AMC Entertainment Holdings, Inc.

Yes, I do.

Greetings. Welcome to the AMC Entertainment fourth quarter and year-end 2020 earnings webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, John Merriweather. You may begin.

Thank you, Alex. Good afternoon. I'd like to welcome everyone to AMC's fourth quarter and year-end 2020 earnings webcast. With me this afternoon is Adam Aaron, our President and Chief Executive Officer, and Sean Goodman, our 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 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-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 to not place undue reliance 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 call, we may reference measures such as adjusted EBITDA, free cash flow, adjusted free cash flow, and constant currency, among others, which are non-GAAP financial measures. 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 Q&A session. This afternoon's call is being recorded, and the webcast replay will be available in the Investor Relations section of our website at amctheaters.com later today. With that, I'll turn the call over to Adam. Thank you, John.

Good afternoon, everyone, and thank you for joining us today. Let me begin this afternoon's call the same way I've begun all of our 2020 earnings calls, by expressing my wishes that you and your families are all in good health, And I will add to that on this call and that vaccination comes soon for you as well. You all know that 2020 was a year unlike anything that we've ever seen. COVID-19 has dramatically and in some cases tragically affected all of us to an extent we never could have or would have imagined. Throughout it all, AMC never minimized the stresses that this pandemic put on our industry and on our company, which were corporately life-threatening, as you all know. On our quarterly calls, we told you of our resolve and determination, but also of our reality and distress. Our public disclosures were fulsome, robust, and fully transparent. We pulled no punches in describing the magnitude of our challenge, and yet we were clear that at AMC, we were absolutely committed to fighting the good fight and doing all that was humanly possible to save this proud, century-old American company that has been a meaningful part of the American cultural landscape since 1920. And finally today, we can give you and immensely satisfying report. As we sit here today, thanks to developments on so many fronts during the fourth quarter, and especially in January and February, I am now in a position to say that I am optimistic and confident about AMC's ability to weather this COVID-19 storm. Our focus is no longer on survival but now has turned instead to directing a surge in movie going and on the recovery of AMC. Objectives that feel to us like they're right around the corner. AMC's accomplishments over the past year have literally been breathtaking since our theater shutdowns almost exactly a year ago. With what essentially was an instantaneous and almost complete collapse of our revenues, there was very little room for error. Simply put, AMC needed to execute flawlessly to make it through 2020, and that is exactly what we did. So why are we so confident, even a bullion today? Four reasons why. We raised a boatload of money. Over and over again, we raised cash. Doomsayers wrote us off several times during the last 10 months, and many strongly doubted our ability to raise the necessary capital to survive absent a court sanctioned restructuring. But happily, they were wrong. Now, they weren't wrong because they misjudged the risk. AMC walked quite a tightrope in 2020. But thanks to the tireless and skilled efforts of the AMC team, support from our creditors and landlord partners, and enthusiasm for AMC's future in the equity markets, since March of 2020, we've raised a total of $2.2 billion of gross debt and equity capital, including some $870 million of equity. We secured more than $1.6 billion of creditor and landlord concessions and generated more than $80 million in asset sales to weather the storm. Second, we have proven that we can operate our theaters safely and cleanly, and our theaters are reopening now once again. As for our safety and cleanliness protocols, They were developed in partnership with the Clorox Company and current and former faculty of Harvard University's prestigious School of Public Health. And those protocols have worked brilliantly. Some 17 million moviegoers have watched movies in our theaters since reopening. And we are not aware of even a single COVID-19 case having been transmitted at our theaters amongst our guests. To achieve this impressive result, of course, we did the obvious social distancing, mask wearing, seat blocking, ubiquitous cleaning wipes and hand sanitizer gel, along with a wide array of other sanitization efforts. But at AMC, we also were way out in front with high-tech solutions like electrostatic sprayers, HEPA vacuums, and perhaps most important of all, upgrading our HVAC systems to include MERV 13 quality air filtration. As for theater reopenings, we finished 2020 with only 67% of our US and 30% of our international theaters open for business. This is down