Amc Entertainment Holdings, Inc. Q4 FY2020 Earnings Call

Greetings. Welcome to the AMC Entertainment Fourth Quarter and Year-End 2020 Earnings Webcast. Please note this conference is being recorded. I will now turn the conference over to your host, John Merriwether. You may begin.

Thank you, Alex. Good afternoon. I'd like to welcome everyone to AMC's fourth quarter and year-end 2020 earnings webcast. With me this afternoon is Adam Aron, our President and Chief Executive Officer; and Sean Goodman, our Chief Financial Officer. Before I turn the call over to Adam, let me remind everyone that some of the comments made by management during this conference call may contain forward-looking statements 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-Q. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the uncertainties inherent in any forward-looking statements, listeners are cautioned to not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. On this call, we may reference measures such as adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency, among others, which are non-GAAP financial measures. 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 Q&A session. This afternoon's call is being recorded and a webcast replay will be available in the Investor Relations section of our website at amctheaters.com later today. With that, I'll turn the call over to Adam.

Thank you, John. Good afternoon, everyone, and thank you for joining us today. Let me begin this afternoon's call the same way I've begun all of our 2020 earnings calls by expressing my wishes that you and your families are all in good health, and I will add to that on this call, and that vaccination comes soon for you as well. You all know that 2020 was a year unlike anything that we've ever seen. COVID-19 has dramatically and, in some cases, tragically affected all of us to an extent we never could have or would have imagined. Throughout it all, AMC never minimized the distress this pandemic put on our industry and on our company, which were life-threatening, as you all know. On our quarterly calls, we told you of our resolve and determination, but also of our reality and distress. Our public disclosures were fulsome, robust and fully transparent. We've pulled no punches in describing the magnitude of our challenge, and yet we were clear that at AMC, we were absolutely committed to fighting the good fight and doing all that was humanly possible to save this proud century-old American company that has been a meaningful part of the American cultural landscape since 1920. And finally, today, we can give you an immensely satisfying report. As we sit here today, thanks to developments on so many fronts during the fourth quarter and especially in January and February, I am now in a position to say that I am optimistic and confident about AMC's ability to weather this COVID-19 storm. Our focus is no longer on survival but now has turned instead to directing a surge in moviegoing and on the recovery of AMC. Objectives that feel to us, like they are right around the corner. AMC's accomplishments over the past year have literally been breathtaking since our theater shutdowns almost exactly a year ago. With what essentially was an instantaneous and almost complete collapse of our revenues, there was very little room for error. Simply put, AMC needed to execute flawlessly to make it through 2020, and that is exactly what we did. So why are we so confident, even ebullient today? Four reasons why: First, we raised a boatload of money; over and over again, we raised cash. Doomsayers wrote us off several times during the last 10 months and many strongly doubted our ability to raise the necessary capital to survive absent a court-sanctioned restructuring. But happily, they were wrong. Now they weren't wrong because they misjudged the risk. AMC walked quite a tightrope in 2020. But thanks to the tireless and skilled efforts of the AMC team, support from our creditors and landlord partners, and enthusiasm for AMC's future in the equity markets, since March of 2020, we've raised a total of $2.2 billion in gross debt and equity capital, including some $870 million in equity. We secured more than $1.6 billion in creditor and landlord concessions and generated more than $80 million in asset sales to weather the storm. Second, we have proven that we can operate our theaters safely and cleanly. And our theaters are reopening now once again. As for our safety and cleanliness protocols, they were developed in partnership with the Clorox Company and current and former faculty of Harvard University's prestigious School of Public Health, and those protocols have worked brilliantly. Some 17 million moviegoers have watched movies in our theaters since reopening. And we are not aware of even a single COVID-19 case having been transmitted at our theaters amongst our guests. To achieve this impressive result, of course, we did the obvious: social distancing, mask wearing, seat blocking, ubiquitous cleaning wipes and hand sanitizer gel, along with a wide array of other sanitization efforts. But at AMC, we also were way out in front with high-tech solutions, like electrostatic sprayers, HEPA vacuums, and perhaps most important of all, upgrading our HVAC systems to include MERV 13 quality air filtration. As