AMC Entertainment Holdings, Inc.

Greetings and welcome to the AMC Entertainment Holdings fourth quarter and full year 2023 earnings webcast. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Merriweather, Vice President, capital markets, and investor relations. Thank you. You may begin.

Thank you, Diego. Good afternoon. I'd like to welcome everyone to AMC's fourth quarter and full year 2023 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-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, free cash flow, non-GAAP 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 this afternoon. 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. And thank you everyone for joining us today. 2023 marked another year of strong operational and financial gains for AMC Entertainment, affirming the success of our strategic recovery efforts as the industry continues to rebound from the lingering effects of the pandemic. Our determination, innovation, and agility allowed us to adapt to a rapidly changing and unpredictable box office in calendar year 2023. And once again, it allowed AMC to defy Wall Street's expectations, beating fact-set and repetitive consensus estimates in Q4 and for full year 2023 for revenue, adjusted EBITDA, adjusted net income, and adjusted earnings per share. As a result of our actions, global attendance at AMC theaters in 2023 tallied nearly 240 million guests, up 19% over the prior year and marking the highest annual attendance in the post-pandemic era for AMC. When you couple our 2023 attendance growth with our all-time record-setting admissions revenue, and our all-time record-setting food and beverage revenues per patron, AMC's annual revenues grew by 23%, exceeding $4.8 billion in 2023. And our adjusted EBITDA improved by $379 million to $426 million in 2023. It was the highest level for adjusted EBITDA in four years, the highest revenues for AMC in four years, and in fact, our adjusted EBITDA was up more than nine times what it was just a year earlier in calendar year 2022. Unquestionably, our positive recovery trajectory continued in 2023. Not enough for what we hoped to eventually wind up in the year ahead or the years ahead, but encouraging progress again was made. We're also proud that when you look at the magnitude of our revenue and adjusted EBITDA increases, AMC is outshining several of our largest and most important key competitors in the US and in Europe. One of AMC's most essential accomplishments which may not be widely understood, is just how efficient we have become after having to adapt to pandemic stresses these past four years. Thanks to AMC's increased high margin foods, beverage, and merchandise sales, rising ticket prices, our industry-leading premium large format capacity, a commitment to laser projection, pruning our network of some marginal theaters and replacing them with some clear winners, and of course, holding the line on costs, AMC's internal analysis reveals to us that our contribution per patron is up by some 37% versus what it was before the pandemic. This means that AMC does not need for the industry box office to return completely to pre-pandemic levels for AMC's adjusted EBITDA to dramatically outstrip what we generated historically. Speaking of the box office, let's turn to the domestic industry box office as a placeholder for the size of our industry and to demonstrate our industry's long climb back from COVID. We all know that the box office fell from $11.4 billion in 2019 to $2.2 billion in the height of the pandemic calendar year 2020. But then the domestic industry box office started on its rebound, up to $4.5 billion in 2021 to $7.5 billion in 2022. And it grew again in 2023 by 21% to more than $9 billion in the year just completed. That is an upward slope for sure. Again, it's not enough. But again, progress has been made. And in looking at the fourth quarter of 2023 in particular, what is particularly noteworthy about the box office is how our company, AMC Entertainment, reshaped the box office and how much AMC benefited from our trailblazing, industry-leading efforts with our highly successful distribution of two concert movies, Taylor Swift, The Iris Tour, and Renaissance, a film by Beyonce. In the fourth quarter, compared to the same quarter a year ago, AMC's revenue grew by 11.5%. And AMC's adjusted EBITDA almost tripled, literally All of that increase in AMC's revenue and all of that increase in AMC's is attributable to our having shown these two concert movies in our theaters in the U.S. and internationally. They also caused AMC's U.S. market share to noticeably rise. That's because our share on these two concert films, the two that we not only exhibited but also were the distributor for, were well more than 50% higher than our market share normally. If that's not enough, both of these two movies played a rave critical acclaim. Each received a rare A-plus cinema score. And the Rotten Tomatoes response was astronomical. And