Amc Entertainment Holdings, Inc. Q1 FY2023 Earnings Call

Greetings and welcome to the AMC Entertainment's First Quarter 2023 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Merriwether. Please go ahead, sir.

Thank you, operator. Good morning. I'd like to welcome everyone to AMC's First Quarter 2023 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, let me remind everyone that some of the comments made by management during this webcast may contain forward-looking statements that are based on management's current expectations. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those that might be expressed today. Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K and 10-Q. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the uncertainties inherent in any forward-looking statements, listeners are cautioned 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, constant currency, free cash flow, operating cash burn, and operating cash generated 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 morning. After our prepared remarks, there will be a question-and-answer session. This morning's webcast is being recorded, and a 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 morning, everybody. Thank you for joining us today. As we sit here this morning, I could not be more optimistic about AMC's future because of two vital developments from the first quarter of 2023. First, is the clearly growing industry-wide box office up in North America by some 29% quarter-to-quarter versus last year, growing to more than $1.7 billion in the quarter. And industry-wide attendance in movie theaters in our markets across Europe has risen even closer to pre-pandemic levels, prior to pre-pandemic norms than even the surge in North American box office gains. Incidentally, that clearly growing industry box office has continued in April and so far in May. The April domestic box office was up about 58%, for example, and there is a flood of potential hit movies still to be released in the remainder of 2023. We previously indicated that we expected the 2023 industry-wide domestic box office to be up 15% to 25% or more over that of 2022. Well, now with a big start this year, we now believe the '23 domestic box office will be up 20% to 30% over last year. The second development in Q1 is that our shareholders, at our March 14 special meeting voted by an enormous margin by a total of 88% in favor, but only 12% opposed or abstaining, to our proposal to combine our APE preferred units and AMC common shares. Of the AMC common shares that were voted, 72% voted yes. Of the APE holders that were voted, 91% voted yes. As a result, AMC should be able to raise significant equity capital to outlast the pandemic's lingering aftermath affecting our cash reserves, help us pay down debt or for attractive M&A opportunities as well as for other growth initiatives. AMC's unique and singular ability to raise capital since 2020 has been one of the key reasons for our success in avoiding the fate of other movie theater chains, big and small that didn't make it. Our continued ability to raise capital is what gives us unbridled confidence in AMC's future. We thank our shareholders for the real wisdom shown in their votes of March of 2023. We are also aware that there is angst among some of the holders of a considerably smaller number that voted against our proposal. We hope to convince you over time that the majority of shares that were cast, voted in favor of strategies and actions, which will generate the best long-term results at AMC. Let's turn back to the box office. First, there were many movies that were in theaters in Q1 that had extraordinary appeal. Thank you, above all, to James Cameron for Avatar: The Way of Water. At a current growth of $2.3 billion globally, it's the third highest grossing movie in the history of cinema. I need to remind any of you that we are near 19 months and 14 days away from Avatar 3 gracing our AMC and Odeon screens. It will be a Merry Christmas indeed in 2024. But it wasn't just Avatar that resonated with consumers in Q1, nine different movies won their week as the highest grossing films across the week of Q1. And the news is not only that there were more big movies in our theaters in Q1, there were more movies, period. Q1 proved out to be precisely true in what we have been predicting. The quantity of films now coming out theatrically is rising. If you look at wide releases, defined as films grossing $5 million or more domestically, there were 35 such movies in Q1 2023 versus only 26 in Q1 of 2022, that's a 34.6% increase in the supply of theatrically released films, regardless of their ticket sales numbers and dollars. As we look at the whole of the year, we continue to expect a similar substantial increase in the total movie count throughout the remainder of the year of movies being released theatrically. For more context, back to Q1, this year was the best first quarter domestic box office since March 31, 2020. And while still in a recovery mode, at 72% of 2019's pre-pandemic first quarter, the first quarter of 2023 represents a significant improvement compared to last year's first quarter which was only 56% of 2019 level, 56% a year ago, 72% this year, still rising. As for AMC, the first quarter's box office success for the industry translated into AMC's strongest start in four full years. AMC exceeded consensus market expectations for revenue. We exceeded consensus market expectations for adjusted EBITDA and exceeded consensus market expectations for adjusted net income as well as exceeding consensus market expectations for adjusted EPS. AMC enjoyed a 21% growth in global revenues to $954 million and a $69 million improvement in adjusted EBITDA, up from a $62 million loss in EBITDA a year ago to positive $7 million this year. Indeed, Q1 of 2023, combined with Q4 of 2022, marked the first two consecutive quarters of positive adjusted EBITDA since March of 2020. More than 47 million guests visited an AMC theater worldwide in the first quarter of 2023. 