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AMC Entertainment (AMC) Q4 2022 Earnings Call Transcript

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AMC Entertainment (AMC -6.18%)
Q4 2022 Earnings Call
Feb 28, 2023, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the AMC Entertainment fourth-quarter and year-end 2022 earnings webcast. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce to your host, John Merriwether, vice president, capital markets and investor relations. Thank you. John, you may begin.

John MerriwetherVice President, Investor Relations

Thank you, Vikram. Good afternoon. I’d like to welcome everyone to AMC’s fourth-quarter and year-end 2022 earnings webcast. With me this afternoon is Adam Aron, our chairman and CEO; and Sean Goodman, our chief financial officer.

Before I turn the webcast over to Adam, let me remind everyone that some of the comments made by management during this webcast may contain forward-looking statements that are based on management’s current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K and 10-Q. Several of the factors that will determine the company’s future results are beyond the ability of the company to control or predict.

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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. On the webcast, we may reference non-GAAP financial measures such as adjusted EBITDA, constant currency, free cash flow, operating cash burn, and operating cash generated among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the Investor Relations section of our website earlier today.

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 at amctheatres.com later today. With that, I’ll turn the call over to Adam.

Adam AronChairman and Chief Executive Officer

Thank you, John. Good afternoon, one and all, and thank you for joining us today. Let me add a very special welcome to the thousands of our individual shareholders who have been making it a habit to tune into these quarterly earnings webcast for AMC Entertainment. 2022 marked another year of significant strategic, operational, and financial gains for AMC Entertainment.

With our two announcements today on Q4 2022 earnings and of the launch of AMC Perfectly Popcorn at more than 2,600 U.S. Walmart stores. Once again, AMC is demonstrating unmistakable progress along our multiyear pandemic report — recovery glide path. In my opinion, there are five reasons why AMC shareholders should be especially excited and smiling today: first, the increasing size of our industry as it recovers; second, AMC’s performance in Q4; third, the fact that we are outperforming our competitors; fourth, our agility in raising cash and reducing debt; and fifth, this morning’s Walmart-AMC Perfectly Popcorn announcement.

First and overarching is the size of our industry itself, which is increasing. For five consecutive years prior to the pandemic from 2015 to 2019, the domestic box office, which is all theaters, all brands across the United States and Canada, exceeded $11 billion. It was $11.4 billion in 2019. But then COVID came and brought our industry to its knees, and the 2020 domestic box office was only $2.2 billion.

Down, as we all know, a breathtaking 82% year over year from the pre-pandemic level in 2019. Since then, our industry has seen a steady growth trajectory. The 2021 domestic box office was $4.5 billion, more than double that of 2020, and 2022’s full-year domestic box office of $7.4 billion was about 65% higher than 2021. The numbers again $11.4 billion in 2019, falling to $2.2 billion, rising to $4.5 billion, rising to $7.4 billion.

Based on the box office results so far, in the first quarter of 2023, which is already up 44% year over year, combined with a much larger number of broader and deeper movie titles to be released in the coming quarters. Based on what we know today, the 2023 domestic box office will almost certainly be significantly higher in 2023 than that of 2022. You all know that we finished 2022 and started 2023 on a very strong note with what is already the third highest-grossing film of all time, James Cameron’s epic sequel, Avatar: The Way of Water. It really is a testament to the genius of James Cameron that he is responsible for three of the four highest-grossing movies in the history of cinema.

I digress for a moment to say, thank you, Jim Cameron, and thank you to your producing partner, John Landau. It won’t surprise you both to hear that you both are greatly appreciated by AMC and by the millions of AMC shareholders and the millions of AMC moviegoers. Please, please, Jim and John, keep making more movies. Speaking of more movies, that’s one of the key stories of the coming year 2023.

The incredible Tom Cruise’s Top Gun: Maverick, which grows more than $1.5 billion of movie theaters in 2022, and Avatar: Way of the Water, which has already grossed almost $2.3 billion of movie theaters in only 11 weeks, among many other successful movie releases. They all prove that moviegoers no longer are afraid to go to a cinema to watch a movie as they once were afraid in the darkest days of 2020 at the height of the pandemic. Our problem now in generating attendance in theaters is quite different. Instead, it’s simply that Hollywood has been releasing fewer movies of late.

Depending upon how you count, the number of major movies released in 2022 was somewhere between a third and a half fewer than the total number of such major films released in 2019 before the pandemic. Fortunately, now, finally, that is all changing. We currently estimate that 30 or more movies will gross more than $100 million domestically in 2023. That compared with only 18 doing so in the just completed 2022.

That is an increase in 2023 of about 75% of the number of movie titles grossing $100 million or more. Let me repeat that. We are expecting in 2023, about a 75% increase in the number of major movie titles grossing $100 million or more compared to last year. The second reason for our enthusiasm is that AMC posted much improved results for the fourth quarter of 2022.

