantial number.
Moviegoers are seeing movies in IMAX, Dolby or threed formats, and the within the last program.
The only.
Real advantages.
That Regal related Regal says it slightly lower price than ours.
But when you add in their surcharges.
It actually can be much more expensive than ours.
That may actually give us an opportunity to raise price.
For a list if we so choose.
But the only real advantage.
That Regal has is that.
We are limiting the movie going to three movies per week.
And Regals program is essentially unlimited moving over the month.
We went back and checked.
Precisely three tenths of 1%.
Of a listers.
Our seeing more than 10 movies in a month now more than.
11, 12 or 13 10.
Up three tenths of 1%.
Three tenths of.
1% is 2700 people on 900000 members.
This unlimited feature that there.
Talking about.
It is a very limited appeal.
And candidly.
They can have all of our members who are going to.
10, 11, 12 or 13 members a month.
No matter, how much food they buy.
That's a lot of moving volume, we're paying full rents on each and every one of those visits.
Take it all together.
We think a list is.
Already way out in front, it's going to stay way out in front.
As I said before we have a smash at winter in our hands and.
We're going to make sure that continues.
Probably just final one real quick question of our net yen on the on the test of the broadcasting line Sporting events, if that goes to a full rollout and beyond a test would it be exclusive to Angie.
For a while.
I think if we prove the concept.
Oh league or leagues.
May want to reap the benefit of spreading in wider but.
I think we started out in front with we'll see how long that lasts.
Thank you guys.
The next question is from Chad Beynon of Macquarie Group. Please go ahead.
Hi, good morning, Thanks for taking my question.
Great second quarter, guys wanted to ask about the international strength.
Which is a little bit harder for us to nail down the drivers I guess against your peers.
Even though one of 'em reported this morning, and we'll be able to review that shortly.
But do you have a sense of if you gained market share in the quarter and then also can you kind of update us on what percentage of your screens.
Have been renovated and then lastly on international any commentary just in terms of how you're thinking about the back half of the year.
Versus how we're thinking about the U.S. Thanks.
Well clearly the the international story.
Was and.
A big improvement over last year, and you might recall that.
That we had a number of things.
Headwinds last year.
Our circuit.
Generally performed in line.
With with the industry it is wise.
And so you know, it's holding up well and from a competitive perspective.
We are seeing as we've talked about before some some competition competition on price.
But we are beginning to respond on a very targeted and selective basis. So so we think that's the right approach, even though it may be providing some overall headwinds for average ticket prices throughout those industries are throughout those different countries on the international front, but we're very pleased with how our European circuit is performing and we're seeing.
I think very importantly, we are seeing the types of returns.
And types of lift both attendance and pricing from the deployment of our recliner strategy and renovation program on a number of the.
Theater assets in primarily in the UK and Ireland. So so we're pleased with that and that's driving.
Our results overall as well.
The.
You know theres a lot of the strength that's come from the family product.
And we had expected that and it's good to see that we are getting some some lift from from the more favorable product.
Back half again, I think there is a good sprinkling of family product that should bolster those markets as well as our our smaller rural or non urban markets in the U.S. So the the product mix it should bode well for the last half in Europe .
Chad I would add that remember the stats I gave in my prepared remarks.
Uh huh.
The overall box office was industry box office is up 16 six.
And the Odeon countries and up 11, one I think in the Nordic countries and attendance in Europe was up 16 six across all over the continent.
Including the UK and Ireland.
So what Craig said were in line, we might have picked up a little share, but what's impressive to me is that happen.
With anywhere from 15 to 20 theaters out of service for renovation.
Because remember we closed a significant number of theaters.
So that we could put in the refiners.
For us to be growing share with a significant number of theaters closed.
That's also very good news.
As those theaters.
Reemerge.
We've told you on prior calls were saying 50, and 75% ROI is it our theater renovation projects.
In Northern Europe .
That's a.
That's a that's a very good omen of things to come for us in Europe .
Great. Thank you.
And then separately at your Investor Day, you talked about.
Testing mobile ordering on food and beverage at a small amount of theaters that could potentially provide a nice uplift to CP piece can you elaborate on how this is tracking and then Adam has this been included in.