47 million guests stands in stark contrast to the naysayers and doom tellers of conventional wisdom who loudly but wrongly predicted that moving theaters were dead and an anachronism of bygone days. Those 47 million people tell us, as we have known for years and years, that movie theaters are very much alive and very much the center of the cultural fabric of the United States for years and decades to come. Also, as those 47 million guests came into our theaters, boy, did they even drink. Our food and beverage revenues per patron were eye-popping at $6.90 per patron globally and $7.99 per patron in the United States. This is so far above pre-pandemic consumption and it's occurring in a very high-margin business for us. When we walk through our doors, AMC guests also continue to seek out premium large format screens or PLF, as they're known, where AMC already has a commanding competitive lead. AMC is the largest IMAX operator in the world outside of China and about half of the IMAX screens in the United States can be found in AMC Theaters. Similarly exciting, we're the only operator of Dolby Cinema screens in the United States and continue to have contractual exclusivity on Dolby Cinema going forward in the U.S. market. Our premium large format screens often over-index five or six-fold in box office revenues or more in the box office grosses that they bring to AMC, compared to a non-PLF AMC screen. So over the next one to three years, you will see us continue to invest in our PLFs. We intend to upgrade a significant number of IMAX screens with lasers. And we intend to increase the number of our PLFs by adding more IMAX screens and by adding more Dolby Cinema screens. We also expect to significantly grow the numbers of our private label house branded PLF screens called Private AMC in the United States and iSense in Europe. We're not only making AMC a more compelling experience for moviegoers through more and better PLF screens, we have also contracted to install laser projectors in about half of our U.S. screens over the next three calendar years. Laser projection increases the light levels on our screens by 50% to 100%, which makes the pictures much brighter, much sharper and more vivid. It's also our biggest green initiative ever in our company's history as laser projection consumes far less energy, and there are no xenon bulbs to throw away in landfills. Installation of laser at AMC started back in 2022, and it is going extremely well. The fact that I'm talking about the investments we will be making in upgrading and enhancing our product is in itself enlightening and revealing. During the height of the pandemic, when we were fighting for survival, long-term planning around here was like a week from Thursday. But now, as we become ever so much more confident in AMC's vitality, we can actually look forward again to our longer-term future and specifically how we can improve the appeal of our theaters and how we can grow and transform AMC for M&A activity. Make no mistake, we are not out of the woods yet. The box office, while elevated, is not yet back at 2019 levels. As I previously indicated, I believe COVID will be a five-year detour for the movie industry. We just started the fourth year in our ramp-up to eventual normality, but we are indeed on an improving ramp. Domestic box office revenues is a basic placeholder of size for our industry, was above $11 billion for five years in a row between 2015 and 2019. It was only $2 billion in 2020, then $4.5 billion in 2021, $7.5 billion in 2022, and no guarantees here, but we believe the domestic box office revenues are likely to be $9 billion or considerably more than that in 2023, that also is an upwards ramp. We're looking at AMC EBITDA, which was $771 million in 2019. Incredibly, seemingly overnight, it sank to minus $999 million in calendar year 2020, minus $292 million a year in 2021, up positive but paltry $46 million in 2022, and if you combine first quarter actual results for 2023 with analyst consensus estimates for quarters two, three and four of 2023, that EBITDA number would be hundreds of millions of dollars higher in 2023 than was the case in our 2022 results. Look at the trend, $771 million pre-pandemic, following the negative $999 million, negative $292 million, positive $46 million, hundreds of millions of dollars higher than that now. Again, that's a confidence-building and encouraging upwards ramp. In summary, we just posted encouraging and excellent Q1 results, and we have excellent things coming down the pipe for moviegoers as we go forward. I'll be back to talk briefly about a few other important topics after Sean goes into more detail about our operational and financing results.