Naturally, we’re pleased that AMC Entertainment easily bested consensus estimates for Q4 2022 revenue and for Q4 2022 adjusted EBITDA, as well as posting a beat on adjusted net income and EPS for 2022 in Q4 after excluding for noncash impairment write-offs. We are similarly encouraged that Q4 2022 revenue per patron of $19.98 was well above pre-pandemic levels. Thanks to rising ticket prices and the consumers continue predilection to indulge more at our concession stands in our high-margin food and beverage business. AMC’s full-year 2022 results represented our strongest year since pre-pandemic 2019 with 2022 results improving over 2021, which in turn were better than those of 2020.

Indeed, in full year 2022, AMC saw our annual revenue increase by more than 54% year over year, and our adjusted EBITDA improved in a single year by more than $338 million versus 2021. That’s an enormous increase. The third reason we are smiling today is that it’s the world’s largest theater chain, we are outrunning our competitors. Number two, Regal Cineworld, is in bankruptcy court because they essentially ran out of cash in September.

By contrast, AMC has been masterful in raising equity as needed, and we ended 2022 with over $840 million of cash in the bank or undrawn revolving credit line. As for No. 3 operator, Cinemark, we encourage you to look at the Q4 metrics where we overlap in the United States. Average ticket price: AMC, $12.22; Cinemark, only $10 even, $12.22, $10.

Food and beverage per patron: AMC, $7.76; Cinemark $7.43. Total revenues per patron: AMC, $21.85; Cinemark $19.35. Film exhibition costs, and this is one where you want the number to be low, not high, AMC, our film exhibition costs were 51% of our admissions revenues; at Cinemark, it was 58%. Our fourth marker of progress at AMC has been our ability to strengthen our liquidity profile and balance sheet.

Over the last 12 months, AMC has raised approximately $314 million in gross cash proceeds. And we’ve also reduced the aggregate principal balance of our debt by approximately $390 million since the beginning of 2022. And as for that fifth reason for smiles today, the exciting popcorn announcement this morning, we are launching with Walmart. What an enormous vote of confidence that’s coming to AMC from the largest retailer in the United States in the quality and consumer appeal of our new microwave and ready-to-eat popcorn.

I’ll come back to that and other essential topics after I return. But right now, let’s pass the call over to Sean Goodman, our CFO, to review our financial and operating results in more detail. Sean?

Sean GoodmanExecutive Vice President, Chief Financial Officer

Thanks, Adam, and thanks to everyone for joining us this afternoon. 2022 was a year of growth and recovery for AMC. During the year, we welcomed 201 million guests to our theaters around the world. That’s a 56% increase compared to 2021 and at 72 million more guests than in 2021.

This attendance improvement, coupled with strong admissions and food and beverage revenue per guest, translated into a $1.384 billion increase in consolidated revenue, representing a 54.7% increase compared to 2021. And likewise, 2022 adjusted EBITDA improved by more than $338 million to a positive $46.6 million. This compares to a loss of $291.7 million in 2021. Clearly, our recovery is continuing in earnest.

Now, looking specifically at the fourth quarter of 2022 compared to the same period last year. The North American box office declined by 14.5% to $1.8 billion. This was due to the relative strength of Spider-Man: No Way Home in 2021 and the limited number of new titles available for release in October and November of 2022. Our fourth-quarter consolidated revenue declined by $181 million or 15.4% to $991 million.

However, on a constant-currency basis, consolidated revenue declined by 12.4% as we outperformed the overall industry because of strong operating performance metrics. For the fourth quarter, on a constant-currency basis, total consolidated revenue per patron was $20.69. This is approximately 5.4% higher than the fourth quarter of 2021. This was driven by admissions revenue per patron growth of 5.1% and food and beverage revenue per patron growth of 7.8%.

It is worth noting that consolidated constant currency revenue per patron in Q4 of 2022 was 30.8% higher than pre-pandemic in 2019 indicative of the tremendous growth in revenue per patron during our recovery period. Domestic revenue in Q4 declined by 10.7% with admissions revenue per patron increasing by 6.2% to $12.22, and food and beverage revenue per patron increasing by 7.7% to $7.76. In addition, other revenue per patron increased by 6.3%. In the international business, on a constant-currency basis, revenue in Q4 declined by 16.6% with admissions revenue per patron increasing by 2.2% to $10.70 and food and beverage revenue per patron increasing by 7.4% to $4.98.

Other revenue per patron decreased by 8.8% as theater rental revenue generated during 2021 was replaced by regular admissions and food and beverage revenue. We continue to generate strong growth in revenue per patron as our guests enjoy our innovative food and beverage offerings, including movie theater-themed cocktails and collectible items. Our initiatives to optimize admissions revenue, including blockbuster pricing, are yielding positive results and the increased adoption of our industry-leading AMC app and our marketing initiatives, are all helping to drive overall revenue per patron growth. And this growth is further supported by increased premium format or PLF penetration.