from the intra fourth quarter highs where 90% of our circuit was open, both in the United States and internationally. But as we now turn the page on 2020, the year 2021 is already proving to be a much brighter story. As of March 5th, with the reopening of our very important New York City and San Francisco theaters, and a brand new theater christening in Denver as well, we are back to our fourth quarter highs of approximately 90% of the AMC domestic circuit being open. That is a much higher percentage of our theaters that are open than most of our major competitors and the US theater community as a whole. We think that's a competitive advantage for us as we move to bring moviegoers back to our theaters as new movie titles are released. Now as for New York, The New York City reopening is such a harbinger of good times ahead for AMC. Pen up demand is a mighty, mighty thing. In just its first open weekend, the New York DMA was AMC's single biggest market in attendance and in revenues across the entire United States. It helped drive our weekend attendance a few days ago to be 250% of what it was in the last three weekends of January or in the first three weekends of February. New York's first open weekend gave us at AMC our best weekend results dating all the way back to March of 2020. And importantly, based on comments made yesterday and again today by Governor Newsom of California, We should be opening our theaters across Southern California, including Los Angeles County, sometime very soon, possibly, but not yet definitely, as soon as nine days from now on Friday, March 19. Incidentally, we're opening our theaters in Alameda County, California, what you think of as Oakland and the East Bay, two days from now on Friday, March 12th. To put the magnitude of an L.A. reopening in perspective, as a moving market, the L.A. DMA is about double the size of a New York City market. And so important for us, given AMC's market share leading positions in these cities and in these states, almost one-third of all AMC movie viewing dollars in the United States takes place in just the four states of California and the tri-state region of New York, New Jersey, and Connecticut. And finally, after a year of closure, New York City and Los Angeles are coming back for AMC. Looking internationally, our seven theaters in the Middle East all reopened this past weekend also. And it's our current expectation that almost all of our European theaters will in fact reopen well in time for the big spate of movie blockbusters that are expected to start getting released in May. Speaking of movie blockbusters, the third reason for our good humor and secure state of mind is that after a long drought, one major new movie title after another is set for near-term release. Warner Brothers has Godzilla vs. Kong later this month. We hear that Disney is very firmly committed to an early May release of Black Widow. Sony just moved Peter Rabbit forward in May. Paramount just moved to Quiet Place 2 from September to Memorial Day weekend. Universal is holding F9, the latest Fast and Furious movie, with a June 2021 release. And speaking as a personal favorite, my favorite movie this summer, no doubt, will be the long-awaited Top Gun Maverick starring Tom Cruise, which opens Fourth of July weekend. And after that, it will be one hit movie after another all year long. The CEOs of two major studios each told me that a good metaphor for AMC's circumstance is that we are LaGuardia Airport, closed by a thunderstorm with tons of planes circling overhead, all waiting to land and all needing to land. By our count, around 40 major movie titles that have already been completed were delayed from a 2020 release and will be released theatrically, hitting our big screens starting in May and beyond. Another metaphor that I've repeatedly used is that AMC is in the new car business, and that since March of 2020, we've had very few new cars shipped to our showrooms. Finally, now, those new cars are on their way to us, and seldom we will in massive quantities, I might add. And the fourth reason for our optimism is the brisk pace of vaccination. This very week will mark the 100 millionth vaccine injection in arm in the United States. And we are vaccinating now in this country at a rate of between 60 and 90 million injections monthly. For all the talk of the steps we at AMC have taken to bolster our position, the real salvation of our company will be because of vaccination. I know for a fact who the single most important person is in the entire movie business throughout 2020 and 2021. And no studio nor any movie theater circuit is the employer. His name of the most important person in our business is Albert Borla, and he is the CEO of Pfizer. He and his talented colleagues and those of Moderna and Johnson & Johnson are what have given us our newfound fortitude. I had the privilege of thanking Albert firsthand for the vital role his leadership has played in saving AMC, and those sentiments of thanks were never more deserved. There's more to discuss. But before we do, I'll now turn the call over to Sean Goodman, our CFO, to update you on the fourth quarter and more on the recent actions taken by AMC. Sean?