Thank you, Adam. And thanks, everyone, for joining us this morning. 2023 is off to a really good start with our consolidated revenue up 21.5%, or 24% in constant currency compared to the first quarter of 2022. The highlight of this being food and beverage revenue. Food and beverage revenue is up 30% or 32% in constant currency versus the same period last year. Overall, our attendance increased by almost 22% over Q1 2022. Revenue per patron was in line with the prior year or up 1.7% in constant currency at $20.45. And it's worth noting that this revenue per patron is some 36% higher in constant currency than pre-pandemic in 2019. In the North American business, the total revenue increased by 25.1% compared to Q1 of 2022, with admissions revenue per patron decreasing by 1.5% to $11.87, and food and beverage revenue per patron increasing by 6.2% to $7.99. This is an all-time record. Note that admissions revenue per patron in the quarter was impacted by an increased proportion of discount tickets during our Tuesday Discount Program and A-lister subscription member attendance. In the international business, on a constant currency basis, total revenue increased by 21% compared to Q1 of 2022, with admissions revenue per patron increasing nearly 6% to $10.61 and food and beverage revenue per patron increasing by 12.5% to $4.96. This is another all-time record. And this growth is further supported by increased premium format or PLF penetration, with PLF revenue representing 29.2% of domestic admissions revenue in Q1 2023. This compares to 21.7% in the first quarter of 2022 and 19.9% in Q1 of 2019. Clearly, guests are increasingly appreciating the premium experience offered by our IMAX, Dolby and AMC Prime offerings. Our strong revenue growth per patron is being achieved as guests increasingly choose the premium auditoriums and indulge in our innovative food and beverage offerings, including movie-themed cocktails and collectible items. Our initiatives to optimize revenue, including blockbuster pricing are yielding positive results and the increased adoption of our industry-leading AMC app and targeted marketing initiatives are all helping to drive revenue growth. Looking forward, we will maintain our focus on the overall guest experience in order to drive our key performance metrics, including: one, our loyalty programs and the AMC app; two, our food and beverage innovations; three sight and sound experiences through advanced laser projection technology and premium offerings; and four, diversification initiatives such as the successful launch of the AMC ready-to-eat and microwave popcorn and the AMC branded credit card. All of the above, of course, to be achieved while paying very close attention to our overall operating efficiency. Before moving on to talk about the balance sheet, I do want to just point out that our consolidated statement of operations included a charge of $126 million related to the potential settlement of litigation in the Delaware Court brought by the Allegheny County Employees' Retirement System. $10 million of this charge represents estimated legal fees net of estimated insurance recoveries and is included as a reduction in our adjusted EBITDA for the quarter. If excluded, the adjusted EBITDA would have been $17 million. And $116 million represents a noncash estimate of the value of this settlement, which is subject to court approval, and this is included in net income but excluded from adjusted net income. Moving to the balance sheet, we ended the quarter with liquidity of $704 million. This is comprised of $496 million of cash and cash equivalents and $208 million of undrawn credit facilities. During the quarter, net cash used in operating activities was $190 million, and non-GAAP operating cash burn, which represents cash from operating activities after deducting capital expenditures and before both debt servicing costs and deferred rent payback was $139 million. This compares to a non-GAAP operating cash burn of $224 million in Q1 of 2022. Note that our cash burn in the first quarter was, as anticipated, adversely impacted by normal seasonal first quarter working capital needs. We are anticipating an improvement in cash flow during the remainder of 2023. During the quarter, we made significant progress in strengthening our balance sheet. We raised $155.4 million of gross equity capital through APE unit issuances. We repurchased approximately $103.5 million of debt at an average discount of 45.4%, and we reduced the principal amount of our debt by an additional $100 million through a debt-for-equity exchange. The net result of all this in the first quarter is a $208.5 million reduction in the principal amount of interest-bearing debt during Q1 of 2023. During the quarter, we also strengthened our balance sheet by repaying approximately $33.6 million of deferred rent reducing our deferred rent liability to $123.6 million at March 31, 2023. One might recall that back in March of 2021, this deferred rent balance was $473 million. And so over the last 24 months, we have lowered the deferred rent liability by nearly $350 million. All told, including the decrease in deferred rent, we have reduced our liabilities by a total of $242 million thus far in 2023 alone. And if one goes back to the beginning of 2022, the reduction in liabilities is $620 million. Strengthening the balance sheet is an ongoing priority. To that end, so far in the second quarter, we have already raised another $34.2 million of gross equity proceeds and we have bought back another $9 million of debt. During the remainder of 2023, we plan to further reduce the deferred rent balance by another $50 million to $70 million reducing this liability to approximately $50 million to $75 million by the end of this year. Note that we have fully issued the APE units that were available for issuance under the most recent September 2022 at-the-market equity program. Our capital allocation priorities remain unchanged: one, liquidity; two, reducing financial leverage and strengthening the balance sheet; three, investing in our existing business; and four, investing in value-enhancing growth and diversification initiatives. CapEx net of landlord contributions was $41 million in Q1 of 2023. And consistent with our previous guidance, we expect net CapEx for 2023 to be in the range of $150 million to $200 million. Actively managing our theater portfolio continues to represent a profit enhancement opportunity. During the first quarter, we added 1 new theater and we closed 21, which includes the 13 Saudi theaters. This brings the total number of locations closed since the pandemic began to 136, the total new locations opened to 55 for a net reduction of 81 locations. The combined 55 new locations continue to substantially outperform the 136 closed locations prior to their closings, and they also continue to outperform our underwriting expectations. Looking forward, we're optimistic about the future and the opportunities to strengthen and diversify our business while continuing to enhance our financial position as we progress along our recovery glide path. And with that, I'll hand the webcast pass back over to Adam to provide an update on our strategic initiatives.

