Greetings and welcome to the AMC Entertainment Holdings, Inc. Fourth Quarter and Full Year 2024 Earnings Webcast. At this time all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to John Merriwether, Vice President, Capital Markets and Invest Relations. Please go ahead, John.

Thank you, Kevin. Good afternoon. I'd like to welcome everyone to AMC's fourth quarter and full year 2024 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. 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 this webcast, we may reference non-GAAP financial measures, such as adjusted EBITDA, constant currency, and free cash flow, among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the investor relations section of our website earlier 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.

Thank you, John. Good afternoon, everybody. And thank you for joining us today. What a superb quarter AMC just completed, especially so in November and December of 2024, thanks to hit movies like Gladiator 2, Wicked and Moana 2, which pushed Thanksgiving patronage at AMC across the United States to the highest AMC has ever seen in our 105 year history. And Mufasa: The Lion King, along with numerous other titles, gave us results in December that were just stellar as well. AMC revenue in the fourth quarter was up 18% year-over-year, and our adjusted EBITDA of $164.8 million was more than triple. May I say that again? Our adjusted EBITDA was more than triple the adjusted EBITDA that was reported for the fourth quarter a year ago. We handily beat consensus estimates for both revenue and for adjusted EBITDA in the fourth quarter of 2024. Importantly, AMC generated more than $200 million of cash from operating activities and $114 million in free cash flow in the fourth quarter. It was our highest quarterly cash flow post-pandemic. These results underscore the continued progress that AMC has been making as we continue on a road to recovery, buttressed by a growing lineup of consumer-appealing movies opening exclusively in movie theaters. More than 62 million guests visited an AMC theater worldwide, AMC here in the United States, Odeon in Europe, and our operations in the Middle East, in the fourth quarter of 2024, marking a post-pandemic fourth quarter record for us and an impressive 20% increase in attendance compared to the fourth quarter of 2023. Complimenting this fourth quarter attendance milestone, moviegoers enthusiastically embraced the variety and quality of our food and beverage offerings, driving food and beverage revenue per patron to $7.15, an all-time fourth quarter record for AMC ever. All…

Thanks, Adam. Thanks, everyone, for joining us this afternoon. Indeed, the fourth quarter once again did prove that movie-going demand is robust when compelling content is available on the big screens. During the quarter, we welcomed 62.4 million guests to our theaters around the world. This is a post-pandemic fourth quarter record that exceeded the prior year by some 20%. And not only did we achieve an attendance record, we also achieved all-time fourth quarter record and beverage revenue per patron of $7.15. And our second highest fourth quarter admissions revenue per patron of $11.56. As a result of this, we registered fourth quarter post-pandemic records for both total admissions and total food and beverage revenue and our overall revenue grew 18.3% compared to the fourth quarter of 2023 to hit a post-pandemic fourth quarter record of $1.3 billion. Our results show that the continued focus on enhancing the guest experience, growing profit per patron, and overall operating efficiency are indeed yielding results. Our revenue per patron is now approximately 34% higher than it was in pre-pandemic 2019. This is driven primarily by growth in food and beverage revenue per patron of 51%. The success in food and beverage revenue per patron is a result of our market-leading initiatives, including collectible movie themed merchandise, specialty cocktails, menu enhancements, and mobile ordering technology. When comparing our results to the fourth quarter of 2023, it's important to note that comparisons may not really provide the full picture. This is because you may recall that in the fourth quarter of 2023, AMC distributed the highly successful concert movies, Taylor Swift’s The Eras Tour, and Renaissance, a film by Beyoncé. These concert movies had special event ticket pricing and generated higher than usual food and beverage revenue per patron associated with high demand collectible…

