AMC Entertainment Holdings, Inc. (AMC) Q1 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to AMC Entertainment First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Merriwether, Vice President Investor Relations.

Thank you, Dana. Good morning. I'd like to welcome everyone to AMC's First Quarter 2019 Earnings Conference Call. With me this morning is Adam Aron, our Chief Executive Officer and President; and Craig Ramsey, Executive Vice President and Chief Financial Officer. Before I turn the call over to Adam, let me remind everyone that some of the comments made by management during this conference call may contain forward-looking statements, which 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 those risks and uncertainties are discussed in our public filings, included in our most recently filed 10-K and 10-Q. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the uncertainties inherent in any forward-looking statements listeners are cautioned to not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements whether as a result of new information or future events. On this call, we may reference measures such as adjusted EBITDA, adjusted free cash flow, and constant currency, which are non-GAAP financial measures. For a full reconciliation of our non-GAAP measures to GAAP results please see our earnings release issued earlier this morning. In conjunction with our earnings release, we encourage you to review the supplemental financial information for the 2019 first quarter that we published this morning on our website in tandem with the earnings release. After our prepared remarks, there will be a question-and-answer session. This morning's call is being recorded and a webcast 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.

Thank you, John. Good morning, everybody. Thank you for joining us to review AMC's look at 2019 results. Since our most recent earnings call covering AMC's record-setting full year 2018 results, we've gotten together telephonically to take you through with as much transparency as we're able the impact of ASC 842 and the change in accounting rules surrounding our theater leases. To reiterate, and as noted in our April 24 presentation, this is purely a non-cash accounting change, with no impact on operations, or total cash flows. In our view, it does not alter the past or future performance of this business in reality. As we did this morning for clarity, we will do our best for some time into the future, to give you current and historic financials on both the actual and as-adjusted basis for ASC 842. In addition, we had the opportunity to get together in person at a well-attended Investor Day, where we showcased the strength of the AMC platform and the ongoing transformation of AMC's delivery of the quintessential 21st-century out-of-home entertainment experience. We get there by combining our size and scale with market-leading technology and world-class marketing prowess to communicate, engage, and sell to our guests on a frictionless, proactive and intentional basis. We're aided by AMCs having the largest consumer database of avid theatergoers, as a result of our AMC Stubs loyalty program, enticing recurring revenue through our now profitable subscription service A-List, along with a network of theaters richer and guest-pleasing amenities than what is offered by anyone else. At that Investor Day session, we laid out our competitive strengths and commanding market leadership position as well as our ongoing strategies to drive growth in adjusted EBITDA, and adjusted free cash flow. In addition, we addressed our commitment to deleveraging to between 3.5 times and 4.5 times within 36 months and thereafter to reaching our long-term leverage target of three times net debt to adjusted EBITDA, which we believe to be prudent for AMC in terms of driving equity returns and the optimal cost of capital for the company. At the Investor Day, we also discussed in detail our view of capital expenditures for multiple years and set a marker on the ground giving you a framework to think about our medium- to long-term financial performance for AMC with targets that we believe are evidently achievable. While growth is not always a straight line linearly, we firmly believe that over a three to five year timeframe AMC can reliably generate revenue growth of 3% to 5% per year or 1% to 2% in excess of expected industry box office growth combined with delivering margin expansion after adjusting for ASC 842 of up to 200 basis points. As for CapEx having all you gone through much of the capital investment cycle domestically we believe CapEx will settle in over the next three to five years to a more normalized CapEx investment level of $250 million to $300 million annually. That's about $150 million in annual maintenance CapEx and $100 million to $150 million per growth initiatives especially those internationally. Note that this is down considerably from net CapEx investments of $500 million two years ago and $450 million anticipated for this year 2019. We encourage