Thank you, Sean. Our goal as leaders of AMC is to increase the value of the company over the long term for our shareholders. We do this by efficiently managing our operations and taking decisive actions to provide the best products, services and experiences for our guests, which in turn drives revenues and profit growth. At the same time, we seek to invest in the development of our business, enhancement of our theater footprint, and the growth through value-creating diversification initiatives. Over the last three years, we have operated in an extremely challenging environment, as you all know. Survival was our primary focus. That is changing now. It is finally starting to be time again when AMC can focus not only on surviving but instead on thriving. Thus far this morning, you've heard about the progress we're making in our ongoing recovery. I'd now like to provide an update on some of the key strategic initiatives we're implementing that will transform AMC in a post-pandemic operating environment. In that light, I'd like to highlight four other recent developments. First, our retail popcorn launch. On March 11, the day before Oscars Sunday, we launched AMC's ready-to-eat Perfectly Popcorn for exclusive six months engagement at about 550 locations of the nation's largest retailer, Walmart. As you know, AMC's Perfectly Popcorn hit special aisle endcaps with three varieties of ready-to-eat popcorn, Classic Butter, Extra Butter, and Lightly Salted. Sales were brisk. In fact, so much so that most of the Walmarts sold out of their initial supply. Not only are we very pleased by the initial positive consumer reaction, but so too, Walmart is pleased. Importantly, the second phase of our exclusive Walmart launch began on April 29 when we scaled up the supply chain, with the distribution of AMC's ready-to-eat popcorn hitting the shelves at approximately 2,600 Walmart stores and for shipping nationally in the United States on walmart.com. AMC's Microwave popcorn was also introduced at that time at Walmarts across the country as well. As was the case back in March, again, in the early days, sales are brisk. We think that our home popcorn is going to turn into a substantial business for AMC. We are already currently exploring opportunities for its eventual expansion into other grocery store chains and other e-commerce channels, once Walmart's exclusivity ends. Second, development. We kept our promise to our shareholders in launching the AMC Entertainment branded credit card in partnership with Visa, a world leader in digital payments, and deserves a leading mobile-first fintech credit card platform, the rewards with AMC Entertainment Visa card is the only credit card that earns in-theater rewards whenever it's used. AMC Entertainment Visa cardholders earn extra AMC Stubs points, which they can use as currency, rewards they get with every purchase made on their AMC Entertainment Visa card. That card exemplifies AMC's ongoing commitment to delivering tangible benefits, both to our guests and to our shareholders while reinforcing our bond with our devoted movie-going patrons. Third, development. The creation of APE units in August of '22 was vital for AMC. It resulted in our being able to raise $418 million of much-needed gross cash proceeds, allowing us to boost our liquidity and reduce debt, including deferred rent by more than $470 million. Indeed, AMC is unequivocally financially a stronger company today as a result of our having created APE units. Nonetheless, despite having the same economic and voting rights as our AMC common shares, APE units have consistently traded at a substantial discount to AMC common shares. That discount creates inefficiencies that increase our cost of capital and cause unnecessary and preventable dilution. Therefore, after careful thought, the AMC Board presented a proposal to amend our corporate charters to simplify