for theater reopenings, we finished 2020 with only 67% of our U.S. and 30% of our international theaters open for business. This is down from the intra-fourth quarter highs, where 90% of our circuit was open, both in the United States and internationally. But as we now turn the page on 2020, the year 2021 is already proving to be a much brighter story. As of March 5, with the reopening of our very important New York City and San Francisco theaters, and a brand-new theater christening in Denver as well, we are back to our fourth quarter highs of approximately 90% of the AMC domestic circuit being open. That is a much higher percentage of our theaters that are open than most of our major competitors and the U.S. theater community as a whole. We think that's a competitive advantage for us as we move to bring moviegoers back to our theaters as new movie titles are released. Now as for New York, the New York City reopening is such a harbinger of good times ahead for AMC. Pent-up demand is a mighty, mighty thing. In just its first open weekend, the New York DMA was AMC's single biggest market in attendance and in revenues across the entire United States. It helped drive our weekend attendance a few days ago to be 250% of what it was in the last 3 weekends of January or in the first 3 weekends of February. New York's first open weekend gave us, at AMC, our best weekend results standing all the way back to March of 2020. And importantly, based on comments made yesterday and again today by Governor Newsom of California, we should be opening our theaters across Southern California, including Los Angeles County sometime very soon, possibly, but not yet definitely as soon as 9 days from now on Friday, March 19. Incidentally, we're opening our theaters in Alameda County, California, which you think of as Oakland and the East Bay, 2 days from now on Friday, March 12. To put the magnitude of an LA reopening in perspective, as a movie market, the LA DMA is about double the size of the New York City market. And so important for us, given AMC's market share leading positions in these cities and in these states, almost 1/3 of all AMC movie viewing dollars in the United States takes place in just the 4 states of California and the Tri-state region of New York, New Jersey and Connecticut. And finally, after a year of closure, New York City and Los Angeles are coming back for AMC. Looking internationally, our 7 theaters in the Middle East all reopened this past weekend also. And it's our current expectation that almost all of our European theaters will, in fact, reopen well in time for the big spate of movie blockbusters that are expected to start getting released in May. Speaking of movie blockbusters, the third reason for our good humor and secure state of mind is that after a long drought, 1 major new movie title after another is set for a near-term release. Warner Bros. has 'Godzilla vs. Kong' later this month. We hear that Disney is very firmly committed to an early May release of 'Black Widow.' Sony just moved 'Peter Rabbit' forward in May. Paramount just moved 'A Quiet Place 2' from September to Memorial Day weekend. Universal is holding 'F9', the latest 'Fast and Furious' movie with a June 2021 release. And speaking as a personal favorite, my favorite movie this summer, no doubt, will be the long-awaited 'Top Gun: Maverick' starring Tom Cruise, which opens 4th of July weekend. And after that, it will be one hit movie after another, all year long. The CEOs of 2 major studios each told me that a good metaphor for AMC's circumstance is that we are LaGuardia Airport closed by a thunderstorm with tons of planes circling overhead, all waiting to land and all needing to land. By our count, around 40 major movie titles that have already been completed were delayed from a 2020 release and will be released theatrically, hitting our big screens starting in May and beyond. Another metaphor that I've repeatedly used is that AMC is in the new car business and that since March of 2020, we've had very few new cars shipped to our showrooms. Finally, now those new cars are on their way to us, and sell them we will in massive quantities, I might add. And the fourth reason for our optimism is the brisk pace of vaccination. This very week will mark the 100 millionth vaccine injection in arm in the United States, and we are vaccinating now in this country at a rate of between 60 million and 90 million injections monthly. For all the talk of the steps we at AMC have taken to bolster our position, the real salvation of our company will be because of vaccination. I know, for a fact, who the single most important person is in the entire movie business throughout 2020 and 2021. And no studio or any movie theater circuit is the employer. His name of the most important person in our business is Albert Bourla, and he is the CEO of Pfizer. He and his talented colleagues at Moderna and Johnson & Johnson are who have given us our newfound fortitude. I had the privilege of thanking Albert firsthand for the vital role his leadership has played in saving AMC, and those sentiments of thanks were never more deserved. There's more to discuss. But before we do, I'll now turn the call over to Sean Goodman, our CFO, to update you on the fourth quarter and more on the recent actions taken by AMC.