In the revenues for your profit improvement plan or is this initiative separate thanks.
You're right, we announced actually we announced.
Two changes way back then.
April seems so long ago Preventers end game.
Why.
On every order this conducted through mobile ordering so right there.
You've got revenue enhancement and we've seen the order size the slightly larger.
Amongst those who mobile order now that pickup rate on mobile ordering is still in its infancy first of all it has it rolled out across all of the system.
And also.
It's still relatively new.
But that is not in our profit improvement plan, because that's something we did.
Starting six months ago, and that's sort of embedded in the base.
The base case for 2000, Nineteens, if not a new idea the second idea that we spread in Q2 of 19.
Which we completed basically by.
Memorial Day weekend.
Was to introduce reserve seating.
Across all of the AMC branded theaters and all of the AMC dine in brand at theaters not at the AMC classics.
We're now at something like 95, 97% of those branded theaters, the only theaters that might not be included or.
Theaters, we might intend to dispose of.
Or renovate in the near term. So we would not have spent the money to put a reserve seating we think reserve seating.
He is a great benefit for our guests, it's something across on a circuit wide basis that is only being done by AMC of the major mass operators.
It takes all the anxiety out of.
Going to movies, because you know what your seat is.
So you don't have to get their 20 or 40 minutes early.
To lock in and snag a high quality seat.
It also tends to drive increased ticketing fees from for advanced ticketing online.
And I'm pleased to report that our advance ticket sales now are in the neighborhood of 50% to 55%.
That contrasts with 20% of our tickets were being ordered online and advance three years ago is a huge change.
And we've seen significant increases on online ticketing fees.
Great. Thank you very much.
The next question is from Jim Goss of Barrington Research. Please go ahead.
Thanks, I was wondering if you have.
In many cases of two or more household members joining the list and if not would you consider as part of your pricing strategy a couples are a family cash.
Try and pricing structure to encourage attendance or would that come out come out of the.
Average visits a number.
Yes, we have a significant number of couples.
A andrew our friends.
Who both join a list.
Because of a quirk.
In our technology platform.
You can only join a lift individually joint stubs household, but you can only join a lift as individually.
To have corrected that.
Would have delayed our launch last year by three to six months, we didnt want to wait.
But.
Why don't I blow the eight bit of news that I didn't put in the today's call. It was going to be the one of the points of next quarter's call.
But in October we will be announcing something called AMC stubs They list entourage.
In which couples or groups of friends.
We'll be able to.
Joining the program individually, but we'll be able to make their analyst reservations for a particular movie collectively.
So that you.
Can block C. Eight six and seven for you and your wife for example, if you're both members of a list in one single transaction rather than having to do it in two separate transactions.
And hope that she quickly grabs eight seven immediately after you grab date, six and that no one else.
Grab that seat.
Out from underneath the two of you.
We are not expecting to reduce price however.
Well thats.
That's a.
That's a service enhancement to our guests.
It's another thing that we think could allow us to charge a price premium rather than have to institute a price decrease.
And while we don't intend to charge the price premium we also don't intend to cut price for our new multi person plan.
Again, whether it's a couple or just for your friends.
One person in the party can snag seats.
Again, we're we're basically in all reserve circuit within the AMC brand and AMC Dine in brand.
For for a lift there so that's a very good.
Well enhancement of the program, it's something our members have been asking for from the day, we launched.
And as I said, we've we have addressed and fixed that quirk in our in our technologic platform that will that preventative from happening before and will enable it to happen going forward pretty soon.
Okay, and maybe maybe this is it too granular, but you might do this year liability to the studio in terms of your.
Your rental piece is.
Probably based on.
The ticket prices charge, so that it might vary by.
Time or age or data, especially as you get into more variable pricing does that did you try to factor that in as you're looking at the visits per month calculation.
We have never publicly before.
Said, what our private discussions are with any studio on film rents other than giving you a collective film exhibition cost number we continued that view with respect to our a list agreements with studios.
I don't think you should assume that the premise of your question is accurate.
But I cannot confirm or deny what we're doing.
Because weve long felt.
That our discussions with studios should stay private I might add.
That.
We believe today, what I believe the day I took the job.
