AMC Entertainment Holdings, Inc. (AMC) Q2 2026 Earnings Report, Transcript and Summary

Hello, and welcome, everyone joining today's AMC Entertainment Holdings Second Quarter 2026 Results Call. [Operator Instructions] Please note this call is being recorded, and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to John Merriwether, Vice President, Capital Markets and Investor Relations. Please go ahead.

Thank you, Angela. Good morning. I'd like to welcome everyone to AMC's Second Quarter 2026 Earnings Webcast. With me this morning is Adam Aron, our Chairman and CEO; and Sean Goodman, our Chief Financial Officer. Before I turn the webcast over to Adam, I'd like to remind everyone that some of the comments made by management today 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 those risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K and 10-Q. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the uncertainties inherent in any forward-looking statements, listeners are cautioned against relying on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. On this webcast, we may reference non-GAAP financial measures such as adjusted EBITDA and free cash flow, 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 early this morning. 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 -- excuse me, this morning's webcast is being recorded, and a replay will be available in the Investor Relations section of our website later today. With that, I'll turn the call over to Adam.

Thank you, John. Good morning, everyone, and thank you for joining us to discuss AMC's record-breaking results for the second quarter of 2026. What a quarter, what a quarter, what a quarter. In AMC's entire 106-year history, there has never been a quarter like this one. Needless to say, I'm extremely pleased to report that AMC Entertainment achieved all-time record revenue and all-time record adjusted EBITDA for the period April to June 2026. More than 71 million guests visited our theaters worldwide in the second quarter, 13.5% more than last year, drawn by one of the most powerful and diverse film slates that we've seen in years. Second quarter total revenues for AMC and ODEON increased 14.2% year-over-year to approximately $1.6 billion, while adjusted EBITDA surged 70% to $321.4 million, exceeding $300 million in a quarter for the very first time ever. Let me say that again so that the prognosticators of doom who have continued to vastly underestimate the will and the skill of AMC despite our having risen to meet challenge after challenge after challenge during these difficult past 6 years can hear me clearly. AMC reported record adjusted EBITDA of $321.4 million in Q2 of 2026. That's up $132 million over the results of last year's second quarter, and you may recall that last year's second quarter itself was a strong one. Both second quarter revenue and second quarter adjusted EBITDA exceeded Wall Street's expectations, and established new all-time high points for our company. Equally important, we converted this outstanding performance into generating cash. Free cash flow for the quarter was $190.1 million. You all have known for some time that the overall industry-wide domestic box office was showing strength in the quarter. At $2.99 billion, it was the highest second quarter in 7 years. And perhaps of even greater note of the 200 quarters in the past 50 years for which I have been able to personally scrutinize the statistics. This was the fifth best quarter ever in the past half century. Indeed, in the second quarter, 6 different film titles coming from Universal, Lionsgate, A24 and 3 from Disney had impressive domestic opening weekend grosses exceeding $75 million or more, in some cases, far more. But AMC did not just benefit from the rising box office tide, which, as you know, saw an overall 10.7% bump domestically. We also increased AMC's market share as our domestic ticket revenues were up by even more, up by some 11.4%. Our European numbers also shined as evidenced by our European attendance in the second quarter, increasing by 18% year-over-year. And I might add with our European second quarter adjusted EBITDA more than quadrupling over the second quarter of a year ago. Globally, in the quarter, we also successfully grew our food, beverage and merchandise sales, which increased by 15.3%, as did our so-called "other