Thank you, Sean. On our last quarter's call, we introduced the notion that after four grueling post-pandemic years, it was finally time for AMC to get off our heels defensively and instead to play on offense once again. So on this call, I want to give you an update of the activity already underway for AMC to go on offense. Specifically, AMC's GO plan, GO, go on offense, set in motion a series of initiatives designed to leverage our strengths and accelerate our recovery. Aligning with our expectations for a rising and more consistent box office over the next several years to come, it makes sense to try to grow your revenues when revenues are in fact growing. With a central theme of improving the guest experience inside our theaters, the AMC GO Plan is multi-dimensional and designed to drive additional profitable attendance to our theaters, to AMC in the US and Odeon Abroad. With our industry leading per patron metrics, which as you know hit record levels in 2024, what's so important about this drive to increase and bolster our attendance is that every incremental guest in our theaters is not only valued, but it drives a huge percentage of their incremental revenue down to the EBITDA line. As more capital becomes available to AMC to invest in growth initiatives, one key aspect of the AMC GO Plan is to add more premium experiences, capitalizing on the fact that AMC today is already, without question, the global leader in offering premium large format screens. I can say to you today that in calendar year 2025, and again in calendar year 2026, we currently expect to upgrade more of our IMAX auditoriums to the very popular IMAX with Laser. We intend to add more Dolby Cinema screens. We intend to…

Thank you. We're now conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Chad Beynon from Macquarie. Your line is now live.

John for Chad. Thanks for taking our question. So on the AMC GO Plan, if the number of wide release films and the box office growth materializes as you expect, is that when CapEx will rise to the $375 million or so annual level implied by the high end of the CapEx range? Or is there anything else you can share in terms of further visibility for the magnitude or cadence of the CapEx deployment? Thank you.

I'm happy to respond, Chad. Our CapEx budget is going to stay around $200 million plus or minus a little change, until such time as we have access to growth capital. How we have access to growth capital is something that we are sorting through right now. There are a number of really creative ideas in place inside the company where we might be able to get third parties to finance some of our growth. There are other opportunities that are so obvious. The growth, the returns on some of these growth initiatives is so high that we'd love to be able to convince people to trust us with more growth capital. But until we have access to growth capital, we're going to keep CapEx tightly constrained. The time will come when we can grow it, but you'll know it way in advance. We will flag it in advance. We're not going to surprise you with big CapEx expenditures without having told you prior to doing so.

Understood, appreciate that. As a quick follow-up, you know, IMAX recently announced a deal for the movie Narnia to have an exclusive theatrical run, and I think this is a film that otherwise would have gone directly to streaming. So just curious to hear your thoughts and your views on the potential for more deals like this to come through and how you see the dynamic between streaming and theaters evolving from here. Thanks.

So there are streamers and then there are streamers. There are some streamers who have actively embraced theatrical releases. Apple and Amazon come to mind. And we've had superb meetings and conversations with both Apple and Amazon. We're highly encouraged, for example, that Amazon, which is a combination of Amazon and the old MGM. Now, just about a week or two ago, that they were staffing up and boosting their distribution personnel with significant numbers because they would like to dramatically increase the number of films that Amazon is releasing. Doubling even potentially tripling, or not quite tripling, but more than doubling the potential releases coming out of the Amazon Sphere. Similarly, Apple is so excited about the movie F1, which is coming out in June, which they're hopeful and we're hopeful is going to be a major blockbuster, gangbuster hit. It's directed by Joe Kosinski, the director of Top Gun: Maverick. I believe it stars Brad Pitt. Apple is behind it completely. Being distributed in the US by Warner Brothers is behind it completely. AMC is behind it completely. So the notion that some of these streaming services might actually embrace the app releases is something that's quite exciting to us. I think that one of the, as the industry experimented with all sorts of different release patterns post-COVID, a general consensus has emerged in Hollywood, not by all, but by most, that the most successful movies on streaming platforms are those that go to theaters first. And those movies that have a great theatrical release often wind up being the most watched movies on streaming services. Not all, you notice that there is another major streaming service that I talked about, that I did not talk about yet, that is not as enthusiastically embracing theaters, that being Netflix. But we continue to reach out to Netflix, and right now Narnia is scheduled to play on AMC's IMAX screens. We would love to be able to convince Netflix that they're embracing theatrical releases is good for them. They did it with Glass Onion. They are doing it with Narnia. We'll see where this goes. Narnia is still two years away. But having said all that, I have always believed that the world is of the consumer's appetite for entertainment, amusement, and [indiscernible] that it can support both the robust theatrical industry and a robust streaming industry side by side.

That's perfect. Thanks, Adam, and congrats on a great quarter.