you to hold us to these targets. As we meet them, we should be generating meaningful free cash flow and creating attractive equity value for our shareholders. If you've not already looked through our Investor Day presentation, we encourage you to visit our Investor Relations website where you can download the full presentation and a transcript. Now let's turn to 2019. The background context for 2019 results is that for the full-year, we remained optimistic, confident, ebullient why don't you pick your favorite robust adjective that in 2019, we can drive yet another record year for AMC both in terms of revenue and adjusted EBITDA both of which we expect to beat full year 2018 results as adjusted for ASC 842. We always expected that the 2019 year would get off to a slow start and that the year will be back-end loaded and that continues to be our view. This is exactly what happened last year. Despite being the second biggest first quarter of all time, the domestic industry box office back in 2018 was actually down 2% year-over-year through mid-April. But then Avengers: Infinity War opened. When the dust settled at year-end, the 2018 domestic industry box office finished up 8% and set a new all-time record. Looking at the 2019 film slate, we many of you and other knowledgeable industry observers think that pattern will repeat again this year. For sure, 2019 this year started slowly. But that all changed with the record-shattering opening of Avengers: Endgame. Spoiler alert expect amazing title after amazing title after amazing title in the remainder of 2019. Our sense of the film slate from April to December of this year is that we could be seeing the busiest biggest 9-month period in the 106-year history of cinema and we would not be surprised in any way if 2019 becomes the first year ever in which the domestic industry box office exceeds $12 billion. You know that many consumer-appealing movie titles that will be in theaters near you throughout 2019. Among many others in May Rocketman, John Wick 3, Pokemon: Detective Pikachu and Disney's Aladdin; Secret Life of Pets 2, Men In Black: International, Annabelle Comes Home and Toy Story 4 all open in June; Spider-Man: Far From Home and Lion King what I think is going to be a huge movie to set July on fire; Fast & Furious Presents: Hobbs & Shaw and Angry Birds 2 highlight August; It: Chapter 2, Warner's incredible horror movie will fill red balloons in September; Joker and Gemini Man open in October; Terminator: Dark Fate another Charlie's Angels movie and Frozen 2 come in November; and of course there's December with Star Wars: The Rise of Skywalker along with the Jumanji sequel and Andrew Lloyd Webber's Cats, the legendary Broadway musical comes to the big screen will all please audiences just before the holidays of December. It is a stunning list of movies and the 2019 film slate has something for everyone young and old alike. Importantly, as you heard in the list I just rattled off family-friendly movies tend to perform better for both our international and non-urban domestic markets. And with the greater mix of family-friendly movies coming in the remainder of the slate this year this should be a boom for AMC both in the United States and around the world. Just as was the case during the box office record-setting years of 2015 and 2016 and 2018 the massive current success of Avengers: Endgame demonstrates just how many people could be flocking to theaters in the remainder of 2019. When Hollywood turns out quality movies moviegoers come in throngs to our theaters. Literally billions of times each year people the world over enjoy seeing movies communicatively in theaters on the big screen. You already know these mind-numbing stats for Avengers: Endgame, the highest grossing domestic opening weekend of all time bringing up more than $350 million domestically and $1.2 billion worldwide. And in just 1.5 weeks the fastest movie ever to reach $2 billion in global box office. Our hats off to Disney on its wonderful accomplishment, but we should all keep in mind with some glee that AMC, Odeon generates more box office dollars for Disney than does any other single cinema operator in the world. So when Disney wins, AMC wins. And make no mistake with its incredible skill as filmmakers and film marketers, and now combined with Fox, Disney is going to continue to win. That's very good news for AMC. Coupling, AMC's relationship with Warner Bros., Universal, Sony, Paramount, Lions Gate, FTX, Annapurna, Amazon Studios just about any filmmaker committed to theatrical exhibition is similarly tight. We can certainly say that Avengers: Endgame sure worked for AMC. In the United States alone, we wound up playing the movie 63,000 times in just the opening four weekend days. That's a full one-third more than at AMC for the previous biggest opening film. To accommodate this unprecedented demand, we had 19 AMC locations opened around the clock continuously from Thursday morning through Sunday night and about 180 AMC theaters with posted show time starting after