revenues," which increased by 16.1%. By now on this earnings webcast, you're probably hearing a common theme of one word being repeated over and over again. Increasing. Increasing. Increasing. And doing so with increases of double-digit growth. But happily, we get to use a different but equally impressive qualifier when you all take a look at just how well AMC kept a tight lid on our costs. With so much zeal in cost management, our adjusted EBITDA margin jumped from 13.6% in last year's 2Q to 20.1% in the quarter just completed. This all demonstrates the inherent operating leverage in our business model, which is significant at a time of rising revenues. The power of AMC's market-leading position stems from our size and scale, of course, but also from the compelling appeal of our theaters, the increasing numbers of our premium offerings, the prowess of our marketing programs, as well as our ability to keep our costs in check. Finally, after some admittedly tough years as our industry recovered only slowly from the ravages of COVID-19 and its aftermath, the relentless focus of AMC on delighting our guests has seen AMC executing with all cylinders blazing so far throughout 2026. Combining both the first and second quarters of this year, AMC's revenues are up 16.9% year-over-year, and our adjusted EBITDA for the first 6 months of $359.7 million in the first half of '26 is considerably more than 2.5x the $131.8 million reported in the first half of last year. Think about this as you reflect on the operating leverage inherent in AMC when revenues are rising. For the first 6 months of 2026, AMC's adjusted EBITDA is some $228 million above that achieved in the same period last year, up $228 million. As you've been learning this morning, the AMC story of 2026 includes our vastly improved operating results, but we also should speak to the enormity of the progress that we've made in strengthening the AMC balance sheet. Sean will walk you through the details in a couple of minutes. Suffice it to say, we have $1.7 billion less debt than we had at the end of 2020. Assuming static overall market benchmark rates, interest expenses decrease as our debt levels decrease, and with rising adjusted EBITDA, interest rates also decreased as our leverage ratios improve. Thanks in part to our success in generating free cash flow, and thanks in part to our success in raising equity. Take it all together, AMC had $778 million of cash on hand, excluding restricted cash, at the end of Q2 2026. And importantly, we do not expect any significant debt maturities prior to the year 2029, 3 years from now. Looking ahead, we continue to be ever so optimistic. This weekend's powerful debut of Universal Pictures and Christopher Nolan's The Odyssey, with an encouraging media reported $124 million domestic opening weekend gross, is the latest reminder of the strength of today's theatrical marketplace. Indeed, we also announced this morning, in addition to second quarter earnings, that there were some 4.3 million guests in AMC Theaters and Odeon Cinemas this weekend from Thursday to Sunday. 4.3 million people in our theaters, big, big numbers. That outstanding debut of The Odyssey will be followed a mere 2 weeks from now by Sony's highly anticipated Spider-Man: Brand-New Day, for which advanced bookings suggests yet another box office triumph is at hand. There will be more exciting movie weekends this year, especially including when Warner Bros. will be releasing Dune: Part Two and Disney will be unveiling Avengers: Doomsday just before Christmas. Accordingly, we believe that movie theaters will enjoy in the full 12 months of 2026, their strongest yet post-pandemic year at both the domestic box office and at the global box office. The summary of 2026 so far is that our strategy, our execution, and our preparation at AMC all came together as the recovering box office that a strong, lean, and well-positioned market leader in the largest movie theater chain on Earth, AMC. In short, $321.4 million of adjusted EBITDA, the best in 106 years. What a quarter. What a quarter. What a quarter. With that, I'll turn the call over to Sean Goodman, our CFO, who will walk you through our second quarter financial results in greater detail. After that, I'll return to highlight some of the consequential strategies and actions that encourage us greatly as we move forward. Sean?