Thanks, Adam, and thank you everyone for joining us this afternoon. I do hope that you and your families have been safe and well during these continued extraordinary times. As Adam mentioned, the fourth quarter was, once again, severely impacted by the COVID-19 crisis. The sizable number of our theaters that were closed for much of the quarter plus the limited number of new titles during the quarter significantly impacted our attendance levels and our financial results. Overall, our domestic attendance in the fourth quarter was 92% below the prior year, and our international attendance was 89% below the prior year's fourth quarter. The very low attendance levels ultimately make the quarter's financial results largely irrelevant. And so on this call today, Adam and I will devote very little time to the fourth quarter results, and we'll talk more about the issues that relate to our future. However, I do want to point out just a couple of encouraging data points from Q4. In our international markets, average ticket price was up more than 13% or 7% in constant currency. And food and beverage revenue per patron increased by more than 16% or 10% in constant currency compared to last year. In the domestic market, ticket prices and food and beverage results were similarly encouraging, with average ticket price up slightly, and food and beverage revenue per patron up more than 22%. These statistics, which are actually even more impressive when you consider the discounted pricing on library content and food and beverage promotions that we offered during the quarter, were driven by a number of factors, including a higher proportion of evening and weekend shows, strategic ticket and food and beverage pricing adjustments, the success of our new and very popular private theater rental program in the United States. And by the way, we have already hosted 115,000 of these private theater rentals, a sure sign of consumer enthusiasm for their theatrical experience. And increased usage of our mobile AMC app for both ticket and food and beverage purchases. We used this pandemic period to roll out our mobile food and beverage capabilities across the entire domestic theater network. This industry-leading feature of our smartphone app makes it easy and convenient to order food and beverage items at the same time as one purchases tickets, with these items prepared and waiting for our guests either to collect when arriving at the theater or delivered directly to their seat. So let’s talk about AMC more broadly rather than just looking at quarterly results. As of December 31, 2020, we had $308 million of cash plus $13 million of restricted cash. Our total cash burn for the fourth quarter was $110 million. Now when we normalize this number for all of the cash raised during the fourth quarter, the monthly cash burn comes out at $124 million per month, which is right in line with our expectations at the beginning of the quarter and our previous guidance. At the end of the fourth quarter, we had deferred rent of approximately $450 million, with repayment terms being, on average, 27 months. Although a number of agreements have repayment periods that extend through the remaining lease term, which in some cases is well in excess of 10 years. A reminder that the rent expense shown on the face of our income statement represents our rent obligation for the quarter. For the fourth quarter, actual cash rent payments were approximately $45 million less than what was shown on the face of the income statement. While future cash rent payments will continue to depend on our ongoing discussions with landlords, we anticipate cash rent paid in Q1 of 2021 will be higher than in Q4, while still being well below the income statement rent liability. Before moving off the topic of rent, it is worth noting that during 2020, we quietly and without fanfare closed 60 lower-performing theaters, 48 domestic theaters and 12 international theaters. These theaters were mostly money-losing historically, so AMC's EBITDA actually will increase because of their closure. This is part of our plan to improve the sustainable profitability of our theater portfolio as we move out of this pandemic. Shifting over to capital expenses. We have continued to reduce capital expenditures to minimum maintenance levels. We eliminated all but essential maintenance CapEx and previously committed growth CapEx during 2020. During the fourth quarter, our CapEx spend was only $6.1 million net of landlord contributions. This is a full $152.5 million lower than the same quarter a year ago. Our net CapEx for the year 2020 totaled $130.2 million at the low end of our net CapEx guidance of between $130 million and $150 million. Net CapEx for 2021 is expected to be approximately $100 million, and this will be almost entirely maintenance related. So let’s focus on actions that we have taken to improve our liquidity profile, manage our expenses and position AMC for success in 2021 and beyond. When we last spoke in early November, I noted that we had sufficient cash on hand to last through only the beginning of 2021, assuming no increase in attendance levels. However, I also noted our intention to raise additional capital to expand our liquidity runway. And from October of 2020 to January of 2021, that is exactly what we did. Firstly, our at-the-market, or ATM, equity offerings have raised approximately $870 million on the issuance of approximately 278 million shares in a little more than 4 months. You should note that $772 million of these proceeds were raised after our third-quarter conference call. Secondly, we issued an additional $100 million of first lien debt financing, and we did this without increasing leverage because we swapped $100 million of second lien debt for equity as part of this transaction. Third, we executed a new Odeon GBP 140 million and EUR 296 million term loan agreement that provided approximately $411 million of incremental liquidity. And this is after paying down our European revolving line of credit. And fourth, we also saw the deleveraging effect of $600 million in convertible notes that were swapped out of interest-bearing debt and into equity at a conversion price of $13.51 per share. Importantly, as of February 28, thanks to the actions that we have taken above, we had a little more than $1.1 billion of cash on hand. We believe that this cash puts us in a very strong position to weather continued COVID-related disruptions to our business until attendance returns to more normal levels. However, we are not resting on past accomplishments and we will continue to actively explore alternatives to raise additional capital and reduce our leverage. Finally, before handing the call back over to Adam, there has been a lot of interest in the number of AMC shares that are currently outstanding. The total outstanding share count as of March 3, 2021, is 450.2 million shares. As we move forward from 2020, we are doing so with renewed confidence that AMC and our industry have turned a corner.

