AMC Entertainment Holdings, Inc.

Greetings and welcome to the AMC Entertainment Holdings third quarter 2024 earnings webcast. At this time all participants are in a listen-only mode. The question and answer session will follow the 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'll now turn the call over to John Merriwether, Vice President, Capital Markets and Investor Relations. Thank you. You may begin.

Thank you and good afternoon everyone. I'd like to welcome you to AMC's third 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 statement, 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 refer to non-GAAP financial measures, such as adjusted EBITDA, constant currency, contribution margin, 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 amcttheaters.com later today. With that, I'll turn the call over to Adam.

Thank you, John. Good afternoon and thank you to everyone for joining us today. What a difference a quarter makes. As most of you know all too well, the industry-wide box office late last year and for several months at the start of this year was severely affected by the prolonged Hollywood strikes of 2023. Even so, when we looked ahead, knowing the movie titles that were scheduled for release, we saw better times ahead. So earlier this year, we started saying that we all would finally get to enjoy a surge in movie going in the second half of 2024 and that is exactly what happened. In the third quarter of 2024, the domestic industry box office set a third quarter post-pandemic high of $2.7 billion, up 37% from the second quarter of 2024. It slightly exceeded last year's Barber Heimer dominated third quarter and it came within 4% of the pre-pandemic domestic box office of Q3 of 2019. The box office's return to life became evident on June 14th of this year with the release of Disney Pixar's record-breaking Inside Out 2, now the highest grossing animated film of all time and thus far the top grossing movie of 2024 and the fourth highest grossing movie since 2019. The third quarter followed Inside Out 2's lead-in, fueled by blockbusters like Disney's Deadpool and Wolverine, Universal's Despicable Me 4 and Twisters, and Warner Brothers' Beetlejuice Beetlejuice among many other movie titles from a multitude of studios and distributors. To illustrate the magnitude of the box office improvement since June 14th of this year, let's compare the first five and a half months of 2024 to the next three and a half months. On a per day basis, the domestic entity-wide box office was 82% stronger between mid-June and end-September than it was in 2024 prior to June 14th. And that strengthened the entity-wide box office, translated to strong performance by AMC Entertainment in the third quarter of 2024. Solidifying our financial metrics, our net loss in the third quarter of 2024 was narrowed by fully 37% compared to the loss in the second quarter of 2024. What's more, in this third quarter, AMC's total revenues were 31% stronger than our During the third quarter of 2024, we are proud that AMC achieved a new record for our third quarter admissions revenue per patron, and we're even happier to report that we set an all-time record for any quarter ever for our food and beverage revenues per patron. AMC's adjusted EBITDA was four times stronger in Q3 of 2024 than that of Q2 of 2024, four times stronger. Indeed, AMC's adjusted EBITDA posted in the third quarter of 2024 was the second best EBITDA performance of any third quarter in AMC's 104-year history, second only to last year's quarter of 2023. It's especially encouraging that because we've worked so hard to put in place operational and financial efficiencies, that AMC realized adjusted EBITDA in this just-completed third quarter that was in line with pre-pandemic Q3 of 2019 five years back, even though our in the just-completed quarter was a full 25% lower than it was in that third quarter of 2019 pre-pandemic. Of enormous importance, as we look ahead for the next two years, looking forward, not looking backwards, we believe that the box office will continue on its recent market rise. There's an impressive Q4 2024 movie slate about to be released into our theaters in the coming weeks, highlighted by two beloved blockbuster Disney storylines, Mufasa the Lion King and Moana 2. Adding to the excitement is Universal's highly anticipated film Wicked, the adaptation of the -year-running second most successful Broadway musical ever. Some people even know, are telling me, that