Greetings, and welcome to the AMC Entertainment Fourth Quarter and Year End 2022 Earnings Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, John Merriwether, Vice President, Capital Markets and Investor Relations. Thank you, John. You may begin..

Thank you, Vikram. Good afternoon. I'd like to welcome everyone to AMC's fourth quarter and year-end 2022 earnings webcast. With me this afternoon is Adam Aron, 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 the webcast, we may reference non-GAAP financial measures such as adjusted EBITDA, constant currency, free cash flow, operating cash burn 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 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 amctheatres.com later today. With that, I'll turn the call over to Adam..

AMC, our film exhibition costs were 51% of our admissions revenues; at Cinemark, it was 58%. Our fourth marker of progress at AMC has been our ability to strengthen our liquidity profile and balance sheet. Over the last 12 months, AMC has raised approximately $314 million in gross cash proceeds.

And we've also reduced the aggregate principal balance of our debt by approximately $390 million since the beginning of 2022. And as for that fifth reason for smiles today, the exciting popcorn announcement this morning, we are launching with Walmart.

What an enormous vote of confidence that's coming to AMC from the largest retailer in the United States in the quality and consumer appeal of our new microwave and ready-to-eat popcorn. I'll come back to that and other essential topics after I return.

But right now, let's pass the call over to Sean Goodman, our CFO, to review our financial and operating results in more detail.

Sean?.

one, we need to maintain sufficient liquidity to manage through the recovery phase of our business; two, we just strengthened our balance sheet by extending debt maturities, reducing debt and reducing associated interest costs; three, invest in our business to continue to enhance the guest experience; and four, opportunistically pursue value-enhancing initiatives, including those that lead to diversification of our business and revenue streams.

Having the flexibility to raise equity capital allows us to opportunistically take critical actions to strengthen our balance sheet and at the same time, successfully navigate through the ongoing recovery of our industry.

For these reasons, I would like to take this opportunity to urge shareholders to vote in favor of the proposals that will be voted on at the upcoming shareholder meeting on March 14.

These proposals are designed to protect the long-term value of AMC equity, and provide us with the flexibility necessary to ensure a successful recovery from the ongoing impact of the COVID pandemic.

Our capital expenditure, net of landlord contributions was $69 million in the fourth quarter of 2022, and we finished the year with a total net CapEx spend of $182.1 million. And similar to 2022, looking towards 2023, we expect our capital expenditure to be in the range of $150 million to $200 million.

Actively managing our theater portfolio continues to be a priority as we add new high-performing locations and eliminate low performance, all with the goal of improving our guest satisfaction and enhancing our overall profitability. During the fourth quarter, we added five new theaters and we closed nine.

This brings the total number of locations closed since the pandemic began to 115 and the total new locations opened to 54 for a net reduction of 61 locations. The combined 54 new locations continue to substantially outperform the 115 closed locations prior to their closings. And they also are outperforming our underwriting expectations.

Looking forward, we're optimistic about the future and the opportunities to strengthen and diversify our business while continuing to enhance our financial position.

So with that, I'll hand the call back over to Adam to review some exciting recent announcements and provide an update on our strategic initiatives, including our upcoming stockholder meeting.

Adam?.

one, increase the number of authorized AMC common shares from 524 million to 550 million and combine the AMC common shares and 8 preferred units; second, to effect a reverse stock split of one share for every 10, which, together with the increase in authorized common shares permits that automatic conversion of 8 units into AMC common stock.

Our Board and I strongly believe that's in the best interest now of AMC shareholders to convert 8 units into AMC common shares, thereby simplifying our capital structure and eliminating the gap between the prices of 8 units and of AMC shares. As AMC's single largest individual shareholder with millions of AMC shares and 8 units.

I have a vested interest in the outcome of this election because my net worth rises as AMC strengthens and my network falls as AMC gets weaker. I currently own outright some 3.7 million AMC shares or 8 units and have a further economic interest and an additional 4.5 million 8 units or AMC shares as a result of granted but unvested stock.

In total, I have some 8.2 million AMC shares or AMC units. You know what that means? It means that my interests are directly aligned with those of our shareholders. I am not some hedge fund plan or Trojan Horse as a few of the more bizarre conspiracy theories go. I'm on the side of the retail investor because I am myself a retail investor.