Thank you, Sean. For the past 12 months, our overarching focus has been raising capital to ensure our survival during this dreadful pandemic. And as Sean just described, we did just that, meaningfully extending our financial runway. At this point, with any semblance of even a partial recovery of movie theater revenues beginning this summer, we have enough cash to make it all the way through the end of 2021 and beyond. However, we are not done. While understandably, we are pleased with the progress that we've made, that does not in any way diminish our intense focus on diligently managing our expenses, seeking opportunities to enhance our profitability, innovating in driving the recapture of our moviegoing revenues from moviegoers who will come to our theaters once again, ensuring that we have adequate liquidity, and managing our balance sheet to deleverage. As I said earlier, 2021 is already feeling very different from 2020. We have more than $1 billion of cash on hand. President Biden has stated that there will be enough vaccines for every adult in the United States by the end of May. And the rate of new COVID-19 cases, associated hospital stays and morbidity statistics, thankfully, are all declining. Theater openings are happening again. A spate of major movie titles are coming to our theaters again, blockbuster after blockbuster after blockbuster. And all that is combined with a massive amount of stimulus money being voted upon in Congress this very week to jump-start the U.S. economy more broadly. So with this as a closing thought, I'd ask that you reflect for just a moment about the consumer, the moviegoing public. Last week's poll from the National Research Group showed moviegoer confidence growing to its highest level since the late summer of 2020, with consumers feeling far more optimistic than they've been in at least 6 months about returning to cinemas again. At AMC, we also have been conducting our own proprietary research amongst a scientific sample size of some 2,431 AMC Stubs members. You'll recall that Stubs members represent our most avid customers. They make up more than half of our total movie theater ticket sales in the United States. Here are some fascinating insights that have not been shared before from that research done just a couple of weeks ago. Our Stubs members were asked what out-of-home activities they most singularly were looking forward to doing post-pandemic. Out of 15 possible choices that we gave them, going to see a movie at a theater was #1 on the list with a score that was 43% more popular than the score for going to a friend's house to socialize, 47% more popular than that of going to a restaurant, 79% more popular than that of going to a concert, 138% more popular than that of going to a sporting event, and 257% more popular than that of going shopping. Now admittedly, these responses are from moviegoers, so it's no surprise they want to go to see movies. But the important thing for us is that what our customers are telling us is that they desperately want to come back and enjoy moviegoing at our movie theaters again. That is the very definition of pent-up demand, and that is very good news indeed for AMC. Before we open the call for your questions, I want to touch briefly on 3 items: one, Silver Lake's conversion of their convertible debt; two, Wanda's conversion of their Class B common shares to Class A common shares; and three, the so-called Reddit rally. First, on Silver Lake. We've always said that we believe that Silver Lake's convertible debt would be converted and should be treated and thought of like equity. And when our stock price rebounded recently, that is exactly what Silver Lake did. They converted and thereby eliminated $600 million of interest-bearing debt from our books in exchange for about 44 million shares of stock. This represents a conversion price of $13.51 per share and meaningfully reduces our leverage. Silver Lake has been a highly effective and beneficial partner at AMC since their investment in our company in September of 2018. Their guidance and assistance have been incredibly helpful to AMC. While Silver Lake has sold their shares, Silver Lake's representative, and truly brilliant Lee Wittlinger, still serves on the AMC Board of Directors and I hope we can keep Lee in our Board for a long time to come. Second is Wanda's conversion of their Class B common stock into Class A common stock, one that has been and continues to be our largest shareholder. Wanda's Class B shares came with a super voting feature such that each share carries 3 votes provided that I economic ownership of AMC remained above 30% of the outstanding shares. Prior to our ATM programs, this feature made Wanda not only our largest shareholder but also a controlling shareholder. With the success of our ATM programs, Wanda's ownership was diluted well below that 30% threshold during the fourth quarter. And on December 29, Wanda's Class B shares have thus been converted to Class A shares, each carrying a single vote per share. Wanda owns less than 10% of AMC shares at this point. Wanda still has 2 board seats, and I can genuinely tell you that they have been an absolute delight for me to deal with during the past 5 years that I've led AMC. However, with no controlling shareholder in place, now AMC will be governed just as most other publicly traded companies are, with a wide array of shareholders. And finally, a quick comment on the so-called Reddit rally. Our focus has been on managing our business and directing its recovery. It's really not appropriate to say much more here on this earnings call. It's probably notable to point out that of the more than $2.2 billion of cash raised between April of 2020 and now, about 99% of that cash, ironically, came in before the Reddit rally. But as I look at all those retail investors, I realize and truly take to heart one thing among others: how 101-year-old AMC is a crucial part of the American zeitgeist. Many Americans have a strong affection for AMC. They've been going to our movie theaters for years and years or for decades and decades. And we intend to get many of these people to very soon be ticket buyers at our AMC theaters once again. With that, operator, we're now ready to open the call up for questions.