midnight for a 3.5-hour movie comedy trailers. Beyond admissions, we also set not one, but two single day U.S. food and beverage revenue records during the Avengers opening weekend. More than $13 million was spent on food and beverage at AMC on the opening Friday. That new record lasted for all the day as was followed by an even bigger record set the next day on Saturday with $15 million spent. The Avengers: Endgame results were similarly thrilling for us for Odeon and AMC Theatres all throughout Europe and the Middle East. You'll hear us talk about operating leverage on the call in a moment. After all, cinemas are a high fixed cost, low variable cost business with shrinking revenues as we saw in Q1, profits are challenged. But when revenues are stronger, profits follow suit. Avengers: Endgame is a great example of how operating leverage works in good times to AMC's benefit. And we have many more big movies coming in 2019. Turning more directly to the first quarter of 2019. There are five shiny nuggets of information so far in 2019 that are highly encouraging to us as to what they portend for AMC in the balance of the year. In total though, the first quarter was a challenging quarter and one that we are thoroughly glad is behind us. As we had expected all along based merely on the timing of releases within the 2019 film slate the industry got off to a very slow start. At $2.4 billion, Q1 2019 was the lowest U.S. industry box office since 2013, down 16.2% in revenue year-over-year, down 14.8% on attendance. You're already aware that we had a tough comp with Black Panther opening in February 2018 and stronghold over titles from 2017 continuing into the first quarter of 2018 including Star Wars: The Last Jedi, Jumanji and The Greatest Showman. In the first quarter of 2019 this year, AMC on a consolidated basis generated $1.2 billion of total revenues, which was down 13.2%, compared to last year and down 11.2% on a constant currency basis. This was driven primarily by a 12.2% decline in attendance globally. For AMC, domestic attendance was down 11.1%. Domestic admissions revenue in the United States was down 14.8%. Fortunately, however, we continue to see strong returns from our U.S. food and beverage initiatives with AMC's U.S. food and beverage revenues per patron, up 3.9% as moviegoers enjoyed our popular feature for our menu variety and our strategic price increases took hold. On the international front, we saw an attendance decline within our network of 14.5% and an admissions revenue decline of 13% year-over-year adjusted for currency, largely due to the same industry dynamics that we've noted earlier in the United States. As also was the case in the U.S., international food and beverage revenues benefited from a 9% constant currency increase in food and beverage revenue per patron as we continue to implement theater innovations, new food and beverage initiatives and take our domestic food and beverage knowhow into international markets. As I mentioned a moment ago, our business has a significant operating leverage, which benefits our profitability during strong attendance periods but adds pressure during weak attendance periods. As a result of the industry-wide attendance declines in Q1, AMC generated first quarter adjusted EBITDA of $108.2 million, down considerably from the prior year. As we stated in the press release issued earlier today, the comparability between this year and last year is complicated by; one a sizable prior year rent benefit related to a lease modification that did not recur this year; two, a reduction in cash distributions received this year related to the sale of our ownership in National CineMedia last year; and three, a meaningful non-cash impact related to the adoption of the new lease accounting standard, ASC 842. Adjusting for these three items, adjusted EBITDA was down $111 million from the prior year which is slightly below the decline in gross profit over the same period of $117 million, reflecting the operating leverage in our business. Just to spend one extra minute on ASC 842. For those of you who have not yet updated your models for ASC 842 had our Q1, 2019, adjusted EBITDA not been impacted by the new lease accounting standard, our total adjusted EBITDA of $108.2 million would have been higher by $22.7 million. Well, if that's the tough news for Q1, so what are those five bright spots so far in 2019 that I referred to earlier that we find intriguing and compelling. First, in Q1, AMC outperformed the U.S. industry across some crucial and key metrics, including that AMC outpaced the industry on attendance per screen by approximately 570 basis points. And we outpaced the industry by more than 700 basis points on attendance per screen if you compare AMC to non-AMC, meaning you exclude AMC from the U.S. industry statistics so it's not us against ourselves and the other guys, it's us against just the other guys. We also outperformed on admissions revenue per screen by approximately 340 basis points by about 450 basis points comparing AMC to non-AMC