Thank you, Adam, and good morning to everyone. We are indeed proud of the Q2 results. They delivered the highest quarterly revenue and adjusted EBITDA in AMC's entire history. We did not simply benefit from a stronger industry box office, we outperformed. In the United States, admissions revenue increased by 11.4%, approximately 70 basis points ahead of the industry box office growth that was 10.7%. And in Europe, our attendance increased by 17.9%, and that's approximately 170 basis points ahead of the relevant industry attendance growth. The success of our initiatives around the market share, per patron profit, cost management, and portfolio optimization, coupled with the benefits of operating leverage, drove second quarter adjusted EBITDA up 70% to the record $321 million. That is more than $30 million ahead of the previous record that was achieved almost 9 years ago when our attendance was approximately 23% higher. Comparing Q2 2026 results to the prior year, approximately $200 million of incremental revenue generated $131.9 million of additional adjusted EBITDA. That's a roughly 66% flow-through that drove our adjusted EBITDA margin up 650 basis points to 20.1%. The second quarter's performance was broad-based across our global circuit, with food and beverage revenue per patron and total revenue per patron hitting new all-time highs in both the domestic and the international businesses. In the United States, adjusted EBITDA increased by 57.5% year-over-year to $285.6 million, while in Europe, adjusted EBITDA increased by 337% to $35.8 million. Note that when comparing our second quarter 2026 results to the prior year, international revenue and EBITDA benefited by approximately 2% from European currency appreciation versus the U.S. dollar. And also note that 2026 general and administrative expenses benefited from an approximately $5.5 million credit associated with insurance recoveries. It's informative to compare our results this quarter to the second quarter of 2019, that was before the onset of the pandemic and before the strategic actions that we have taken over the last 6.5 years. In this year's second quarter, the North American box office was approximately 7.5% less than the second quarter of 2019. Yet in Q2 2026, AMC generated 6% more revenue and 39.5% more adjusted EBITDA than we did in Q2 2019, with attendance at our theaters approximately 26 million people or 26.5% less than in 2019. So we generated more revenue and significantly more adjusted EBITDA in a lower box office environment after 7 years of inflationary cost pressures and with approximately 16% fewer theater locations. This very clearly illustrates that we do not need the box office to return to pre-pandemic levels to achieve the same levels of EBITDA. This is because of the actions that we have taken and that we continue to take to enhance our market share, grow profit per patron, reduce our cost base, optimize our theater portfolio, and invest in the guest experience. During the second quarter, we closed 7 theaters and introduced 6 new premium large format and 25 new XL or extra large auditoriums. Since 2020, we have now closed 225 locations. We've opened 66 for a net reduction of 159 theaters, or approximately 16% of our global circuit. We have, at the same time, also added 77 premium large format and 193 XL or extra-large auditoriums. This increases the number of premium or enhanced auditorium options available to our guests by more than 50%. Now let's move to the balance sheet. Our priorities are clear: one, maintain sufficient liquidity; two, reduce borrowing costs and extend maturities; three, lower financial leverage; and four, invest in high-return opportunities that enhance the moviegoing experience at AMC. During the quarter, we successfully refinanced $400 million of debt that was due in 2027, thereby extending the maturity by 4 years. We also eliminated approximately $155.8 million of exchangeable debt that was due in 2030 through its conversion into equity. And we completed $150 million of at-the-market equity offering, raising more than $85 million of gross proceeds during the second quarter. In addition, we recently completed a $200 million registered direct equity offering with several institutional investors. And following the closing of that transaction, we exercised our right to redeem the remaining $125.5 million of 6.125% senior subordinated notes due in 2027. This redemption is subject to a 30-day notice period, and as such, the subordinated notes will be redeemed on July 24, 2026. As a result of the debt refinancing and repayment actions taken in the second quarter, we do not anticipate any material debt principal payments required prior to 2029, and our go-forward annual cash interest expense will be reduced by approximately $16 million. Our outstanding first half of 2026 financial performance, together with a meaningful improvement in the balance sheet, has resulted in a substantial reduction in our financial leverage ratios. And thanks to the terms that we negotiated in our various debt documents, the financial leverage reduction achieved during the second quarter is expected to trigger a reduction in the interest rate paid on approximately 75% of our debt. This will result in a lowering of the annual interest expenses by approximately $51 million. Yet another significant step in the transformation that we've been driving over the last 6 years. At the end of June, thanks to free cash flow generation of $190.1 million and the benefit of the capital raised during the quarter, our cash on hand was $778 million, excluding $42 million of restricted cash. It is important to note that on July 24 of this year, $125.5 million of cash will go out to be used for the redemption of our subordinated debt. As you may recall, our working capital cycle is closely tied to the seasonality of the box office. Generally, this has resulted in a positive cash impact from working capital in the second and fourth quarters and a negative cash impact in the first and third quarters, and we do expect this cadence to continue through 2026. With a strengthening balance sheet, enhanced cash position, and a resurgent box office, we're continuing to execute on the highly successful AMC Go Plan. And we expect net CapEx for 2026 to be between $200 million and $235 million. As we look ahead, we are optimistic about the ongoing recovery of global box office and confident in our ability to convert box office growth into significant growth in profit, cash flow, and ultimately shareholder value. And with that, I will turn the call back over to Adam.