We are so disinterested.
In haggling over film rent split.
Between AMC and our studio partners.
Our focus on everything that we've done over the past three and a half years, whether it's investing in the theaters or innovative marketing programs has been to drive industry demand.
So that the pie is bigger for both our studio partners.
And for AMC, that's a much better strategy.
And Thats the strategy that we've been embarked on for years now and will continue to be embarked on going forward.
Our goal is the health of AMC and the health of the industry and the health of a strong bonded loyal to a partnership.
Between AMC and Disney AMC in Warner AMC, and Universal Sony Paramount Lionsgate.
All the smaller distributors.
We want to be their best friends.
Because they are our best friends.
All right I'll, let it go at that thanks, very much and thanks for the questions Jim.
The next question is from Mike Hickey of the Benchmark company. Please go ahead.
Hey, Adam Craig John Congrats on a strong quarter here. Thanks for taking my questions curious on your 0.3 Adam.
I don't think it's bearable fracing, but you're looking to sort of your testing out sort of I guess premium.
Pricing and of course, you blend that with this down to diagnose it sort of more bearable.
For but.
Curious how fast assuming the 33 year test here a successful how fast you intend to roll that out obviously Q4, there's some pretty big.
Siding films that are coming out I'm sure people will not paying a premium for.
So curious on that and then I'm just sort of if you are successful on your your test here and you think on an annual basis on a full roll out domestically I'll call them blocking premium pricing on average how big of an impact that would be on your average ticket price.
I have a follow up.
Sure.
Well you're right. This is they like this isn't the first time, we are doing this.
We did it with weekend pricing, where we went up on Friday Saturday and Sunday actually went up initially on Friday Saturday then we went on Friday Saturday Sunday, then down on Tuesdays.
We know this works because we do in Europe , all the time, we've looked at a whole slew of ideas charging more for large screens charging more for the best seats in the house, maybe charging less for the front row because.
They are not the best seats in the house charging more for blockbusters.
You know the other ideas that have surfaced over time, maybe charging more at the beginning of a movies run charging less at the end of the movies run, but the thing about pricing.
The whole concept is.
Good.
The test will be successful if consumers are not offended.
By a nominal.
Surcharge.
Well you can pile on too many nominal surcharges.
Right on top of each other or they don't become so nominal anymore.
That's why there was about a two year.
A two year spread between introducing weekend price increases and are now looking at weather.
Small increases on blockbuster movies, one or two movies a month.
Maybe in the occasional month three movies in a month, but I would say more likely one or two movies in a month, whether that will be acceptable to us consumers. It is certainly acceptable to European consumers.
We have noticed.
If there are some very large movies coming in the fourth quarter of 2019, which just might be one of the reasons.
Why that test started on August 2nd.
And we are testing movies from each of the major studios.
We're the largest studios I should say so as to get a good read.
On does this concept work.
Because if it is accepted by us consumers, we could roll it out very quickly.
As of the order of magnitude.
It is a low a if we do believe it's a very low eight figure number.
Just for AMC, if it works.
But that assumes that the test will prove successful.
And of course, it will be a much different number if it's a 50 cent surcharge or if it's a $1 surcharge for example, and remember our studio partners get a big chunk of this money, we don't bank at all but I said earlier to Jim Goss his question.
We're interested in growing our bottom line. We're also interested in growing the bottom line of our studio partners, we could roll this out very quickly.
If it works.
Thanks, Thanks, Adam a last question from me on your 0.5.
Your profit improvement plans its going fine line revenue.
Enhancements 50 million.
Cost savings.
Total.
Curious.
How that balances.
Domestic.
Various international.
And then international obviously, you enhance than that work.
Planners or maybe not here.
Dancing with your property or profit improvement plan and.
Yes, you're optimizing.
The model internationally. This also we didn't work San IPO.
So.
Let's let's be clear.
There is international ideas, our international ideas in the profit improvement plan.
A lot of new relate to.
Above theater overhead things that the consumer will never see.
When we bought Odeon in Nordic they had seven different.
Well you might call fiefdoms of duplicative country overheads territory after territory after territory.