on admissions revenue per screen. Second, I mentioned earlier in the call the strength of our F&B spend for patron in the quarter, up 4% domestically and up 9% internationally currency adjusted. In the United States, we were pleased to see that F&B spend actually increased to $5.23 per patron which is higher than that realized by other major cinema operators and represents a new first quarter F&B revenue per patron record for F&B for AMC. Third, memberships in our AMC Stubs loyalty program is soaring. We will cross 20 million member households in AMC Stubs in the next few weeks, up from 2.5 million member households only three years ago. Stubs is, especially important, as it allows us to collect unique data around the viewing preferences and purchasing behavior of our customers on an individual account-by-account basis and then enables us to personalize the customer experience as they engage with us, both inside and outside the theater. Before they arrive when they are there and after they got home. Fourth, it is now formerly time for us to declare to you that AMC Stubs A-List our subscription program is a winner. As of today, we currently have more than 785,000 A-List members, 787,342 to be precise, which is light years ahead of our early projections when we launched the program less than 10 months ago. And if you're counting, that's roughly 85,000 more subscribers than when we spoke on the fourth quarter call at the end of February. And roughly 180,000 more members in A-List than we had at the beginning of the year. A-List member counts keep growing handsomely, even though we launched nationwide at double the price of competitors and more recently implemented in January of 2019 an additional 10% to 20% price increase on new members in various parts of the United States. Here's another important metric. A-List frequency of visits per member per month in the first quarter was 2.6 times, right within our desired sweet spot of 2.5 to 3.0 visits per member per month. Average week frequency per member Q1, 2.6. But that was admittedly in a slow moviegoing quarter. We can now report the average A-List frequency for April and the first eight days of May which includes the first two weeks that were heavily attended for Avengers: Endgame also was 2.6 times exactly as it was for the January to March quarter and right where we want it to be. Additionally we are also pleased to report that the A-List program was profitable and was accretive to adjusted EBITDA in the first quarter of 2019. We continue to believe that by the end of the year A-List will be $3 accretive to adjusted EBITDA on a per member per month basis. Again that is way beyond our original expectations. We have good history now, 10 months into A-List and we think we have good visibility in the A-List going forward. And as I said, it is a winner for AMC. And the fifth point. While, we certainly saw a negative adjusted EBITDA swing in Q1 against the soft industry backdrop, we're already beginning to see the positive uplift in earnings on the heels of Avengers: Endgame in April. We expect to continue to see strong positive operating leverage throughout the rest of 2019 as the box office ramps. Accordingly, let me reiterate that we believe 2019 has the potential to be another record-breaking year for AMC. And as a result we now expect that our full year 2019 adjusted EBITDA will exceed that of 2018 adjusted for ASC 8421. One final update for you before we close, I'm pleased to point you to our announcement yesterday of our addition of a new independent Director joining the AMC Board of Directors, Adam Sussman. As part of the strategic investment from Silver Lake last September, we agreed to elect a Director with significant technology experience and knowledge and we couldn't have picked a better candidate. The Harvard MBA, Adam Sussman is currently the GM of Direct Digital and Geographies at Nike with over 20 years of digital consumer experience at major global brands including; Disney, Electronic Arts and Zynga. We look forward to his valuable ideas and contributions to AMC. In conclusion, before we turn to your questions. Looking at the totality of AMC, increasingly AMC is delivering a moviegoing experience to our customers that is frictionless and leverages data to create meaningful and personalized communication and experiences between AMC and our guests. We are marrying our global and upgraded physical footprint with a rapidly growing customer database along with modern technology interfaces, data-driven insights and innovative consumer engagement practices. Clearly, we continue to see in Q1 that this is all measurably driving attendance surges at AMC. With a strong movie slate coming and increasing consumer loyalty to our company, we look forward to the remainder of 2019 and what will hopefully be another record-breaking year for AMC. And as I said before what we might -- what we just think might be the biggest nine months in movie history. With that thank you for listening. And Craig and I are happy to take your questions.

