AMC Entertainment Holdings, Inc.

Greetings and welcome to the AMC Entertainment Holdings second quarter 2024 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. Thank you, John. You may begin.

Thank you, Alicia. Good afternoon. I'd like to welcome everyone to AMC's second quarter 2024 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 10Q and 10K. 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 non-GAAP 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, everybody, and thank you for joining us today. You might think that someone reporting an 84% drop an adjusted EBITDA this quarter compared to the same quarter last year, might be in a foul mood. But to the contrary, as I sit here today and look at what has transpired so far this year, and especially over the past seven weeks, I am ecstatic. Pick any adjective you want. Ecstatic, euphoric, almost giddy? At AMC's Prospects, for near-term and medium-term improvement and recovery. In fact, I'm now more confident than I've been in more than four years about how well AMC will perform over the next six to 30 months. That would seem to be inconsistent with the earnings release that we just put out for the second quarter, but here are the four Key reasons for my optimism. First, include monies raised during the second quarter. AMC ended the second quarter with $770 million of cash. I've said it repeatedly over the past few turbulent years. Cash is king. And having ample cash reserves is the single best strategy for survival. Sometimes a few of our retail shareholders want to hang me by my toenails that on my watch we have brought so much cash in AMC's coffers. But I cannot say it enough times. It is so important. The single smartest thing that AMC has done since 2020 was to make sure that our bank account balances were always plentiful and abundant. Despite all the rocky roads of the past several years, AMC has stayed strong. We've defied the conventional wisdom. We've continued to innovate, and we've maintained our leading industry position, and we did that at the exact same time that many of our competitors, large and small, in the U.S. or in Europe, found themselves in ruin. How did we pull that off? Well, in honor of the Paris Olympics, which I might add, in partnership with NBC, we have to be showing right now in our AMC theaters in the United States, I'll use a French word. We pulled it off by having beaucoup of cash. I've said it before, and I'll say it again. Cash is king. Cash is king. Cash is king. And we ended the quarter with $770 million. The second reason. Starting in mid-June, this is just a month and a half ago, the box office finally, after four long, tough years, has shown evidence of its making a real and enduring comeback. Disney's and Pixar's Inside Out 2, which debuted in mid-June, became the highest grossing animated film of all time. It was followed by an enormous success, from Universal's Illumination Studios with its despicable Me 4, Twister's Open Strong, and Disney then came right back with Marvel's smash hit Deadpool and Wolverine, which has set all sorts of attendance and revenue records for AMC. We knew 2024 was coming. We correctly predicted and previously publicly disclosed that moviegoing in general would be weak in the early months of 2024 because production delays caused by the prolonged writers and actors' strikes of 2023 would decrease the number of movies that would be ready for theatrical release early this year. But by the end of May, the impact of those 2023 Hollywood strikes was finally, for the most part, firmly behind us. And it is as clear as a bell right now that the box office has started its big upwards climb. As but one example, the June domestic industry box office was so much larger than the prior months that June was only two percentage points less than the box office of April and May combined. And comparing June to the earliest part of 2024, that same June domestic industry box office was 10% more than the January and February 2024 box office combined. The strikes of 2023 had their impact, but that impact appears to be, for the most part, behind us. It's not surprising then that with a surging June box office, AMC saw a remarkable contrast in our own results between the early quarter with a dearth of movie releases and the end of the quarter with a record-setting movie, Inside Out 2, delighting audiences in theaters. There was a soaring difference for the industry's performance and, more importantly to us, in AMC's performance when looking later in the second quarter versus looking earlier in the second quarter. The contrast was so vivid, the difference between the end of the quarter and the beginning of the quarter, that it was as if we were two totally different companies surrounded by two totally and completely different industry dynamics. And the proof is in the pudding. AMC capitalized on the strong June box office recovery. And in so doing, AMC set an all-time monthly adjusted EBITDA record for the month of June, meaning this was the best June result for AMC of any June in AMC's 104-year history. There were 103 Junes before this one, and this was the best. And we did so across the board. We did so domestically. We did so internationally, and we did so on a consolidated basis. But the good box office does not stop with June. We have carefully and intensely studied the movie slate coming for the remainder of 2024, as well as the slates that are coming out for 2025 and 2026. Our current expectations are that the box office turned an important corner in June of 2024 and looking ahead, We at AMC believe we will see sizable growth in industry-wide revenues and therefore most likely in AMC revenues in the second half of 2024. It's possible that the third quarter box office may not overtake last year's record-breaking Barbenheimer phenomenon, but the fourth quarter slate really looks to easily outpace that of Q4 last year with spectacular titles This year, like Warner Brothers' Joker, Universal's Wicked, Disney's Mufasa, The Lion King, and Disney's Moana 2, Sony's Venom, and Paramount's Gladiator 2, among so many other big films that are coming out in the remainder of 2024. Based on the movies that we know are coming, including in 2025 and 2026, another Star Wars movie, another Avengers movie, and another Avatar movie, and so many more, a growing box office is also what we believe will be the case again in 