Thank you, Sean. I want to briefly address a few key topics, 6 to be specific, before turning to your questions. First, one of the reasons AMC continues to outperform is the strength of the relationships that we have built with our guests through our industry-leading loyalty programs. More than 40 million U.S. households, for example, have participated in our AMC Stubs loyalty program, creating a direct and ongoing relationship between AMC and our guests. It is especially helpful that we know exactly which movie genres and which movie titles they have seen in our theaters. Through our loyalty programs, we're then able to develop a valuable understanding of our guests, reward their patronage, and encourage them to visit our theaters for the movies that they most like more often. AMC Stubs members represented just more than 50% of our total U.S. guest count in the second quarter. Second, benefiting from our many best practices learnings from our highly successful limitless subscription programs in Europe. I cannot rave enough about the success of our A-List subscription program in the United States, the one that lets you see up to 4 movies a week for a flat monthly fee of somewhere between $24 and $30 a month plus tax. At the end of the second quarter, more than 1.1 million moviegoers were members of our A-List program, more than double the membership that AMC's A-List had just 5 years ago. A-List is such a popular program, especially among Gen Z moviegoers. And it gives AMC a more consistent and increasingly more predictable cadence to welcome a younger generation to flock to movie theaters, as their parents and grandparents did before them for decade after decade, dating back a full century or more. Indeed, A-Listers who also get to participate in our AMC Stubs loyalty program were responsible for right around 20% of all AMC theater patronage in the U.S. during the second quarter. Think about that, 1.1 million people out of the 330 million Americans are so loyal to AMC that they represented about 20% of our moviegoing customers in the second quarter, which itself was so successful. Third, Sean often mentions with great satisfaction our closing nonperforming theaters and opening shiny new ones. What is so impressive here is that the theaters that we're opening so outgross and have so much more combined profitability than the theaters that we've shut. What's more, our willingness to do so also has given us the credibility we need in the theater landlord community to successfully renegotiate and receive much more attractive lease terms on many of the theaters that routinely come up for renewal each and every year. Fourth, AMC is the movie theater chain that led the way with recliner seating, both in the U.S. and at our ODEON Luxe branded theaters across Europe. Ironically, many of our highest grossing theaters simply can't take reclining seats because they require so much seat loss. We just can't afford to give up those seats in theaters that are so thoroughly patronized. Fortunately, we have a solution to this conundrum. Our relatively new branded AMC Club Rocker seat is much more attractive and much more comfortable than the seats that preceded it. The seat loss is but a fraction of the seating given up to install full recliners, and it also costs only a fraction to deploy the Club Rockers compared to what we previously were investing. The AMC Club Rocker seats propelled AMC Burbank, AMC Lincoln Square, and AMC Empire to be among the highest grossing theaters across the entire country week after week after week. Just as it has been for the past several years, we will remain highly disciplined with our capital expenditures efforts. But even so, we have figured out a way to relatively inexpensively get more of these Club Rockers into more of our top-performing theaters, which will make them even that much more appealing to moviegoers. Fifth, I've noticed that many of us have been writing recently about the power of extra large format and premium large-format screens. I want to remind you how much of a commanding lead AMC enjoys most importantly with IMAX and with Dolby Cinema, among others, along with our house brands, consumer-preferred premium products all, and proudly featured in the world of AMC in the U.S. and Odeon in Europe. Globally, AMC and Odeon now have deployed and operating some 226 IMAX screens, 182 Dolby screens, 83 iSense screens, 47 Prime screens, 14 ScreenX and 4DX screens, along with 193 XL screens, just about 750 in total. No other movie theater chain on earth comes even close. And these auditoriums are so popular. They represent only about 8% of our total screen count. But for The Odyssey this weekend, for example, they generated more than 50% of our total ticket gross for the film. IMAX especially performed fabulously well with The Odyssey. Chris Nolan's Epic movie was filled entirely with IMAX cameras, and our IMAX auditoriums are just packed right now. That's a real triumph for both IMAX and for AMC. It's no surprise then why AMC and Odeon are so committed to further increasing the number of our PLF and XLF screens, mostly using third-party capital to get there, I think that we can affordably increase that total count of our PLFs and XLFs by 100 and 250 more auditoriums over the next 2 to 4 years. And finally, sixth, I really want to salute our headquarter staff and our theater teams in the field for the creative ways in which they have controlled costs so far in 2026. It would almost be mind-numbing on this webcast today to try to walk you through all the line items on which we've been vigilant in keeping costs in check. But you should know that our success in the second quarter in driving more EBITDA than -- more EBITDA than almost any of you expected, came from our determined efforts first to get revenues growing, but to get them growing at a far faster pace than that of expense growth. With that, Sean and I would be pleased to take your questions from analysts and our retail shareholders following a quarter in which I forgot to mention it before, generated some $321.4 million, a 106-year record for AMC.