[Operator Instructions] Our first question comes from the line of David Miller with Imperial Capital. Please proceed with your question.

Hey guys. Adam, question on surge pricing for you. You recall a couple of years ago you guys did an analyst event in San Francisco where you detailed all kinds of surge pricing strategies around multiple days and multiple formats and multiple types of genres and films. You reiterated that, I think briefly at your Analyst Day a couple weeks ago. With that being said what kind of surge pricing strategies and tactics have you been using with this Avengers juggernaut that continues? And will those continue going forward into the back half of the year? Thanks very much.

Sure. David, so this is a complicated question. There are so many things that are on the table for pricing strategies. And let me -- I'll mention some that we've done and some that are on the drawing board. 1.5 year ago, we already introduced weekend surcharges at hundreds of our most visited theaters. And those have been in place now for a long time. Consumers have accepted them and we're doing just fine. So that's one. Second, as you know, we charge a premium for PLFs and it's a very healthy premium. We get a 70% price premium at Dolby and IMAX, about a 40% premium, 45% premium for AMC Prime. We get a -- on average a 33% premium for 3D. And we have leaned into 3D and premium formats bigger than anyone else in the country. And as an example, a couple of years ago we had 155 PLFs, we have over 350, I believe, in the United States currently. All those auditoriums were commanding those pricing premiums for Avengers: Endgame. In addition to that, we created, as you know, the first-ever pricing department in the history of the movie industry. And that pricing department looks at the prices we charge at every single theater on a constant basis and we move pricing around building by building all the time, trying to optimize pricing, taking price up where we're able and taking price down where we need to. Knowing that Avengers: Endgame was coming, we certainly looked hard throughout the latter half of 2018 and the first four months of 2019, to make sure that the overall box office pricing theater by theater was well positioned. Beyond that, we've had two major pricing actions in the last 12 months, again, as you know, we call it Discount Tuesdays, which launched nationwide at $5 on Tuesdays and turns Tuesday into the second biggest attendance day of the week at AMC. Actually, when we launched the program last year, we called it $5 Tuesdays. We renamed it Discount Tuesdays at the beginning of 2019, because very quietly we've been taking price increases on Tuesday, pushing Tuesday from $5 to anywhere between $5 and $7 depending upon the theater. And then, of course, there is A-List which is a dramatic change in pricing philosophy that's affected so far 787,342 of our happiest customers. As we look ahead, there's still more that we can do, obviously, not that we did in time for the Avengers: Endgame opening, but we continue to think hard about, what we call, zone pricing, charging different prices for different seats as we do in Europe. We looked hard at, what we call, in Europe, Blockbuster pricing, where we charge different process title by title, just as we did in Europe on Avengers: Endgame. And then, also, we are looking at the timing of pricing, the possibility of charging more at the beginning of a movie's run when obviously demand is at its peak and charging less at the back end of a movie's run when demand is weakest, just before it leaves theaters and goes elsewhere into the ecosystem. Just to show you how dramatic this all is, I just want to give you an example of the theaters that I attended the opening of Avengers: Endgame, it was the ODEON Leicester Square in the heart of London. For opening weekend of Avengers, we charged anywhere from $15 to $51.63 per ticket for the opening weekend of Avengers: Endgame, based on where you sat in the theater. With more than half of the seats in the theater priced at north of £33 per ticket, close to $40 a ticket or higher. So pricing is something we think we understand a lot about at AMC. We've already taken a lot of actions over the past couple of years and this will continue to be an active area of revenue opportunity for us going forward.

Wonderful. Thank you.

Our next question comes from the line of Eric Handler with MKM Partners. Please proceed with your question.

Yes. Good morning and thank you very much for the question. Adam, I wonder if you can dig in and maybe provide us a little color about the bring-alongs that you're seeing with A-List subscribers?

Eric, we know exactly what it is and I don't think we've released the statistic probably, but -- and if I'm wrong, I'm happy to say what it is in the call, but people are nodding that we haven't released the number publicly. But there are three -- there are four numbers that really drive the profitability of A-List. And those people who were at our Investor Day presentation, or those who've looked at the Investor Day presentation realize that the level and detailed analysis that we have in A-List is huge. But the big numbers that drive the profitability of the program. What's the price we're charging, what's the frequency per month at which members are going, what's the take along percentage, and how much food and beverage spend are they buying? And literally, we are now sophisticated enough in our A-List analysis that we're able to track those statistics literally account-by-account, member-by-member. And we have a very good feel of who's profitable and who's not profitable and what the average profitability of that portfolio is. So, while we haven't released that specific stat yet and therefore, I don't want to set a precedent today. Rest assured that we know it, we track it literally daily and as a result of all this we're very confident in putting forward the two comments that AMC Stubs A-List was accretive in Q1 and by the end of the year, it will be accretive to the tune of $3 per member per month, that's $36 million a year if we had one million members in the system. I should also add that while we're not releasing the exact stats, it is a meaningful number. There are a lot of A-Listers who are being joined by non-A-listers. And one of the many technical enhancements that we're making in the AMC app right now as we speak is making it easier and more seamless, more frictionless for AMC A-Listers to bring along guests at full revenue, so they can do it in a single transaction without paying. The easier we can make it to user app, the more incentive it will provide those A-Listers to bring people along with them.

Great. And just as a follow-up, not sure what you'll be able to provide. But among families, how many subscriptions are you seeing per family on average? And secondly, what percentage of ticket purchases are seeing upgrades?

When you say seeing upgrades, what do you mean by that?

PLF.

PLF upgrades?

PLF. Yeah. Yeah.