they think Moana 2 could eclipse and outshine even the success of the Inside Out 2, and early critics have used Wicked are stellar. Wicked is already described as a masterpiece. Notwithstanding the success of Taylor Swift's record-breaking year of tour concert movie, which was the top movie in last year's fourth quarter, as well as Beyonce's Renaissance film, both of which are our very own creations here at AMC, today, we anticipate that the Q4 2024 domestic box office will emphatically surpass last year's Q4 results. And that's just the beginning. It is AMC's belief that the 2025 domestic industry box office should easily surpass that of 2024, with bankable titles hitting our theaters next year, such as Paramount's Mission Impossible 8, Universal's Jurassic World 4, and Disney's Captain America, Snow White, The New Thunderbolts, and of course Avatar 3 as just some of the big movies coming next year. And as for 2026, 2026 could make 2025 look small. We currently believe the domestic box office will be bigger still two years out. Movie theater ticket sales should continue to build, led by some truly blockbuster releases, including the next chapters of The Avengers, Star Wars, Batman, Super Mario Bros., and Toy Story franchises lighting up our huge silver screens at AMC in the United States, Odeon in Europe, and AMC cinemas in the Middle East. The buzz and excitement surrounding theatrically released movies over the next two years is nothing less than probable. We believe that as the industry's largest player, and an increasingly efficient one at that, AMC is well poised to benefit from that highly likely increase in movie going. The other accomplishment of vital importance by AMC in the third quarter of 2024 was our continuing to successfully strengthen our balance sheet. As you know, in the quarter we announced we extended up to $2.4 billion of our long-term debt maturities from 2026 to 2029 and 2030. That is a big step forward for AMC. So too, is that in 2024 year to date, we paid down some $345 million of debt and raised some $250 million gross proceeds of equity. This all translated to ending the third quarter with some $527 million of cash on hand. I have said many times that cash is king and that AMC must maintain ample cash reserves. Similarly, paying close attention to our balance sheet has been a mandatory priority at AMC Entertainment. These are among the major reasons why AMC has survived these past four and a half years at a time by contrast when so many of our competitors failed. As we move forward, we will continue to take actions as needed to keep our cash reserves robust and to lessen our debt. Before I turn the call over to Sean, I have been asked by many of our retail shareholders to give you an update on our AMC Perfectly Popcorn home offerings. So here it goes. We could not be more pleased with the response both from retailers and by consumers to our Ready to Eat and microwave lines of popcorn. As you will recall, it was launched exclusively at Walmart in 2023 on walmart.com and at more than 2,500 Walmart stores for our Ready to Eat popcorn and at 500 Walmart stores for our microwave corn. In 2024, this year, we successfully added Kroger, Publix, Meyer, and amazon.com online, bringing our store count now to well more than 6,000 locations selling AMC Perfectly Popcorn. For 2025, Walmart and Kroger have advised us that they are adding our microwave line in up to 4,000 or more of their stores on top of where it was carried previously. We also added Hy-Vee and Associated Wholesale Grocers, which supplies several regional and smaller grocery chains. As a result, we would expect to see AMC Perfectly Popcorn on the shelves of as many as 10,000 or more retail locations by early or mid-year 2025. That's about four times where it was in mid-2023. Our distribution footprint is expanding so rapidly because sales of our home-cut popcorn are brisk, and it is AMC Perfectly Popcorn that is actually driving the category growth. Successfully launching a new packaged goods food product for the home is not at all an easy task. Most people who try fail, and as I just said, at AMC, we could not be more pleased about where we are only 18 months after initial product launch. With that, I'll now turn the call over to Sean Goodman, our Executive VP and Chief Financial Officer, to take you through the third quarter in more detail, and then I'll return afterwards for a very important update on our plans for a growth trajectory ahead.