Thank you. I'll turn the call over to management for retail investor questions at this time.

Thank you. So the first question that we have is about our merchandise and movie themed collectible items and how that is going and if we can give the investors an update on that.

Thank you, Sean. One of the things I said in my prepared remarks was that AMC has been implementing one new idea after another. And you know, not all ideas work, but a lot of them have. And one of them clearly has worked and worked unbelievably well is movie-themed Merchandise. Three years ago, it's working by the way, not only in the United States, but also in Europe. Three years ago, we didn't sell any movie themed merchandise in our theaters, None, none. In calendar year 2024, we sold about $65 million of movie themed merchandise from nothing three years earlier. And the profit margin on this movie themed merchandise, not exactly, but it's in the neighborhood of 50%. These are good margins. As they were great margins as they were if you were in Shark Tank, these are really good margins and we're selling a lot of merchandise and one of my goals for 2025 is to see what we can't do to significantly increase our merchandise sales for the fourth year in a row. And it should actually be easier to accomplish than it may sound because, number one, we've been increasing the number of movies that we do this movie themed merchandise for. It started out that we were only doing a handful of these a year. And now seemingly every couple of weeks, we have a new movie themed product coming out. But people didn't want to get stuck with excess inventory. So especially in the early phase of this merchandise ordering, you've got to buy the merchandise from where it's manufactured, like nine months before the movie comes out. So we would place orders for merchandise and then have to get it to hundreds and hundreds of retail locations around the country. And there was no ability to increase the supply of fast selling items. Whatever you ordered nine months before, once it sold out, you were sold out. We were finding ourselves in 2024 often selling out on Friday or Saturday of opening weekend of everything that we'd ordered for a movie. And when I say everything, I don't mean small quantities. I mean quantities in the hundreds of thousands of items. And so one of the things that we've decided to do for 2025 is to increase the quantity of the merchandise that we order in advance so that we have more supply in our theaters so that we don't sell out on Friday or Saturday, that maybe we have supply through Sunday or maybe we have supply through the second weekend. But I do believe that our ability to continue to drive our merchandise business is one where we ought to be able to succeed handling.

And talking about --.

Before you go on this one, and your question is on movie-themed merchandising, but talking about movie themes, we also have movie themed drinks now in our bars. And just like we have more, and we used to have a few a year, but just like we have more and more movie themed merchandise in our theaters, we now have more and more movie-themed drinks. And often, they're our most successful item at the bar. And so we're also looking at ways, including new beverage pouring technologies, where we can increase the number of movie-themed drinks that we have available, because people clearly are buying them. And remember how important food and beverage numbers are to us. Our food and beverage numbers for the fourth quarter were the highest they've ever been in AMC's 105-year history. So this notion of being creative and imaginative and innovative in what we sell to our guests in our theaters is of crucial importance because it drives increased profitability.

And talking about food and ancillary revenue, there's a question about popcorn.

Popcorn. So I'm going to say I'm so proud of what we've done in taking what's called AMC Perfectly Popcorn into the home. This started only not even two years ago, 22 months ago I believe, when we launched AMC Perfectly Popcorn at 2,600 I think, close to it, plus or minus 100 Walmart locations in the United States for our ready to eat popcorn and about 500 Walmart locations for our microwavable popcorn. Believe it or not, as a movie theater company, we have chefs, both for our dining theaters and even for our concession stands. And our chefs worked extremely hard and almost for a year developing the recipe for the home popcorn line so that it would taste like theatrical popcorn that you get in our theaters if you made it yourself at home, or ate it yourself at home, and they succeeded. Fast forward 24 months. In calendar year 2024, our popcorn sales doubled compared to 2023. What's more, the distribution of our store counts greatly increased. In 2024, We added Kroger and Publix and Meyer. For 2025, we've added what's called Associated Grocers, which wholesales food products to regional and local markets and smaller chains around the country. As a result of all that, our Home Popcorn line, which launched in, in round numbers, 2,500 stores just 2 years ago, by the end of next month will be in 11,000 retail stores in the United States. And I'm especially pleased, Walmart is such an important player in the grocery space. And I'm just so, so pleased that Walmart informed us a couple of months back that they were going to more than quintuple the number of Walmart stores carrying our microwavable popcorn line. So I think we went from 500 Walmart stores carrying the microwavable line to 2,700 by the end of April. This is all quite encouraging. It's very hard to launch a consumer product in the United States and do so profitably. And I believe where we are now is cumulatively, our Perfectly Popcorn line cumulatively is profitable and currently profitable. And we are highly confident that it will continue to grow in sales, as we go forward. We've already established we're one of the best sellers in the popcorn category. And by the way, we just launched a new flavor, Cinnamon Butter. For those of you who like it, slightly sweet. Anyway, I think popcorn's been a smashing success and more to come.