Thanks, Adam. And thank you, everyone, for joining us this afternoon. I do hope that you and your families have been safe and well during these continued extraordinary times. As Adam mentioned, the fourth quarter was once again severely impacted by the COVID-19 crisis. The sizable number of our theaters that were closed for much of the quarter, plus the limited number of new titles during the quarter, significantly impacted our attendance levels and our financial results. Overall, our domestic attendance in the fourth quarter was 92% below the prior year, and our international attendance was 89% below the prior year's fourth quarter. The very low attendance levels ultimately make the quarter's financial results largely irrelevant. And so on this call today, Adam and I will devote very little time to the fourth quarter results, and we'll talk more about the issues that relate to our future. However, I do want to point out just a couple of encouraging data points from Q4. In our international markets, average ticket price was up more than 13% or 7% in constant currency. And food and beverage revenue per patron increased by more than 16% or 10% in constant currency compared to last year. In the domestic market, ticket prices and food and beverage results were similarly encouraging, with average ticket price up slightly and food and beverage revenue per patron up more than 22%. These statistics, which are actually even more impressive when you consider the discounted pricing on library content and food and beverage promotions that we offered during the quarter, were driven by a number of factors, including a higher proportion of evening and weekend shows, strategic ticket and food and beverage pricing adjustments, The success of our new and very popular private theater rental program in the United States. And by the way, we have already hosted 115,000 of these private theater rentals, a sure sign of consumer enthusiasm for the theatrical experience. And increased usage of our mobile AMC app for both ticket and food and beverage purchases. We use this pandemic period to roll out our mobile food and beverage capabilities across the entire domestic theater network. This industry-leading feature of our smartphone app makes it easy and convenient to order food and beverage items at the same time as one purchases his or her tickets, with these food and beverage items prepared and waiting for our guests either to collect when arriving at the theater or delivered directly to your seat. So let's talk about ANC more broadly rather than just looking at quarterly results. As of December 31, 2020, we had $308 million of cash plus $13 million of restricted cash. Our total cash earn for the fourth quarter was $110 million. Now, when we normalize this number for all of the cash raised during the fourth quarter, The monthly cash burn comes out at $124 million per month, which is right in line with our expectations at the beginning of the quarter and our previous guidance. At the end of the fourth quarter, we had deferred rent of approximately $450 million, with repayment terms being an average 27 months. although a number of agreements have repayment periods that extend through the remaining lease term, which in some cases is well in excess of 10 years. A reminder that the rent expense shown on the face of our income statement represents our rent obligation for the quarter. For the fourth quarter, actual cash rent payments were approximately $45 million less than what was shown on the face of the income statement. While future cash rent payments will continue to depend on our ongoing discussions with landlords, we anticipate cash rent paid in Q1 of 2021 will be higher than in Q4, while still being well below the income statement rent liability. Before moving off the topic of rent, it is worth noting that during 2020, we quietly and without fanfare permanently closed 60 lower performing theatres. 48 domestic theaters, and 12 international theaters. These theaters were mostly money-losing theaters historically, so AMC EBITDA actually will increase because of their closure. This is part of our plan to improve the sustainable profitability of our theater portfolio as we look at this pandemic. Shifting over to capital expenditures, We have continued to reduce capital expenditures to minimum maintenance levels. We eliminated all but essential maintenance CAPEX and previously committed growth CAPEX during 2020. During the fourth quarter, our CAPEX spend was only $6.1 million net of landlord contributions. This is a full $152.5 million lower than the same quarter a year ago. Our net capex for the year, for 2020 year, totaled $130.2 million at the low end of our net capex guidance of between $130 million and $150 million. Net capex for 2021 is expected to be approximately $100 million, and this will be almost entirely maintenance related. So let's focus on the actions. that we have taken to improve our liquidity profile, manage our expenses, and position AMC for success in 2021 and beyond. When we last spoke in early November, I noted that we had sufficient cash on hand to last through only the beginning of 2021, assuming no increase in attendance levels. However, I also noted our intention to raise additional capital to expand our liquidity runway. And from October of 2020 to January of 2021, that is exactly what we did. Firstly, our at-the-market or ATM equity offerings have raised approximately $870 million on the issuance of approximately 278 million shares in a little more than four months. You should note that $772 million of these proceeds were raised after our third quarter conference call. Two, we issued an additional $100 million of first lien debt financing, and we did this without increasing leverage because we swapped $100 million of second lien debt for equity as part of this transaction. Third, we executed a new ODEON, £140 million and €296 million term loan agreement that provided approximately $411 million of incremental liquidity. This is after paying down our European revolving line of credit. Fourth, we also saw the deleveraging effect of $600 million in convertible notes that were swapped out of interest-bearing debt and into equity at a conversion price of $13.51 per share. Importantly, as of February 28th, thanks to the actions that we have taken above, we had a little more than $1.1 billion of cash on hand. We believe that this cash puts us in a very strong position to weather continued COVID-related disruptions to our business until attendance returns to more normal levels. However, we are not resting on past accomplishments and we will continue to actively explore alternatives to raise additional capital and reduce our leverage. Finally, before handing the call back over to Adam, there has been a lot of interest in the number of AMC shares that are currently outstanding. The total outstanding share count as of March 3rd, 2021 is 450.2 million shares. As we move forward from 2020, we are doing so with renewed confidence that AMC and our industry has turned a corner. And with that, I will pass the call back over to Adam. Thank you, Sean.

