Greetings and thank you for standing by. Welcome to the AMC Entertainment Third Quarter 2022 Earnings Conference Call. During the presentation all participants will be in a listen-only mode and afterwards we will conduct a question-and-answer session. [Operator Instructions] Today’s call is being recorded Tuesday, November 8, 2022. And now, I’d like to turn the conference over to John Merriwether. Please go ahead.

Thank you, Scott. Good afternoon, everyone. I’d like to welcome everyone to AMC’s third quarter 2022 earnings webcast. With me this afternoon is Adam Aron, our Chairman and CEO; and Sean Goodman, our Chief Financial Officer. So before I turn the call and 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 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 webcast, we may reference non-GAAP financial measures, such as adjusted EBITDA, constant currency, operating cash burn, among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the Investor Relations section of our website earlier today. After our prepared remarks, there will be a question-and-answer session. This afternoon’s webcast is being recorded and a replay will be available in the Investor Relations section of our website at amctheatres.com later today. With that, I will turn the call over to Adam.

Thank you, John. Good afternoon, everyone, and thank you for joining us today. Even with the third quarter financially being flattish, we join you on this call today brimming with confidence that the recovery of AMC Entertainment is well underway. AMC welcomed more than 53 million guests to our theaters around the world in Q3 of 2022, a 33% increase compared to the third quarter of 2021. On our last quarterly webcast, we were encouraged that the July industry-wide domestic box office was down only 12% from the pre-pandemic July of 2019, but we also did predict quite correctly that there would be a dearth of big movie titles being released in August and September of this year. Even so, we also were brilliant about the movies coming out in the fourth quarter of and in calendar year 2023, and that is precisely our view again today. Despite a lackluster August and September, we are seeing that the industry-wide box office is already on a rebound, both domestically and globally, clawing and climbing its way back. And looking at the fourth quarter of 2022, it’s worth noting that Warner Bros.’ Black Adam released in mid-October had the highest domestic box office opening weekend growth of all time for any movie featuring Dwayne Johnson as the leading man. I also can confirm today that our advanced bookings at AMC and Odeon for Black Panther: Wakanda Forever are frothy and robust. We are about as certain as we can be, that the so-called Black Panther 2 will be one of the biggest movies of the year and that its ticket sales might even cause it to rise as high as the second biggest movie of 2022, behind only Top Gun Maverick. And of course, Q4 will continue with Disney’s Strange World, with…

Thank you, Adam, and thank you to everyone for joining us this afternoon. While the third quarter started off strong, August and September were as we expected relatively quiet. Nonetheless, the quarter still saw revenue growth of 27% and that number is 32% in constant currency when compared to the third quarter of 2021. Comparing Q3 2022 to the prior year’s third quarter, the growth in revenue was offset by box office concentration with a resulting increase in film exhibition costs, a reduction in government assistance and inflationary cost pressures. The result for the quarter was a small consolidated adjusted EBITDA loss of $12.9 million, compared to a $5.3 million loss a year ago. Note that our domestic adjusted EBITDA in Q3 of $1.2 million was an improvement of $31.3 million compared to the prior year. While the international business, which enjoyed meaningful government assistance in 2021, experienced an adjusted EBITDA loss of $14.1 million, compared to adjusted EBITDA of $24.7 million a year ago. Now let’s just step back and look at our recovery over the last nine months. Year-to-date, consolidated adjusted EBITDA is a positive $32 million, compared to an adjusted EBITDA loss of $450 million for the same period a year ago. That’s approaching $0.5 billion of adjusted EBITDA improvement so far this year. As has consistently been the case in this recovery period, our per guest performance metrics remain markedly better than pre-pandemic 2019. For Q3 2022, on a consolidated basis, total revenue per patron was $18.21, approximately 21% higher than Q3 of 2019. This was driven by admissions revenue per patron growth of 12%, food and beverage revenue per patron growth of 30% and other revenue growth per patron of 48%, all compared to the third quarter of 2019. Taking a closer look at the…

Thank you, Sean. Before we head to your questions, I’d like to debunk a few myths, but also to address what I think is the single most important topic facing the movie theater industry of today, as well as several operational, environmental and business development concepts directly on the horizon, as we continue to innovate at AMC. Since the pandemic first arrived, the press has been filled with three concerns that conventional wisdom has repeatedly insisted would be existential threats to moviegoing in theaters. Fear of infection of the coronavirus disease, the rise of streaming services and the collapsing of exclusive theatrical windows. On the disease risk, thanks to vaccines, medicines that deal with COVID-like -- medicines to deal with COVID like Paxlovid and the fact that so many people have antibody protection because they already experienced the COVID infection, dealing with COVID now has transitioned from pandemic to endemic. It’s now more like the seasonal flu, which has been with us for more than a century since it was a killer pandemic in the early 1900s. People will still come down with COVID-19, but it’s no longer the commerce-destroying thing than it was back in 2020 and 2021. Life is returning to normal. Risk one, dealt with. On the streaming services risk, we have long said that the consumer’s voracious appetite for content is big enough for movie theaters and streaming services to coexist harmoniously together. The results from Spider-Man: No Way Home last winter from Top Gun: Maverick this past summer and from the expected big grosses this weekend from Black Panther: Wakanda Forever will again remind us all that movie theaters can thrive even with the consumer having a multitude of streaming services that are choices as well. As opposed to streaming services being a threat, we…

