Greetings and welcome to the AMC Entertainment First Quarter 2021 Earnings Conference Call. During the presentation, participants will be in a listen-only mode. Afterwards, we will conduce a question-and-answer session. As a reminder, this call is being recorded today Thursday, May 6, 2021. I'd now like to turn the call over to John Merriwether, Vice President, Investor Relations.

Thank you. Good afternoon. I'd like to welcome everyone to AMC's first quarter 2021 earnings webcast. With me this afternoon is Adam Aron, our President and Chief Executive Officer; and Sean Goodman, our Chief Financial Officer.

Thank you, John and good afternoon everyone. Thank you for joining us today. For the last year, I've started all our AMC earnings webcasts and all our internal employee meetings by expressing my sincere wishes that you and your families, along with your colleagues and friends all have been and are now still in good health in these challenging COVID times. Today is no different. I so do hope that you all are well. But with 250 million vaccination doses already in arm in the United States, and more than 1.2 billion doses of the vaccine having been administered globally and given that millions of more vaccine injections are taking place every single day, both at home and abroad, this just may be the last time or close to the last time that we feel the need to do a preamble on these calls about your health. Isn't that a glorious thing to contemplate? I watched those vaccinations statistics closely all the time, because let's say what it is. Vaccination is our way out of all of this. Count me among the many. So continue to marvel. And by the way, that's little M marvel, as in being amazed, not capital M Marvel through which Disney is going to be releasing some extraordinary movies theatrically this year.

Thanks Adam, and thank you to everyone for joining us this afternoon. And I also do hope that you and your families have been keeping safe and well during this time.

Thank you, Sean. Two very quick points, but important points before we open it up to your questions. First, on AMC's continuing liquidity. Let's assume that our current 43 million share at the market equity raise continues to go well. Let's also assume that the domestic box-office as a proxy for the industry's overall health has some semblance of a recovery starting in the second half of 2021. How do we define some semblance of recovery? A domestic box-office, meaning the box-office for the U.S. and Canada hitting $5 billion or more in 2021 and a domestic box-office of $8 billion or more in 2022. How reasonable is an $8 billion placeholder for 2022? We all have our opinions, some more informed than others, but literally no one knows for sure. After all, 2020 was a disaster and there are a myriad of predictions as to how quickly a recovery in movie theater ticket sales will occur. Still reflect on this. Absent a global pandemic, the domestic box-office has exceeded $8 billion every year between 2001 and 2019, 19 years in a row. It is exceeded $9 billion every year between 2006 and 2019, 14 years in a row. It is exceeded $10 billion every year between 2009 and 2019, 11 years in a row; and is exceeded $11 billion every year between 2015 and 2019, five years in a row. And finally, also assume that everything else more or less works out along the lines of our current expectations. In that scenario, when looking at our liquidity, we can say now that AMC will have materially extended our liquidity runway all the way through the end of 2022. And given our sizable market share, our domestic box-office in 2021, above $5 billion or domestic box-office in 2022 above $8…

Certainly and thank you very much. First question comes from Eric Wold with B. Riley. Your line is open.

Thank you. Good afternoon, Adam and Sean. I appreciate taking the time for question. A couple of questions. I guess, maybe as the markets start to reopen a question on your two largest state, how are you interpreting the new social distancing capacity rules in New York City and what that actually means for capacity limits near term? And then on California, do you plan on going to 100% capacity when allowed to in mid-June, or are there some local restrictions that may not allow that?

So, Eric, whatever the capacity limitations are, they are a lot higher than 0%, which is where it was like eight weeks ago, and 25% where it's been recently and 50% -- in New York, especially the capacity -- we expect that the capacity limit will be removed, but the enforcement of a six-foot social distancing rule will continue to be enforced by governmental authorities, which of course, we will respect. And we've already made the decision. It's something to continue mandatory math policy, deep into the summer at the very least, maybe beyond that, as we learn more about, not the pace of our recovery, but the pace of the nation's recovery from the spread of the COVID-19 vaccine. So, I think, clearly capacity limitations are going up. That's true in New York. That's true in LA. We intend to be very cautious. I am immensely proud of how much effort AMC put into AMC Safe & Clean. But we opened our theaters back in August and we still have not heard of one documented case of COVID-19 being transmitted guest to guest at our theaters. That's so -- and that's such a tribute to our people at our theaters who worked so hard to operate their theaters cleanly, operate their theaters responsibly, operate their theaters safely. With this commitment to safety, at extraordinary expense, I might add, that AMC has shown over -- since last August. Protocols that we started working on last May. We're not -- no, we're not about to blow it now by taking unnecessary risks. So, we'll follow the science very carefully. We're listening to our Harvard faculty very carefully. It's interesting that people we've been working with at the School of Public Health were so far ahead of the rest of the country,…

Thank you. Maybe just one more, if I may. i guess, can you talk about what you're seeing in the current labor market and hiring hourly employees to come back to the theater? Are you needing to push up wage rates with all due track workers? And then kind of taking it from the reverse, obviously you're trying to get out of this pandemic in a more efficient manner. Eventually, you -- will you have the same number of hourly workers on hand, kind of when things ramp back up as you did 19, or will the number actually be lower?