For the past 12 months, our overarching focus has been raising capital to ensure our survival during this dreadful pandemic. And as Sean just described, we did just that. meaningfully extending our financial runway. At this point, with any semblance of even a partial recovery of movie theater revenues beginning this summer, we have enough cash to make it all the way through the end of 2021 and beyond. However, we are not done. While understandably we are pleased with the progress that we've made, that does not in any way diminish our intense focus on diligently managing our expenses, seeking opportunities to enhance our profitability, to innovate in driving the recapture of our movie-going revenues from moviegoers who will come to our theaters once again, ensuring that we have adequate liquidity, and managing our balance sheet to be leveraged. As I said earlier, 2021 is already feeling very different from 2020. We have more than a billion dollars of cash on hand. President Biden has stated that there will be enough vaccines for every adult in the United States by the end of May, and the rate of new COVID-19 cases, associated hospital stays, and morbidity statistics, thankfully, are all declining. Theater openings are happening again. A spate of major movie titles are are coming to our theaters again, blockbuster after blockbuster after blockbuster after blockbuster. And all that is combined with a massive amount of stimulus money being voted upon in Congress this very week to jumpstart the U.S. economy more broadly. So with this as a closing thought, I'd ask that you reflect for just a moment about the consumer. the moviegoing public. Last week's poll from the National Research Group showed moviegoer confidence growing to its highest level since the late summer of 2020, with consumers feeling far more optimistic than they've been in at least six months about returning cinemas again. At AMC, we also have been conducting our own proprietary research amongst the scientific sample size of some 2,431 AMC Stubbs members. You'll recall that Stubbs members represent our most avid customers. They make up more than half of our total movie theater ticket sales in the United States. Here is some fascinating information that has not been shared before from that research done just a couple of weeks ago. Our Stubbs members were asked what out-of-home things they most singularly were looking forward to doing post-pandemic. Out of 15 possible choices that we gave them, going to see a movie at a theater was number one on the list, with a score that was 43% more popular than the score for going to a friend's house to socialize, 47% more popular than that of going to a restaurant, 79% more popular than that of going to a concert, 138% more popular than that of going to a sporting event, and 257% more popular than that of going shopping. Now, admittedly, these responses are from moviegoers, So it's no surprise they want to go out and see movies. But the important thing for us is that what our customers are telling us is that they desperately want to come back and enjoy movie-going at our movie theaters again. That is the very definition of pent-up demand, and that is very good news indeed for AMC. Before we open the call for your questions, I want to touch briefly on three items. One, Silverlake's conversion of their convertible debt. Two, Wanda's conversion of their Class B common shares to Class A common shares. And three, the so-called Reddit rally. First, on Silverlake. We've always said that we believe that Silverlake's convertible debt would be converted and should be treated and thought of like equity. And when our stock price rebounded recently, that is exactly what Salt Lake did. They converted and thereby eliminated $600 million of interest-bearing debt from our books in exchange for about 44 million shares of stock. This represents a conversion price of $13.51 per share and meaningfully reduces our leverage. Silverlake has been a highly effective and beneficial partner to AMC since their investment in our company in September of 2018. Their guidance and assistance has been incredibly helpful to AMC. While Silverlake has sold their shares, Silverlake's personable and truly brilliant Lee Whitlinger still serves on the AMC Board of Directors, and I hope we can keep Lee on our board for a long time to come. Second is Wanda's conversion. of their Class B common stock into Class A common stock. WANDA has been and continues to be our largest shareholder. WANDA's Class B shares came with a super voting feature such that each share carried three votes, provided that WANDA's economic ownership of AMC remained above 30% of the outstanding shares. Prior to our ATM programs, this feature made WANDA not only our largest shareholder, but also a controlling shareholder. With the success of our ATM programs, Wanda's ownership was diluted well below that 30% threshold during the fourth quarter, and on December 29, Wanda's Class B shares have thus been converted to Class A shares, each carrying a single vote per share. Wanda owns less than 10% of AMC shares at this point. Wanda still has two board seats, and I can genuinely tell you that they have been an absolute delight for me to deal with during the past five years that I've led AMC. However, with no controlling shareholder in place, now AMC will be governed just as is most other publicly traded companies with a wide array of shareholders. And finally, a quick comment on the so-called Reddit rally. Our focus has been on managing our business and directing its recovery. It's really not appropriate to say much more here on this earnings call. It's probably notable to point out that of the more than $2.2 billion of cash that will be raised between April of 2020 and now, about 99% of that cash ironically came in before the Reddit rally. But as I look at all those retail investors, I realize and truly take to heart one thing among others, how 101-year-old AMC is a crucial part of the American zeitgeist. Many Americans have a strong affection for AMC. They've been going to our movie theaters for years and years or for decades and decades, and we intend to get many of these people to very soon be ticket buyers at our AMC theaters once again. With that, operator, we're now ready to open the call up for questions.