Beyonce's film scoring a 97-99. With some $213 million in domestic ticket sales within Q4, these two movies added greatly, not only to AMC's bottom line, but to movie theater success across our entire industry. As just these two films represented fully one-ninth of the complete fourth quarter domestic industry-wide box office. One-ninth from our two movies. Taylor's movie in particular, was the single highest grossing movie of them all within the fourth quarter at the domestic box office. And worldwide, at $275 million of gross, Taylor's film also was the highest grossing concert film of all time and the highest grossing documentary of all time. It's hard to believe, but it's true. Only Universal and Warner significantly outgrossed AMC Theater's distribution domestically in the fourth quarter of 2023. With just these two movies, AMC Theater's distribution had a domestic box office gross during the months of October, November, and December of 23 that was only 1.6% less than that of industry behemoth Disney. And our two films domestically outgrossed all of what was offered theatrically in the quarter by Paramount, by Sony, by Lionsgate, or by any of the other smaller movie makers. This is a stunning result, given that neither of these films were on anyone's drawing board until mid-year, and that they were the first movies ever distributed by AMC in our entire 103-year history What a triumph for our company. To that end, it is no surprise then that our praise for Taylor Swift and for Beyonce Knowles-Carter has no limit. And you will surely understand why we offer our boundless thanks to these two world-class artists for entrusting AMC to collaborate with them as to the theatrical exhibition of their two masterpiece creations. I should add that I've said before that our phones have been ringing off the hook, and I can confirm to you today that we are now in constant touch with others who are seeking that AMC also distribute the movies of more world-class musical artists for later in 2024 and or 2025. This blending of great musicians and movie theaters is an innovation for AMC that should and will continue into the future. But make no mistake about it, as pleased as we are with the movies that we distributed or as pleased as we are with our entire results for the entire year of 2023, 2023 did not live up to its full potential. That's because the many months of actors and writers' strikes crippled Hollywood, and they seriously hurt movie theater operators who have been forced to wait for delayed movie titles that shifted out of 2023 into future time periods. After three years of hard work by one and all after theaters were closed back in 2020, the domestic, industry-wide box office finally was in sight of pre-pandemic levels back in the summer of 2023. At the peak of the summer of 2023, the July 23 domestic box office was actually up 6% above July of 2019, the last July pre-pandemic. And in that summer quarter of 2023, AMC generated the highest third quarter adjusted EBITDA Clearly, moviegoers flock to theaters when Hollywood releases films in quantity and in quality. Just think, Barbie in an Alzheimer. Or for that matter, think of what came out of Leawood, Kansas, Taylor Swift, The Heiress Tour, among others. But the strike of 23 clearly interrupted that momentum that was pushing us to above pandemic norms in the middle of last year. The strikes in Hollywood led to the fourth quarter domestic industry-wide box office being down 35% versus pre-pandemic 2019. The January, February 2024 domestic industry-wide box office was down about 45% versus the same months of pre-pandemic 2020. We point this out not to alarm you or to whine about it, but instead because we want everyone to realize that by the middle of 23, we had finally emerged from the cloud of the pandemic. But then the strike hit. and sent us back into the soup. However, at AMC, we believe that the strike impacts will only be short-term in nature. AMC believes that the box office will start to strengthen again as soon as this coming month of March, in some of the summer months of 2024, and especially in the latter third of this year. And over the medium term, We are both bullish and optimistic, with all the caveats that no one's crystal ball is perfect. At AMC, we currently believe that the industry box office in 2025 will be robust. We believe it will grow by $1 billion to $2 billion or more in size over what will be the box office in 2024. With that, as an introduction to our results for the quarter and the year, I'll now pass the webcast over to Sean, our Chief Financial Officer, to provide more details on our quarterly and full-year financial results, and especially to share with you the progress that AMC has made in reducing our debt and in bolstering our cash reserves. After that, I'll return to provide you with my further take on where we are at the moment as a company and share some other news that may be of interest. Sean?