Our first question is from Chad Beynon with Macquarie.

Adam, just wanted to start off with a broad one on the theatrical window topic. We've now heard from many of your studio partners, including Universal, Paramount and Warner. Just wondering how you're thinking about this from an agreement standpoint? What this means for the business model? And how this could affect getting back to historical EBITDA margins?

Thank you, Chad. I want to address an area that I feel very positive about. Back when I first joined AMC, we tried to launch something called screening room, which aimed to allow movies to be viewed at home sooner than the traditional release window. Although it didn't gain traction, I think it's important to emphasize that over the years, we've communicated with all major studios our willingness to experiment with window strategies that differ from the norm. However, we established a key principle: any changes to windows had to benefit AMC shareholders, not harm them. When we couldn't reach agreements with studios on shorter windows, we strongly resisted. Many may remember our correspondence with Universal back in April 2020 as an example. After several years, we briefly engaged in serious discussions, which resulted in a significant new agreement with Universal that proved advantageous for both parties. This demonstrated that alternative release strategies could be beneficial for both AMC and our studio partners. Regarding Warner Bros. and their HBO Max announcement, we clearly stated that we wouldn't allow Warner to prioritize its streaming service at the detriment of our shareholders. Currently, we are screening Warner Bros. films, which indicates that we have reached an agreement favorable to our shareholders. I won't disclose specific terms, but you can infer that our arrangement with Warner ensures that any changes in their strategy are beneficial to AMC. We remain open to discussions with all major studios on similar topics, and I am optimistic that, having been partners for many years, we can modify our business relationships to support both their streaming services and theatrical releases without harming our interests. While some may be more concerned about windows, our negotiations with studios have led to changes that we believe benefit us rather than put us at a disadvantage.

Appreciate that. And then, Sean, you noted the reduced CapEx for the year, the guidance of $100 million. How are you guys thinking about the percentage of your theaters now that have been updated, if the renovation return CapEx is still in the cards in the future if that is almost complete? And then if new build opportunities come along, how would you think about partnering with landlords to build more particularly if your liquidity is strong and the business is stable?

Yes. Thanks for the question. Our primary focus right now, I think as we've said in our prepared remarks, is: a, liquidity; and b, deleveraging. And so you see that reflected in the CapEx guidance for 2021 of $100 million, primarily focused on maintenance CapEx. We're pretty fortunate that over the last few years, we have spent a considerable amount of CapEx renovating and updating our theater fleet. And so the timing is quite good to reduce that CapEx. We're always planning to reduce that CapEx in 2020, and we did reduce it, and we reduced it even more than our original plans just because of the situation with the pandemic. But we believe that our theater portfolio is in good shape. The $100 million is predominantly maintenance-related. I would expect in the future as our liquidity position improves, as our leverage position improves, we will then look to invest more from a growth point of view. But at this point, as I said at the beginning, it's primarily leverage and liquidity. And I'll let Adam talk a little bit about the growth opportunities.