And our first question today comes from Mike Hickey with StoneX.

Congrats guys on an incredible 2Q strong first half performance. Two questions, Adam. The first is probably your point 6 on your team's cost discipline here, which has been exceptional, holding your OpEx basically flat in 2Q. How sustainable do you think that cost discipline is in the second half? And would you expect continued revenue growth to drive similar operating leverage?

Thanks, Mike. And by the way, Mike, our top lawyer at Weil, Gotshal is named Michael Hickey, so it's very confusing. That's very confusing. Thanks for your nice words about the quarter, it was quite a good one. There were a few onetime items in the second quarter last year and this year. So I don't know if we'll have exactly the same expense growth going forward -- expense growth containment going forward as we had in Q2, but that's a small piece of what was going on in Q2. What was really going on in Q2 is just we really contained costs. And I'm so proud of our people because it took 30,000 of them across 850 theaters, as well as in our headquarters organizations in Europe and the U.S. to pull it off. We're going to be maniacal in continuing to try to keep our costs down. Will we have the full 700 basis point improvement in adjusted EBITDA margin every quarter going forward that we had in Q2? I guess that remains to be seen based on how strong the revenues are and how much we can keep a lid on costs. But we're going to do everything in our power to maximize and drive revenue growth and keep costs under control.

The free cash flow, also exceptional, $190 million free cash flow in 2Q. I guess at this point, and I know that you've brought your leverage down, you reduced your interest expense. That all seems very positive for the second half and then overall annually. Do you have a sense at this point, the level of box office that would be required for you to consistently generate positive free cash flow moving forward?

To how many decimal points would you like that answer? We know exactly what the breakeven box office needs to be for us to be free cash flow positive on a 12-month basis. Right now, it's right around $10.4 billion, which is so impressive because we've -- if you compare what it was back in 2019, pre-pandemic, add 7 years of inflationary costs and wage pressure, among other things, and everything is more expensive that we buy, as everything that everyone buys is more expensive over 7 years. You would have thought the breakeven box office would have been much higher, but we've done such a great job in increasing our profit per patron and in controlling our costs. We're within sight of being cash flow positive, not for a quarter, but for a year. And the efforts to continue to drive that breakeven box office level downwards continue. If, in fact, we are successful in continuing to get lower interest rates going forward, and Sean deserves to be justifiably proud of how we built some automatic triggers into our various debt instruments, that as our leverage ratios improve, our interest rates fall, and that's exactly what's happening right now with the strong operating results from the second quarter and having paid off or converted into equity a bunch of our debt so far this year. If interest rates go -- interest expense goes down, -- that means that the breakeven box office level goes down as well. As I said to your earlier question, Mike, we're going to continue to do all in our power to drive revenues. Remember that something like 2/3 of our incremental revenue dollar falls to the EBITDA line. And we're going to do everything in our power to keep costs under control. So we're not quite breakeven neutral for the full year. But boy, are we close, and there's so much improvement over where we've been since 2019.

And our next question will come from Alicia Reese with Wedbush.

Great numbers, guys. Congrats on the quarter. I had a couple of questions about international. Just looking at the admissions revenue per screen growth of 20% year-over-year, and that's on the 34% growth last year in the second quarter. And some really nice growth in the first quarter, strong expectations for the back half of the year with a good slate. I wonder if you could talk about -- you had mentioned about 250 more premium large-format screens expected for the full, I think, global footprint over the next 2 to 4 years. To what extent have you completed your upgrades in Europe? And are those driving results? And to what extent are you still taking that 250 and driving that higher?