Which we think we can prudently rationalize, especially since we invested heavily to put in new account Oracle accounting systems across Europe .
And other technological advances that.
In the last two years.
That will continue this year to improve the technology platform that we have across Europe .
Nothing related to putting recliner seating.
In Europe is included in the profit improvement plan.
That's not a new idea that we came up with four this profit improvement plan. That's an idea that was that the central investment thesis.
On buying Odeon in the first place similarly, the investment thesis and Nordic of adding new build theaters, where we opened a theater in Oslo. It became the highest grossing theater movie theater in Norway from the day. It opened we opened a new theater in Helsinki that became one of the highest grossing theaters in Finland as soon as it opened.
That's not in the profit improvement plan either to qualify for the profit improvement proven idea this had to be a new idea.
That we have been working on all of 2019.
And especially since Investor day of 2019, and especially in the last two months.
The hit the list of new ideas to make 2020.
More successful than 2019.
Thank you.
The next question is from Eric Handler of MKM partners. Please go ahead.
Thank you good morning, and thanks for the question two questions for you.
It was very helpful that you gave what a S. C 842 pro forma impact would have been on last year's numbers.
Which essentially show that Youre.
Fully consolidated adjusted EBITDA margin increased year over year.
You Didnt give that on a segment basis I was wondering if you could.
Give what would happen what would have happened to adjusted EBITDA last year with a C 842, and what that impact would have meant for on a year over year margin be that's for this year.
And then secondly, with regards to Capex lowering that number by a $100 million very helpful for free cash flow next year.
Wondering I'm, assuming most of that impact is going to be seen in Europe .
Can you talk about where <unk> has to things just been pushed out our thing is any investments are being canceled and where you know is this just a matter of just pushing out the reclining seats or initiative.
Eric We do believe that the ASEAN 42 information segment data that you requested is in.
The CFO no no it's actually in the press releases in the press release under the <unk> selected second quarter financial results.
It's in the third bullet under that section.
So it already a thing so it's there.
Secondly on your second question.
Most of the reductions in Capex, our domestic production.
You know, we said back at the April Investor Day.
That.
Well when I forgot <unk> somebody asked the question I didn't give a number of what the percentage of recliner theaters of.
We'll we'll dredge that out for you.
But.
When you look at the domestic circuit.
From memory.
More than 50%.
Of our theaters have been fully recline.
And we put some recliner seating and more than 75% of our domestic theaters.
And that those numbers.
Our based on theater count.
But you have to remember that.
Our AMC classic theatres of which we have 240.
Only give us something like 10% to 15% of our visitation. So if you volume adjust the theater count with recliner seats.
Not as a percentage of theaters, but as a percentage of our attendance.
Were substantially above.
The 50% and 75% numbers.
I think you'd see something more like 60% to 65%.
By domestic volume.
And even more by the number of theaters, where some auditoriums have been done.
But not all.
But because so many of the domestic theaters have already been done.
There just aren't that many domestic theaters remaining to be done.
So.
Where weve reduced.
Maybe someone's ambitious plan to keep going with renovation.
Isn't the domestic circuit not the international circuit.
We're going to do is met we still we think the low hanging fruit has been seized domestically we started renovating theaters in the United States in 2011 in 2012.
We just started in 2017.
In Europe and that was the very tail end of 2017.
So the number of projects that we expect to do in Europe .
In 2020.
It's a similar number to what we did in 2019, we renovated in the neighborhood of 15 theatres in 2019 in Europe , we expect to renovate another 15 theatres in Europe in 2020, we've not slowed down the pace.
Renovated renovating theatres in Europe .
It's an enormous area of opportunity for us.
Were continuing the flood of new build theaters in the middle East.
Not necessarily with our own capital because our middle Eastern partner is putting up 90% of the money for our middle Eastern expansion.
Which is which is helpful for us.
So our international growth.
It's still going to be quite robust.
Even with the lower Capex number where you will see it is.
Being what we think is coming near to the end of the domestic reinvestment cycle from.
2011, 12 to 2019 2020.
We're kind of getting there we'd also note.
That nobody else seems the renovating theatres in Europe . So.
This continues to be a first mover advantage for us in Europe .
And other circuits are signaling also in the United States.