Sean? Thank you, Adam, and thanks to everyone for joining us this afternoon. As Adam noted, the North American box office experienced a very strong recovery as we moved into the second half of this year. While the box office in North America exceeded the prior year's third quarter, AMC's consolidated attendance was approximately 12 percent below the same period last

year.

There were two factors driving this result. First, the phone slate did not resonate as well in Europe as in North America. It was particularly for titles such as Deadpool and Wolverine, Twisters, and Beetlejuice Beetlejuice. The result is that the overall theater industry in the European markets in which we operate experienced an attendance decline of approximately 16 percent in Q3-24 when compared to the same quarter last year when titles such as Oppenheimer and Barbie outperformed in the European markets. Second, in our domestic business, the phone slate in Q3-2024 skewed in attendance away from the major urban centers such as New York and Los Angeles where AMC has our largest presence. This was particularly evident with titles such as Twisters, Stickable Me, and Beetlejuice compared to the prior year when again Oppenheimer and Barbie attendance skewed very much in favor of AMC's urban geographic footprint. As a result, our overall North American market share declined by approximately 60 basis points. This is related to the interplay between the phone slate and our geographic mix. During the third quarter, we welcomed 65 million moviegoers to our theaters worldwide. This represents a sequential revenue increase of approximately 31 percent compared to the Hollywood strike-impacted second quarter of 2024 and resulted in an EBITDA of more than four times that of Q2 of 2024. A key to our post-pandemic recovery trajectory over the last few years has been the success of our profit optimization initiatives including elevating the guest experience, optimizing the theater fleet, tightly managing expenses, and improving operating efficiency. These initiatives allowed us to achieve adjusted EBITDA in Q3 of 2024 that was in line with pre-pandemic Q3 of 2019 despite selling 25 percent or 22 million fewer tickets. We achieved this notable result due to record revenue per patron of $20.72 up 37.1 percent from pre-pandemic 2019 and contribution margin per patron of $13.49 up 41 percent from pre-pandemic 2019. And by the way, compared to Q3 of 2023, both revenue per patron and contribution margin per patron increased by approximately 8 percent. Recall that we define contribution margin per patron as total revenue, less form exhibition costs and less food and beverage costs divided by the number of guests. This measure is indicative of the incremental profit generated per additional guest at our theaters. It is worth noting this that our food and beverage initiatives led to all-time record achievements in food and beverage revenue per patron during the quarter. Consolidated food and beverage per patron hit a high of $7.53, an increase of 14.8 percent compared to Q3 of 2023, and an increase of 56.3 percent compared to Q3 of 2019. Both the domestic and the international business achieved all-time records for food and beverage per patron. In our domestic market, food and beverage revenue per patron was $8.49, 14.2 percent ahead of Q3 of 2023, and 58.8 percent ahead of Q3 of 2019. And in our international business, food and beverage revenue per patron was $5.07, 12 percent ahead of Q3 of 2023, and 41.5 percent ahead of Q3 of 2019. Our results for the quarter reflect the continued success of our market-leading food and beverage offerings, including collectible movie themed items, movie themed cocktails, and menu upgrades, world-class marketing, a leading position in immersive premium large format auditoriums, and revenue diversification initiatives such as retail popcorn. All of this underscores our belief that we can achieve pre-pandemic levels of EVDA even while the box office is not quite back to 2019 levels. Now let's move on to the balance sheet. The third quarter began with a substantive strengthening of our balance sheet. As previously announced at the beginning of the third quarter, in a collaborative agreement with both our second-lean and first-lean firmland lenders, we extended the maturity date of approximately $2.4 billion of debt from 2026 to 2029 and 2030. And in addition, since our last webcast, we've taken significant further actions to reduce debt and extend the maturities. Specifically, one, we extended the maturity of $31 million of term loans from 2026 to 2029. And as of September 30th, all $1.9 billion of term loans that were due in 2026 are now due in 2029. Two, we reduced our second-lean debt due in 2026 by approximately $128 million through buybacks and exchanges of debt for equity. Three, we reduced our senior subordinated notes due in 2025 by approximately $28 million through buybacks or exchanges of debt for equity. And four, we reduced our senior subordinated notes due in 2026 by approximately $10 million through exchanges of debt for equity. In addition, sorry, in total, since our Q2 earnings webcast, we were able to reduce our debt through these transactions by approximately $165 million using a combination of cash and approximately 14.2 million shares of common stock, bringing the total reduction in principal, debt, and finance leases to $349 million thus far in 2024 alone. And since the beginning of 2022, we've lowered the principal value of our debt and finance leases by approximately $1 billion, and we've repaid $277.3 million of deferred leases. All this for a total debt at deferred rent reduction of $1.31 billion. For now, our capital allocation priorities remain. One, liquidity. Two, reducing financial leverage and strengthening the balance sheet. Three, investing in our existing business. And four, investing in attractive high-return growth initiatives. Before handing the webcast back over to Adam, a couple of quick additional points worth noting. Q3 net cash use in operating activities was $31.5 million, and we ended the quarter with cash of $527.4 million, excluding restricted cash, which was $49.7 million. Based on our box office forecast, we would expect net cash provided by operating activities to be positive in the fourth quarter. CapEx net of landhold contributions was $50 million.2, and we continue to expect net CapEx in 2024 to be in a range of $175 million to $225 million. The deferred rent balance at the end of Q3 was approximately $38 million. We plan to reduce this balance by another $2 million during the fourth quarter. From a theater portfolio perspective, during the quarter, we closed 11 underperforming locations, and we opened one new location. This will bring the total number of locations closed since 2020 to 187, and the total new locations opened to 61, or a net reduction of 126 locations, or approximately 13 percent of our locations at December 31, 2015. And we continue to see that the 61 new locations very significantly outperform the 187 closed locations. So, in summary, the box office recovery has resumed, and our profit enhancement initiatives that are yielding the record results, plus the actions that we continue to take to strengthen the balance sheet, position us very well to capitalize on what we expect will be an increasingly strong box office through the remainder of 2024 and 2025 and beyond. And with that, I'll now hand the webcast back over to Adam. Thank you, Sean.