With PLF attendance representing 25.5% of domestic attendance in Q4 2022 compared to 19.8% in Q4 of 2021. And in our international markets, premium formats attendance represented 18% of attendance compared to 10.7% in the fourth quarter of 2021. So, clearly, guests are increasingly appreciating the premium experience offered by our IMAX, Dolby, and AMC Prime offerings. Looking forward, we will maintain our focus on the guest experience that supports the strength of our key performance metrics, including, one, ongoing enhancement of our loyalty programs, and the functionality of the AMC app; two, innovative food and beverage offerings; three, investing in providing the best possible sight and sound experiences through advanced laser projection technology and premium offerings such as IMAX, Dolby and AMC Prime; and four, growing revenue through diversification initiatives, such as retail popcorn, the AMC credit card, renting out our theaters during off-peak times, marketing and promotional initiatives.

All of the above to be achieved while paying very close attention to our overall operating efficiency. Let’s talk about the balance sheet now. We ended the quarter with liquidity of $843 million, comprised of $632 million of cash and cash equivalents and $211 million of undrawn credit facilities. During the fourth quarter, net cash used in operating activities was $33.3 million, and we achieved positive non-GAAP operating cash generated of $57.5 million.

And we define operating cash generated as cash from operating activities plus total capital expenditures before debt servicing costs and before deferred rent payback. During 2022, we were active in the capital markets as we took actions to strengthen our balance sheet. In total, in 2022, we raised $229 million of gross equity capital. We refinanced $1.4 billion of debt, we extended certain debt maturities through to 2026 and beyond, and we repurchased $123.5 million of debt at an average discount of 43.7%.

The net result is a $220 million reduction in the principal amount of interest-bearing debt outstanding during 2022. And during ’22, we also strengthened our balance sheet by repaying approximately $158 million of deferred rent, and this reduced our deferred rent balance to $157.2 million at December 31, 2022. You may recall that back in March of 2021, this deferred rent balance was more than $470 million. So, over the last 21 months, we have lowered our deferred rent liability by approximately $313 million.

All told, if we include the decrease in deferred rent, we reduced our liabilities by a total of $378 million in 2022. And in addition to that, so far in the first quarter of 2023, we have raised another $84.7 million of gross equity proceeds and we have reduced the principal balance of our debt outstanding by an additional $170.2 million through the exchange of debt into equity and capitalizing on opportunities to repurchase debt at a discount. These actions in the first quarter of 2023 so far, take our total debt reduction to $548 million when we include the reduction in deferred rent liabilities, and our total equity capital so far raised to $314 million. Note that during 2023 we plan to further reduce the rent balance by another $75 million to $100 million and this will reduce the liability to approximately $60 million to $80 million by the end of 2023.

Regarding capital allocation, our priorities remain unchanged: one, we need to maintain sufficient liquidity to manage through the recovery phase of our business; two, we just strengthened our balance sheet by extending debt maturities, reducing debt, and reducing associated interest costs; three, invest in our business to continue to enhance the guest experience; and four, opportunistically pursue value-enhancing initiatives, including those that lead to diversification of our business and revenue streams. Having the flexibility to raise equity capital allows us to opportunistically take critical actions to strengthen our balance sheet and at the same time, successfully navigate through the ongoing recovery of our industry. For these reasons, I would like to take this opportunity to urge shareholders to vote in favor of the proposals that will be voted on at the upcoming shareholder meeting on March 14. These proposals are designed to protect the long-term value of AMC equity and provide us with the flexibility necessary to ensure a successful recovery from the ongoing impact of the COVID pandemic.

Our capital expenditure, net of landlord contributions was $69 million in the fourth quarter of 2022, and we finished the year with a total net capex spend of $182.1 million. And similar to 2022, looking toward 2023, we expect our capital expenditure to be in the range of $150 million to $200 million. Actively managing our theater portfolio continues to be a priority as we add new high-performing locations and eliminate low-performance, all with the goal of improving our guest satisfaction and enhancing our overall profitability. During the fourth quarter, we added five new theaters, and we closed nine.

This brings the total number of locations closed since the pandemic began to 115 and the total new locations opened to 54 for a net reduction of 61 locations. The combined 54 new locations continue to substantially outperform the 115 closed locations prior to their closings, and they also are outperforming our underwriting expectations. Looking forward, we’re optimistic about the future and the opportunities to strengthen and diversify our business while continuing to enhance our financial position. So, with that, I’ll hand the call back over to Adam to review some exciting recent announcements and provide an update on our strategic initiatives, including our upcoming stockholder meeting.

Adam?

Adam AronChairman and Chief Executive Officer

Thank you, Sean. As I said at the top of the call, at AMC, we’re all smiles today, but by no means are we out of the woods yet. We will need to remain smart and action-oriented to successfully chart our way through what are still COVID-impacted waters. But clearly, we have been and are now making great progress.

And while we have much more work ahead of us still, my ongoing conversations with our studio partners, including some as recently as this weekend, buoys my optimism that more movies are indeed headed to theaters, and that the value of theatrical exhibition is clearly recognized and internalized by the heads of every single major studio. As the leader of AMC, I am proud that we have resiliently weathered many a storm over the past 36 months. A storm first of the virus itself, then the threat to exclusive theatrical windows. More recently, the conviction held by some that streaming services would win out over theaters and all through it was the concern that there would not be enough cash in the coffers for AMC to outlast all that we had to stir down.