Again, we track that stat hourly and I don't think we release that stat, we don't. But we know exactly what it is and it's pretty close to where we modeled it. And it's a big exciting feature of our program to the guest. They use our PLFs. They like IMAX. They like Dolby Cinema. They like getting it without having to pay the normal 70% premium that we charge. And it's one of the things that is I think driving the major appeal of A-List. With respect to families, the average member is between one and two members per household our AMC Stubs members, so we have a lot of couples, both of them are members. We also have a lot of single members. While we have some children members, we don't have as many as you might think, because we imposed as a rule of the program when we launched back in 2018, a minimum age which we lowered down to 2016. But we still have a minimum age of 2016. And you may wonder why. The reason is literally every time an A-Lister shows up at our theater, we require that they show us a government-issued photo ID, which generally is a driver's license. And obviously, if you're under the age of 16, it's not going to be so easy to get a driver's license. We've done this because we wanted from day one to make sure there was not fraud within the A-List program. Others and subscription who failed pretty spectacularly were saying that they say massive fraud because they were not checking identification and people were passing their cards around. I'm also pleased to say that we are working right now to program family membership capability within our website and app. And essentially what we're going to do is program a photo upload capability so that you can store your picture with us, so you won't have to show us a government ID for us to know that you are actually the member, because we'll have your picture loaded on file. And while you'll be able to change your picture from time-to-time, they will be infrequently so maybe once a year or something. So that we don't open ourselves up to fraud. When we have the photo upload capability that will then allow us to lower the minimum age down to let family members enroll not only for a husband and wife, but also for their children. So that's -- and that's yet another one of these bells and whistles adds to A-List coming down the pike that will make A-List even more attractive to more people which I think will cause it to continue to grow as a program into the future. But I wouldn't be surprised if that photo upload capability is a 2020 initiative rather than something we'll have to -- will happen this year in 2019.

Eric it's Craig. I'd add and just kind of to repeat a point to that I mean maybe and balance it a little bit. We actually for the quarter planned as we looked as we planned 2019 without the second quarter, the A-List program would actually be slightly dilutive on an EBITDA basis. So, we thought it would be better than -- it performed in 2018 but still a little dilutive. The fact that it was by a meaningful number accretive I think it was really in Q1 was an indication of kind of the strength and contribution of all the factors frequency really in line bring along exceeding expectations and so it's a combination of a lot of things that are driving the improvement well above what we expected at this point in time and why we again think run rate at the end of the year it's going to be $3 of contribution per member.

Thank you very much.

Can I just add one more thing because obviously A-List is such an important topic? I'm an old geezer. I'm 64 years old. I have been in business for 40 years. I worked for probably 10 different companies over the course of my career. I have never been more proud of an organization in my entire career than I am of AMC's marketing organization and its ability to analyze A-List and understand what's going on. The sophistication of our understanding of A-List is a big reason why it's profitable. We designed the program right. We are prepared to change the program as needed to make sure that it would become profitable and stay profitable and obviously the early returns are just way ahead of our expectations positively on every dimension. And they rip this program apart every single day. We understand it well. We know what's going on. We have it under control. It's performing well and we will do whatever we need to do to change the program to keep it that way, but as I said right now, program is very profitable and way ahead of timetable.

Much appreciated.

Our next question comes from the line of Jim Goss with Barrington Research. Please proceed with your question.

Thanks. I might as well stay in the A-List theme for a moment. You are tempted to right-size frequency with the price increases. And I wondered if you can talk about how that calculation changed the frequency in New York or Chicago or LA as you raised the prices?

So, we didn't see any change in frequency in the five states we went up to $24 that I detected. But we -- and the five states where California, New Jersey, New York, Connecticut, which is Metro, New York, and Massachusetts which is Metro Boston. We then went up $4 a month in those markets. We went up $2 a month in another 10 states plus the District of Columbia. It's not so much that it right-size frequency it just got us more revenue. If we're getting $4 more per head per month, it's $48 more per year and that's $48 more that we either can afford to pay our studio partners and film rent or put in our pocket or a combination of the two. And we needed to get that additional price increase because we want this program to be profitable and we got a lot of people seeing a lot of movies 2.6 per month in a quarter and we want to price it right. Plus I guess the other comment on pricing it right it's just also a function of demand. The membership applications have been so solid. When you got demand, you can afford to raise the price and we had demand, so we figured might as well raise the price.

All right. And Adam does the 2.6 times frequency mainly create profitability by the bring along box office or by adding concession sales? And when you do the accretive calculation what are you accounting into that?

So, it's both. Because it's a sum of all these metrics, right? Money is fungible, right? If we didn't have the bring along factor, we wouldn't have the $3. If we didn't have the F&B -- increased F&B spend, we wouldn’t have the $3. We do have the bring along factor, we do have the F&B spend, hence the $3. The $3 means that it's $3 per member per month of incremental EBITDA. What we're doing is we're comparing the program to the money that it's bringing to us now versus what the moneys that would have come to us anyway if we didn't have the program, so that's this calculus. Because for an enormous subset of this group, I'd say in the neighborhood of half, we knew what their frequency with us was prior to creating A-List because they were already Stubs members. So they were already tracking our purchases with us. So we're able to compare -- and remember Stubs gives them points not only on their own tickets, but on other tickets they buy for bring alongs and brings them points for F&B spend. So we knew exactly what they were doing before A-List and we know exactly what they're doing after A-List and you can adjust that for the change in the box office. You can -- so you can size it to make sure that the box office was comparable in dollar volume and you can analyze exactly how much money was coming in the door beforehand and how much was coming in after. And that's what this incremental calculation is.