And I'd like to share with you the 7 reasons why I have voted yes, voting for the proposals that are being recommended by the Board. Before I do so, however, I should point out that litigation has been brought in the Delaware Court of Chancery attempting to block our shareholder proposals, and you are right to vote on them.

We believe such litigation is without merit, that our actions have been totally lawful and consistent with our charter, and we will vigorously defend our position in this matter.

The court has ordered that the March 14 vote shall take place on schedule, but then any implementation action resulting from the vote be held in advance until the court rules on the substance of the claims being made. So the vote is on and it is on now. I urge our shareholders to vote now so that your voice can be heard.

And because I think it's the right thing for me to do and for you to do. I urge you to vote for the proposals with me. Here's why. First, a more resilient AMC. Having the flexibility to efficiently and opportunistically tap both the equity and debt capital markets results in a more resilient company.

Were it not for our ability to have raised both equity and debt over the past three years, AMC would not have survived the pandemic that caused a material decline in our business activity. Second, reduced capital raising inefficiencies associated with 8 units trading at a discount to AMC shares.

Converting 8 units to AMC shares will result in a single price for all AMC equity. This single price eliminates the inefficiency inherent in the discount between 8 units and AMC common stock and will allow AMC to more efficiently raise equity capital at the most attractive terms in the future.

Third, enhance the ability to raise cash and increase liquidity. While I believe AMC is currently in a strong liquidity position with more than $840 million of available liquidity at the end of December 22, the ability to efficiently raise additional liquidity when needed has proven to be critical for this company in the past.

And depending upon the path and timing of recovery may be critical to our survival, again, in the future. Fourth, strengthen AMC's balance sheet. AMC's balance sheet is expected to strengthen over time as the box office grows.

At the same time, as we have demonstrated in recent months, there continue to be attractive opportunities for us to use available equity or equity proceeds to buy back debt or exchange debt for equity at a discount to face value, which greatly benefits shareholders. Fifth, simplify ownership in AMC.

Consolidating ownership of AMC into one single class for all shareholders eliminates the added complexity that some brokerages have imposed on their clients in the holding or trading of our preferred equity securities.

In addition, the single class of equity eliminates the potential for hedge funds or other investors to engage in arbitrage trading strategies between the eighth and AMC securities. Sixth, position AMC to transform into a stronger, more diversified company.

A single equity class will better allow us to pursue attractive shareholder value creation opportunities to diversify and to transform our business. And last, seventh, create long-term value for AMC. A vote for the resolutions is a vote in favor of the long-term value of AMC.

Since we announced our intention to hold a shareholder vote to convert 8 units into AMC shares, the total equity value of our company has increased. The other matter of consequence being discussed at the March 14 shareholder meeting is the one for tender of our stock split. So let me quickly address that topic.

If you have 10 $1 bills in your pocket and you exchange them for one $10 bill, you still have $10 either way. If you would have 10 $10 bills in your pocket, and you exchange them for one $100 bill, you'd still have $100 either way. This reverse split in and of itself should be neutral.

However, for a variety of reasons, including the technical listing rules of stock exchanges, we think it's unwise for our shares to be trading at levels in the single digits.

The reverse split also creates room to allow for the full conversion of eights into common stock, which we also think is a good idea for each of you, as I previously explained, and creates the capacity for common stock to be issued -- adds equity in the future.

In my view, I believe that there is no compelling argument why our shareholders should generally be averse to reverse stock split.

As I stated earlier, having the flexibility to continue to raise capital as we navigate through our recovery is crucial to AMC's future success and has thus far kept us from the state of several of our competitors who have been forced to seek bankruptcy protection.

Where we to be somehow the pride of this cash-raising capability, our future may not nearly be so bright as it appears currently. Indeed, our future could turn quite bleak in just a blink of an eye. I cannot emphasize enough that while things are looking up now, our success could literally vaporize in an instant if we misstep.

The reason we have succeeded to date is that in our opinion, we have threaded the needle perfectly heretofore during this pandemic. But make no mistake, the need to continue to thread the needle perfectly going forward is unchanged at AMC Entertainment. Fortunately, we're pretty good at this. And we've been at it a while and we know what we're doing.