What’s more? There was the added complexity for us of doing something well that few, if any, company ever thought about before, how to adjust to a whole new cadre of millions of individual shareholders taking ownership of our company. Fortunately, for us, the people who predicted that we could not weather the storms were all wrong. And more fortunately, for us, those new retail investors turned out to be the savers of our company. Their passion for AMC saved our company as they provide us with the cash resources we needed to survive.

They also flooded us with some truly great ideas, including one of my personal favorites, that we should sell popcorn into the home market in what is, after all, a multibillion-dollar category. This morning’s exciting news announcement that the retail launch of AMC’s microwave and ready-to-eat Perfectly Popcorn is at hand and exclusively with the nation’s largest retailer, Walmart. It keeps a promise to do so that I made six months ago to our shareholders and is yet another example of AMC’s powerful commitment to innovation. Beginning on March 11, just ahead of the Oscars telecast on March 12, AMC’s ready-to-eat popcorn will be available exclusively at hundreds of Walmart locations on much sought-after featured and cap displays.

In the weeks that follow, AMC Perfectly Popcorn will hit the shelves again exclusively at more than 2,600 Walmart stores in the United States with three varieties of ready-to-eat popcorn in the following flavors: classic butter; extra butter; and for those seeking a lower sodium solution, Lightly Salten. The ready-to-eat varieties are expected to be priced at $3.98 per bag, plus tax, and they all offer the authentic taste of real AMC movie theater popcorn to be enjoyed anywhere. Then our microwave AMC perfectly platforms will become available at Walmart. Again, in the same three flavors: classic butter, extra butter, lightly salted.

And they are expected to retail for $4.98 plus tax for a six-count box. As an added and unique benefit, the extra butter microwave boxes will include six packets of additional buttery topping that eaters at home can use and slather all over their popcorn truly replicating that ultimate AMC movie theater popcorn experience. This first-of-a-kind approach by a theatrical exhibitor to distribute ready-to-eat and microwave popcorn at retail outlets all across the country further differentiates AMC as the undisputed leader in this industry and greatly extends the visibility of the AMC brand. Another idea that came to us from our investors was to sell AMC and movie-themed merchandise.

We are doing so now across the United States and online. As every major movie releases, as every big tentpole releases, we have something themed for that film. And it’s but one of many such examples of success here are if you can believe it, and manned popcorn outlets have been quite popular, selling almost $2 million worth in less than two weeks. This has proven to be such a successful concept that we’re about to launch the same activity across our theaters in Europe.

Thank you, retail shareholders, for the idea. Next on the innovation docket is the launch of our new co-branded AMC Entertainment Visa Card coming soon to a wallet or a purse near you. It’s been designed to drive increased AMC brand loyalty along with incremental attendance to our AMC theaters and should generate attractive financial returns with very little risk to boot. And finally, we recently announced a potentially important development, we announced that we are testing sightline seating at AMC in some of our theaters in New York, Chicago, and Kansas City.

New York and Chicago because they’re big cities in the United States. Kansas City because we’re head to headquartered here, and we ourselves want to walk into our theaters and talk to our guests and gauge their reactions directly and firsthand. The test is being done as a — for a potential nationwide rollout later in 2023. With sightline seating, as you know, if you saw the release, we are charging a slight premium for the most popular seats in an auditorium but discounting the prices of less popular seats closer to the screen upfront.

This is in line with our other sellers price their seats for live theater, for concerts, for sporting events. It’s also how we’ve been pricing movie theater tickets in Europe for many years. We do understand, however, that this is a substantial change to the status quo for U.S. moviegoers.

So, we will be watching very closely how moviegoers react to the changes that are being tested right now. We will report back to you in future calls what we’re seeing in the tests, and we look forward to this thing working well for the benefit both of our moviegoing public and for AMC. AMC’s ability to continue to raise capital during our ongoing recovery makes all these potentially transformative innovations and new actions possible. And it is crucial to our future success.

To that end, I’d like to utilize the remainder of my formal remarks today to discuss the upcoming March 14 Special Stockholders’ Meeting and the importance of the proposals on which our shareholders are already voting. Last August, we issued 516,800,000 APE preferred equity units as the dividend to holders of our AMC common shares on a one-for-one basis. The primary goals of issuing the dividend was to provide AMC with a new currency that could be used to strengthen our balance sheet by generating cash, bolstering our liquidity to reduce our debt, and to allow us to grow. And that is precisely what the APE units have done.

Since September of 2022, the creation of APE units resulted in AMC successfully raising $314 million of gross cash proceeds and allowed us to reduce the principal balance of our debt by more than $221 million, most of which was profitably repurchased at a substantial discount. Indeed, AMC is unequivocally a stronger company today as a result of the creation of the APE dividend, and it’s allowing us to raise cash and reduce debt. I might add that that came amid a lot of press speculation that we’d be unsuccessful in doing so. To the naysayers and doom tellers, you know what I say, choke on that.