They're pulling back on.
Domestic us capex investments for the same reason that we are.
That they've already renovated a bunch of theaters, they've gotten there low hanging fruit.
And they are slowing down so.
That's where that's how we think we could get there.
We're still chasing the highest growth ROI and we still have a substantial amount.
Of growth capital that will be spent if you think that maintenance capex.
Is you pick your number.
Somewhere between 100 and $200 million, probably in the lower half of that range. So we're doing a 100 million and $150 million.
Even at a $300 million total capex number.
When you add in the landlord contributions.
We're still going to have in the neighborhood of.
Like 300 million ish of growth Capex.
To invest in 2020.
No thats not all coming from us.
Cause our landlords in Europe , and our landlords in United States are chipping in profusely, but we still have a lot of money.
We'll probably spend more money than anybody else.
And growth in pursuing growth initiatives and high return projects in 2020, but.
$300 million worth of net Capex not for 50.
And not five not 550 like it was two or three years ago.
Which means that.
Our de leveraging priority will be increasingly Matt.
And our.
Absolute generation of free cash flow will not only be increasingly matt, but be without any kind of doubt or questioning.
Great. So that's just as a point of clarification.
That $150 million reduction that's pretty much because its domestic you're pretty much looking at a permanent capex reduction there.
Well I said in my prepared remarks host permanence, you can get [laughter] answer to your question is sort of.
We said back in April we want to get to get to $250 million to $300 million in three to five years.
We're now, saying, we can get to $300 million in one year.
This is net capex.
That's a little ahead of schedule from the three to five years and I, specifically said in my earlier remarks.
That we have not yet set a capex number for 21 or 22, we don't need to make that decision today, we can make that decision based on what we learned over the course of the next.
16 months or so 18 months.
So that's a decision for another day.
Precisely.
But if I had to give you a is it more likely to be a permanent reduction or might more likely to be a one year aberration.
I'd say, it's more likely to be a one year, that's more likely to be a permanent reduction then it's likely to be a one your aberration.
But we specifically havent set a 21 target yet.
What we said back in April .
Was hold this management team accountable we are.
No we shouldn't be knee jerking.
Based on what last week's box office was.
We shouldn't be knee jerking.
Operating and capital strategies, we ought to set medium to long term targets and then you should hold us accountable to deliver on those targets.
Between the profit improvement plan of the capital expenditure.
Containment.
We think we're making great progress on both of those goals.
But I am holding out a little bit of wiggle room for 20 122 based on what we learn.
Over the next year and a half, but as I said.
We want to get that we want to de lever.
It's a high priority we're not kidding.
We're proving it.
With the agility and the discipline.
To deliver a capex plan.
For 2020 of approximately $300 million.
And that sounds like the general neighborhood, where we would expect to be going forward, although not necessarily precisely that could be more could be less.
Depending upon what we learned over the next year and a half.
Very helpful. Thank you very much.
Thank you Eric.
And I might add Eric.
Yes.
Given us a lot of I mean, we read your note when you read all your notes Dot just Eric handler.
A lot of your thinking has been very helpful.
So this management team.
As weve crafted these various strategies.
And.
Thought how best.
To drive performance going forward.
Thank you.
The next question is from Alan Golden Loop Capital. Please go ahead.
Thank you for taking the question I've got to.
First Adam are you surprised with the price elasticity of a list and what do you and the competition charge for your unlimited programs in Europe .
So we're not surprised by it actually.
And I guess I was in the ski resort business.
And when I got it for 10 years of my life, when I got to Vail, Colorado, We sold 5000 season pass the year when I left out Colorado 10 years later, we were selling 160000.
Season pass this year, you know I had a couple of years stent.
As the CEO of might have the NB a team in my hometown.
And we doubled season ticket sales in one year and drove the biggest attendance increase.
Of all 30 teams in the N. BA and the biggest revenue ticket revenue increase of all 30 teams of the MBA and my first season.
I think if you're smart about these things.
They can be massive hits.
And.
Long before there was a movie pass.
We had been working on a subscription product.
With that AMC and as we met in conference rooms.
We actually peg the launch price.