Jim, I might add. I'd say it's fully loaded. And by that, I mean, in this comparison that Adam's describing the program -- the A-List program versus how the member attended before A-List, we also consider any additional fees -- ticketing fees that may be weighed. So we're putting that factor in all the film costs, all the food and beverage costs, operating expenses were loading any incremental operating expenses whether they maybe be even credit card fees as an example, not to -- this isn't an exhaustive list, but we're putting in some overhead costs that are incurred in the program from this office. So I think it's a realistic view of incremental revenues and also incremental costs that are associated. So we're trying to be as transparent I guess as we can. And intellectual honesty is a good thing. We're trying to be able to actually honest with how it is performing in -- by building in all the costs as we compare pre-A-List to post-A-List.

Okay. One smaller non-A-List question. I noticed you had a few more Dolby Cinema openings and I think one IMAX opening. And I assume that IMAX is pretty much largely in place or is it -- do you have more room for IMAX and do you think most of the PLF increments will come from Dolby and perhaps your Prime area and how aggressively will you be?

Jim, so look AMC is in love in IMAX and AMC for that matters in love with Dolby Cinema. We are the largest IMAX exhibitor in North America. We have about half of all IMAX installations in North America. We did a major announcement I think a year ago might have been two years ago, but I think it was a year ago that we are going to look to add 25 IMAX locations throughout Europe. Similarly, we're the only Dolby Cinema operator in North America or in the United States and we have about 130 Dolby Cinemas by now opened in the United States, the Odeon Leicester Square the Dolby Cinema in London. We would like to add as many IMAX and Dolby Cinema locations as we can. We have room for -- in the U.S., Europe and the Middle East maybe 100 to 150 more theaters could take an IMAX or a Dolby installation I would think. I'm sure that we will add more IMAX locations I'm sure that we'll add more Dolby Cinema locations. We're also going to have more Prime locations. We're -- without being too specific, we're also looking at other large-format ideas that we find fascinating that might not require as much capital as an IMAX or Dolby or Prime installation. And -- so -- but because consumers are willing to pay premiums for the better sight and sound experience in the theater, we're working hard to figure out how we can maximize the number of premium sight and sound, technology auditoriums that we have, because we're getting handsomely compensated by the customer for them.

All right. Thanks for that. Appreciate it.

Our last question comes from the line of Mike Hickey with The Benchmark Company. Please proceed with your question.

Hey guys. Thanks for taking the question. A couple on A-List. You noted the frequency was 2.6 for Q1, obviously not the most compelling slate during that period. And you mentioned that 2.6 to -- looks like May 8 and obviously that includes Avengers I think intuitively you sort think frequency would go higher and maybe it's just a case that we haven't stressed long enough into the tent-pole season or enough weeks of Avenger. But why you think frequency I guess had stepped up given more compelling film content? On a similar level, I guess you would anticipate I guess Avengers would be a driver of A-List sales. I'm curious what relationship you've seen there in terms of Avengers being a catalyst for A-List sales or at least does that meet your expectations. And I have a follow-up.

So it's our supposition also that frequency would rise with Avengers. And the last step that I saw 73% of A-List members went to see Avengers which is a pretty amazing statistic. But it didn't actually change the number of movies that they saw in a month. And I think it might be because they -- 2.6 movies a month is -- you're going every week and a half it may have to do more with their lives than the titles that are out there. But I wouldn't be surprised if the frequency goes up a little bit between now and December. It's -- but it sure feels to us like it's -- I called 2.5 to 3.0 times per month the sweet spot for this program, it sure feels to us that it's staying within that bound even with a stronger box office going forward. And if it were ever to raise higher than that, we would raise the price to make sure that the profitability of the program stays in balance. But so far so good and does it grow up to 2.7 or 2.8 with higher -- with this better slate of movies coming, it's possible. But it doesn't look like it's going to soar beyond that. And I said -- as I said, we always have a pricing mechanism that we could pull if we need to.

Okay. And then I guess the question was on Avengers what influence it has on ...

I'm sorry you asked that question too, Mike. Yeah. Yeah.

Yeah.