However, despite having the same economic and voting rights as our AMC common shares, APE preferred equity units have consistently traded at a mysterious and substantial discount to AMC common shares. This discount creates inefficiencies that increases our cost of capital and causes unnecessary and preventable dilution. So, after careful thought, the AMC Board of Directors is presenting important proposals for shareholders to vote on at the upcoming special meeting on March 14, 2022. These proposals are designed to protect the long-term value of a shareholders’ investment in AMC while still providing AMC with the flexibility necessary to continue along our recovery trajectory in a challenging environment.

As you already know, the two key proposals are to, one, increase the number of authorized AMC common shares from 524 million to 550 million and combine the AMC common shares and APE preferred units; second, to effect a reverse stock split of one share for every 10, which, together with the increase in authorized common shares permits that automatic conversion of APE units into AMC common stock. Our board and I strongly believe that’s in the best interest now of AMC shareholders to convert APE units into AMC common shares, thereby simplifying our capital structure and eliminating the gap between the prices of APE units and of AMC shares. As AMC’s single largest individual shareholder with millions of AMC shares and APE units. I have a vested interest in the outcome of this election because my net worth rises as AMC strengthens and my network falls as AMC gets weaker.

I currently own outright some 3.7 million AMC shares or APE units and have a further economic interest and an additional 4.5 million APE units or AMC shares as a result of granted but unvested stock. In total, I have some 8.2 million AMC shares or AMC units. You know what that means? It means that my interests are directly aligned with those of our shareholders. I am not some hedge fund plan or Trojan Horse as a few of the more bizarre conspiracy theories go.

I’m on the side of the retail investor because I am myself a retail investor. And I’d like to share with you the seven reasons why I have voted yes, voting for the proposals that are being recommended by the board. Before I do so, however, I should point out that litigation has been brought in the Delaware Court of Chancery attempting to block our shareholder proposals, and you are right to vote on them. We believe such litigation is without merit, that our actions have been totally lawful and consistent with our charter, and we will vigorously defend our position in this matter.

The court has ordered that the March 14 vote shall take place on schedule, but then any implementation action resulting from the vote be held in advance until the court rules on the substance of the claims being made. So, the vote is on, and it is on now. I urge our shareholders to vote now so that your voice can be heard. And because I think it’s the right thing for me to do and for you to do.

I urge you to vote for the proposals with me. Here’s why. First, a more resilient AMC. Having the flexibility to efficiently and opportunistically tap both the equity and debt capital markets results in a more resilient company.

Were it not for our ability to have raised both equity and debt over the past three years, AMC would not have survived the pandemic that caused a material decline in our business activity. Second, reduced capital raising inefficiencies associated with APE units trading at a discount to AMC shares. Converting APE units to AMC shares will result in a single price for all AMC equity. This single price eliminates the inefficiency inherent in the discount between APE units and AMC common stock and will allow AMC to more efficiently raise equity capital at the most attractive terms in the future.

Third, enhance the ability to raise cash and increase liquidity. While I believe AMC is currently in a strong liquidity position with more than $840 million of available liquidity at the end of December 22, the ability to efficiently raise additional liquidity when needed has proven to be critical for this company in the past. And depending upon the path and timing of recovery may be critical to our survival, again, in the future. Fourth, strengthen AMC’s balance sheet.

AMC’s balance sheet is expected to strengthen over time as the box office grows. At the same time, as we have demonstrated in recent months, there continue to be attractive opportunities for us to use available equity or equity proceeds to buy back debt or exchange debt for equity at a discount to face value, which greatly benefits shareholders. Fifth, simplify ownership in AMC. Consolidating ownership of AMC into one single class for all shareholders eliminates the added complexity that some brokerages have imposed on their clients in the holding or trading of our preferred equity securities.

In addition, the single class of equity eliminates the potential for hedge funds or other investors to engage in arbitrage trading strategies between the APE and AMC securities. Sixth, position AMC to transform into a stronger, more diversified company. A single equity class will better allow us to pursue attractive shareholder value creation opportunities to diversify and to transform our business. And last, seventh, create long-term value for AMC.

A vote for the resolutions is a vote in favor of the long-term value of AMC. Since we announced our intention to hold a shareholder vote to convert APE units into AMC shares, the total equity value of our company has increased. The other matter of consequence being discussed at the March 14 shareholder meeting is the one for tender of our stock split. So, let me quickly address that topic.

If you have 10 $1 bills in your pocket and you exchange them for 1 $10 bill, you still have $10 either way. If you would have 10 $10 bills in your pocket, and you exchange them for 1 $100 bill, you’d still have $100 either way. This reverse split in and of itself should be neutral. However, for a variety of reasons, including the technical listing rules of stock exchanges, we think it’s unwise for our shares to be trading at levels in the single digits.

The reverse split also creates room to allow for the full conversion of APEs into common stock, which we also think is a good idea for each of you, as I previously explained, and creates the capacity for common stock to be issued — adds equity in the future. In my view, I believe that there is no compelling argument why our shareholders should generally be averse to reverse stock split. As I stated earlier, having the flexibility to continue to raise capital as we navigate through our recovery is crucial to AMC’s future success and has thus far kept us from the state of several of our competitors who have been forced to seek bankruptcy protection. Where we to be somehow the pride of this cash-raising capability, our future may not nearly be so bright as it appears currently.