2025 and again in 2026. Clearly, a rising box office is good news to those who are rooting for AMC to succeed and bad news for those who root against us. As a significant portion of our expense structure consists of fixed costs, more than half of incremental revenues wind up flowing through as contribution. Clearly then, a box office that looks to be rising over the next 30 months blows extremely well for the cash generation and the financial results that AMC could be reporting over the two and a half years ahead. The third reason for our optimism and why there's such a palatable sense of confidence here and almost a relaxation compared to the stresses and pressures that we've been facing since the spring of 2020. It's our company's laser focus on driving up revenue and driving down expense that's been in evidence over the last several years. We've gotten this way both through product innovation to capture more revenues and by our cost cutting efforts to reduce expense. As but one example of many in driving revenues, our retail shareholders floated an idea a few years back that we sell merchandise in our theaters. Three years ago, we sold next to nothing in the way of merchandise in our theaters until this recommendation came from our retail investor base. This year, by comparison, we should sell around $50 million of merchandise, especially movie-themed collectibles, and we will do so with handsome profit margins. Here's the other statistic that drives home the point of our latest laser focus on becoming more efficient. AMC's June 2020-24 adjusted EBITDA was higher than AMC's June 2023 adjusted EBITDA, but that occurred despite the fact that the box office in June of 24 was actually 3.6% lower than the box office in June of 2023. And even more dramatic, our June 2024 adjusted EBITDA was higher than the June 2019 adjusted EBITDA pre-pandemic, despite the fact that the 2024 box office was approximately 12% lower in June of 24 than it was in June of 2019. And the summary of it all that continues to support our proposition that we are more innovative than ever before while being more lean than ever before is that often our contribution to overhead per patron, that is our contribution per head, can be as much as 50% more now than it was five years ago. A 50% improvement in our profit per head. So what that means, because we're bringing in more per head, we don't actually need for movie theater attendance to rise all the way back up to pre-COVID levels for us to generate pre-COVID levels or maybe even more than pre-COVID levels of adjusted EBITDA. And finally, the fourth reason our confidence levels are so high. Just last week, we announced that AMC completed several transformative capital market transactions that took up to $2.45 billion of our debt, previously due in 2026, and extended the maturities to 2029 and 2030. This was an enormously complex effort, but one that will have profound positive impact on AMC. the years 2029 and 2030 are a long way away. We have years and years of additional breathing room before then to further build, grow, and strengthen our company. For full disclosure and complete transparency, we did not move all of our debt that was due in 2025 or 2026 to 2029 and 2030, but that which remains that is still due in 2025 or 2026, in my view, is de minimis compared to the previous amounts due, and we believe it's thoroughly and entirely manageable. I cannot even begin to count the number of nervous Nellies, bloggers, and journalists who are agonizing in the press about our looming debt repayment obligations just 20 months from now prior to this debt refinancing. And they were just over and over again, wherever you look, predicting our demise in 25 or 26 as a result of the debt payment that until last week was owed 21 months from now. Perhaps that's what they believe. Perhaps they were spurred on by the short-selling community who had every financial incentive in the world to sow seeds of doubt. about AMC's viability, there's no way of knowing for sure. But in any case, it does not matter now because so much of our debt has been pushed so far out into the future, it's no longer an issue. With this debt refinancing and our other capital markets actions, this managing team has demonstrated our competence in buckressing our balance sheet at AMC. Needless to say, There are still fertile lines here at AMC, and we have numerous other thoughts and ideas about how we can further reduce some of our debt or further improve the terms surrounding our debt along the pathway between now and 2029 and 2030. This debt refinancing is an accomplishment of the highest order, one of the most important things that AMC will get done all year long in 2024. So it would be an error, an absolute error, if on behalf of myself personally and on behalf of our company, if I failed to express my gratitude and the gratitude of AMC to our lenders who worked so constructively with us on this endeavor. Make no mistake, AMC's lenders just gave our company a strong vote of confidence as to their view of the likelihood of AMC's long-term success. And we're grateful to them for that. In summary, my comments this afternoon are simple and straightforward. The 2023 strikes impacted the number of movie titles early in 2024 and somewhat crushed our profitability January and May. But look out world, June and July were decidedly different. And we believe the rest of 2024 and on into 2025 and on into 2026 also should be decidedly different. The power of our extending our financial runway for many years into the future, combined with what we believe is a multi-year slate of blockbuster movie releases immediately ahead of us, sets the stage for continued recovery at AMC. Now, it does go without saying that we cannot just declare a win today and take a victory lap today. We still have to implement and execute very well between now and the end of this year, beyond the end of next year, by the end of the year after that. But even with that statement that we have to do our jobs well and we continue to have to excel and be on the ball every step of the way, Today, as we sit here right now, we are more confident than ever in our ability to ensure that AMC will thrive as both our company and our industry continue to rebound. With that, as introductory remarks, I'm going to turn the call over to our CFO, Sean Goodman, to give you more detail on our results.