At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Jad Beynon with Macquarie. Please proceed with your question.

Thanks for taking my questions, and thanks for all the prepared remarks. Good to hear you well. Adam, just want to start off with a broad one on the theatrical window topic. We've now heard from many of your studio partners, including Universal, Paramount, and Warner. Just wondering how you're thinking about this, you know, from an agreement standpoint, what this means to the business model and how this could affect getting back to historical EBITDA margins. Thanks. Thank you, Chad.

So this is an area, actually, Could have put this in the prepared marks, but I figured I'd save it for questions. This is an area where I feel very good. Dating back to my first week at AMC, we signed on to something called Screening Room. It never took off, but some of you may remember it. That was going to play movies at home earlier than traditional windows. And I think that over the past several years, AMC has indicated in private conversations with every major studio that we are willing to be the most experimental movie theater circuit around with respect to Windows strategies that were different than the traditional norm. But we always laid down one marker, and that was if we adjusted Windows It had to be good for AMC shelters, not bad for AMC shelters. And when we couldn't strike deals with studios on shorter windows, we resisted them with all of our might. Some of you will recall the letter exchange from April of 2020 with Universal as an example of that. Having said that, After a very brief, given that we were at it for years, after a very brief 90 days of serious discussion, we announced what we thought was a groundbreaking, landmark new agreement with Universal that was good for Universal and good for AMC. It suggested that there were other ways than the hidebound traditional way to release movies that could be done in a way that was beneficial for our studio partners and for AMC as a theater chain. Fast forward to Warner's announcement about HBO Max. We put out a very clear statement that we were not willing to let Warner Brothers advantage its streaming service at AMC shareholders' expense. And you may have noticed that we are playing Warner Brothers movies right now. Now, we never discuss our film terms publicly. And I won't break that pattern today. But you should properly assume that if we're playing Warner movies, we came to agreement with Warner that any changes in their strategy are being done in ways where AMC shareholders benefit as opposed to are being penalized. We are willing to engage with every major studio on the same topic. And I continue to be optimistic that having been business partners with all these studios for a century, we can adjust the business relationships between us and our studio partners such that they can support their streaming services and their theatrical releases and do so not at our expense. So I know that there have been others who aren't necessarily privy to our private conversations who are more anxious about Windows than am I. But so far, in our dealings with studios where Windows policies have changed, we've made changes such that we think we come out ahead and not come out behind.

Thank you. Appreciate that. And then, Sean, you noted the reduced capex for the year, the guidance of $100 million. How are you guys thinking about the percentage of your theaters now that have been updated? If the renovation return capex is still in the cards in the future, if that is almost complete? And then if new build opportunities come along, how would you think about partnering with landlords to build more, particularly if your liquidity is strong and the business is stable? Thanks.

Thanks for the question. Our primary focus right now, I think, as we've said in our prepared remarks, is A, liquidity, and B, deleveraging. And so you see that reflected in the CAPEX guidance for 2021 of 100 million primarily focused on maintenance CAPEX. We're pretty fortunate that over the last few years, we have spent a considerable amount of CAPEX renovating and updating our theater fleet. And so the timing is quite good to reduce that CAPEX. We're always planning to reduce that CAPEX in 2021. 2020 and we did reduce it and we reduced it even more than our original plans just because of the situation with the pandemic uh but we believe that our theater portfolio is in good shape the hundred million dollars is um predominantly maintenance related. I would expect in the future, as our liquidity position improves, as our leverage position improves, we will then look to invest more from a growth point of view. But at this point, as I said at the beginning, it's primarily leverage and liquidity. And I'll let Adam talk a little bit about the growth opportunities.

So what we're finding, you know, just literally last week we opened a new build theater in Denver. And what we're finding is is that landlords still find the AMC brand to be very powerful, and opportunities are coming our way constantly to pick up existing theaters or to have new builds in attractive locations. And I would expect that you'll see new builds continue for us or what we sometimes call spot acquisitions. Having said that, we're in a position where we can – be somewhat demanding with respect to the landlords of those theaters. For us to take on a new-build theater going forward, the landlord is going to have to take a lot more risk as opposed to AMC taking a lot more risk. So you probably will see a greater capital contribution from landlords rather than from us. You might see percentage rents based on the ebb and flow of theatrical revenues rather than fixed rents. We're solely on the hook for the success of the theater. So I still think they're in our future, but they'll be on much more attractive financial terms to us than the expansion that we might have put in place over the past decade when times were more flush.

Thank you both. Best of luck. Thank you.

Our next question is from Eric Wold with B. Reilly F. B. R. Please proceed with your question.

Eric Wold, B. Reilly F. B. R.: Thank you, guys. A couple more questions as well, kind of around the cash flow and outlook. Can I think about the current liquidity and kind of the runway you laid out to next year? Can you update us on what your underlying box office, your domestic international box office assumptions are to get to that point next year versus kind of maybe what you had in prior filing?

Sure. Hi, Eric. It's Sean. So let's talk a little bit about our cash projections in 2021. When we look at those projections, we necessarily look at them very conservatively. I think that's appropriate when we're managing our liquidity to make sure that we have sufficient liquidity. When we think of 2021, it's going to be an interesting year. The first half, from a conservative point of view, again, the first half we're expecting cash burn to be somewhere similar to the cash burn that we've seen in the months of January and February. Q3 will be a transition quarter. And then Q4, our expectations as things start to return more to normalized levels. And so in Q4, we expect to be cash flow break even despite the cash flow positive. Q3, that transition period, is probably somewhere around $50 million, let's say, a month cash burn during that Q3 period. If you, when it added up all those quarterly numbers, you would see that based on that expectation, that conservative expectation, we have more than sufficient cash on hand right now to be able to cover that and then what that translates to answer your question specifically, what That translates to, from a box office point of view, is a box office that is significantly below 2011 levels, somewhere around... You said 2011. Sorry, not 2011. I don't know why 2011. Sorry, significantly below 2019 levels, somewhere close to 50% below 2019 levels. And again, I'll go back to what I said at the beginning. It's conservative, necessarily, because I think that's the appropriate way to manage our liquidity.

