Greetings, and welcome to the AMC Entertainment Holdings Incorporated First Quarter 2025 Earnings Webcast. 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. It is now my pleasure to introduce John Merriwether. Thank you, John. You may begin.

Thank you, Julian. Good afternoon, everyone. I'd like to welcome you to AMC's first quarter 2025 earnings webcast. With me this afternoon is Adam Aron, our Chairman and CEO; and Sean Goodman, our Chief Financial Officer. Before I turn the call -- the webcast over to Adam, I'd like to 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 and 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 statement, listeners are cautioned against relying on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. On this webcast, we may reference non-GAAP financial measures such as adjusted EBITDA and constant currency, among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the Investor Relations section of our website earlier this afternoon. After our prepared remarks, there will be a question-and-answer session. This afternoon's webcast is being recorded and a replay will be available in the Investor Relations section of our website at amctheatres.com later today. With that, I'll turn the call over to Adam.

Thank you, John. Good afternoon, everybody, and thank you for joining us today. Anyone who has ever driven a car knows that you spend far more time looking out the front windshield than you do looking at the rear view mirror. That metaphor of it being more important to looking ahead, not looking backwards, is particularly appropriate for the movie theater industry at this particular moment in time, because the first quarter of 2025 was not at all indicative of the current strength and what we expect will be the coming strength of the movie theater business. Simply put, we believe that a dramatic reawakening of the industry-wide domestic box office has begun. Right now, movie theaters are literally booming, and we believe that this great news about a robust box office will continue for the foreseeable future. Clearly, though, that was not the case in the first quarter of 2025, which was entirely consistent with our earlier pronouncements that calendar year 2025 would start out slowly. How slow was it? Really slow. Setting aside those first quarters directly impacted by COVID and its aftermath, the 2025 January to March industry-wide domestic box office was the lowest it has been since 1996. But fortunately for us, in brilliant contrast to Q1 of 2025, we continue to believe that moviegoing demand for the balance of 2025 and all of 2026 will show great strength. So much so, in fact, that we now believe that the full year 2025 industry-wide domestic box office will come in at the high end of our previously forecasted range of it being $500 million to $1 billion ahead of the industry-wide domestic 2024 box office. Even more compelling, we also believe that the 2026 box office will wind up being considerably larger than that of 2025.…

Thanks, Adam, and thanks to everyone for joining us this afternoon. As Adam noted, the first quarter box office was indeed challenging. Nonetheless, while the North American box Office was down 12.4% compared to last year, AMC in fact outperformed by around 150 basis points, recording a domestic admissions revenue decline of 10.9%. Despite the relatively modest box office in the first quarter, AMC's business fundamentals were robust, as evidenced by the sustained strength of our underlying performance metrics, which, coupled with the operating leverage that is inherent in our business model, mean that we are exceptionally well positioned to capitalize on the industry recovery that is expected in the remainder of 2025 and beyond. This afternoon, I'll focus my comments on some of the key indicators of the health of our business. In Q1, our consolidated revenue per patron on a constant currency basis was up 1.6% year-over-year, and notably up a very substantial 40% compared to pre-pandemic 2019. This was fueled by a 49% increase in food and beverage revenue per patron, along with a 26% increase in admissions revenue per patron. Even more compelling, we grew our consolidated contribution margin per patron on a constant currency basis by 3.7% compared to last year, and this is approximately 51% higher than pre-pandemic 2019. Note that contribution margin per patron is calculated as total revenue minus film, exhibition, and food and beverage costs. This divided by the total attendance. This measure is intended to provide an indication of the incremental profit that we generate with each additional moviegoer, and this incremental profit per moviegoer is around 51% higher than it was in pre-pandemic 2019. From a segment perspective, our US operations delivered resilient results with admissions revenue per patron achieving an all-time Q1 record of $12.31. This despite a…

Thank you, Sean. Today, I'd like to take you a little bit deeper into how we're proactively positioning AMC to capitalize on what we firmly believe will be a resurgent box office for the balance of 2025 and full year 2026 and beyond. It starts with our strategic playbook, the AMC Go Plan, a forward-leaning, intensely designed blueprint to elevate the guest experience at AMC theaters and ODEON Cinemas. It was named the Go Plan, GO because we're going on the offensive. Frankly, we got tired of being on our heels defensively for the past five years, and it's time to move forward with big ideas. The Go Plan is built around AMC's most compelling competitive strengths, our unmatched customer loyalty programs, our sophisticated marketing engine, our innovative food and beverage offerings, and our global leadership in immersive premium large format experiences. AMC is already the global leader in Premium Large format and Extra Large format screens, with more than 600 such screens in total. That's more premium experiences than that offered by any other movie theater operator in the world. But under the AMC Go Plan, starting this year in 2025 and continuing in the years ahead, we are going to further that lead, and we'll do so in a big way. We expect to grow our Premium Large format and Extra Large format screens from more than 600 now to more than 1,000 in the months and years ahead. To do so, we'll be doubling our footprint of upgraded IMAXs with laser screens by converting some of our older IMAX auditoriums into state-of-the-art IMAX with laser systems. We're also growing our count of Dolby Cinema screens by almost 25%, adding about 40% more. Both of these growth initiatives are structured so as to require minimum upfront capital expenditures…

All right, thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Okay. Well, I would like to turn the floor back to management for further questions.