Indeed, our future could turn quite bleak in just a blink of an eye. I cannot emphasize enough that while things are looking up now, our success could literally vaporize in an instant if we misstep. The reason we have succeeded to date is that in our opinion, we have threaded the needle perfectly heretofore during this pandemic. But make no mistake, the need to continue to thread the needle perfectly going forward is unchanged at AMC Entertainment.

Fortunately, we’re pretty good at this. And we’ve been at it a while and we know what we’re doing. I know I have about 3 million or 4 million friends out there who like to give me advice. But I’d like to remind you, we’ve done a pretty good job of stewarding this company during tough times.

Avoiding a dire fate is a commitment that I personally made to our shareholders in the earliest days of this global pandemic when our revenues went to zero overnight and stayed there for months. I remain steadfast in that commitment to you today. Every action that AMC has taken is in direct support of that commitment. Despite what the naysayers or the short sellers of those that wish us harm would have you believe, our mission now is clear.

And it’s the same exact cause that so many of our shareholders joined and embraced way back in the dark days of 2020 and early 2021. You all remember the hashtag, Save AMC. That’s the report for Q4 2022. Sean, let’s now move to questions, both from our industry analysts and from our shareholders.

Sean GoodmanExecutive Vice President, Chief Financial Officer

Great. Thanks, Adam. Let’s start with some questions from our shareholders. There are a number of questions coming through about the upcoming shareholder vote that we just spoke about.

Here is a good example. What are the implications if the vote passes? And what are the implications if the vote does not pass?

Adam AronChairman and Chief Executive Officer

So, if the vote passes, it’s my expectation that this ridiculous gap between the price of an AP and the price of an AMC share will go away. And when I say it’s a ridiculous gap, folks had the same thing. They have the same economic rights. They have the same voting rights.

Why shouldn’t be trading at a third the price of a common share or a seventh of the price of a common share as it was just two months ago? If the vote passes, I think what you’ll find is that this discounting of the APEs goes away. What that means is that we’ll be able to raise capital on in my opinion, more attractive terms. Similarly, what will happen to those passes is there will be a one-to-10 reverse stock split. So, you’ll stop seeing the share price of AMC floating around $3 or $4, or $5 a share.

The simple math is it should multiply by 10. Where it goes in there, up or down, that’s a function of market dynamics. But it is simple math, you’ll be trading one share — you’ll be trading 10 shares for one, which mathematically should be priced ten times higher. If the votes that we’re voting on at this shareowner meeting do not pass.

It’s true that the reverse split won’t happen. But what is true is that the status quo doesn’t change, which means that there’s still be APEs, and there are still the AMC shares. The APEs will continue to trade at a discount, I would guess. No one has a perfect crystal ball, but that’s been the experience since August.

And since our ability to raise capital is tied only to the price of the APE. If the APE continues to exist, it would seem that we would be — we wouldn’t be bought from raising capital, but we’ll be raising capital on much less attractive terms. It would cause more dilution of the stock that is entirely 100% preventable if a majority of our shareholders vote yes.

Sean GoodmanExecutive Vice President, Chief Financial Officer

So, here’s another question related to this. It’s related to the reverse stock split. And basically, it says, why do we need to do a reverse stock split? Can’t we just convert APE units into AMC without doing this reverse stock split?

Adam AronChairman and Chief Executive Officer

We could. But as I said in my earlier remarks, the share price would hover in the single digits. And there are certain technical listing rules on stock exchanges. We don’t think it’s a good idea for our stock to be trading in single digits.

And since we’re going to have a shareholder vote anyway, it seems logical to us to resolve both questions at the same time. It’s expensive to call these special meetings of shareholders, cost millions of dollars to do so. We’d rather get them both done now than have to deal with a reverse stock split at some point in the future.

Sean GoodmanExecutive Vice President, Chief Financial Officer

We have a number of shareholders asking about their proxy materials. One example he has, I have not yet received my proxy materials from a broker. What do I need to do to be able to vote to get my proxy materials and be able to vote?

Adam AronChairman and Chief Executive Officer

As Bill Clinton shamelessly said the 1990s for those of you who are old enough to remember the 1990s, I feel your pain. My AMC shares and units are at four brokerage firms, and I’ve received the voting materials from three of the four firms but not the fourth. So, if you have not heard from your broker, you should do what I’m about to do, call them, explain to them that there is a March 14 shareholder vote, that you own shares or units, and that you’d like to cast your vote, and they should get you a proxy. If your broker is not acting in response to your question quickly enough, email or call our proxy solicitor, DF King.

You can reach them at an email address [email protected], [email protected] Their phone number is 800-859-8511. All the information I just gave is for our U.S. shareholders, probably our Canadian shareholders, and international shareholders in many countries, but we are all aware of painfully that the brokerage firms in some countries, especially in Europe do not facilitate shareholder voting.