Perfect. Last question. Sorry to write another finance question. Sorry, Adam. I'll get you another one later. I guess thinking about the $450 million of deferred rent, you mentioned 27-month on average kind of payback period. Are most of the terms in general that once a feeder reopens, you go back to full rent plus a deferred rent kicking in immediately or there are other requirements that need to be hit in terms of attendance levels or whatnot and then assuming we get to year end and all theaters are open we're kind of back to kind of normal environment does that does that bring in the fact you know kind of pre-pandemic rent levels plus then that kind of you know 17 million dollars per month of deferred rent kicking as well

Yeah, the way to think about the deferred rent, $450 million of deferred rent, be careful on just assuming that that deferred rent is paid back roughly over the 27-month period, except for the rent that's paid back over a longer period of time. And the reason I say be careful of that assumption, because during 2021, and specifically in the first half of 2021, we will have additional rent concessions. And that will offset. So you will have some of that deferred rent being paid down, but it will be offset by additional rent concessions. As far as the timing of when these paybacks happen, it's a specific date. It's a specific date agreed with the landlords. And that date is something that is discussed and negotiated depending on how attendance levels are going. But think about it as a specific date. A lot of that deferred rent from 2020 the repayment period kicks in at the beginning of January, 2021, but then to go back to what I've said before, there's additional rent concessions that will offset that.

So Eric, if I could just add a comment, you know, there are so many heroes for AMC over the past year. I told you about my deep appreciation, Albert Borla of Pfizer. We could talk about all the retail investors, who bought shares from us in the ATM effort from October through January. But another constituency that has really stood tall in helping AMC survive was our theater landlord community. And we renegotiated hundreds and hundreds and hundreds of lease agreements. And our theater landlords wanted us to stay in business, and they wanted to keep us around. and the concessions that they made are very much appreciated, and those talks continue. We continue conversations with all of our theater landlords. As wonderful as it is that we raise cash, and as wonderful as it is that new movies are coming this summer, we're still burning through cash right now. And we continue to find that our landlords have been flexible and creative, and we are very much

appreciative to them. Perfect. Thank you both, and congrats on getting through this, and best of luck. Thank you.

Our next question is from Eric Handler with MKM Partners. Please proceed.

Yes, good evening, and thanks for the question. Anthony, you gave us a good update on your cash. Can you give us an update on where your total debt is now at the beginning of march and what your cash interest expense will most likely look like either on a per quarter basis or just for all of 21 given that you've got some pick notes to deal with sure so to answer your first question

If you look at our total debt, and you'll see our capitalization table on the 10K, which will be published later this week. You look at the total debt at the end of December, and then I'll tell you that as of the end of March, what our performer debt is, and it's essentially the same number. So there's a lot of puts and takes, but at the end of the day, essentially that total debt, same number at the end of March as it was at the end of December. This reflects, okay, so what you have, the big transactions that you have, is you have the conversion of the convertible debt. That eliminates $600 million from our debt. However, at the same time, you have the European loan, right? So that's additional debt. That's 550-odd million dollars of additional debt. Those are the two big items. The other big items is repayment of the revolving credit facility podium. And then the difference, because that one quite met out, the difference is actually payment in kind, pick interest on the second lien debt on the European term line. There'll be some pick interest on that. And that... and there's some PIC interest on some of our first in debt as well. So when you add up all of that, you end up with the same debt number at the end of the day. I think your second question was related to interest costs. So you're looking at cash interest costs in 2021. 2021, there's a significant amount of payment in kind of PIC interest. When you go through a capitalization schedule, you can calculate what the total interest is, but you'll see that the payment in kind interest, it's not a single number because it depends what elections we make with pick interest, but if we elect all of the pick interest we're able to do right through 2021, you have around $250 million of pick interest that you need to net off the interest payments in the month. And the heavy quarters for interest payments are Q4 and Q2. Q1 and Q3 are pretty low interest payments. Q1 and Q3 are about $20 million a quarter. The heavier interest payments are in Q2 and Q4.

So what should, if you assume your PIC contributions are paid and, you know, you elect the pick option, what is your average or what should be your cash interest payments for the year?

For 2021, the cash interest payments, assuming that pick number that I gave you, the cash interest payments will be around $165 odd million. Thank you very much. Appreciate it.