I know I have about 3 million or 4 million friends out there who like to give me advice. But I'd like to remind you, we've done a pretty good job of stewarding this company during tough times.

Avoiding a dire fate is a commitment that I personally made to our shareholders in the earliest days of this global pandemic when our revenues went to 0 overnight and stayed there for months. I remain steadfast in that commitment to you today. Every action that AMC has taken is in direct support of that commitment.

Despite what the naysayers or the short sellers of those that wish us harm would have you believe, our mission now is clear. And it's the same exact cause that so many of our shareholders joined and embraced way back in the dark days of 2020 and early 2021. You all remember the hashtag, Save AMC. That's the report for Q4, 2022.

Sean, let's now move to questions, both from our industry analysts and from our shareholders..

Great, thanks, Adam. Let's start with some questions from our shareholders. There are a number of questions coming through about the upcoming shareholder vote that we just spoke about. Here is a good example.

What are the implications if the vote passes? And what are the implications if the vote does not pass?.

So if the vote passes, it's my expectation that this ridiculous gap between the price of an APE and the price of an AMC share will go away. And when I say it's a ridiculous gap, folks said the same thing. They have the same economic rights. They have the same voting rights.

Why shouldn't APE be trading at a third the price of a common share or a seventh of the price of a common share as it was just two months ago. If the vote passes, I think what you'll find is that this discounting of the APE goes away. What that means is that we'll be able to raise capital - in my opinion, more attractive terms.

If the - similarly what will happen to those passes is there will be a one to 10 reverse stock split. So you'll stop seeing the share price of AMC floating around $3 or $4 or $5 a share. The simple math is it should multiply by 10. Where it goes from there, up or down, that's a function of market dynamics.

But it is simple math, you'll be trading one share - you'll be trading 10 shares for one, which mathematically should be priced 10 times higher. If it - if the votes that we're voting on at this shareowner meeting do not pass. It's true that the reverse split won't happen.

But what is true is that the status quo doesn't change, which means that there's still be APEs, and there are still the AMC shares. The APEs will continue to trade at a discount, I would guess. No one has a perfect crystal ball, but that's been the experience since August. And since our ability to raise capital is tied only to the price of the APE.

If the APE continues to exist, it would seem that we would be - we wouldn't be bought from raising capital, but we'll be raising capital on much less attractive terms. It would cause more dilution to the stock that is entirely 100% preventable if a majority of our shareholders vote, yes..

So here, another question related to this. It's related to the reverse stock split.

And basically, it says, why do we need to do a reverse stock split? Can't we just convert APE units into AMC without doing this reverse stock split?.

We could. But as I said in my earlier remarks, the share price would hover in the single-digits. And there are certain technical listing rules on stock exchanges. We don't think it's a good idea for our stock to be trading in single-digits.

And since we're going to have a shareholder vote anyway, it seems logical to us to resolve both questions at the same time. It's expensive to call these special meetings of shareholders, cost millions of dollars to do so. We'd rather get them both done now than have to deal with a reverse stock split at some point in the future..

We have a number of shareholders asking about their proxy materials. One example he has, I have not yet received my proxy materials from a broker.

What do I need to do to be able to vote to get my proxy materials and be able to vote?.

As Bill Clinton famously said in the 1990s for those of you who are old enough to remember the 1990s, I feel your pain. My AMC shares and APE units are at four brokerage firms, and I've received the voting materials from three of the four firms but not the fourth.

So if you have not heard from your broker, you should do what I'm about to do, call them, explain to them that there is a March 14 shareholder vote, that you own shares or units and that you'd like to cast your vote, and they should get you a proxy.

If your broker is not acting in response to your question quickly enough, e-mail or call our proxy solicitor, D.F. King. You can reach them at an e-mail address amc@dfking.com, amc@dfking.com. Their phone number is 800-859-8511. All the information I just gave is for our U.S.

shareholders, probably our Canadian shareholders and international shareholders in many countries. But we are all aware painfully that the brokerage firms in some countries, especially in Europe do not facilitate shareholder voting.

And there's - if that - if you're with one of those firms, there's not much you can do other than put - your shares in a different broker who would allow you to vote at future shareholder meetings..

And there's a question here about the lawsuit that you mentioned in your prepared remarks. Is it has been reported that AMC is defending against two lawsuits relating to the issuance of APE units.