Let’s start with questions from our shareholders. Thank you to them for submitting their questions. I have grouped the questions into three categories. So the first category, Adam, is innovations. And the first question there is, where do you see AMC expanding in the future and what categories of innovations are in the pipeline to enhance the business?

So these items were sort of addressed in my earlier prepared remarks. Number one, within our existing theaters, the amount of business that we do in our premium large format screens is significant. Sometimes on our opening weekends, even though our premium format screens represent only 10% of our auditoriums, sometimes they are producing as much as 50% of the gross of our films across the network. So it makes sense for us to increase the number of premium format -- large format screens in our system and that we are doing. We are going to introduce more IMAX screens, more Dolby Cinema screens, more iSense screens and more Prime screens. So that’s happening. Second, in terms of innovation, again, I mentioned it in my prepared remarks. But I can’t say enough how big it is that we are deploying about $0.25 billion of resource to introduce laser projection in about half of our auditoriums. This is a technical term, but the so-called light levels inside a movie theater with laser projection of contrast with a halogen bulb. It goes up by between 50% and 100%. It means the pictures on the screen are sharper, they are brighter, and therefore, the movie watching experience is that much better. We are always going to want to create an environment in our theaters that makes the consumer want to get off their couch at home and come out to a theater, and brighter sharper pictures, especially doing so in an environmentally-friendly way is a good way to do that. And then the third major item of innovation for AMC is what we have been doing away from our theaters. Things like the branded credit card, things like Perfectly Popcorn, things like Zoom Rooms, which is in our theaters, but away from movie watching per se. These are all areas where we think AMC will shine going forward. And it’s not exactly innovation, but you talked in your remarks about how we closed 100 plus marginal theaters and opened 50 new ones and the 50 new ones are, make a lot more money than the 100 that we closed. I do continue to think that as the rest of the industry stumbled financially, we are going to see increased opportunity to grow our network and take advantage of our various strengths.

Next question here, Adam, is a request on update on AMC on demand?

AMC on demand, which we introduced several years ago before the pandemic, has always had kind of low usage, and candidly, while it’s a good little product, I think, our money is better directed elsewhere. And so the money that we have been investing to grow AMC Theaters on demand is money, I think, that instead, we ought to be putting in placing a significant number of branded credit cards or taking popcorn to the home popcorn market. So I think that as we look to 2023, we are going to look to either phase out AMC Theaters on demand or alternatively joint venture with another party to offer that same capability to our guests, but not only -- but not necessarily to investment spend to build it up ourselves. So I mean it takes me to a point that at a time when dollars are presses, because the recovery of the movie industry has taken a considerable time. You and I agree, Sean, that we need to be laser-focused on making sure that every dollar counts, because every dollar of expenditure increase every possible dollar of revenue back to best ideas, walk away from the ideas that may be intriguing but maybe a lower grade priority.

Two questions here-- thanks, Adam. Two questions here that you did mention in your prepared remarks, but people are asking when can they expect to see AMC branded popcorn on the shelves and what is the long-term potential of the partnership with Zoom, so maybe you want to add a little bit more color.

Sure. Sean and I have been at many a taste testing of one recipe after another for our ready-to-eat popcorn and our microwaveable popcorn that’s going to hit shelves in the first half of 2023. We have seen the packaging, which I think is beautiful. We have had numerous conversations with major national retailers and are getting really favorable response. People want to carry this product on their shelves. You are going to see it in the first half of 2023. I was supposed to caveat everything, because you never know what can go wrong, but my firm expectation is on the shelves first half of the year. As for Zoom, I was in the hotel industry for a good chunk of my career. The meetings market is a multibillion-dollar market. And for any of you who have gone to a hotel for a meeting and sat in their ballrooms or in their breakout rooms, their chairs are not comfortable. When you compare the comfort of an AMC signature recliner seat, so what you might get at a hotel, we beat them. Traditionally, we have only been offered to offer meetings at our theater as a standalone entity. Now thanks to our partnership with Zoom, we are going to be able to link up theaters in city-after-city so that people who want to have a nation-wide meeting and setting that to get everyone to fly on a plane and go to a convention city can do so simultaneously at our theaters. And I saw some reaction to the press announcement yesterday at Zoom. Why would people go to a theater? Why don’t they just sign in on Zoom? Because like Zoom is an amazing thing. As you know, we -- like we run our whole company on Zoom for like…

Thanks, Adam. So a question about our operations, especially looking into 2023 in the current environment. The question is, we are all seeing the impact of inflation on our daily lives. How is this impacting AMC?