And there’s — if that — if you’re with one of those firms, there’s not much you can do other than put your shares in a different broker who would allow you to vote at future shareholder meetings.

Sean GoodmanExecutive Vice President, Chief Financial Officer

And there’s a question here about the lawsuit that you mentioned in your prepared remarks. It has been reported that AMC is defending against two lawsuits relating to the issuance of APE units. Is this true? And can you elaborate?

Adam AronChairman and Chief Executive Officer

Yes, litigation has been filed. We think it’s misguided. We believe that all the actions we’ve taken are lawful. We think we have the merits in this case.

It’s consistent with our charter. We will defend our position vigorously. And we are encouraged that the Delaware Court of Chancery has allowed this March 14 vote to proceed on schedule.

Sean GoodmanExecutive Vice President, Chief Financial Officer

There are some questions here about our loyalty programs, and I’ll just read a few of them to you. Does AMC have any plans to revise loyalty programs and A-List memberships, for example, what about family memberships, partnerships with streaming companies, maybe a lower price for memberships with restrictions to limit frequency of attendance, etc.?

Adam AronChairman and Chief Executive Officer

So, those are all good questions and good ideas. We have been and are studying them all. The two of the most important marketing programs we have, our AMC Stubs and especially AMC Stubs A-List. About half of our total clientele in the United States participates in Stubs and about 15% of our total activity in the United States comes from A-List members.

These are very important programs. We’re constantly reviewing them for possible changes and improvements. There’s nothing immediately on the horizon that would change either program other than AMC Visa Entertainment card, it’s going to be added an AMC Entertainment Visa card you got set right. AMC Entertainment Visa card that will be coming as part of the Stubs program that will allow subs members to even — to earn even more subs points, both when they spend at our theaters and when they spend away from our theaters but keeps the good ideas flowing.

We continue to think hard about what’s the best way for AMC to approach the moving-going public.

Sean GoodmanExecutive Vice President, Chief Financial Officer

Question about our theater footprint. Does AMC plan on opening new theaters in areas such as perhaps South Carolina or other states where AMC has a limited presence?

Adam AronChairman and Chief Executive Officer

I can’t make a specific comment about South Carolina, but at least South Carolina is one of our theaters. We have none in Hawaii. We have none in Alaska. We have none in Mississippi.

I don’t think we’re in Vermont. But we do have the largest national footprint of any operator. I think we’re in 43 or 44 states on the District of Columbia. We have a sizable market share in the largest cities all across the country.

Plus we have a big platform in theaters, even in smaller rural markets. We’re always looking to add theaters and you said earlier in the call, Sean, that we closed over 100 theaters that were not performing during the pandemic, but we opened up 54 new ones. And the 54 new ones were producing to the bottom line far more than the 100 that we put. I think 10 of the 54 probably produce far more EBITDA than the 100 that we closed.

So, we’re always looking to grow. We can grow by adding new build theaters from the ground up or there’s also the opportunity for us to inexpensively add into our system theaters that may have been opened by other operators who have faltered during the pandemic. Several firms declared for bankruptcy in over the last three years and shed a lot of theaters. And we picked up a bunch.

As you know, we picked up about a third of the ArcLight circuit, which was headquartered in Los Angeles. We picked up more than half of the Vote circuit that was headquartered in Connecticut. Our eyes continue to be wide open. I do believe that there will be a continued opportunity for AMC to add theater locations quite inexpensively, and I might add to do so sometimes it requires money, which is why it was so very helpful to us that we have raised over $300 million of cash from August through January.

The more cash in the bank, the easier it is to make the decision to add theaters and grow.

Sean GoodmanExecutive Vice President, Chief Financial Officer

There is a huge amount of interest in the retail launch of AMC Perfectly Popcorn. Let me read you just a few of the questions. Can you talk more about the opportunity for AMC in retail popcorn? When will AMC popcorn be available in the U.S. nationwide? Will AMC popcorn be available to purchase online through the AMC website? Will AMC Popcorn be available to purchase in Canada and maybe in Europe?

Adam AronChairman and Chief Executive Officer

That’s lots of questions. Yes. The enthusiasm and excitement for AMC Perfectly Popcorn Home is real. I see it on Twitter.

When I look at the readership of the tweets I’ve been putting out recently on popcorn, they’re sky-high. The likes are sky-high. The retweets are sky-high. The comments back to me, every single one of which I read, by the way, I got like 4,000 or 5,000 inbound messages on the Popcorn tweets recently, and I read them all.

Were they make me excited because you’re excited about it. We launched March 11, Oscar weekend with end cap displays at Walmart, they’re almost impossible to get. And Walmart volunteered them up to us because they’re excited about popcorn. And by late April, we’ll be at 2,600 — more than 2,600 Walmart stores.

That’s more than half of all Walmart locations in the United States. We will have a website where you’ll be able to go to find out at what locations you’ll be able to actually pick up boxes of microwave popcorn or bags of ready-to-eat popcorn. We are going to sell on walmart.com, which of course, is nationwide. I would expect it will sell an A theaters.com, we’re discussing whether or not we should sell microwave boxes of popcorn at our theaters.

