AMC Entertainment Holdings, Inc.

Greetings and thank you for standing by. Welcome to the AMC Entertainment third quarter 2022 earnings conference call. During the presentation, all participants will be in a listen-only mode and afterwards we'll conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. Today's call is being recorded Tuesday, November 8, 2022. And now I'd like to turn the conference over to John Merriweather. Please go ahead.

Thank you, Scott. Good afternoon, everyone. I'd like to welcome everyone to AMC's third quarter 2022 earnings webcast. With me this afternoon is Adam Aaron, our chairman and CEO, and Sean Goodman, our chief financial officer. So before I turn the call and 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 and certainties 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 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 webcast, we may reference non-GAAP financial measures, such as adjusted EBITDA, constant currency, operating cash burn, 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 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. Even with the third quarter financially being flattish, we join you on this call today brimming with confidence that the recovery of AMC Entertainment is well underway. AMC welcomed more than 53 million guests to our theaters around the world in Q3 of 2022, a 33% increase compared to the third quarter of 2021. On our last quarterly webcast, we were encouraged that the July industry-wide domestic box office was down only 12% from the pre-pandemic July of 2019, but we also did predict quite correctly that there would be a dearth of big movie titles being released in August and September of this year. Even so, we also were ebullient about the movies coming out in the fourth quarter of 2022 and in calendar year 2023, and that is precisely our view again today. Despite a lackluster August and September, we're seeing that the industry-wide box office is already on a rebound, both domestically and globally, clawing and climbing its way back. In looking at the fourth quarter of 2022, it's worth noting that Warner Brothers' Black Adam, released in mid-October, had the highest domestic box office opening weekend gross of all time for any movie featuring Dwayne Johnson as a leading man. I also can confirm today that our advanced bookings at AMC and Odeon for Black Panther Wakanda Forever are frothy and robust. We are about as certain as we can be that the so-called Black Panther 2 will be one of the biggest movies of the year and that its ticket sales might even cause it to rise as high as the second biggest movie of 2022 behind only Top Gun Maverick. And of course, Q4 will continue with Disney's Strange World, with James Cameron's Avatar, The Way of Water, and with Damien Chazelle's Babylon. Anchored by the strengthening fourth quarter of 2022, let's get a better sense of this recovery by briefly going back to the beginning. Recall that when the pandemic hit the scene, In early 2020, the industry-wide domestic box office, which is the basic measurement of the size of our industry, fell by more than four-fifths for the full year of 2020, leading to the lowest box office grosses since 1981. But in comparing to 2020, the domestic box office more than doubled in 2021. Our expectation for the full year of 2022, when this year is all over, is that the domestic box office will have dramatically risen and increased yet again, by not quite, but almost by 75%. And while no one's crystal ball is perfect as far in advance, based on our analysis of the movie titles currently expected to be released in 2023, we think that next year's box office should grow yet again by between 15 and 25% and possibly by even more. Our confidence in looking ahead stems not only from a growing industry-wide box office, but also because of the demonstrated agility of the AMC board and management team to skillfully navigate our way through crisis. Since the beginning of the pandemic, We have taken bold and decisive steps to ensure a recovery for AMC Entertainment by taking action after action after action to enhance our marketing appeal and our operating profitability while at the same time brilliantly raising capital. Over the last two and a half years, AMC took in some $2.2 billion of new equity proceeds and another $2.6 billion of debt financings. In addition, we were able to amicably negotiate almost a billion and a half dollars of further benefit from asset sales, government support, and concessions from both our lenders and our theater landlords. Accordingly, at the end of the third quarter, AMC had just under $900 million of liquidity. Having ample liquidity is a bedrock of strength. We will use ours both to continue to grow, but also to continue to deliver. Our smart financing activities include the recently announced refinancing just a few weeks ago of our $400 million ODN term loan in Europe, taking the debt paid off to $144 million so far this year in total. And there is also the introduction of our preferred equity units, or AAPEs, in August. In launching them, we said that the creation of AAPEs was nothing less than an all-defining moment in AMC's future, as it gave us a new currency to help AMC to grow to de-lever, and to raise capital. We also said at the time to those who feared mindless delusions that we would treat our new ape preferred stock, that we would treat it as precious, and we will continue to do so. So far, we have raised only $37 million of equity proceeds from the sale of apes into the market. We have indeed been careful. As to APEs specifically, each AMC preferred equity unit was designed with essentially similar economics and voting rights as an AMC common share. But markets are markets. They act on their own accord and they are out of our direct day-to-day control. Even so, we continue to be convinced that over time, the availability of APEs will serve their purpose for AMC Entertainment well to help AMC to grow, to deliver, and to raise capital. Taken together, all of the actions that we've taken have allowed AMC Entertainment to successfully navigate our way through the impact of the COVID pandemic. And by contrast, we did so while several of our competitors, both big and small, were forced into bankruptcy protection or some other form of reorganization or liquidation. In 2021 and 2022, we wisely pruned our circuit by adding theaters where it made sense to do so and by aggressively shedding about 7% of our theaters. Indeed, AMC and Odeon permanently closed old or tired buildings with marginal or negative profitability that had reached the end of their productive life cycles. At the same time though, we also have been able to grow our network by profitably adding attractive theaters either built from scratch in appealing locations or those picked up from our competitors who may have stumbled. I should point out that with $900 million of quarter ending liquidity, our eyes are keenly open to new such opportunity as it may arise, tempered only by my previous comment that preserving ample liquidity and de-levering are also high priorities for us. We also have a number of bold ideas about how we can broaden our business, which I will talk about specifically later on this call. So that's where we are two and a half years into our COVID-19 journey. We're not out of the woods yet. While the box office is unmistakably on the rise, it's still falling short of pre-pandemic levels. Adding to all that, inflation is rampant and interest rates are marching upwards. In summary though, as I said at the beginning of this webcast, we are brimming with confidence. We know what we're doing and we will manage AMC with all of our skill and determination as we strive to rise to the challenge. With that, I'm going to pass the call to Sean Goodman, our CFO. After that, I'll come back to talk about some key developments and answer your questions.