At AMC, our hard work, imaginative thinking, and bold actions over the past few years have allowed us to successfully manage through challenging times when others in our industry have faltered. But by definition, to survive COVID and then the 2023 Hollywood strikes, we've necessarily been on our heels much of the time and playing on the defensive. Yes, we've repeatedly taken smart and decisive action to protect the business and position our company for success as the industry recovers. But now, finally now, we can see that real success is at hand and not all that far ahead of us. With an expected multi-year rising theatrical box office in our near-term future, and with significant debt maturities having been extended far out, we are finally ready to play on offense again. With what we are calling, and will announce by press release tomorrow, AMC's Go Plan. Go. G period, O period, go on offense. AMC's Go Plan is a multi-year initiative focused on strategically reinvesting in our core business to further elevate and differentiate the moving experience that we offer to AMC and OD and guests. In the process, we will be striving to add mightily to our current adjusted EBITDA levels and to generate attractive returns for our shareholders as a result. Specifically, AMC's Go Plan calls for AMC to over the coming four to seven years back into our theaters and into the AMC-ODM movie-going experience. Coming at a time of a likely theatrical box office resurgence, we are hopeful that in so doing, investing back in our core business, we can turbocharge our financial results in the quarters and years ahead. Of course, it goes without saying that we will implement AMC's Go Plan only as we successfully manage our debt reserves, our debt levels, our liquidity, our cash reserves, and our leverage. With AMC's Go Plan, we will be providing our guests with an ever greater selection of premium experiences, immersive sight and sound enhancements, more comfortable seating and upgraded theaters, as well as other initiatives, including upgrading our IT systems and considering how the smart use of AI can improve AMC's bottom line. Some of the components of AMC's Go Plan are already being implemented now, and others will be implemented over time, but only as and when our financial resources prudently allow. So let's talk some more about just some of the key components of AMC's Go Plan. Here are three in ascending order of importance. First, laser projection. As you know, we previously announced an agreement with Cineonic to launch our first major broad scale projector upgrade since the transition to digital film decades ago by now installing Barco laser projectors broadly throughout AMC auditoriums. This project is currently well underway, and as we sit here right now today, we currently have some 2,137 screens in the United States now equipped with and marketed as laser at AMC. No surprise, guests are reacting extremely positively to the brighter images, more vivid colors, and consistently sharp image quality associated with laser projection. Dimming and lamp degradation are a thing of the past in these auditoriums, and this is a major greening of AMC as well, which also plays well with consumers because laser projection is considerably more environmentally friendly than its predecessor projection technologies. In the timeframe of AMC's Go Plan, it would be our hope to at least double and maybe even triple our current number of laser at AMC equipped auditoriums. Second in the plan is theater renovation and upgrading seating efforts. For over a decade, AMC has led the way in this industry in introducing a bit of luxury for the masses through the upgrades and renovations at our theaters. Our signature recliner seats have often driven instant and dramatic financial returns. AMC's Go Plan will allow us to continue invest in some of our best and most productive theaters where in our view, renovation would cause significant increases in their theater level and or prevent erosion in our operating cash flows when competitors try to claim the moviegoers who are currently ours. In recent years, as Sean just mentioned, we have not been shy, to the contrary, been quite aggressive in opening shiny new theaters in superb locations geographically and in closing tired older theaters where it would be unwise for us to reinvest. That strategy of pruning our fleet by eliminating weak theaters and adding profitable new ones will continue. And some of that will be funded by AMC's Go Plan. But AMC's Go Plan also will allow us to make important what we think are the almost sure better investments in some of our absolute best and most productive theaters where in our view, renovation would cause significant improvements to our already quite solid financial results. The caveat, of course, in saying it's an almost sure bet is that nothing in life is certain, but there is opportunity in life that is often worth grabbing. Right now, for example, we've been putting in new, wider, and much more comfortable plus rocker seats with a feel of leather at three theaters which routinely rank among the five highest grossing AMC theaters in the entire United States currently. We started in our flagship theater, Burbank 16 in Los Angeles, which received this major seating upgrade last year. Our guest scores went up markedly. Based on that success, since Labor Day of this year, we're in the process now of doing so at our two most successful New York City theaters in Manhattan, at AMC Lincoln Square at 13, and at AMC Empire 25. Over 4,000 aids and tired fabric chairs in Manhattan are being replaced with plus deluxe rockers, offering guests between 12% and 23% wider seats. These significantly upgraded seats are visually stunning and physically much more comfortable. As part of the seating renovation of Lincoln Square, our new seats in most of the triumves also will feature 10 inches of additional legroom from the current 38 inches instead to 48 inches of legroom between rows. In eight of our Lincoln Square auditoriums, that will mean that AMC will offer legroom of four feet for your two legs. How's that for a slogan? Making for a much more enjoyable viewing experience, and we believe that will open the door to even higher profitability at that already very successful theater for AMC. The upgrade at Lincoln Square will be completed this month before Thanksgiving. We expect to complete much of the Empire 25 seating upgrades before the rush of the holiday movies around Christmas, with the entire renovation of Empire 25 being finished during Q1 of 2025. Beyond just these three theaters, we have a prioritized long list of high performing AMC theaters that could receive significant seating and other upgrades as part of AMC's Go Plan, which in all of you will make those theaters even more successful, even more profitable. As a third, an extremely important element to AMC's Go Plan, premium large formats or PLFs and extra large formats or XLF screens. AMC already benefits from having the most premium large format screens of any movie theater chain in the world. In the United States, for example, AMC singlehandedly represents just under half of all of IMAX's US screens, and 100% of all of Dolby's Dolby Cinema branded US screens. We also have 31 prime AMC screens in the US, that's our house brand domestically, some 423 PLF screens in total, including IMAX, Dolby Cinema, and our 82 iSense, those are our house brand PLFs in Europe. We now have some 566 PLF screens globally, no one else comes close. From our patronage data, we know with certainty that moviegoers increasingly seek out our premium large format screens. On average, our PLF screens in the