AMC Entertainment Holdings, Inc.

Thank you for standing by. This is the conference operator. Welcome to the AMC Entertainment's fourth quarter 2021 earnings conference call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to John Merriweather, Vice President, Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. I'd like to welcome you to AMC's fourth quarter year-end 2021 earnings webcast. With me this afternoon is Adam Aaron, 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-CAT. 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 the webcast, we may reference non-GAAP financial measures, such as adjusted EBITDA, free cash flow, operating cash burned, 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 Q&A session. This afternoon's webcast is being recorded, and a 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. Thank you for joining us today. The fourth quarter of 2021 saw AMC putting up on the board significant milestones of progress, sending a crystal clear message to one and all that AMC is moving well along the path to recovery. For the first time in the two years since COVID-19 descended upon us all in early 2020, In the fourth quarter of 2021, AMC achieved positive EBITDA, and we generated positive operating cash flow. And this is not a situation where we only narrowly achieved these important markers. Our positive EBITDA on the quarter was almost $160 million, up a breathtaking $487 million over the fourth quarter of a year ago. This led to non-GAAP operating cash generated of more than $220 million in the just completed quarter. In addition, we ended the year with a record-setting year-end liquidity of approximately $1.8 billion, enough to provide AMC with more security in case the return to normal box office levels takes longer than some might expect. And importantly, it also gives us the flexibility to go on the offensive as we work to create the AMC of the future. 2021 was another year of sequential and continuous recovery and improvement. As was the case after COVID forced the closure of all of our theaters in March of 2020, the industry and especially AMC box office grosses improved each and every quarter of 2020 and each and every quarter of 2021. As theaters reopened, as the number of released film titles increased, as the overall film slate became more varied and appealing, and especially throughout 2021, as COVID vaccination counts soared. With the industry and AMC's box office growing each quarter, so too are financial results at AMC improved each quarter as well. As I look at the recently completed fourth quarter, I am especially pleased that we hosted roughly 60 million guests at our theaters in the US, Europe, and the Middle East. 60 million people enjoyed watching a movie at AMC in Q4. 60 million people. I am similarly pleased that our average total revenues per patron at AMC in the quarter were $19.63, some 25.5% higher than the same statistic in our pre-pandemic Q4 of 2019. It's our understanding that this is considerably higher than that of any other major theater operator. None of this is accidental. We worked our tails off to get people back in theaters, and our job is not yet done. We are not yet where we want or where we need to be. That will continue to take time, and it will continue to take sustained and imaginative effort on our part. But even so, you can see and you can taste and you can feel it. that AMC seems to be on a positive glide path to recovery. There is so much conventional wisdom floating around that movie theaters cannot coexist and cannot thrive in a world of streaming. What a load of cow dung. There, I cleaned that up nicely. What a load of cow dung. In a world where the consumer's appetite for content is so voracious that it seems to be sufficient to let us all prosper. It's our view at AMC that movie theaters, and especially our company as the leader in the movie theater industry, have a very bright future. The problem with conventional wisdom is that conventional wisdom is so often just utterly wrong. Remember the breathless reporting that AMC would file for bankruptcy in 2020. Wrong. Remember that otherwise highly respected experts were calling for the AMC share price to fall to $2, $1, or even a penny by February or March of 2022. Now, for all the lawyers listening in, I'm making no prognosis for the future. I'm looking only retrospectively. But those experts gravely underestimated AMC. And with the full benefit of hindsight, We can now happily say, because now it's a simple matter of fact. They were wrong. They were wrong. They were wrong. Reflect on the remarkable success of Sony's Spider-Man No Way Home, currently the third highest grossing movie of all time. Think about that for a moment. The third highest grossing movie ever, and even though it was released at a time when people were battling Omicron fears no less. But it wasn't just Spider-Man, Venom, Bond, Eternals, Ghostbusters. They were all part of the highest North American box office that we've seen in two full years at more than $2.1 billion in the quarter. And that was more than 50% higher than the industry box office just one quarter earlier in Q3 of 2021. Looking to 2022, the 2022 film slate is expected to be significantly stronger than 2021's, with Warner's The Batman opening later this week, for which advanced bookings are very strong. The second quarter slate also includes Marvel's Doctor Strange, Universal's Jurassic World Dominion. Paramount and Tom Cruise are blessing us with a long-awaited Top Gun Maverick. And then there's Pixar's Lightyear. Later in the year, we have titles such as Minions, The Rise of Groot, Thor, Love and Thunder, And I fully expect Disney literally to dazzle us, both with Marvel's Black Panther, Wakanda Forever, and James Cameron's Avatar 2, the sequel to, in inflation-adjusted dollars, the single highest-grossing movie of all time. A couple of great films with much of the industry coalescing around an exclusive 45-day theatrical window in the United States. That is infinitely better for AMC than when the movie industry flirted with day and date simultaneous release of films to theaters and the home experimentation in 2021. As we look forward to the full calendar year of 2022 and reckoning that no one is a perfect crystal ball, but we think that the overall domestic industry box office, which is a good placeholder for the size of our industry, both here in the United States and abroad, could be nearly double that of 2021. And that makes us at AMC bullish about our continued progress. Two notes of caution. Stating the obvious, inflationary cost pressures, labor shortages, and potential supply chain disruptions continue to exist. And if you watch the news, you are well aware, sadly, that there is a war in full bloom on the continent of Europe. These challenges all will need to be carefully managed. Additionally, a year ago, we spoke to you about a sequentially improving year in 2021, with each quarter expected to be better than the previous one, and that is exactly how 2021 turned out. Merely because of the timing of big movie releases in 2022, we expect that 2022 could follow a similar path, with the first quarter being the low point of the year and meaningful sequential improvement being achieved as the year progresses. In short, our expectations are for a Q1 that is well above 2021 Q1 levels. But nonetheless, it will be a relatively weaker Q1, coupled with a strong and reassuring full year performance for all of 2022. As you look at AMC, know that we remain focused on recovery and transformation. We remain focused on innovation and managing through change. We are determined to continue with bold and dazzling marketing initiatives, all the while maintaining our discipline cost controls as well as cash conservation and potentially cash raising strategies. I'll be back in a few minutes to provide some updates on specific key advances for AMC and to take your questions. But right now, I'll turn the call over to our Chief Financial Officer, Sean Goodman. Sean?