So, let's talk about how difficult it is or is not to hire. And then, I'll talk about the -- our staffing levels. In the next several weeks, we're going to be hiring between 5,000 and 10,000 people to beef up our staffing levels, as we approach the summer season, when we see a lot of new movies being released and a lot more people coming to our theaters. Fortunately for us, AMC has always been a very happy place to work. Morale with our theaters has always been high. Our theater general managers just devote so much effort to the care and attention. They direct as what we call our film crew at our theaters. And so, if anybody's going to get employees to come back, I believe it will be us. We have seen some wage pressure by other employers in some low counts. But we ourselves have not felt much wage pressure yet. How that will change over the next six, eight months, we'll all learn together. But I know that as captain of the ship. I'm relaxed about hiring talented people to work at our theaters and our operations department is nervous as all get up about it. And that's because I get to tell them to hire the people and they got to go figure out how to do it. But they've done it really well for a lot of years. I think they're going to get it done again. Here's a little fact that you may not know about companies like ours, who tend to pay starting job wages. Not necessarily minimum wage, some cases, minimum wage, other pace -- other times higher than minimum wage, but still these are first jobs for a lot of young people in the country. The turnover in…

Perfect. Very helpful. Thank you, Adam.

Thank you, Eric.

And our next question comes from Meghan Durkin with Credit Suisse. Your line is open.

Hi, guys. Adam, I wanted to ask about the new shareholder base quickly. So, how do you see this going? I mean, if management thinks that increasing the share authorization is the best move for the company, but the new shareholders don't. Then, what is the way forward from there? And then for Sean, quick one. Are you still expecting to crossover and turn cash flow positive in 4Q 2021? That's it for me.

Thank you, Meghan. I'll take the first one. If management thinks something and the owners of our business thinks something else, in the free market system, guess who wins? Guess who always win? The owners of the business, because the management work for the owners. Now, we can try to explain, and we can try to persuade. And we can also listen, and we can adjust our strategies. There are a lot of ways to skin a cat. And I'm quite optimistic about the new shareholder base of AMC. Just go on Twitter, just go on Reddit, just go on YouTube, read what these people write. They love AMC. This is -- and these are not people who are just going to be investors in AMC. These are going to be customers of AMC who come to our theaters and enjoy watching movies at our theaters as paying guests. So, I love the idea that we have a compassionate, committed, enthusiastic shareholder base, and I'm sure that as we work together, management and ownership, we'll come to the right answer. Look at what we've achieved as -- the whole point of my prepared remarks, look at what we've achieved in the last year. We're going to achieve good things in the next year and the year after that too. The only thing that'll be different though, is before, when I wanted to talk to the company's ownership, I could fly to Beijing and I could sit down with three or four people and they had 75% of the votes, or I could talk to some of you analysts who were in frequent contact with people who also had huge percentage votes of our companies shareholding base. We are going non-deal road shows with you all and meet this institutional investor,…

Meghan, so to your question on the cash flow forecast for 2021, what I'll say is, firstly that our overall forecast for 2021 remains the same as it was when we last spoke on the previous earnings call. There's an assumption behind that. The assumption is that the domestic box-office is around $5 billion level and international is somewhere -- some of that. The timing of the cash flow is obviously going to be very dependent on the timing of specific from leases. What we see from the timing on the predictions for the remainder of this year is that our Q2 cash flow will be pretty similar to Q1. Q -- the second half of the year overall will be significantly better than the first half of the year, but you're going to see Q3 is going to be better than Q2, quite a lot better than Q2 and Q4 is going to be better than Q3, but exactly whether or not we will be breaking Q4 really does depend on how the final film slate ends up at the end of the day here.

Okay. Thanks guys.

Sure.

And we have time for one last question, which will come from Chad Beynon with Macquarie. Your line is open.

Hey, this is Aaron on for Chad. You guys had some really strong ticket and concession pricing, obviously, in the quarter. Can you share how much of that strength was driven by the strategic pricing adjustments you mentioned? And do you think this is sustainable going forward when demand starts returning full and other entertainment options open up?

So, I'll let Sean give you the specific as to what part of this high food and beverage spend per patron was priced rather than quantity. But I will tell you that the lion's share of this massive surge in food and beverage purchasing is that more people are going to the concession stand and they're buying more things when they get there. I remember being kind of astonished when I joined AMC five years ago, that almost a third of our entire clientele went to a theater, watched the movie and didn't get anything, never bought any food and beverage items. And so, one of the ways to increase -- and of course -- but our food and beverage revenues are divided by our whole -- our total patron count. So, that which is being bought by the people who buy as being blended with the nothing, that was bought by a third of our clientele. Well, people have been so deprived of something that they love. People love going to the movies, all the talk about streaming that we hear, people love going to theaters. It happens a billion times in the United States in 2019. And what we're seeing now is how they've been deprived of enjoying movies on the big screen, and going back to theaters, people want the whole enchilada. They want the whole thing. They want popcorn. They want a drink. They want candy. They want hot dogs. They want nachos, everything that we have. And some of our more imaginative food and beverage items, they want those too. Flatbread pizza, give me another. And so what we're seeing is more people are going the concession stand and then when they get there, they're -- if in the old days they bought two items;…

Yeah. Adam explain the drivers of the food and beverage statistics very well there. As to pricing, that was the least significant impact. The much more significant impacts were as Adam said, people were buying and the number of guests going to the concession and actually buying products as well. So, the price adjustment was very, very small in the total drivers there, less than 10% of the total increase.

Ladies and gentlemen, we thank you all for joining us today. It's been a wild ride and that wild ride is going to continue, but we are very much hopeful that recovery is right around the corner. Thank you for being with us today.

And all, that does conclude the conference call for today. We thank you very much for your participation and ask that you please disconnect.