At 999, or 90 95, we thought that was the perfect level to launch it was one of the reasons we were so incensed.
By movie pass coming out at 995, because it was such a joke of a price.
There was a guaranteed to be an economic catastrophe.
And we said so loudly on the first day of their announcement.
So no we're not surprised.
But having launched at 995 and with the success of our program.
We can go up a little bit.
And did go up a little bit.
Up 10% in 10 states the district of Columbia, and up 20% in five states across the country back in January .
I do think Theres still we're providing so much value to our guests and especially without a surcharge for IMAX or Dolby a three day.
Some of the other features of our program.
I not only am I not surprised by the price elasticity.
I think there's room for us.
At some point in the future to go up further.
That's a list.
There was a second part of your question, which was.
Me in Europe in Europe , what do you mean year over year I'm one of the reasons that we settled a 1995 is a launch pricing for a list.
Was because in Europe .
We're charging about.
The equivalent of two movies a month.
And is quite successful program for us.
In Europe .
And the frequency in Europe .
It just like its been the United States is average between two and a half and three movies a month so like the basic deal the basic compact with the consumer.
Is in very round numbers.
They were going to one movie a month.
Charge them for two movies, a month and let them go to two and a half to three movies a month.
It's going to cost us a little bit.
On film rentals, because we're going to have to pay the studios for two and a half to three movie visits at whatever price we've negotiated.
Up, but they're not coming alone.
They are bringing people with them at full ticket prices with much greater frequency than they were coming before and they're buying food on every one of these visits food and drink.
On every one of these active in much greater frequency than they were coming before and when you add it all up.
We are ahead of the game.
And like you've seen it right you've seen.
Our attendance is growing far faster than.
The industry, our prices come down a little bit on a per transaction basis.
Our film rents as a percentage of revenue have gone up a little bit because we're paying film rent on these extra visits.
But our total revenues are like through the roof why.
Because our our overall revenue is up.
Because.
Our food and beverage revenue is up our other our other revenues are up and that offsets any change in ticket revenue and we've said in prior calls Youve got to look at all these factors you got them all up some are positive. Some are negative you take a portfolio approach to the population.
And we're way ahead and Thats.
That's what we modeled and Thats, what we hope going into the program.
And if anything.
I take you back to day one.
We said it would take us a year to get to 500000 members. It took us four and a half months.
We said we would invest in spend.
Tenant half million $10 million to $15 million.
In the second six months of 2018 on.
400 million members, we investment spent less than that on 600000 numbers in 2018.
We similarly said.
The 2019.
Would be a breakeven year for a list and in fact, we said on the first quarter call.
That we thought a list would be was profitable in Q1, we've said on this call its profitable in the first half.
And that it would be nicely generative.
I like handsomely generative.
By the end of this year.
Well ahead of schedule because it wasn't supposed Bruce anything this year and we Didnt originally expect to really generate profits may less until 2021.
And obviously were full year ahead of schedule, sorry wouldn't be profitable until 20.
Right breakeven in 19, and we appear to be no. It's profitable and 19, it will be much more profitable than 20, we appear to be we seem to be up full year ahead of schedule. So.
That's more in a less.
Well I understand why it's so many investors were spooked by it.
Cause movie pass and Sun EMEA.
Went bust.
But we have a very different program with radically different economics.
We're not foolishly charging 995.
And we do get the benefit.
Of all the take along revenue, we do get the benefit of all the food and beverage spending.
As they did not so this and we had years of experience.
Looking at what was done in Europe .
Ends with the data inside our company and I might add we remember we were the.
For the first time, the company's history back in 2016, we created what is now a five person pricing department.
We got a lot of quantum jocks inside this company, who analyze everything that we do.
Exhaustively.
Im very proud of the capabilities that we've built.
And the.
The the internal data we have about the a list clientele is so extensive.
We could do so much analysis.
And we can Bob and weave with our communications program programs to members.
Based on the profitability of gas.
Such to such that to those guests who are most profitable.
They are getting a lot more communications from us.
Saying keep doing it.
And on and on and on so I don't know what more I can say.
About how powerful a concept a list has been for this company.
Yes, Cinemark has a program it's not like our program.
I think you'll find the ticket counts in our program are significantly higher than theirs.