So for those of you who are under the age of 35 on this call, you probably don’t even remember what inflation is. But for those of us who are old enough to remember Jimmy Carter when he was President of United States, we lived through inflationary periods and they stress the system because costs rise. And if you want to know how much they raised costs, just look at what the national inflation rate is. That tends to be the cost and everything goes up in the country. What’s ridiculous, so in terms of a starting point, when you hear inflation statistics being reported nationally, you should assume that AMC’s costs are going to go up by a similar amount. Having said that, what is very unusual in AMC’s case is that, because the box office is on a path of recovery, the volumes that we are seeing in our theaters, the volumes of customers that we are serving is rising dramatically. And as a result, we pick up operating efficiencies and increased operating productivity because the number of guests coming into our theaters is coming down, essentially because we are spreading our fixed costs over more people. So we are in the enviable circumstance that we have got a mitigating offset to inflation. The increasing productivity that comes from being able to spread our fixed cost over a larger customer base is offsetting a big chunk of the inflationary costs that would otherwise not be mitigated without this increasing volume of customers for productivity gains.

And then the next section here is a couple of questions about the stock. And the first one here is, please explain why you believe the stock has gone down and why management has been generally silent on this matter.

So this is the biggest question of the day, isn’t it? Let me start by saying, I am a major AMC shareholder. It is an enormous part of my net worth and I venture to guess that I personally own more shares than anyone listening on this call today. So I assure you that just as you watch the share price, I watch the share price. Having said that, in terms of decline, there are a lot of factors. These aren’t the only reasons why the share price has fallen. But look around at what’s happened in the United States, and for that matter, the planet over the past several months. There’s a war going on in Ukraine, which is not good for global stability. It’s caused the surge in energy prices. It’s caused dramatic inflation, which in turn, has caused the Fed to commit to raising interest rates. These are all factors that have affected the market overall. In the case of the movie theater industry, in early September, CineWorld also declared for Chapter 11 bankruptcy protection, which also created a certain amount of agita around the movie theater industry and our share price. It also does depend on what your timeframe is, of course, because while the share price is lower than it was in, let’s say, June of 2021, it’s still a lot more than it was in January of 2021. But what I just said is about all you will ever hear me say about our share price, because you asked sort of like why is management silent on this subject. There are things called securities laws in the United States. And if you are the CEO of a public company, it is much better for you to be talking about the state of the business than the state of the share price. And I know this is frustrating to some of you who would like me to comment all the time. But prudence says that our focus and our public focus should be what we are doing to bring back the health of the business over the short-, medium- and long-term, and that’s what we should be talking about, and so that, in fact, is what we have been talking about. We said earlier in the year that you should never interpret silences in action or indifference. We are aware this subject is very important to you and to all of us as significant shareholders of the company. Having said that, our focus and our public commentary is usually constrained to what’s in the best interest of the business, what’s the future of the business, what are the risks in air of the business and that’s what drives our public commentary.

Thanks, Adam. Then there’s a follow-up here, which is asking, can we reverse split the APE shares?

It’s something that’s legal to do. But interestingly, an action like that would require a shareholder vote, which should remind us all since there are many shareholders on this call. This is your company. Day to day, we run it, we do our best on your behalf, but on major topics of governance, shareholder vote is required. And that would be one, for example, that we would have to take out to the shareholders for their opinion and their consideration and ultimately their decision.

Great. And then a question on disclosure here, someone is asking, will you provide information on the number of shareholders and the number of shares that have been directly registered with the transfer agent, Computershare?

So for those of you who don’t know what direct registration of shares is, our transfer agent is Computershare. And most of you hold stock through brokerages, some of you owns stock that’s directly registered with the company through our transfer agent. A primary benefit, I suppose, for you when you register your shares directly with the transfer agent is that transfer agents do not allow for shorting of shares, whereas most brokerage firms do. And so what we have heard from some of you is that, to make sure that your shares cannot be shorted, you want to register them directly with the company and a transfer agent, which is you are right as an owner of a public security. We haven’t given any guidance to any of you to do that or not do that. It’s entirely your call. I should point out it’s a small number of people who have done it. As best I can tell, it’s around 15,000 or so of our millions of shareholders who decided to directly register shares. I think they have registered in the neighborhood of 10 million shares or APEs with our registrar. And what -- and we have decided that this is a number that -- is one of these numbers that we should publicly release, so when we file our 10-Q for the third quarter, we are going to announce in the Q what the number of directly registered shares is.