our capital structure via a reverse stock split and a conversion of APE units into AMC common shares. Based on your vote on March 14 to approve such amendments, we think our shareholders overwhelmingly agree with the importance of doing this. However, in response to litigation about this shareholder vote, we worked with the plaintiffs and found common ground to settle our differences, which, if approved, will allow the charter amendments to be implemented in accordance with the affirmative shareholder vote. Because that proposed settlement is currently under review by the Delaware Chancery Court, we do not intend during this call to discuss this litigation further. And the fourth development, we are so appreciative that Hollywood Studios again seem to recognize the incredible value creation of theatrical exhibition. In recent years, some studios were prioritizing their streaming services over in theaters. Today, the talk in Hollywood has flipped. Moviemakers know there is money to be made in theaters and studio after studio is rushing to increase the number of movies that they release first theatrically. Traditional studios aren't the only ones interested in launching films on the big screen. Amazon Studios just theatrically released their wonderful movie about the true story of Nike introducing the Air Jordan Sneaker. Air starring Ben Affleck and Matt Damon has enjoyed more than $47 million of domestic box office success and received far greater consumer acclaim and awareness than it would have had it been released directly to streaming without a theatrical release first. And we look forward to showcasing two Apple theatrical releases later this year: the highly anticipated Killers of the Flower Moon distributed by Paramount, directed by Martin Scorsese and starring Leonardo DiCaprio and Robert De Niro. In addition, the riveting movie, Napoleon, distributed by Sony, directed by Ridley Scott and starring Joaquin Phoenix. These initial releases by Amazon and Apple could be just the tip of the iceberg of new content for AMC. There have been numerous press reports that these two tech giants each plan to spend about $1 billion per year on movies that will be headed first to theaters prior to going on streaming platforms. This means that you'll be able to watch in the friendly confines of an AMC Theater or an Odeon Cinema, on our big screens, Amazon and Apple movies, potentially $2 billion of new content annually headed for theatrical release. We can't wait to showcase their films. So in conclusion on this call, we could not be more optimistic about the prospects for the movie slate of films coming out during the remainder of '23, except only to say that 2024 looks even better. The 2023 Q1 financial results, coupled with a strong start to the second quarter, make us confident about the path we are on towards an ongoing recovery for AMC in '23, '24 and 2025. And as I conclude, a special final word to the shareholders. I have greatly enjoyed meeting so many of you in our theaters. I personally hosted 23 movie screens in 22 different cities over the past 18 months. And I do my next one in Berlin, Germany on May 13. I also greatly appreciate your communicating with me on Twitter. As I think many of you know, I write all of my tweets myself, and I devote about an hour a day to reading the voluminous inbound comments from you about AMC. It is illuminating for me to hear what you have to say. I am a better educated and a more capable CEO because I get to hear your views directly and uncovering. Thank you for your ongoing support. Thank you for your passion and enthusiastic commitment to AMC, and I look forward to you seeing any number of great releases that will be playing on the big screen of our AMC Theaters and Odeon Cinemas in the weeks, months, and years ahead. Sean, let's now move to questions, both from shareholders and from industry analysts.