Is this true? And can you elaborate?.

Yes, litigation has been filed. We think it's misguided. We believe that all the actions we've taken are lawful. We think we have the merits in this case. It's consistent with our charter. We will defend our position vigorously. And we are encouraged that the Delaware Court of Chancery has allowed this March 14 vote to proceed on schedule..

There are some questions here about our loyalty programs, and I'll just read a few of them to you.

Does AMC have any plans to revise loyalty programs and A-List memberships, for example, what about family memberships, partnerships with streaming companies, maybe a lower price for memberships with restrictions to limit frequency of attendance, et cetera?.

So those are all good questions and good ideas. We have been and are studying them all.

The two of the most important marketing programs we have, our AMC Stubs and especially AMC Stubs A-List, about half of our total clientele in the United States, participates in Stubs and about 15% of our total activity in the United States comes from A-List members. These are very important programs.

We're constantly reviewing them for possible changes and improvements. There's nothing immediately on the horizon that would change either program other than AMC Visa Entertainment card, it's going to be added an AMC Entertainment Visa card yes I got it right.

AMC Entertainment Visa card that will be coming as part of the Stubs program that will allow Stubs members to even - to earn even more subs points.

Both when they spend at our theaters and when they spend away from our theaters, but keep the good ideas flowing, we continue to think hard about what's the best way for AMC to approach the moving going public..

Question about our theater footprint, does AMC plan on opening new theaters in areas such as perhaps South Carolina or other states where AMC has a limited presence?.

I can't make a specific comment about South Carolina, but at least South Carolina is one of our theaters. We have none in Hawaii. We have none in Alaska. We have none in Mississippi. I don't think we're in Vermont. But we do have the largest national footprint of any operator. I think we're in 43 or 44 states on the District of Columbia.

We have a sizable market share in the largest cities all across the country. Plus we have a big platform of theaters, even in smaller rural markets. We're always looking to add theaters and you said earlier in the call, Sean that we closed over 100 theaters that were not performing during the pandemic, but we opened up 54 new ones.

And the 54 new ones were producing to the bottom line far more than the 100 that we put. I think 10 of the 54 probably produce far more EBITDA than the 100 that we closed. So, we're always looking to grow.

We can grow by adding new build theaters from the ground up or there's also the opportunity for us to inexpensively add into our system theaters that may have been opened by other operators who have faltered during the pandemic. Several firms declared for bankruptcy in over the last three years and shed a lot of theaters. And we picked up a bunch.

As you know, we picked up about a third of the ArcLight circuit, which was headquartered in Los Angeles. We picked up more than half of the Vote right circuit that was headquartered in Connecticut. Our eyes continue to be wide open. I do believe that there will be a continued opportunity for AMC to add theater locations quite inexpensively.

And I might add to do so sometimes it requires money, which is why it was so very helpful to us that we have raised over $300 million of cash from August through January. The more cash in the bank, the easier it is to make the decision to add theaters and grow..

There is a huge amount of interest in the retail launch of AMC Perfectly Popcorn. Let me read you just a few of the questions. Can you talk more about the opportunity for AMC in retail popcorn? When will AMC popcorn be available in the U.S.

nationwide? Will AMC popcorn be available to purchase online through the AMC website? Will AMC popcorn be available to purchase in Canada and maybe in Europe?.

Lots of questions yes, the enthusiasm and excitement for AMC Perfectly Popcorn in home is real. I see it on Twitter. When I look at the readership of the tweets I've been putting out recently on popcorn, they're sky high. The likes are sky high. The re-tweets are sky high.

The comments back to me, every single one of which I read, by the way, I got like 4,000 or 5,000 inbound messages on the popcorn tweets recently, and I read them all. Will they make me excited, because you're excited about it. We launched March 11, Oscar weekend with end cap displays at Walmart, they're almost impossible to get.

And Walmart volunteered them up to us because they're excited about popcorn. And by late April, we'll be at 2,600 - more than 2,600 Walmart stores. That's more than half of all Walmart locations in the United States.

We will have a website where you'll be able to go to find out at what locations you'll be able to actually pick up boxes of microwave popcorn or bags of ready-to-eat popcorn. We are going to sell on walmart.com, which of course, is nationwide. I would expect it will sell in amctheaters.com.