Thank you. So, Adam, the first question from our shareholders is related to the tariffs. What are your thoughts about the current discussions around tariffs in Hollywood?

Well, obviously this is a-- this is a new topic. It is our understanding that there are no final specific plans as to what may transpire and that there's going to be ample opportunity for discussion between the government and industry on this topic. It goes without saying that we'll be paying very close attention to developments in this area.

A lot of questions about the Go plan. Some of them are as follows. What proportion of AMC locations do you think ultimately could include a premium format auditorium? Likewise, recliner seating. What percentage of our auditoriums could have recliner seating? And then questions about other innovations that we might be looking at for our auditorium, such as somebody suggesting semi-private viewing booths, for example.

So there's a lot in there. As I said in my prepared remarks, we have more than 600 PLF and XLF screens. That number should grow to around something over 1000. In what percentage of our theaters will we find that? In the plans we have now probably we will hit three quarters of our theaters worldwide. But that's just the plans we have now. We've only announced 250 XL auditoriums in the United States. That's based on our current plan. But you could easily see the XL auditorium if it's successful, if it resonates with consumers, you can easily see that number shooting up from 250 XL auditoriums to maybe 500 XL auditoriums, in which case we could find ourselves with a PLF or an XLF in just about every theater in our circuit. Depends what the guest response is. In terms of recliners, more than half of our circuit is reclined at the moment. That number could grow. We will need growth capital available to us to do so because those theater renovations are not cheap. But interestingly, we have a significant number of theaters, I'd say 50. Where to put in recliner seats would be uneconomic to do so because the theaters have such high volumes that we can't afford the seat loss that comes with putting in recliner seats. And for that reason, we just came up with this Club Rocker seat, the AMC Club Rocker that we put into AMC Burbank. We put in Lincoln Square, we put in Empire, and we have more than 500 theaters in the United States. We look at these attendance reports on a daily basis, and it's just so stunning to see over and over again that the three highest-grossing theaters we have in the entire United States out…

Kind of a related question here from one of our shareholders. At what point do you expect the business to be in a position to generate positive free cash flow?

That's a nice question to get because the answer is right now, the first quarter, so bleak and yet was anyone drawing any kind of negative conclusions from the first quarter? It's just going to be wrong because the second quarter, third quarter, fourth quarter 2025 are going to perform so radically different than did the first quarter of 2025. It wasn't wholly unexpected. We predicted last year that the industry would start very slowly in Q1 because we knew what titles were coming out. But we also know what titles are coming out for the balance of the year. And if we hit our internal forecasts of what's going to happen for the balance of 2025, then this company will be free cash flow positive for the nine month period, April to December 2025. And what a stark change that is compared to where we've been since the pandemic hit in 2020.

Let's talk a little bit about food and beverage. We're doing very well on food and beverage growth. Are there plans to enhance and expand the food and beverage offerings to our guests?

Sure there are. This better than anybody, Sean. We're so proud of what we've done to drive the revenues of this company and cut the cost of this company such that our contribution per patron is up more than 50% above where it was pre-pandemic levels. It came with a lot of hard work and we've had a lot of cooperation from a lot of sectors to pull this off. Our landlords cooperated. Not only did we close unprofitable theaters, but we were able to reduce rents on a lot of our theaters, which improved their profitability, which allowed them to stay open. One of the other areas where we've had a lot of cooperation is from our guests because they're buying more stuff at the concession stand than they've ever done in AMC's 105 year history. And we are the industry leader in terms of food and beverage spending per patron amongst the mass operators. I'm not trying to compare AMC against small boutique dining chains, but when you look at AMC against other mass operators, we have the highest food and beverage spend. We do that because we pay a lot of attention. We achieve that. We pay a lot of attention to innovation in the food and beverage area. And just as examples, we put -- I think when I got here, we only had like 100 bars at our theater. We now have 350 MacGuffins Bars in the United States. We're also serving liquor across Europe. Movie-themed drinks is just a huge hit. And I'd say twice a month we have movie titles that are big enough where we're creating special movies, multiple movie-themed drinks, and they sell very well. Then there's like, obscure stuff. So in the first quarter, we just completed the rollout across…

Well, talking about that and the profitability per patron that has been, as you say, so much higher than pre-pandemic levels, there is a question about how sustainable is that? Because as the box office recovers, is there going to be pressure on that profitability per patron metrics?

Well, it depends if you want to think logically or get the data. Logic says if we add a ton of attendance, which we expect to add in the remainder of 2025 and 2026, then it might be hard to continue to drive these massive improvements in contribution per patron that we've enjoyed over the last couple of years and it's up over 50 compared to pre-pandemic levels. And yet April was a month where we had a massive surge in attendance. And as opposed to that massive surge in attendance eroding these key performance metrics and causing some of the revenue per patron to fall and the incremental contribution per patron to fall, it's been the exact opposite. In April, our revenue per patron and our contribution per patron increased even on stronger attendance. So I think that there's good news in all this, that we've managed the business with a lot of innovation and a lot of effort to drive revenues and to drive profit, and it looks like it's going to continue.

That's all the questions that we have at this time.

Well, good. Thank you everybody for joining us today. The first quarter of 2025, while it beat analysts' expectations, was nothing to write home about. But what you're going to see out of AMC and out of the movie theater industry generally across the remainder of 2025 will be something to write home about. If we hit our forecasts, we are going to do very well and show a dramatic improvement over where we were only a year ago. Thank you for joining us one and all.

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