Thanks, Adam. Let's start with a couple of questions from our shareholders. The first one here is, are there any plans to enhance or expand our AMC loyalty programs?

Yes, there are several key marketing programs we focus on. First is our A-list subscription program, which allows members to see up to three movies a week for a monthly fee of $20 or $25 plus tax. Second is AMC Stubs, which has two tiers, Insider and Premiere, offering discounts and rewards for returning to our theaters. Third, we engage in extensive outreach through email, push notifications, and texts to our loyalty program members, highlighting upcoming movies and benefits tied to their support of AMC. The COVID pandemic had a significant impact, halting these programs while theaters were closed for nearly six months, leading to a decrease in participation. However, we have been working to rebuild since reopening, and I am happy to report that the numbers are improving. We have a strong A-list membership base and are considering various enhancements for this program in 2023 and beyond. One key area we are focusing on is reducing churn among A-list members, as a small number drop out each month. We want to retain them as customers, so we plan to reach out to former A-listers who have chosen not to continue with the program. Regarding the Stubs program, we are testing several new initiatives in select markets to see which ones resonate with consumers. As we evaluate these tests, we will determine which successful initiatives to implement nationwide. Our communication efforts are also ramping up, and AMC moviegoers can expect tailored messages based on their past movie preferences, as we know the types of movies they’ve enjoyed in the past.

Thanks, Adam. That's great. The next question here asks about whether AMC will expand the distribution of retail popcorn to grocery stores and perhaps in international markets? And also is it possible to arrange for the shipping of AMC merchandise internationally?

So the answer to your question is almost definitely yes, mostly. So definitely yes, we would like to expand where AMC Perfectly Popcorn can be bought in the United States. The reasons we were so eager to give Walmart a six-month exclusive: Walmart is one of the great retailers of the world, and it's very rare that there are product launches that start at 2,600 Walmart stores across the United States. They showed great enthusiasm for our product, and therefore, we were willing to give them a head start. But you can be sure that we'll be talking to just about every major grocery store in the country. We'll be talking to convenience stores in the country. We're looking at other possible places to buy AMC Perfectly Popcorn through e-commerce. It has been suggested to us if we want to sell it on Amazon.com, for example. It's been suggested to us that we had to sell it on amctheatres.com, in addition to it being available at walmart.com. We're also going to look at other unconventional places potentially to showcase AMC Perfectly Popcorn. Like, for example, sports stadiums, company cafeterias that are privately catered. There are companies with big cafeterias. And hopefully, we can get in there, too. It might just be the best mood that it’s found in the cafeteria. So there are a lot of places that we can take it after the six-month Walmart exclusive. I've heard a lot of you on Twitter, asking me if we are taking it to Canada, the UK, and continental Europe. It's a little harder because right now we've only found manufacturers in the United States, and the cost of shipping that Perfectly Popcorn overseas, for example, would raise its price. To sell in Europe, we'd have to find a European manufacturer who could meet our very high-quality standards. What's really fascinating about AMC Perfectly Popcorn, people don't necessarily realize this, but we spent almost a full year in flavor testing, both the ready-to-eat popcorn and the microwave popcorn because we wanted it to taste as good as the popcorn does in our theaters. And we do buy a much higher grade of corn than many other popcorn makers buy. It's one of the reasons why our popcorn in theaters is so good. And we've been selling it for 100 years. We do know how to prepare it. And we tested a whole variety of flavor protocols to make sure the product we are taking to home was just as good as what we serve in the theaters. And the reviews were fabulous in the early weeks. So to take it overseas, even to take it into Canada, we probably have to find a manufacturer who could live up to the high standards of what we're doing at launch here in the U.S. As for shipping the merchandise internationally, I don't see any reason why not. So we're on the case. We don't have it sorted out yet. But it does raise another question. We have a very successful program for AMC shareholders called AMC Investor Connect. We have almost 1 million members of AMC Investor Connect. These are people who've self-identified to us that they have owned AMC shares since we launched the program 1.5 years back. We've made offer after offer after offer to our U.S. members of AMC Investor Connect. Because we're in a dozen countries in Europe because we have a dozen different systems because we're in different languages across Europe, we've not been able to easily make an offer that's Pan-European, the way we can make an offer that's Pan United States. I think that our European shareholders have taken short shrift in Investor Connect. We communicate with them just as much as we do with the U.S. shareholders, but the offers have been less. And it's a high priority for me in 2023 to come up with ways to make AMC Investor Connect offers to our international shareholders in Canada, Europe, and the Middle East, where we have theaters.