US, for example, do about quadruple, quadruple the revenues of our non-PLF houses. You all know the saying, fish where the fish are. Moviegoers clearly want to see their own movie. We have every expectation of improving the quality and increasing the number of our PLF auditoriums. Under the auspices of AMC's Go Plan, we expect to continue to increase the number of our IMAX auditoriums, but more importantly, we intend to upgrade many to IMAX's latest technology. Not so long ago, only 42 of our 223 IMAX theaters offered the superb IMAX with laser product, including laser projection and its enhanced 12 channel sound system, along with significant recliner or plus rocker seating upgrades. We are optimistic that AMC's Go Plan will enable us going forward to have IMAX with laser installed in more than two thirds of our IMAX deployments. We are also proud of our success, our clear success in establishing the Dolby Cinema PLF brand in the United States. As a result of AMC's Go Plan, we would expect to increase the number of Dolby Cinema locations in the U.S. by 25%, bringing our total globally up to about 214. As envisioned in AMC's Go Plan, we further expect to more than triple, more than triple the number of our prime and AMC auditoriums primed being our U.S. House Plan PLFs from the current 31 to what we hope will get up to about 100. We indeed hope to have 100 of these wonderful offerings in which no royalty has to be paid to a third party, I might add, installed in our theaters over the next several years. Beyond our so-called PLFs, also in another press release that will be issued tomorrow, we will unveil a new auditorium product, but I don't think any of you have heard about yet, called XL at AMC. XL stands for Extra Large Screens and will be yet another AMC innovation and one of the many premium experiences that AMC will offer to our guests. It is modeled after something that we've been testing and piloting in Europe over the last year, where over the past 12 months, we've quietly but successfully introduced some 68 XL screens across Europe. XL, or XL at AMC, lets us brand and leverage other offerings currently in place or envisioned for ODEON and for AMC. For example, here in the United States, we already have extra large screens in place at almost all of our theaters presently, but they've never been marketed as such. Now, we're just not living in the laurels that we have large screens. We're combining some of these larger screens with a new laser projection that has been or will be deployed in our theaters. Specifically, the brand standards for XL at AMC here in the United States will include screens that are sized only 40 feet or wider. What's more, in our new XL product, we will especially offer another upgrade in immersive sight and sound, the latest 4K laser projection technology. Thanks to AMC's GO plan, we anticipate rolling out approximately 50 to 100 XL at AMC screens in the United States within calendar year 2025, with the potential to grow the total number of XL at AMC screens in the United States to between 200 and 250 screens over time, in addition to our XL screen count in Europe. With the introduction of AMC XL, we will specifically identify the largest screens in the theater, equip them with the best in 4K laser projection, and through XL at AMC branding, arm our guests with the knowledge to select their auditory choice when reserving their seats. In Europe, we are currently charging an extra euro or an extra pound for our XL screens. We've not yet decided whether it's smarter to charge an extra dollar here in the United States or instead to keep our current pricing as is and instead generate our financial returns from the added patronage that will come our way thanks to offering a clearly superior and guest pleasing consumer offering. Take all this together, adding IMAC screens, upgrading our current IMAC screens to IMAC laser, increasing accounts of Dolby Cinema and Prime screens, and introducing XL at AMC and introducing XL in Europe. AMC's Go plan features as its hallmark a significant commitment to building upon AMC's now massive competitive lead in PLF movie going. It's our view that these investments in preview auditoriums are an ambitious and an aggressive step in indeed going on offense. They have the likelihood of generating attractive shareholder returns for our much deserving retail shareholder base and those institutional investors who care to join them. That's so given their popularity of premium screens not only with moviegoers but also with movie studios who tell us constantly that they recognize and seek out the unparalleled audience experiences and creative opportunities that AMC offers through our premium screens at AMC theaters. Two final thoughts about AMC's Go plan. First, it does not pertain exclusively to our domestic theaters. Our ODIM team in Europe is excited about the opportunity to roll out internationally as well where industry PLF screen density is lower than that of the United States and a differentiated experience as evidence in our PLFs resonates with consumers extremely well. Similarly, in terms of theater renovation in Europe and the introduction of new theaters into our fleet, we've already identified opportunities to add theaters or to develop a meaningful number of additional Lux cinemas especially in the United Kingdom. Our Lux theaters here to four introduced in Europe have been quite a successful innovation by AMC. These theaters as you know boast of upgraded amenities including reclining seats, premium auditoriums, handsome theater lobbies and enhanced bars and concession areas. Audiences have been keen on our Lux cinema experience in Europe and happily for us theater landlords even drive footfall to their developments often have been quite willing to provide a substantial portion of required capital investment resulting in healthy financial returns for AMC. The second thing that I want to stress about our GO plan is that we will carefully marry our going on offense plan with respect to added capital investments with our financial ability to do so. We can either go fast or go slow. We said four years to seven years but we will not get ahead our skis. As we see it today substantially heightened capex levels will only occur with rising EBITDA or a sense within our shareholder base that it is wise to increase the pace of equity raising not just to maintain our cash reserves or manage our debt load but also for the purpose of increased capital expenditures specifically aimed at accelerating our growth. Thank you for listening today. Not all rosy. We had a good quarter but we still have challenges to navigate. Most obviously adjusted EBITDA in calendar year 2024 is expected to be but a fraction of where it was in 2019 pre-pandemic and we are well aware that it is not yet where we will need get it to be but even so the quick synopsis of this call is fourfold. One, the third quarter was a success at AMC. Two, we have been smartly managing our cash levels and are determined to keep our cash reserves robust just at the same time as we have been actively addressing the amount and timing of our debt obligations. Three, a rising box office fills us with optimism for the remainder of 2024 2025 and 2026. And four, we have a plan and are committed to going on offense again. Looked at as a whole assuming we continue to do all the work of the company in making sure that our liquidity and leverage is well managed, that our business is operating efficiently and that we produce rising EBITDA in the years ahead. We could not be more confident about the future for AMC. Sean, that concludes my remark. Let's end from our equity research.