Excellent. And then the last question that I have here and then we can go into questions from analysts is, do you have any comments regarding the acquisition of Twitter by Elon Musk?

That’s quite good question. So the funniest comment that I heard on Twitter in the past two years was the two great means stocks are AMC and GameStop, and then there’s Musk. And the guy who runs AMC is Adam Aron that begins with an A, and Ryan Cohen that begins with the C runs GameStop, and of course, there Elon Musk. And somebody strung together that AMC was Aaron, Musk and Cohen and it’s quite something to a hold. But Mr. Musk is just taking control of Twitter and I have no comment really one way or another whether he will do a fabulous job owning and running Twitter or not. But what I can tell you is that the asset that he bought, meaning Twitter, this is the most incredible communications tool that I have ever seen. And if you just look back over the last, what is it now, year and a half that I have actively been tweeting with our shareholder base, we have been able to convey hundreds and hundreds of important messages to you all about what’s going on in our company and I have been able to read literally hundreds of thousands of inbound comments back to us. I spend about an hour a day on Twitter mostly reading what you have to say and I learned so much about what’s on your mind. And of course, Twitter also gives us the opportunity not only to learn by listening from you, but also to share information with you and share news with you. And so I continue to be astounded by how impactful and powerful Twitter is as a communications vehicle. And I hope that Elon Musk does good things with Twitter, because it’s a very valuable national asset if it’s run well. With that, I guess, Scott, the Operator, can you see if there are any questions from our industry analysts who are on the call?

Absolutely. Thank you. [Operator Instructions] And we have a question from the line of Jim Goss with Barrington Research. Please go ahead. Your line is open.

Good afternoon, Adam.

Hello, Jim.

How are you doing?

We are all good. Thank you.

I thought I’d -- good. I thought I’d ask you about the Stubs A-List. It’s been sort of not relevant for the past couple of years as the content and everything has been under pressure. But I wonder if you might talk about whether you have a plan to revive it, make it more relevant as the amount and mix of content improves and where it might stand right now, what is your starting point?

Sure. The A-List was -- for those of you who aren’t totally familiar, A-List is our subscription program, up to three movies a week for a fixed price of between $20 and $25 a month, basically. When we launched the program in June of 2018, it instantly took off and it popped up to as much as 15% of our total moviegoing in the United States. And we have a similar program, by the way in London called Limitless at our -- and in Germany at our Odeon theaters in the U.K. and our UCI theaters in Germany. In Europe, the Limitless program has grown considerably. And back in the height of the pandemic when our theaters are all closed, obviously, there was nobody paying us $25 a month to go see three movies a week because all our theaters were shut. So we put AMC A-List on pause in the United States and cranked it up last year. The good news is we are already back to between 600,000 and 700,000 A-Listers, up from zero during the pause. And again, we are seeing, depending on the title, 10% to 15% of our total moviegoing is coming from A-List members. So the A-List numbers have continued to rise from the second that we unpaused the program. If you look at A-Listers as a percentage of our total moviegoers, it’s kind of on par with where it was prior to the shutdown and we intend to be very aggressive going forward to continue to attract people to the program.

Okay. The one I might ask...

So -- yeah. Sure. Go ahead. Go ahead, Jim.

Thanks. Now I was thinking with alternative content. You have tried -- you have had an opportunity to try a number of things for the same reason the areas have been under pressure. I am wondering if there are any things you have shown on your screens that you think have some promise to be more than just better than nothing else.

Yes is the answer to your question. So we had good success with the concerts that we showed, whether they were live or taped. We had good success with WWE and UFC events and we have experimented with some professional sporting events. For all those things, concerts, the various sporting events, we need to secure what are called rights -- broadcast rights, from the leagues or the owner of the IP. And in all cases, we are encouraged by the results and so we will be on a path to try to negotiate rights with the various IP holders so that we can grow our alternative content going forward.

All right. Thanks a lot.

Thank you, Jim. Operator, am I correct, Scott that we are done with questions today?

That’s correct. There are no further questions at this time.

Great. So to all of you who joined us today thank you. I think I’d like to close the call with two thoughts. I said in my opening remarks that we are brimming with confidence as we look at the recovery path that AMC is on. That’s the first comment. The second comment is, to keep us continuing to be encouraged and brimming with confidence. Black Panther: Wakanda Forever. Black Panther: Wakanda Forever. Black Panther: Wakanda Forever. It’s going to be a big weekend in the movie theater business and we are excited to be talking to you today shut the head of this new very big movie being released theatrically. Thank you for joining us. We look forward to talking to you again next quarter.

That concludes the call for today. We thank you for your participation and ask that you please disconnect your line.