Recently, we opened a new theater in Denver. We've noticed that landlords still see the AMC brand as very strong, leading to a consistent influx of attractive opportunities for acquiring existing theaters or developing new ones in desirable locations. I anticipate that we'll continue to see new builds or what we refer to as spot acquisitions. However, we are in a position to be more selective regarding the landlords of these theaters. For future new builds, landlords will carry more risk instead of AMC. As a result, we expect to see a higher capital investment from landlords compared to us. There may also be percentage rents linked to the fluctuations in theatrical revenues instead of fixed rents. The responsibility for the theater's success lies entirely with us. While I believe these opportunities are still ahead, the financial terms will be significantly more favorable to us compared to the expansions we pursued over the last decade when conditions were better.

Our next question is from Eric Wold with B. Riley FBR.

A couple more questions is really kind of around cash flow and outlook. I'm kind of thinking about the current liquidity and kind of the runway you laid out to next year. Can you update us on what your underlying box office, your domestic and international box office assumptions are to get to that point next year versus kind of maybe what you had in prior filings?

Sure, it's Sean. Let's discuss our cash projections for 2021. We are taking a conservative approach in our assessments to ensure we manage our liquidity effectively. Looking at this year, we anticipate that the first half will see cash burn similar to what we've experienced in January and February. The third quarter will serve as a transition period, while we expect to reach cash flow breakeven and slightly positive cash flow in the fourth quarter as conditions normalize. In the third quarter, we project a cash burn of about $50 million per month. Considering these projections, we currently have more than enough cash on hand to manage this and move forward. Specifically, this translates to a box office performance significantly below 2019 levels, approximately 50% lower. As I mentioned earlier, this conservative outlook is essential for effective liquidity management.

Perfect, that's helpful. Maybe just one last question. I have another finance question. I just noticed another one here. Regarding the $450 million of deferred rent, you mentioned an average payback period of 27 months. Once a theater reopens, does the full rent resume immediately along with the deferred rent, or are there other criteria related to attendance levels that need to be met? Assuming we reach year-end and all theaters are open, will that lead to the return of pre-pandemic rent levels along with the additional $17 million per month of deferred rent?

Yes. The way to think about the deferred rent, $450 million of deferred rent, be careful on just assuming that, that deferred rent is paid back roughly over the 27-month period, except for the rent that's paid back over a longer period of time. And the reason I say be careful of that assumption is because during 2021 and specifically in the first half of 2021, we will have additional rent concessions. And that will offset, so you will have some of that deferred rent being paid down, but it will be offset by additional rent concessions. As far as the timing of when these paybacks happen, it's a specific date. It's a specific date agreed with the landlords. And that date is something that is discussed and negotiated, depending on how attendance levels are going. But think about it as a specific date. A lot of that deferred rent from 2020, the repayment period kicks in at the beginning of January 2021. But then I go back to what I've said before; there's additional rent concessions that will offset that.

So Eric, if I can just add a comment. There are so many heroes for AMC over the past year. I told you about my deep appreciation of Albert Bourla of Pfizer. We could talk about all the retail investors who bought shares from us in the ATM effort from October through January. But another constituency that has really stood tall in helping AMC survive was our theater landlord community. And we renegotiated hundreds and hundreds and hundreds of lease agreements. And our theater landlords wanted us to stay in business, and they wanted to keep us around. And the concessions that they made are very much appreciated. And those talks continue. We continue conversations with all of our theater landlords. As wonderful as it is that we raised cash, and as wonderful as it is that new movies are coming this summer, we're still burning through cash right now. And we continue to find that our landlords have been flexible and creative, and we are very much appreciative to them.

Our next question is from Eric Handler with MKM Partners.

Can you give us a good update on your cash? Can you give us an update on where your total debt is now at the beginning of March? And what your cash interest expense will most likely look like either on a per quarter basis or just for all of '21, given that you've got some picked nits to deal with?