Thanks, Adam. So we have questions from the retail shareholders and I'll ask just a few of those and then we'll pause and see if there's any questions from the equity research analysts. Starting with questions from our retail shareholders, the first one relates to the loyalty programs, our AMC loyalty programs. The question is really, are there plans in place to enhance or change these loyalty programs at AMC in the future?

I am actually very glad you asked that question because as you know, I'm a marketing guy by training and I'm so proud of what AMC has done in the area of loyalty. We have three major programs that have massive enrollments and each of the three is vital to our success. A couple of years ago we launched something called AMC Investor Connect. It was a free program for our retail shareholders to join that would get them frequent benefits at AMC and who would in the occasion free this and free that. Normally they're buying a movie ticket when they're there, which is a good thing too, right? We have 1.4 million members of that program. We're communicating to them almost on a monthly basis. We're coming out with significant offers to them four to six times a year. This is a group that has been very loyal to AMC and in fact we track their patronage because they also were enrolled in AMC Stubs, our frequent movie goer program so we could see what tickets they were buying. Our AMC Investor Connect population, 1.4 million is about twice as loyal to AMC as our regular AMC Insider Stubs members and infinitely more loyal to AMC than the great population as a whole who are not in our loyalty program. Then that's program one. Program two is AMC Stubs, which is our play for points movie theater equivalent of a frequent flyer program. Over the years we've enrolled I think it's 34 million households, U.S. households in AMC Stubs. It was only two and a half million households when I joined the company nine years ago. This has been massive area of increase for AMC. Back when I joined AMC about 19% of our guests were playing for points through AMC Stubs. In the third quarter and in fact for the latest 12 months ending September 30, 48% of our guest tickets are purchased by members of the AMC Stubs program. It's not just that we've got a lot of consumers intrigued with playing our game. It's so important for us because remember we know the movie ticket buying habits of the members of our AMC Stubs program. If you went to see Mission Impossible 7 last year, guess who's going to get a lot of marketing to see Mission Impossible 8 in 2025? If you show up as a Stubs member to see Wicked two weeks from now, guess who's going to get a reminder next Thanksgiving when Wicked Part 2 comes out? We actively market through email, push notification, and text literally billions of times a year to the members of our Stubs program. It's immensely important and successful program for us. And then the third program which is actually a subset of AMC Stubs is AMC Stubs A-list, our subscription program where under current rules for somewhere between $20 and $25 a month, you get to see up to three movies a week. You may recall the pandemic just gutted AMC A-list. We had to pause the program for a couple of years. There's no point having a subscription program when movie theaters are closed for months on end or when there are very few movie titles coming out. Fortunately, since we reopened our theaters and restarted AMC Stubs, we've seen a dramatic increase in the number of members. And I believe the count that I last saw was up about two-thirds in terms of AMC list active paying current members today as contrasted with the number we started with coming out of the pandemic pause. You know the other reason I'm just so excited to talk about Stubs and A-list endlessly is because I don't want to announce it today or tomorrow. I don't want to announce the other things. But I can tease this audience to tell you we have some significant enhancements coming both to the Stubs program and the A-list program in 2025. We've been working on this for almost a year. We did a lot of market research in 2024. We test marketed some of these cities. We're confident they're going to work. We're confident they're going to drive significant improvements to our bottom line and make both the A-list and the Stubs programs all that more appealing to their members. So watch this space for important Stubs and A-list announcements for 2025.

It's exciting stuff. And the next question here is about investment spend. Can you talk more about financing and timing of investments that we plan to make in the future?

Sure. You know for the past several years we've been investing about $200 million a year in CapEx. What we've announced with the AMC GO plan is that we're going to invest in CapEx in our fleet of theaters somewhere between a billion dollars and $1.5 billion over the next four to seven years. Now at the slowest, that's a little bit more than $200 million a year. At the fastest, it's $375 million a year. We'll decide how much we're spending in the future years only by applying the fiscal discipline that you practice as our CFO and I've talked about on this call already. We've got to marry our fund, increase spending or alternatively if our shareholders were to tell us that they think it's smart of us to increase capital expenditure spending specifically with the purpose in mind of accelerating growth. So the exact timing and speed is something that we'll decide over the course of the next several years. But as we outlined on the call today, we have a lot of very specific ideas of opportunities a company that could turbocharge our EBITDA returns.

Thanks, Adam. And Diego, let's pause with the return of interest questions and see if there are any questions from equity research analysts.

Thank you. And those on the phone to ask a question, press star one to queue up for a question and press star two to remove yourself from the queue. Once again, to queue up, press star one on your telephone keypad. Our first question comes from Jim Goss with Barrington Research. Please go ahead.

Okay, thank you. Adam, I know you are all about the creative use of your platform. I was wondering if you might talk a little about AMC's participation in the effort by IMAX, insured's biggest partner, to exhibit the Penn State-Washington football game live on selected IMAX screens. And sort of on a related basis, is there any likelihood you might try to initiate a similar program since you would arguably have greater available screen capacity? I assume rights issues are the primary obstacle and the level of interest in specific games tend to be very localized, but how do you approach this opportunity? How do you size it? And maybe this new emphasis on the Excel screens might tie into this.