That's very exciting. And the next question here is talking about AMC's plans to expand theaters, both in new markets within the U.S. and perhaps in other countries as well.

So we do have plans going forward, and it's impressive the plans that we've already implemented. We've done a tremendous amount of work addressing what we call our fleet of theaters since the pandemic hit in March of 2020, and we've actually closed like 150 of our roughly 1,000 theaters because there were money losers or because they were in terrible shape at the end of their lease or some other good reason to close. At the same time, we either acquired or built from scratch, 66 new theaters. Interestingly, the 66 new theaters greatly out-produced in profitability the 100-plus that we closed. We're going to continue to look at our theaters every single year. And if there is dead wood in our fleet of over 900 theaters throughout the world, we'll take them out of our fleet. At the same time, though, we're going to continue to add theaters. And where we've added theaters, we've been very successful. We bought just under half of the ArcLight/Pacific circuit, mostly in California. The Grove theater and the Americana brand theaters, two of the ArcLights that we picked up. The Grove is routinely in five of the seven most highest grossing theaters in the entire United States. The Americana brand is routinely in the dozen most highest grossing theaters in the entire United States. We opened a new theater just a couple of months ago at the new Westfield Mall in Topanga, sort of above Nola. We shut a nearby theater that’s 1 mile or 2 away. It was also in the Westfield Mall. The old Westfield theater was making no money; the new Westfield theater, the one at Topanga, is a beautiful theater, by the way, with an incredible food court that's opening up this week at that mall. That new theater is among the 20 highest grossing theaters for AMC in the United States. And the list goes on and on, where we've added theaters, they've done really well. The Bow Tie theaters that we bought mostly in Connecticut. It looks like we have bought more than half of the Bow Tie circuit. When you look at the purchase price that we paid, and if you look at the EBITDA in those theaters, it's looking like we acquired those theaters at 3x current EBITDA. That's a bargain compared to where we currently trade and where movie theaters historically have traded. We think there are any number of opportunities to continue to add theaters into our network that will perform well in our network that either are built from scratch or come to us from failing circuits who've had difficulty surviving COVID. At any given time, we're talking to half a dozen different movie theater chains about possibly acquiring some or a significant number of their theaters and bringing them into AMC on attractive economics. That’s true not only in the U.S., but also internationally—in Europe.

Questions here, we've all seen the news. Can you comment on the possible impact of the Hollywood writer strike on AMC and particularly the availability of new movies perhaps in 2024?

Sure. We understand the real issues facing members of the writer's guild. Streaming has altered the television landscape, affecting writers' earnings. We are optimistic that Hollywood producers and the writers guild can collaborate in good faith to find a solution that satisfies everyone. Regarding the impact on AMC and the movie industry, if the strike is brief, meaning months rather than days, the main effect will be on television programming since the movies for 2023 and 2024 are largely written and, in many cases, already filmed. A significantly prolonged writer strike would be needed to seriously impact the movie theater industry or AMC.

Question here, can you comment on the take-up of the AMC credit card and the sale of AMC branded retail popcorn? What are the initiatives or plan?

We launched the credit card and popcorn at home a few weeks ago, and sales for the popcorn have been strong. I think it's worth mentioning that 80,000 people have signed up on the waitlist to be notified about the launch of the AMC credit card. The number of AMC cards issued so far has exceeded our expectations, and we are very pleased with these initiatives. We have several new initiatives in development, and I want to share one today that I'm particularly excited about. Due to the pandemic and supply chain issues, we've noticed that candy manufacturers have significantly raised their prices, with some increasing wholesale candy costs by as much as 33% in a single jump. This prompted us to consider creating a private label brand of candy that meets high-quality standards, which we can price lower than our current candy while achieving a higher profit margin since our manufacturing costs will be much less. We will continue to offer branded candy, but I anticipate that by late 2023 or early 2024, we'll be able to introduce a private label brand of popular candies in our theaters, provide them to consumers at a lower price, and enhance our profitability. We will still feature the branded candies for those who prefer them, but I'm really looking forward to this initiative. We're really out of time. So I'd like to ask you a question for a change before we turn to investor questions. In your presentation, there were many numbers, and I would like you to highlight two specific ones. How much cash have we generated from the sale of equity since the APEs were established in August 2022? Additionally, how much debt have we paid off, including the deferred rents, from January 1, 2022, to today? These two figures, cash generated and debt reduced, are crucial for understanding the current state of the AMC balance sheet and the progress we have made in improving it.