We're discussing whether or not we should sell microwave boxes of popcorn at our theaters. Like it's all new. We haven't started yet, and the interest level is very high. This is a nice position to be in when you're launching a new product. Let's put it this way.

We're setting up our production plans to make millions of bags and microwave pouches of popcorn. We think this is a big opportunity for us. Right now, we're going to launch only in the United States. Canada is a possibility. If we did it in Europe, we would probably not do it under the AMC brand.

We would do it under the - one of the Odeon brands of our cinemas operate with their own distinct brands and several countries - across Europe. But right now - you crawl before you walk, you walk before you run. We're going to start in the United States and see where it goes from there..

Thanks, Adam. We continue to receive a very large number of really terrific suggestions from our retail investors, business ideas to grow and diversify and build on the business. And I want to say that we as a management team review these. We investigate these so please, investors, please keep these ideas coming. I think with that....

Let me just respond..

Sure..

[indiscernible], a company that actually listens to its investors? How about that for a change? Yes, sir, you want to go to our question from an analyst maybe? We're already running a little bit long, but - on this call today, but if any investor wants to ask, go ahead..

Operator, we can go to questions from analysts..

Thank you very much [Operator Instructions] So, we have time for only one question, and we take a question from the line of Eric Wold with B. Riley Securities. Please go ahead..

Hi, good afternoon Adam and Sean, I appreciate it. I guess as much as I'm looking forward to the popcorn business being a separately reported segment, I like - so couple questions on the core theater business. I guess, first off....

Eric, not to interrupt, but - you're going to like more than how we report the popcorn results. Eating the popcorn it's really good. We actually worked for a full year on the flavor profile of these products. They are really great..

I'm looking forward to enjoying it with the Oscars. On the sideline seating plan or program, I guess, obviously, that makes sense given what we've seen with other entertainment businesses.

I guess what are your thoughts on where you see the biggest benefit coming from? Is it the premium on the better seats? Is it filling up the less desirable seats to have the price lower or is it that loyalty members don't pay the premium seat charges if the benefit driving more loyalty membership into that program?.

And the answer is all of the above. You've got the three benefits of the concept, right? We can discount upfront. We can charge a slight premium in the middle. And we don't charge - when I say in the middle, the dead center of the auditorium, where most people want to sit.

And if we don't charge that premium and impose it on A-Listers, that's just another big value increase for A-List members, which should make more people want to be A-List members. So all three have the ability to drive improvement and some people have looked at this as a price increase, which, of course, it is on day one.

But what's really interesting is that we are in inflationary times, and inflationary times cause costs to rise. And without making any comment about what AMC is going to do, because it's not legal to talk about pricing prospectively. But companies facing inflationary pressures tend to raise prices, not talking about AMC.

Under the pre-sightline structure of our industry, if we want to raise the price in a theater, the only choice we had was to raise the price on all the seats in the theater.

And so what's - one of the many benefits of sightline other than the three that you mentioned, are that if we feel the need to raise prices, we might only do it in the most popular seats in the auditorium and actually hold the line and not raise prices on other seats in the auditorium.

So it's actually a way of - well, it is a way of increasing the price now, it's a potential way of preventing a price increase later on. And then there is, in fact, the opportunity to discount upfront. I'm telling you, I've been looking at what we call heat maps, which are - what seats are booked for a particular movie.

And nobody sits in row 1 in movie, theater. It just doesn't happen. It could be opening night of Star Wars. Every seat in the auditorium in row three to 18 is booked solid and row one is empty.

And it really - there is a possibility here that by discounting the price upfront, we might be able to expand the movie going market to more price-sensitive consumers..

Perfect, that's helpful Adam. Thank you very much, appreciate it..

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the floor back over to Mr. Aron for closing comments, over to you, sir..

Thank you, operator. To everyone on the call, thank you for being with us today. Today was a good day for AMC. We reported results that were unexpectedly positive. We introduced our popcorn line.

And we've had a lot of discussion about the importance of the March 14 shareholder meeting that will simplify and strengthen the capital structure of this company going forward. Thank you for joining us today. There are a lot of big movies coming out. We look forward to seeing you at our theaters sometime soon..

Thank you very much, sir. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..