Our next question is from Jason Bazinet with Citi. Please proceed with your question.

I just had two quick questions. Without getting in the specifics of your agreements with the studios, can you just talk about the buckets that we should think about when you come out ahead versus behind as the studios sort of rejigger their release or their windows? And then my second question is, if we end up in a world where, and you may disagree with the premise, but if we end up in a world where there are fewer patrons at the end of the day going to AMC just because maybe some of the smaller movies go on these direct-to-consumer apps. Do you think that there's scope to sort of reposition the theater experience as a premium experience and take higher ticket pricing to offset what may be potentially lower attendance? And I'm not talking 2021 or something like that, just if you think sort of longer term to sort of the new run rate. Thanks.

So the first question, we really don't talk about our theater deals, so I'm going to duck it, respectfully. But where you'll see it is, you know, in film runs. I mean, that is the business relationship between movie theater chain and studios. So if we're going to get concessions back, that's where you'd likely see it. And your second question has so many assumptions built into it uh that i don't want to accept okay doesn't mean you're wrong but you're not right yet which is to say that go back to 2019 the industry sold a billion movie theater tickets in the united states a billion It's the second most popular out-of-home experience in the United States, other than going out to eat a meal at a restaurant. If you take the attendance of all five major professional sports leagues together, all 150-ish teams, all sports, all games, all season long, movie theaters sold seven times the quantity of every sports event ticket sold in the United States in 2019. If the pandemic has taught us anything, it's that we do not want to be cooped up in our homes or in our apartments, no matter how nice they are, forever and ever. People want to go back to theaters. And we are, even with changing window strategies, we are quite confident that you're going to see massive amounts of demand heading to movie theaters. You'll recall people have been predicting the demise of the movie theater business for a century. Radio was going to put us out of business, and TV was going to put us out of business, and VCRs were going to put us out of business, and now streaming is going to put us out of business. Except guess what? Other than the pandemic, movie theaters have thrived this whole time. I am highly confident that we will make whatever adjustments we need to make to accommodate whatever change in the industry structure there is. If streaming is on the rise, then something will change. Maybe film rents will come down. Maybe prices will go up. We'll see. But don't just assume that people aren't going to theaters. Because I think we're going to find out post-pandemic that people are going to go to theaters and they're going to be really happy that they got out of their homes to do so.

Perfect. Thank you.

Our next question is from Alan Gould with Loop Capital. Please proceed with your question.

Hi. Thank you for taking the question. I've got a few. First, Adam, how long do you think it will take, or can you get back to the adjusted EBITDA levels that you had in 2019, given that you have fewer screens and that there will be shorter theatrical windows?

So I'm going to answer you this way. Fewer screens does not decrease EBITDA. It increases EBITDA because the screens that we were closing had negative EBITDA. That's kind of point one. On your other question, I know that John reads that forward-looking statement disclosure. But it's such a forward-looking disclosure, I don't think it's appropriate for me to make a crystal ball projection. You know, you've heard me on this call talk proudly of everything that AMC has done to get our way through this extraordinary challenge that was thrown our way. And I'm quite optimistic and bullish about the prospects of moviegoers coming back to our theaters. But I don't think that it's right for us to start predicting what year we're going to see what level of EBITDA. That's your job, and, you know, you all will make your estimates, and we'll try to beat them.

Okay. Let me follow that up with a few others. There haven't been any ATMs or shares offered since the end of January. Was that simply because you needed to have more shares authorized to do that? Because Sean did mention the intention is now to raise additional capital.

Well, he didn't say that we would raise additional capital. He said that we will carefully examine the raising of additional capital and in whatever form we think is most attractive having brought in a billion to 22 uh between december 14 and uh january 20 something 22nd i think it was we thought and with a billion dollars of cash in the bank we thought it was appropriate to take a bit of a breather but we are now very carefully looking at what are the smartest ways for us to raise capital There are a lot of vehicles that we can use to get there. And we're also balancing how we can achieve the goal of deleveraging the company. We are thrilled that in July of 2020, we got rid of $555 million of debt through a very complex negotiation with our second lien holders. We're thrilled that in January we got rid of $600 million of debt when Silver Lake converted their notes in equity. So, you know, it's something that we'll look at very hard, but, you know, it's just a simple fact that, yes, we took five weeks away from capital raising given what we put in the bank

in the last couple of months. Okay. And what do you see happening industry-wide? Do you see screens closing? Do you see, frankly, opportunities for M&A now that you've got a more attractive currency?

I think you're overstating that Not you, but I think people are overstating that streaming is somehow going to cause screen closures. But I do think, given what our industry has lived through this past year, our eagerness to continue to operate money-losing theaters is at a very low point of desirability. And so I think we'll be much tougher. And when I say we, I don't mean AMC. I mean the whole industry. I think people are going to be much tougher in evaluating the risk that they're taking and the degree to which they are willing to lease and operate marginal theaters. Is there M&A activity? I guess we'll all find out together.