Sure. So to answer your first question, if you look at our total debt, and you'll see our capitalization table on the 10-K, which will be published later this week. If you look at the total debt at the end of December, and then I'll tell you that as of the end of March, what our pro forma debt is and it's essentially the same number. So there's a lot of puts and takes. But at the end of the day, essentially that total debt same number at the end of March as it was at the end of December. This reflects, okay, so when you have, the big transactions that you have are the conversion of the convertible debt. That'll eliminate $600 million from our debt. However, at the same time, you have the European loan, right? And so that's additional debt, and that's $550-odd million of additional debt. Those are 2 big items. The other big items is repayment of the revolving credit facility in Odeon. And then the difference, because they didn't quite net out, the difference is actually payment in kind interest on the second lien debt on the European term loan. There'll be some PIK interest on that. And there's some PIK interest on some of our first lien debt as well. So when you add up all of that, you end up with the same debt number at the end of the day. I think your second question was related to interest costs. So you're looking at cash interest costs in 2021. 2021, there's a significant amount of payment in kind of PIK interest. When you go through a capitalization schedule, you can calculate what the total interest is. But you'll see that the payment in kind interest is not a single number because it depends on what elections we make with PIK interest. But if we elect all of the PIK interest we're able to do through 2021, you have around $250 million of PIK interest that you need to net off the interest paid amount. And the heavy quarters for interest payments are Q4 and Q2, Q1 and Q3, pretty low interest payments. Q1 and Q3 are above $20 million a quarter. The heavier interest payments are in Q2 and Q4.

Our next question is from Jason Bazinet with Citi.

I have two quick questions. Without going into the specifics of your agreements with the studios, could you discuss the factors we should consider when you perform well versus when you fall short as the studios adjust their release schedules or windows? My second question is, if we find ourselves in a situation where there are fewer visitors at AMC due to smaller movies going straight to consumer apps, do you believe there’s an opportunity to reposition the theater experience as a premium offering? Would you consider raising ticket prices to counteract what could be lower attendance, thinking longer-term beyond 2021?

We generally don't discuss our theater deals, so I won't address that directly. However, the relationship between movie theater chains and studios is crucial. If we do get concessions back, that's likely where you'll notice it. Your second question contains many assumptions that I prefer not to accept. While it doesn't mean you're incorrect, I believe the conclusions drawn aren’t accurate yet. Looking back to 2019, the industry sold 1 billion movie tickets in the United States, making it the second most popular out-of-home activity, right after dining out. The total attendance at all major professional sports leagues combined, with all their teams and games throughout the season, still fell short, as movie theaters sold seven times the number of sports event tickets in the U.S. that same year. The pandemic has reinforced our desire to escape our homes, no matter how comfortable they may be. People want to return to theaters, and despite the evolving strategies in distribution, we are confident that demand for movie theaters will surge. Predictions of the movie theater industry's decline have been made for decades, but aside from the pandemic, theaters have continued to thrive. I am very optimistic that we will adapt to any changes in the industry landscape. If streaming grows in popularity, adjustments will be necessary, such as possibly lowering film rents or increasing ticket prices. We’ll have to see how things unfold. But it’s essential not to assume that people are staying away from theaters. I believe we will discover that post-pandemic audience turnout will be strong, and patrons will be thrilled to step out of their homes for the theater experience.

Our next question is from Alan Gould with Loop Capital.

I've got a few. First, Adam, how long do you think it will take? Or can you get back to the adjusted EBITDA levels that you had in 2019, given that you have fewer screens? And that there will be shorter theatrical windows?

So, I'm going to answer you this way, fewer screens do not decrease EBITDA; it increases EBITDA because the screens that we were closing had negative EBITDA, that's kind of point one. On your other question, I know that John reads that forward-looking statements disclosures. But it's such a forward-looking disclosure, I don't think it's appropriate for me to make a crystal ball projection. You've heard me on this call talk proudly of everything that AMC has done to get our way through this extraordinary challenge that was thrown our way. And I'm quite optimistic and bullish about the prospects of moviegoers coming back to our theaters. But I don't think that it's right for us to start predicting what year we're going to see what level of EBITDA. That's your job, and you all will make your estimates, and we'll try to beat them.

Okay. Let me follow that up with a few others. There haven't been any ATM or shares offered since the end of January. Was that simply because you needed to have more shares authorized to do that? Because Sean did mention the intention is now to raise additional capital.