Thanks, Adam. That’s a really, as you say, important question. And the two numbers that I want people to take away from this is, one, since the creation of the APEs and an indication of how important that creation was and the impact it has on AMC: we have been able to raise $480 million of cash as a result of the creation of the APEs. So it's a significant impact on our liquidity and cash position. But maybe even more importantly is the debt reduction. If one goes back to the beginning of 2022 and just look over the last 18 months, we have reduced our debt balance by $620 million. That includes a reduction in deferred rent. It’s a significant reduction in our debt. And I think I'll add one more number. You asked for two, but I'll add one more number that I think people don't recognize as well is that if you look at our net debt, net financial debt position today as of March 31, and you compare that to our net debt position just prior to the pandemic, December 31, 2019, what one sees is actually our net debt is surprisingly less than it was pre-pandemic by more than $440 million. So it's not more; it's less than what's pre-pandemic. So I think that is a real indication of the importance of the equity raises that we have done since the pandemic and particularly as a result of the creation of the APEs.

Operator, are there any questions from analysts that we should be taking?

Yes, sir. We have one question from Eric Wold from Riley Securities.

Good morning, Adam and Sean. Congratulations on the strong results and turning to positive adjusted EBITDA. I want to focus on the structural improvements in the business that you've made over the past few years, given I think that those benefits may not completely be understood. I'm currently projecting that domestic industry box office revenue to get back to pre-pandemic levels by 2025, but that attendance will continue to lag that recovery as you talked about, that recovery is also being fueled by consumers choosing the premium large format screens and driving up average ticket prices. Can you talk about the structural benefits of the expense reductions you've made at both the corporate and theater levels along with the benefit of the higher per patron spending? And if it's possible that AMC could actually return to pre-pandemic profitability even if attendance remains below pre-pandemic levels?

Sure. I'll respond to that. We had to make significant cost cuts because otherwise, we would run out of cash. It's never easy to think about job losses, but the pandemic forced us to streamline operations. Currently, our corporate headquarters has about two-thirds of the staff it had before the pandemic, and our theater management staff is down about one-third compared to pre-pandemic levels. We've become more efficient. Interestingly, while we're paying higher wages, we have fewer employees in our theaters at any one time. Many of our employees work very hard and appreciate the shift from being primarily a minimum-wage employer to paying between $10 and $15 an hour based on market conditions for line workers. To summarize, we have fewer management positions at headquarters and in theaters, higher wages, fewer employees in theaters, and our guest satisfaction scores remain very high. Our leadership team is effectively managing the company. On the revenue side, I cannot disclose specific second quarter numbers yet, but I will mention that our food and beverage spending per patron in April is higher than it was in the first quarter. We're performing well in that area. Pre-pandemic, our food and beverage spending per patron was around $5.60. In the first quarter, it increased to $7.99, which is a rise of $2.40 per patron, with 85% of that contributing to our bottom line. This significantly impacts our contribution per patron. The same applies to ticket prices. Although our ticket prices haven’t risen by 20% since before the pandemic, the increase in attendance at IMAX and Dolby Cinema auditoriums has resulted in an average realized ticket price increase of around 20%. This isn't simply a price increase; it's due to a shift in attendance patterns, particularly with our premium large format screens performing significantly better, allowing us to charge higher prices and ultimately leading to a greater contribution per patron. Regarding your question, this means we won’t need as many attendees moving forward to generate EBITDA as we did in the past. With that being said, we will let you go. I want to end the call by thanking all of you who care about AMC and reminding you that there is just an incredible array of really great movies coming out between now and Christmas of 2023. You will just spend a lot of time in movie theaters. If you do, you will be amused and you will be entertained, and as Nicole Kidman says, you'll see dazzling images on a huge silver screen, and you'll see stories that are perfect and powerful, because here at AMC, they are. Thank you for joining us today.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.