Alicia, I'm going to let Sean answer your question because our international theaters actually report to Sean in addition to his CFO duties. But I just want to clarify one thing. What I said on my prepared remarks is that we'll do somewhere between 150 and 250 more premium format and extra large format screens, the so-called XL and AMC screens in the U.S. and XL screens in Europe. We have 193 of them now. I'm sure that we can add 100 more, maybe more than that, across the U.S. and Europe going forward. So there's a lot of opportunity to add more screens. And we do get a healthy price premium for our premium products. Here in the U.S., for example, our IMAX auditoriums, our Dolby Cinema auditoriums usually are carrying something like a $6 or $7 price premium over a traditional auditorium. Our prime auditoriums and our iSense auditoriums are also commanding healthy premiums. And even our XL screens are commanding smaller price premiums, but price premiums nonetheless, basically up maybe 10% above normal auditorium pricing. And not only do we get higher prices for these premium products, but they're also the auditoriums that book first. And you just need to look at this weekend on The Odyssey that our premium and extra large format screens were 8% of our screens, but 50% of our gross. I mean, these -- the premium format screens and extra large format screens have the generating power of 6x that of a normal auditorium. So you can be sure that we're going to do all in our power to increase the number of IMAX auditoriums in our system, Dolby Cinema auditoriums in our system, ScreenX and 4DX auditoriums in our system, and our house brand Prime and iSense auditoriums and our XL screens. With that, do you want to make a further comment, Sean, about Europe?

Thanks, Adam, and thanks, Alicia, for the question. We are very fortunate because in line with what Adam is saying, we have a very long list of extremely high return projects, a longer list than we could afford to actually invest for any particular point in time. We're also fortunate that we are able to get co-funding from our technology partners, from our landlords to do investments in our theaters. The opportunity in Europe is pretty much the same as it is in the U.S. The recliner penetration in Europe is actually quite significantly, more than in the U.S. So there's an increased opportunity with recliner penetration. The Luxe theater conversions that we've done in Europe have generated extremely high returns. And so those opportunities exist and we're spending at the moment pretty much a proportionate amount of capital in the U.S. and Europe, and on these very, very high return projects.

And I might add for -- as excited as we are about the current profitability in the second quarter of AMC. There's so much operating leverage in our company that when revenues rise, EBITDA rises much -- at a much more rapid clip. And as Sean said, there are a lot of growth opportunities that we look at, but I don't want anyone to have the wrong takeaway from this conversation. If you look at the last 6 years, AMC has been incredibly disciplined in our capital expenditure efforts. We've skinnied down CapEx and embraced only the most obvious products and projects, we intend to continue to be extraordinarily disciplined in our capital expenditure process as we go forward.

And as a quick follow-up, can you just discuss briefly the ROI on the European recliner upgrades and just compare that to U.S. back when you were doing that, and the premium and large-format screens as well? Is the ROI similar to U.S.?

Yes is the simple answer, and they vary project by project. But it's not uncommon for us to see ROIs achieved of 30% or more, 40% or more, 50% or more. On the XL screens, they were so inexpensive to create because the screens already existed. We just didn't necessarily market that we had them. The IRR on the XL screens is pretty much infinite. Our total cost to put an XL screen in place, XL screen for which we're getting a 10% price premium in perpetuity, at least if current pricing were to continue. I don't want to make any forward-looking statements about pricing. But our expenditures for an XL screen were under $20,000 a screen. Mean the returns are really high when you can create a product of close to 200 screens globally and spend very little money doing it.

And I'll add to that as well, as one would expect, the returns are also really high when you can get co-funding from your landlords or your technology providers as well. And given what I said at the beginning about a long list of very high-return projects because of that and because of our disciplined approach to capital spending, we're investing in the highest return of those projects. So we're really investing in very high return projects that are going to be beneficial to our revenue and profit growth going forward.

And our next question comes from Chad Beynon with Macquarie.