Thanks for the question, Jim, and hope you're well. I spoke with Rich Gelfand, the CEO of IMAX, as recently as yesterday, about their Penn State-Washington initiative. We've long been in the IMAX's corner. We represent, as I said, almost half of the total US IMAX screens in the United States, provided they can get a suitable window, an exclusive theatrical window. We're willing to do just about anything with IMAX, and I'm optimistic that IMAX can do some interesting things, not just related to Penn State-Washington, but other things as well. And I've got a lot of confidence in Rich to make good things happen for IMAX, which in turn makes good things happen for AMC. If he brings us to Penn State-Washington game, we will play it, of course. That triggers the whole question about sports and sports rights. I've long believed that sports programming is an extremely attractive alternate programming opportunity for AMC. You'll recall that for two seasons we carried NFL games, but we did sell under some quirky rights from given to us by DirecTV. We couldn't ever mention the word NFL. We couldn't ever mention a team name because those were proprietary trademarks of the league and the clubs. And we could only carry the wrong games, which are -of-market games. Like here in Kansas City, they only want to watch the Chiefs. Where you are in Chicago, they want to watch the Bears. I'm sure the Jacksonville-Seattle game is a great game, but the games that we ought to be playing are home games, and we ought to do it in full cooperation with the NFL not going around them. There are some things we are willing to experiment with. Even in football, we've been quite intrigued about carrying nationally broadcast games, whether that's the Thursday night games or the Saturday night games or the Sunday night games or the Monday night games or the playoff games. We don't have those rights yet, but we will continue to work with those entities that can get us those rights. And when we succeed, we'll be very happy and we'll test it and we'll bring it out and see what happens. I think you mentioned college football. We've long thought that while the teams may have regional appeal, there are a lot of teams with a lot of regional appeal in a lot of regions. So I will hope that we'll also continue to introduce conversation with collegiate sports to see what kind of collegiate sports we can carry. Obviously, it will be different teams that we are following in different cities around the country. We had good success with things like UFC and other things that we tried a couple of summers ago. We'll try to bring some of those opportunities back into the system. That's a long answer question. The short answer question is, yeah, I think there's real promise in order to content. The key is getting the rights to the correct events. And we're in active dialogue with a lot of sports leagues to see what we can get our rights.

Thank you. And one other one, if I might. The franchise heavy film release site should support some assurances of continued recovery. I was wondering, though, if you can discuss the role of the smaller films relative to norms and the impact of gaining those films and concentration film ramp splits and also the interplay with streaming options for the smaller films versus theatrical releases.

I'm glad you limited your fall to one question because there was two questions but only nine questions.

I'll just try to give you a general answer.

I'll just try to give you a general answer to the whole thing. When we do our forecasts around here for the size of the box office, we literally do it on a title by title basis. And in a year, that film forecast is updated on a weekly basis. I mean, it's circulated on a weekly basis. It's upgraded by our programming staff on a daily basis. And so we're tracking not only the blockbuster movie titles but also the smaller and size titles. And yes, we're thrilled beyond thrilled that there are so many blockbuster franchises coming in 2025 and 2026. But there are also a lot of medium and smaller size movies coming. And we need them all. We can't just survive on the blockbusters. We need the blockbusters, but we also need the medium and smaller size movies. And in our conversations with major Hollywood studios, one thing we're most encouraged about is so many studios are trying to increase the number of movies that they release now as compared with what they were releasing a year or two or three years ago. And you know, I don't want to name studios, but you had some studios that were producing 25 films that were down to like 10 or 12. And we talked to one major studio just two weeks ago who said their aspiration for calendar year 25 was to release 38 movies. Now, whether they actually can release them, that's a lot of movies, by the way. Whether they can actually release 38, there's no commitment. But what I'm comforted by is the fact that each and every studio that we talk to wants to issue more products. And some of that's the big massive products, like Avatar 3 and the latest Star Wars movie and the latest Avengers movie. But we're happy about that. But we're also happy with the medium and smaller size movies. And as you rightly pointed out, our film grants, we don't really disclose the terms of our deals with each studio, but it's well known that the bigger the movie, often we pay a higher gross split to a major studio, which means that we get to keep more of the smaller and medium film box office grosses. And that's helpful to us as well. So on balance, as we look at 2020, the remainder of 2024, all of 25 and all of 26, there are a lot of big blockbusters coming. We know the studios want to release more and more titles, including medium and smaller size ones. And that all bodes very well for the recovery of our industry broadly, but of ANC specifically.

All right. Well, thanks very much. I'll stop there.

Thank you. And we have time for one more question. And that question comes from Alicia Reese with Web Bush Securities. Please state your question.

Hi, thanks. Thanks for taking my question, guys. I, Jim asked one of my questions, thankfully. But I do have a couple others. Wondering if you could just give some, maybe put some takes on the session costs. It looks like some that was quite a bit lower domestically than it has been trending recently. Perhaps there were some one time items, perhaps some easing of commodity costs in the domestic region. Wondering if you could give your take on the quarter and what to expect going forward on that line item.