Okay. And my last question, now that you have over a billion dollars of cash on your balance sheet, Does that change your landlord negotiations?

Yeah, it makes it harder. We're not quite as desperate as we were in June of 2020. But we're a creative bunch here at AMC, and we're continuing to have really interesting conversations with the landlord community. There are things that we can put on the table. There are things that we can do. And on this call, we focused on some of our theaters that were marginally profitable or unprofitable. We have a lot of theaters in normal times that are very profitable. And so again, landlord by landlord, lease by lease, theater by theater. The discussions are always interesting, and there's plenty of opportunity for us going forward.

Okay. Thank you for taking the questions. Thank you.

Ladies and gentlemen, we have time for one final question. Our final question comes from Jim Gose with Barrington Research. Please proceed with your question.

Thanks. One small one, wrapping up the Windows idea. Do you think, given the variety of types of windows that have emerged. Do you think there will be any standardization or range of standardized options that will develop between the studios and the exhibitors, or will it be on a one-by-one basis as time goes on?

That's a very good question, Jim. And hello, by the way. And I don't think there's going to be a cookie-cutter approach. Everybody understood like there was one window. That's what it's been for years and years and years. I think what we're going to see, what we've learned, especially since the universal agreement, is every studio seems to have different desires and needs. And so I'm expecting that you're going to see custom agreements that will be developed. studio by studio that may differ, and they're probably going to differ circuit by circuit.

Okay.

And over the past year... But if I could just add one more point, Jim, if I could add one more point to the answer. But as I've been saying literally for five years, and as we said with our universal discussions, as we said with our Warner discussions, we can only sign on to something if it's good for our company and good for our shoulders. So you should assume that, like one of the advantages of being the largest exhibitor in the world is that we have a legitimate seat at the table to have discussions with our studios. And we don't go there stuck in 1955 and saying, oh, it's got to be the way it used to be. We're willing to We're willing to be innovative and imaginative and creative and look for solutions. And I am highly confident that we will continue to find those solutions. We have been partners with these studios for decades and decades and decades and decades more. And clearly, we need them to exist. But I believe that they need us too. Last year, or not last year, 2019, you know, there was $43 billion of ticket sales generated in movie theaters globally. The Hollywood share of that, you know, is a huge number. And I don't think it's in their interest to just throw that good money away. So I continue to be confident that working as business partners who have been doing this a long time with each other, I'm highly confident we'll find good solutions that work for our studios and for us. There might be a little jawing in public, there might be a little jawing in private, but when you get to the final end solution, I think it'll be good for both entities.

Okay, and I thank you very much. And my last thing, we've talked over the past year, all of the exhibitors, about things that might persist post-COVID, now that we're getting to a point where this might actually be coming to some sort of conclusion or at least transition, what do you think will persist in terms of staffing levels, seat blocking, private showings, cleaning protocols, and maybe even food and beverage 2.0 as you have a chance to go back from popcorn and soft drinks again to maybe broader menu items.

Thanks, Jim. So there's a whole lot in that question, right? Certainly private theater rentals is here to stay. That's been immensely popular. As Sean said, we did 115,000 of them already, and I'm expecting that will continue. AMC has long prided itself on our imaginative food and beverage efforts. I'm sure as patronage builds up in our theaters. We will go back to more varied and imaginative menus. Another thing that I think you can assume going forward, there will be more automation in the movie theater industry as wages rise. So, for example, you know, we used this pandemic period to build mobile food and beverage ordering into our smartphone app. And that's gotten a lot of traction with our guests, which cuts out a lot of time in the concession stand, which is good for our guests and good for us. So those are three things. But a fourth thing that's going to continue is we're going to have to figure out ways, and I have expressed over and over that I'm confident we can. We're going to have to figure out how to work with our studio partners such that we can support their theatrical business and their streaming business, and I believe that we can do so. And lastly, I saved the biggest for last. This is something that our operations department shudders about when I say it, but I'm just going to tell everybody here and now, The days of dirty movie theaters are over. After what the public has been through over the last year, cleanliness and sanitization is going to be an extremely important factor for guests, even in a post-pandemic world. And we intend to run our theaters spotlessly going forward. And woe be it. to any of our competitors who does not match us stride for stride.

That will go over well, I think. So thank you very much. Thank you.

We have reached the end of the question and answer session, and I will now turn the call back over to management for closing remarks.

Thank you, operator. Thanks for everybody on the call. Since our last quarterly call, AMC raised $1,222,000,000 of cash. We got rid of $600 million of debt. Our theaters are reopening. Big movie titles are coming. Ladies and gentlemen, see you at the movies. Thanks for joining us today.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a great evening.