Nice quarter. I wanted to ask just about the per patron spending metrics. Obviously, this industry has always been affordable compared to other out-of-home options, particularly what we're seeing with World Cup pricing, concerts this summer, and a number of other subsectors. But how are you thinking about pricing opportunities? I know you've already talked a lot about premium format and kind of what that does to pricing. But are there still opportunities either on admissions or concessions in the back half of the year and '27 to keep raising pricing?

So Chad, it is -- I was schooled as a young marketer that it's totally illegal for me to talk about pricing strategies on a going-forward basis. So I'm not trying to duck your question, but I can't answer your question. But I can answer your question in a different way. What I'm very proud of, looking backwards, not looking forward, is AMC has done a really successful job of raising price where we should when demand is strong and reducing price where we should so that bargain hunters can find appealing ways to get into our buildings and buy stuff from us profitably. And just some examples, last July -- well, for the last more than a decade, the movie theater industry has had cheap pricing on Tuesday. Last July, AMC took that cheap pricing on Tuesdays and instead added another second discount day by introducing the cheap prices on Wednesdays, 50% off Wednesdays, 50% off Tuesdays. It was brilliant, if I do say so myself, because prior to that effort, we didn't have anybody in our movie theaters on Wednesdays to speak of, and now Wednesdays is a strong day for us. So there is an example where reducing price worked. Another example of reducing price, A-List, now 20% of our patronage. Our A-List members have the right to go to 4 movies a week, that's 17 movies a month. They don't go to 17 movies a month. They go to 2 and 3 movies a month, but they have the right to, they can do. Some do, like many occasionally do a lot more than 2 or 3 in a particular month. But this has given us a great opportunity to drive moviegoing to secondary movies that might not have made the blockbuster cut and also allow us to sell more food. So there are examples where we have reduced price. But as you say, we have certainly not been shy at AMC in raising price for our premium offerings on weekends, for our blockbuster titles. I could give you example after example after example where we have proven to ourselves and to the outside world that there, again, looking backwards, not looking forwards, that there has been price opportunity, and that AMC has smartly been able to take it. And if you compare the average ticket price that AMC achieves and you compare that to all the other large mass operators, you're going to continue to find and believe that AMC is more successful in commanding higher ticket pricing than our competition. That is a testimony to our proven ability to smartly price, both in having raised prices where we should and having reduced prices where we should.

And if I could add just one thing is that we shouldn't completely equate revenue per patron increases to price increases, right? Because in the case, for example, the average ticket price, significant portion of that increase is driven by the mix, more guests choosing to go to premium formats and willing to pay for that price. In the case of food and beverage per patron is driven by us introducing the movie-themed popcorn containers, which have been incredibly successful. Now, if you look even in the case of our other revenue, it's driven by adding new revenue streams such as retail popcorn, et cetera. So we can grow our revenue per patron without necessarily increasing price, by providing new opportunities for audiences to get to premium formats, providing new movie themed content, movie-themed merchandise, et cetera, to excite the moviegoing experience, et cetera, that drives the revenue per patron up as well.

And we are cognizant that the market is opening in 7 minutes. So we're going to make sure we try to be quick. But I'm just so proud of this, I keep bursting at the seams. 4 years ago, our movie-themed merchandise business had revenues of zero because we weren't in the business. This year, 2026, full year, when you add up our U.S. movie-themed merchandise and our European movie-themed merchandise, we should exceed $100 million in movie themed merchandise in our various theaters. Like that's out of thin air. Good for us.

And our next question comes from Patrick Sholl with Barrington Research.

Congrats on the record results. Just following up on Mike's question on maybe like the level of box office. Is there like a level of box office or leverage level, you've made great progress on that over the past few years, but like a leverage level where you'd be more comfortable with the balance sheet.

It's not the leverage level that we've had over the past 6 years, and that's why we've been reducing our debt every year since then. As you can see from our 2026 June results, the leverage level has improved considerably. But I want to be quite clear, that is not the leverage level that our goal is to get to as well, we know that there's further to go, and we will get there by continuing to reduce the principal balance of the debt and also by increasing EBITDA. Ultimately, and it's going to take a little while to get there. We'd like to get to around a 3x leverage level. We recognize that's not where we are now. But look at the significant change in the leverage level that has happened over just the last 6 months. We went to from a double-digit leverage level now what looks like a leverage level that is less than 6.5x. So a very significant improvement, and we'll continue to work towards continuing to make those significant improvements.