Like it’s all new. We haven’t started yet, and the interest level is very high. This is a nice position to be in when you’re launching a new product. Let’s put it this way.

We’re setting up our production plans to make millions of bags and microwave pouches of popcorn. We think this is a big opportunity for us. Right now, we’re going to launch only in the United States. Canada is a possibility.

If we did it in Europe, we would probably not do it under the AMC brand. We would do it under the — one of the Odeon brands of our cinemas operate with their own distinct brands and several countries across Europe. But right now, were you crawl before you walk, you walk before you run. We’re going to start in the United States and see where it goes from there.

Sean GoodmanExecutive Vice President, Chief Financial Officer

Thanks, Adam. We continue to receive a very large number of really terrific suggestions from our retail investors. Business ideas to grow and diversify and build on the business. And I want to say that we as a management team, review these.

We investigate these, so please, investors, please keep these ideas coming. I think with that —

Adam AronChairman and Chief Executive Officer

Let me just respond to — what an oddity a company that actually listens to its investors? How about that for a change? Yes, sir, you want to go to a question from an analyst?

Sean GoodmanExecutive Vice President, Chief Financial Officer

Yes, sir. Questions.

Adam AronChairman and Chief Executive Officer

We’re already running a little bit long, but on this call today, but if any investor wants to ask, go ahead.

Sean GoodmanExecutive Vice President, Chief Financial Officer

Operator, we can go to questions from analysts.

Questions & Answers:

Operator

Thank you very much. We will now be taking live questions. [Operator instructions] So, we have time for only one question, and we take a question from the line of Eric Wold with B. Riley Securities.

Please go ahead.

Eric WoldB. Riley Financial — Analyst

Hey, good afternoon, Adam and Sean. I appreciate it. I guess as much as I’m looking forward to the Popcorn business being a separately reported segment, just a couple of questions on the core theater business. I guess, first off —

Adam AronChairman and Chief Executive Officer

Eric, not to interrupt, but now, you’re going to like more than how we report the popcorn results. Eating the popcorn. It’s really good. We actually worked for a full year on the flavor profile of these products.

They are really great.

Eric WoldB. Riley Financial — Analyst

I’m looking forward to enjoying it with the Oscars. On the sideline seating plan or program, I guess, obviously, that makes sense given what we’ve seen with other entertainment businesses. I guess, what are your thoughts on where you see the biggest benefit coming from? Is it the premium on the better seats? Is it filling up the less desirable seats to have the price lower? Or is it that loyalty members don’t pay the premium seat charges if the benefit driving more loyalty membership into that program?

Adam AronChairman and Chief Executive Officer

And the answer is all of the above. You’ve got the three benefits of the concept, right? We can discount upfront. We can charge a slight premium in the middle. And we don’t charge — when I say in the middle, the dead center of the auditorium, where most people want to sit.

And if we don’t charge that premium and impose it on A-Listers, that’s just another big value increase for A-List members, which should make more people want to be A-List members. So, all three have the ability to drive improvement. And some people have looked at this as a price increase, which, of course, it is on Day 1. But what’s really interesting is that we are in inflationary times, and inflationary times cause costs to rise.

And without making any comment about what AMC is going to do because it’s not legal to talk about pricing prospectively. But companies facing inflationary pressures tend to raise prices, not talking about AMC. Under the pre-sightline structure of our industry, if we want to raise the price in a theater, the only choice we had was to raise the price on all the seats in the theater. And so, one of the many benefits of sightline other than the three that you mentioned, are that if we feel the need to raise prices, we might only do it in the most popular seats in the auditorium and actually hold the line and not raise prices on other seats in the auditorium.

So, it’s actually a way of — well, it is a way of increasing the price now, it’s a potential way of preventing a price increase later on. And then there is, in fact, the opportunity to discount upfront. I’m telling you, I was looking at what we call heat maps, which are what seats are booked for a particular movie. And nobody sits in row 1 in movie theater.

It just doesn’t happen. It could be opening night of Star Wars. Every seat in the auditorium 3 to 18 is booked solid, and row 1 is empty. And it really — there is a possibility here that by discounting the price upfront, we might be able to expand the moviegoing market to more price-sensitive consumers.

Eric WoldB. Riley Financial — Analyst

That’s how proud I am. Thank you very much. Appreciate it.

Adam AronChairman and Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the floor back over to Mr. Aron for closing comments. Over to you, sir.

Adam AronChairman and Chief Executive Officer

Thank you, operator. To everyone on the call, thank you for being with us today. Today was a good day for AMC. We reported results that were unexpectedly positive.

We introduced our popcorn line. And we’ve had a lot of discussion about the importance of the March 14 shareholder meeting that will simplify and strengthen the capital structure of this company going forward. Thank you for joining us today. There are a lot of big movies coming out.

We look forward to seeing you at our theaters sometime soon.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

John MerriwetherVice President, Investor Relations

Adam AronChairman and Chief Executive Officer

Sean GoodmanExecutive Vice President, Chief Financial Officer

Eric WoldB. Riley Financial — Analyst

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