Let me pass that one to Sean. Sure. Thanks, Alicia. Happy being well. With respect to the food and beverage costs, when you compare it to quarters when our attendance and revenue is lower, you do get a benefit on food and beverage costs when attendance is higher. Why is that? Because you have less spoilage and less shrinkage as a percentage of the total volume of food and beverage sold. So that's one factor to take into account. The other factor to take into account is, yes, there have been five increases, particularly in commodities like cocoa. But at the same time, we have a very focused and successful procurement team that has done a lot of work in terms of looking at the mix of products, the supplies of different products, etc. And that has helped our food and beverage costs. And we do get rebates. And you see some of the impact of rebates coming through the numbers in G3. That certainly helps our food and beverage costs as well. So going forward, if I look out for the remainder of the year, which is basically G4, I think that food and beverage costs should be pretty much in line with what we were able to achieve in the third quarter. And let me just

chime in to small numbers, but when you go to margins and percentages, including our food and beverage numbers are the merchandise that we sell our concession stands. And this has been a massive success for AMC. Three years ago, our merchandise sales were precisely zero dollars. And in calendar year 2024, it's going to be about $50 million. And I think in calendar year 2025, somewhere between $50 and $75 million. Maybe we can even beat $75 million next year. But our profit margins on merchandise are more like 50% whereas our profit margins on other food and beverages are in the low 80s. So mind you, a 50% profit margin is nothing to sneer at. We'll take as much of that as we can get. But that's just one more thing in your list of modeling.

And I think that's an important point, Adam, because despite that, because the merchandise and connectable concession vehicles were up significantly in Q3-24 versus Q3-23, not close to 2%. That does put pressure on your food and beverage costs exactly as you said, despite that our food and beverage costs are still lower, which gives you an indication of the success we're having in managing those costs.

That makes a lot of sense. Thanks for explaining that. And then lastly, the other revenue, obviously there's so many things in there. And with the popcorn expanding early to mid year next year, just taking that into consideration alongside Q4-23 when you had Taylor Swift, that added quite a bit in there, I think, for distributing that. Just wondering if you could give us some sense of where you expect that to track on a per-cap basis, maybe around $182 on a normalized basis, perhaps, once you get the full distribution of popcorn into stores.

Good luck.

Yeah, I just want to say I'm glad I'm not taking that question.

Good luck, Sean. Go ahead. No, look, they said that's absolutely right, including other revenue is the retail popcorn sales. So you would expect, and that retail popcorn sales have grown significantly when you look at the -over-quarter, not -over-year, right, comparison, Q3-24 versus Q3-23. So that impacts your revenue per patron. And I think when you look at Q4 and you look at the following year, well, what's going to happen is the retail revenue sales, probably in Q3 and Q4 are going to be relatively similar, but because Q4 is likely to be higher attendance, likely to be a higher box office, the impact is going to be less. Looking out to 2025, you should continue to see that revenue per patron, that other revenue per patron increase, but probably more towards the second half of 2025 as retail popcorn does increase a little bit.

Thank you. Really appreciate that detailed answer.

Before we end the call, I know it's late and there's like a lot of election news that people want to continue to go back and pay attention to. Let's take one last question from our retail shareholders before we end the call.

Thanks, Adam. And so the last question that I will read out to you from our retail shareholders relates to the box office. And the question is really, when do we expect the industry box office to reach a steady state and return to the traditional pre-pandemic industry growth rates?

So, you know, I mean, I think

the

answer to that question is almost the whole saga of this earnings call combined with Jim Goss' question. It's been a long time in coming. The pandemic knocked the industry box office down 80%. And we've been on a build sort of straight up since 2021, but it's been a slow build and the pace of that growth was knocked off to the side by the Hollywood strikes of 2023. But as we look ahead, you know, we'll all know on December 31 where this year ends up, but should be close to around $9 billion. It may be more, it may be less, but closer to 9 than to 8. As we look ahead to 2025, which will be a lot bigger than that, as we looked at 2026, we think it'll be a lot bigger than that. It'd be nice thought to think that the industry box office in 2026 could get near to pre-pandemic levels. I don't know that it's going to go all the way up to 11 and a half billion in 2026, but an important point for everybody to remember is that AMC does need the box office to return to pre-pandemic levels, to out-produce pre-pandemic levels of EBITDA because of the operational and financial efficiencies that we've achieved in this company over the past several years. Just look at this year, the attendance in Q3 was 25% down from the third quarter of 2019 pre-pandemic, and yet our EBITDA was in line with the pre-pandemic level of EBITDA in the third quarter. So our, whatever you want to call it, our contribution per patron, our profit per patron, there are a lot of phrases you can use to describe it, but the amount of is a lot more today than it was a few years ago, and so we don't need the box office to return to historic levels at the top line of revenue to, or of ticket revenue, let's say, to outshine our former performance at the bottom line, which is of course where the whole story is written. So I'd say everybody should be very excited about 25, 26, and 27, and the box office looks good enough for us to be a quite successful company in 25 and even more so again in 26. With that, I think we're going to end the call. What a good quarter. We have an exciting plan going forward. We're going to put out a press release tomorrow that will give you a little bit more information about AMC's GO plan. We're similarly going to put out a press release tomorrow that will give you a little more description about Excel and AMC, which we are quite excited about. As I said, we think we can get it up to 200 to 250 screens in the United States in addition to the current 68 that we already have in Europe. Thank you for joining us, everybody. We will talk to you again in 90 days from now.

Thank you. And this includes today's call. All parties may disconnect. Have a good day.