Okay. And then on your updated expectations on CapEx, is that an expectation that you would have going forward? Or is that kind of timing and just increasing some of the projects ahead of like the Q4 slate? Yes, or is that also what you alluded to earlier with the increased lease incentives from the landlords? Just a little bit more kind of color around that.

I wouldn't read anything into future years with that because, as Adam said earlier, we're incredibly disciplined on our CapEx spend and it will be very box office dependent. We, as we said earlier on this call, have just such incredible opportunities to spend money this year and create a significant ROI that will benefit the results, and we've taken advantage of the opportunity to do that. We're doing that this year. And we'll have to look at 2027 CapEx, look at the individual projects, look at our expectations for the box office, et cetera, and at that point, decide what our CapEx spend, what appropriate level will be for '27 and going forward.

Thank you very much. Adam, I think there's time for just one quick question from our retail investors. So the question relates to equity and capital markets. And the questioner notes that we have done 2 equity raises during the second quarter. And just a question to discuss the rationale for these equity raises and why they are important to AMC and our business.

Thank you, Sean. We've raised a lot of equity over the past 6 years. And that's why when other movie theater chains went into bankruptcy or liquidation, AMC did not. But even we know that the issuance of stock is a precious commodity. We don't issue it lightly. We think very hard about how much equity we should offer and when. There's always a good reason for it. In the case of the equity that we raised in the second quarter this year, we had a debt maturity coming up less than a year from now where we needed to repay $125.5 million of debt. And the alternative to not repaying that debt would have been catastrophic. So we made sure that we raised the cash we needed to prosper. Having said that, we also know I've said many times publicly that cash is king. We also know that the thing that separated the companies that survived COVID and the Hollywood strikes is that they had cash in the bank. And the companies that did not have cash in the bank faltered. And in our industry, there were many companies that faltered. And so we've also been quite insistent that we always have, to the extent possible, robust cash reserves so that we have the time to recover. And look what's just happened with the second quarter because we gave ourselves the time to recover between the end of 2020 and the beginning of 2026, we put ourselves in the position through a better film slate and a more successful company that was driving revenues and cutting costs. We put ourselves in a position to report a record quarter of $321 million of EBITDA and $190 million of free cash flow. So while the decisions we made were not always popular with our shareholder base, we knew that they were absolutely essential for our survival and gave us the runway we needed to get to the promised land. We're not quite at the promised land yet, because while we were free cash flow positive in Q2, we've got a little way to go to be free cash flow positive for a full 12-month year, but we're ever so close. And as I said, we ended the second quarter with $778 million of cash on hand. Tough decisions, but they were made with great care and deliberation. With that, I think the market is opening. So we're going to finish off this call. I want to thank all of you for participating today, both our analyst community and our retail shareholders who joined the webcast. And I leave you with 3 simple thoughts, which are not going to be a surprise to any of you. Number one, holy moly what a quarter we just completed, the best in 106 years with $321.4 million of adjusted EBITDA. Number two, if you were one of the 4.3 million people in our theaters this weekend who reveled at The Odyssey, which got a 95% score from critics on Rotten Tomatoes and a 97% score from audiences on Rotten Tomatoes, I would strongly encourage you, buy a movie theater ticket, go out and see The Odyssey on a giant screen. It's how that movie was meant to be seen and you're in for 2 hours and 50 minutes of extraordinary entertainment. And three, while I think The Odyssey is going to have legs for many, many weeks, just 2 weeks from now, Spider-Man: Brand-New Day will open in theaters as well. And our theory based on the advanced bookings that we've seen is with all these good movies that have come out this year, especially in the second quarter, 6 movies opening to $75 million or more, Toy Story 5 coming out to $140 million opening. Odyssey coming out to $124 million opening. We think that Spider-Man is going to be the biggest movie of the year so far. So there'll be a lot of movies for you to choose from this week, this month, and throughout the remainder of calendar year '26. Thank you, one and all, for joining us today.