Regals coming to the party quite late.
And if you add up the market share of Regal cinema market AMC, it's like 60% I mean, it's 40% of the industry as everybody else.
And most of those players do not have any kind of a.
A list type program or for that matter of stubs program.
They're not doing a billion and a half outbound email text and push notifications the movie goers.
Tailored and customized.
Based on the purchase patterns of movie goers. Previously so we think we're way out in front and that's why I guess one.
800 basis points of attendance per screen advances over the rest of the industry for it domestically in the US 400 basis points of revenue growth per screen ahead of everybody else.
The marketing activity at AMC is on the technology efforts at AMC is crushing it right now.
By the way I'll stay until you drop but its.
Seven to nine central time that means is seven of 10.
Eastern So I think we're going to go one more or some of you were going to kill us because you would like to cover other things going on the market today.
For our last question operator.
Certainly our last question is from Meghan Durkin of Credit Suisse. Please go ahead.
Hi, Good morning, I had one for Adam and Craig.
Have you seen any change to the attendance trends on Tuesday, since you mean that price in may.
And then for Craig was there anything unusual in the free cash flow results in the quarter you came in light versus my estimate by the EBITDA on Capex, We said you flatten out there or something.
In there.
So I'll take Tuesdays Megan in France.
Thank you for your initial report on AMC.
Yes, something changed on Tuesday.
Shockingly.
It went from being the least visited day of the week at AMC theatres, hence the reason for it.
It is now the second most heavily traffic day of the week at AMC second only to Saturday.
More people are showing up Tuesdays at AMC.
Then Fridays.
Now the revenues aren't.
The second highest revenues of the week Friday is still the second Ais revenue per week.
Because the ticket prices are down.
But yes consumers have figured this out.
And they have they are coming to the party that we through every Tuesday, I might add very quietly.
We really do believe and smart pricing when we launched discount Tuesdays.
We actually launch the program is $5 Tuesdays.
And very quietly earlier this year, we changed the name of the program to discount Tuesdays.
Because we noticed that $6 is a 20% 20% price increase over five and 650 is a 30% price increase and $7 is a 40% price increase over five so we will continue to look theater by theater in market by market.
What the right level of pricing is.
To charge on Tuesdays, but in any case, it will still be quite a bargain compared to what we charge and the rest of the week.
Offering the consumer great value and driving a significant increase in demand.
Okay great.
Yes, sorry about that.
Is there any impact on the attendance since you lifted the price to the 60 650 in some theaters.
Hi. This is there any recent trends pretty recent it's in the.
Last 30 to 90 days.
So it's a little too early to know how consumers will respond over time.
Well, we've seen nothing that scares us yet.
Okay.
You're paying six bucks in Manhattan to go to a movie is quite a deal.
Yeah, I think so.
Craig free cash flow yeah on the free cash flow the only a couple of points I would make.
Megan was would be flat year.
Cash flow from ops number was.
Positively impacted by about 11 million dollar.
Rent.
Inducement that was.
One time was we Didnt didnt recur, we always we have rent adjustments, but that one was abnormally large I guess would be the way to describe it so $11 million positive impact last year, and then last year.
You would want to think about the ASEAN 42 impact about Four Q1 4 million.
There was an impact on ran Theres also an off somewhat offsetting impact on interest cost the net of those two flow through cash flow from operations and.
I would have a pro forma just last year by by that $14 million.
Thank you want to know as we end the call.
Obviously, we had.
The second quarter that were quite proud of but.
We are we think we have bold plans underway.
To make AMC more appealing to our consumers.
To deliver increased margins to deliver free cash flow growth.
And you know again.
If you.
Yes, if we left ourselves up out of the legacy 842 morass because this will.
Come to a clarification sometime soon we would expect.
And.
You don't think about.
Where the movies in June great or poor, where the movies in July grade or poor.
If you lift yourself out of the day to day week to week weekend. The weekend box office and you look at AMC over a medium to long term timeframe.
We think the value creation that we will drive for our shareholders is dramatic.
And we think the future for AMC is quite bright.
We thank you for joining us today and for your attention to our company all year along with that.
We are signing off.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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