We did see a -- when Avengers opened we certainly saw a surge in member applications, but not in an enormous surge. I mean, it was up, it was a higher number. But remember, we added 100,000 from January 1 to Feb 28 and we added 80,000 from March 1 to May 8. So -- and January 1 to Feb 28 was a slower moviegoing season. But still zooming, still zooming that's where -- we thought we would be lucky to get to 500,000 by June of 2019 and we've got to 500,000 in 4.5 months and we've added 180,000 in the first four months of the year basically -- 185,000 in the first four months of this year. And that includes this slow moviegoing season in the first quarter. So, we're not done, they're still signing up. And I think one of the reasons they're still signing up, we're doing a very good job of promoting A-List in our theaters, on the website. We sold more than 20 million tickets a month at our theaters, that's 20 million eyeballs a month that we're promoting A-List to. Between the smartphone app and the website, we're getting somewhere between 50 million and 80 million visits a month, depending upon the month. Those people are hearing about A-List. So -- and interestingly this marketing is pretty inexpensive to us, because they're already on our website, they're already in our theaters. So, it's practically free and yet, it's a lot of exposure and to a very targeted audience too.

Hey, Mike, it's Craig. The thing that strikes me with the great success of the program. We're seeing -- as we've talked about, we're seeing the CapEx cycle kind of coming to maturation certainly in the U.S. and over the next couple of years we'll probably see the same thing in Europe. We'll spend a little more in Europe, but it will tail off and we see the $250 million to $300 million in three to five years. This is the type of strategy A-List which is a low-capital strategy to drive moviegoing res. Before it was physical improvement to the theater costing capital earning good returns, now we're really focused on marketing programs and this A-List program has got so much headroom to it where we can drive growth and drive attendance on a low-capital spend and I think that is an additional big benefit from the program.

Cool. Thanks, guys. Last question from me. I guess when you're close to sort of 800,000 in subs now and I think the bogey of maybe 1 million by year-end, I'm not sure if you gave that that's just what we're thinking. But sort of the 200,000 in incremental subs to bridge from where we are today to that 1 million wherever it is, whenever it is. Any thoughts in terms of what that demo would look like that sort of where we're at and sort of the new buyer movie behavior pattern, what -- any particular geos that you feel like is sort of under-indexed and maybe step up. And I guess, do you feel like you have to pull more from non-AMC patrons and perhaps where you have before.

Well the official bogey is I said 500,000 by June of 2019 and $1 million by June of 2020. I think I'll live with that and beat expectations again, better to under-promise than over-deliver. But yes, if we're already at 785,000 you would think we're going to get to one million before June of 2020. In terms of demos, the thing that I find interesting is that about a quarter of them are millennials above the ages all over the place. We've got senior citizens who were getting senior citizen discounts before and now they're not getting, now they're paying the same price as everybody else. We've got millennials, a couple of years ago people in this industry were lamenting that maybe millennials were not going to movie theaters and were more geared to subscription services well lo and behold AMC now has a subscription service and millennials are coming to AMC. So I find that particularly interesting. It is also interesting to us, I don't want to release the stat, but how many of our A-List members are coming from the five states that -- where we're charging the highest price. Clearly, we have struck a chord with moviegoers in New York and California and that's very good for us. We have a lot of theaters in those states and if we can lock in brand loyalty to AMC, it's good where we've locked in brand loyalty, but it's especially good in states where we have a lot of theaters. And then from geographies, beyond -- I mean that was geographies. Then the other stat that's interesting is that about half of the members for A-List were coming into the program having already been Stubs members, but what was so interesting is about half of the members coming to A-List were not Stubs members. Now some of those people might have been coming to AMC anyway, but coming with very low frequency, once every three or four months and now they're coming once every couple of weeks. Or they might have been coming from other chains where we've been taking share. But there's a lot going on we're tracking it very closely. We have a pretty solid understanding of what it is. And there's really -- there's not a single red flag within A-List right now. Just wherever we turn, we're pleased with what we're seeing.

Thanks guys. Best of luck.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Adam Aron for closing remarks.

Great. Thank you everybody. Thanks for joining us today. Let me just close with a couple of points that we made during the call. Our attendance was 700 basis points better than the competition in the United States that's a whole new world. And as we continue to drive attendance at a time when the movie slate is robust and we believe that the movie slate from mid-April to the end of December will be quite robust. We think while the first quarter was a tough one and we all understand that boy this could be a great year for our company. And we are -- we've never been more upbeat, more confident and more excited to let the next several months play out and post good numbers for the benefit of our shareholders. With that, thank you very much. We're glad you joined us today.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.