He didn't state that we would raise additional capital. He mentioned that we will carefully evaluate the options for raising capital in the most attractive way possible. After bringing in $1.222 billion between December 14 and January 22, along with $1 billion in cash reserves, we felt it was appropriate to take a short break. However, we are now closely assessing the best strategies for capital raising. There are numerous methods available to achieve this, and we are also considering how to effectively reduce the company's debt. We are pleased that in July 2020, we eliminated $555 million of debt through a complicated negotiation with our second lien holders. We are also pleased that in January, we reduced another $600 million of debt when Silver Lake converted their notes into equity. This remains an important focus for us. It is simply a fact that we paused capital raising for five weeks due to the funds we secured in recent months.

Okay. And what do you see happening industry-wide? Do you see screens closing? Do you see, frankly, opportunities for M&A now that you've got a more attractive currency?

I think people are exaggerating the idea that streaming will lead to screen closures. However, considering what our industry has gone through this past year, our willingness to keep operating unprofitable theaters is very low. Therefore, the industry as a whole will be stricter in assessing the risks associated with leasing and operating marginal theaters. Whether there will be M&A activity remains to be seen.

Okay. And my last question, now that you have over $1 billion of cash on your balance sheet, does that change your landlord negotiations?

Yes, it makes things more challenging. We're not as desperate as we were in June 2020, but we are quite creative here at AMC. We are having interesting discussions with landlords and there are several options we can explore. On this call, we talked about some of our theaters that have been profitable or unprofitable. Many of our theaters are usually very profitable in normal times. So, our discussions are varied and there are numerous opportunities for us moving forward, depending on each landlord, lease, and theater situation.

Ladies and gentlemen, we have time for one final question. Our final question comes from Jim Goss with Barrington Research.

One small one, wrapping up the windows idea. Do you think, given the variety of types of windows that have emerged, do you think there will be any standardization or range of standardized actions that will develop between the studios and the exhibitors? Or will it be just on a one-by-one basis as time goes on?

That's a very good question, Jim, and hello. I don't think there's going to be a one-size-fits-all approach. Not everyone understood that there was just one window, as has been the case for many years. What we've learned, especially since reaching universal agreement, is that each studio has different desires and needs. Therefore, I expect to see customized agreements developed on a studio-by-studio basis, and these may vary, likely differing from circuit to circuit. If I could just add one more point, Jim. As I've been saying for five years, just like with our discussions with Universal and Warner, we can only agree to something that benefits our company and our shareholders. Being the largest exhibitor in the world gives us a real opportunity to engage in discussions with our studios. We don't cling to outdated practices; instead, we're open to being innovative and creative in finding solutions. I am very confident that we will continue to discover those solutions. We've been partners with these studios for many years, and while we definitely need them, I believe they need us as well. In 2019, there were $43 billion in global ticket sales for movie theaters, and a significant portion of that comes from Hollywood, which I don’t think they would want to miss out on. So, I remain confident that as long-term business partners, we will find effective solutions that work for both our studios and ourselves. There may be some public and private negotiations, but ultimately, I think we will reach agreements that benefit both parties.

Okay. And over the past year...

But as I've been saying, and I think you were going to ask me the last thing, I’ll wrap this up. There’s a whole lot in that question, right? Certainly, private theater rentals is here to stay. That's been immensely popular. As Sean said, we did 115,000 of them already, and I'm expecting that will continue. AMC has long prided itself on our imaginative food and beverage efforts. I'm sure as patronage builds up in our theaters, we will go back to more varied and imaginative menus. Another thing that I think you can assume going forward is we’re going to have to figure out ways, and I have expressed over and over that I'm confident we can, we’re going to have to figure out how to work with our studio partners so that we can support their theatrical business and their streaming business. And I believe that we can do so. And lastly, I saved the biggest for last. Now this is something that our operations department shudders about when I say it. But I'm just going to tell everybody here and now, the days of dirty movie theaters are over after what the public has been through over the last year, cleanliness, the sanitization is going to be an extremely important factor for guests, even in a post-pandemic world, and we intend to run our theaters spotlessly going forward. And woe be it to any of our competitors who do not match us stride for stride.

We have reached the end of the question-and-answer session, and I will now turn the call back over to management for closing remarks.

Thank you, operator. Thanks to everybody on the call. Since our last quarterly call, AMC raised $1.222 billion of cash, we got rid of $600 million of debt, our theaters are reopening, and big movie titles are coming. Ladies and gentlemen, see you at the movies. Thanks for joining us today.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a great evening.