Question about our Studio Partners and Windows. Do you see any opportunities to negotiate longer Windows for theatrical movie releases and how might that impact the business?

I sure hope that we can introduce longer windows because I think that the current industry experiment on windows has failed. Just a little history for those of you who don't know. Prior to COVID, in the United States, it varies by country outside the United States, but in the United States, movies typically did not get to the home until 74 days after initial theatrical release. The industry [can set out] (ph) then COVID came and everybody experimented with all sorts of everything. Movies were going to the home, the same day they were being taken to the theaters. They were being taken at all sorts of different dates. Big movies, maybe a little slower, but not so big movies, going to the home faster. The end result of all of that, and it's not all because of windows, but if you look at our industry's attendance across the entire industry, it's still 40% below pre-pandemic levels, not quite 40%. The last number I saw was 38%. It's still almost 40% below pre-pandemic levels. That has stressed the EBITDA generation of theaters, that has stressed the profitability of theaters, that has stressed the share prices of theaters, and that's a problem for theaters. Now, I said Windows was not the only problem. There were other issues, including that Hollywood was releasing fewer titles. That appears to be changing. Hollywood is releasing more titles. But as the industry experimented with a whole bunch of variety of options. What the industry coalesced around was that the old 74 day window would become a 45 day window. So the movies would go to the home about six weeks or seven weeks after they hit theaters, not 10 or 11 weeks after they hit theaters. And some movies have gone to the home…

Thanks, Adam. And I think we've got time just for one more question here, which is very related to what you were just talking about. When you think about the box office, how are you thinking about when the industry might reach more of a steady state level and return closer to pre-pandemic [top-of-the-line] (ph)?

So to take you all back in time. Prior to the pandemic, for 5 years in a row, the industry box office was between $11 billion and $12 billion. This is the so-called domestic industry box office. This is all theaters, all movie theater companies, all chains, all locations in the United States and Canada, the basic measure of our industry. For five years in a row, it's been $11 billion and $12 billion. For 11 years in a row, it's been $10 billion and $12 billion. COVID comes, it's $2 billion. That was 2020. Then in 2021, it was $4.5 billion. Then in 2022, it was $7.5 billion. Then in 2023, if you exclude the Taylor Swift and Beyonce movies, which we sort of created out of thin air at the last second, which did not come from a studio and were not expected to be movies and theaters, The industry box office was like [$8.7 billion or $8.8 billion] (ph) in 2023 and it was $8.75 billion in 2024. So the box office was flat. It had been high for a decade, went to next to nothing with COVID. It started rising again. It flattened out in 2023 and 2024. Why did it flatten out in 2024? Because of 5 months of actors and writers strikes that crippled production of movies and decreased the number of film releases in the first five months of 2024. But that's the past. Let's look at the future. I said in my prepared remarks, we think the number of wide-release films is going to increase in 2025 or 2024. We have studiously looked at this movie theater slate of the titles that are coming up. And it's one blockbuster film after another blockbuster film after another blockbuster film, after another blockbuster film.…

And I think that's all the questions we have time for today.

So everybody, thank you very much. We had a very good quarter. The year, 2024, was very good. If you only look at the second 6 months of the year. But the second 6 months of the year looks to us to be a harbinger of what's coming in 2025 and again in 2026. So I have one simple request. I don't know what you're doing this weekend, but why don't you go to a movie theater and go catch a movie? And when you do, we'd be happy to welcome you at AMC. Or if you're in Europe, Odeon. Or if you're in the Middle East, AMC Cinemas. Thank you, everybody, for listening. Thank you for joining us today.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.