Amc Entertainment Holdings, Inc. Q3 FY2023 Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the AMC Entertainment Third Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session, and instructions will be provided for you to queue up for a question. I would now like to turn the conference over to John Merriwether. Please go ahead, sir.

Thank you, Jenny. Good afternoon. I'd like to welcome everyone to AMC's third quarter 2023 earnings webcast. With me this afternoon 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 a 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 the 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 released posted in the Investor Relations section of our website earlier this afternoon. After our prepared remarks, there will be a question-and-answer session. This afternoon's webcast is being recorded and a replay will be available in the investor relations section of our website at 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. It's almost impossible to contain our pride in the record-setting strength of AMC's third quarter 2023 financial results. Following on the heels of our recent record Q2 results, we set the bar even higher in Q3. For both revenue and adjusted EBITDA, these were the single best third quarter results in AMC's entire 103-year history. By definition, revenue and adjusted EBITDA beat last year's third quarter. They beat the third quarter of 2019, which was the last Q3 unaffected by the COVID-19 pandemic. And for that matter, they beat every third quarter result that AMC has ever reported. Once again, AMC exceeded consensus estimates and market expectations across the board, and we did so handily. AMC was literally in a different ballpark of accomplishment than many third-party observers anticipated. Sean will discuss these exceptional third quarter results in more detail during his prepared remarks. But suffice it to say, AMC posting revenues exceeding $1.4 billion, adjusted EBITDA of $194 million, and positive net income of $12 million is a feat that has us all smiling in Leawood, Kansas. The entire quarter was rejuvenating for AMC, and July especially was meaningful, as it was the second highest grossing month in AMC's entire century-long history. Global attendance at AMC Theaters tallied more than 73.4 million guests in the third quarter of 2023, up 38.4% over the third quarter of the prior year. It set a high watermark for quarterly attendance in the post-pandemic era. AMC's attendance in Q3 2023 was the highest since the fourth quarter of 2019. Moviegoers returned to AMC theaters in ever-increasing numbers in the third quarter of 2023 in response to both our studio partners' efforts to increase the quantity and quality of new releases, combined with AMC's continuous commitment to enhancing the guest experience enjoyed at our theaters. This continuity of AMC's glide path to recovery is notable for three key aspects. First, the industry-wide box office is finally showing some strength. Second, we ended the quarter with $730 million of cash, and we remain committed to ensuring that our cash reserves remain robust. And third, AMC's contribution per patron was up 30% from pre-pandemic norms. I want to repeat that number for emphasis so that you all hear it and understand its significance. AMC's contribution per patron was up 30% from four years ago. As a result, AMC has demonstrated that, at least for this quarter, we can report a healthy amount of adjusted EBITDA or be free cash flow positive without a complete return to the box office to pre-pandemic levels. Although pre-pandemic levels of box office would certainly be preferable. As for that box office, this was an inspiring quarter that saw the North American, the so-called domestic box office surge to $2.7 billion, exceeding Q3 2022 by 38% and achieving 95% of the pre-pandemic Q3 2019's box office. This is the closest our industry has come to quarterly box office levels that were considered normal in pre-pandemic times. As for our cash. The reason that AMC Odeon has been surviving this ravaging pandemic, happily staying away from bankruptcy courts, while big chains like Cineworld Regal or small chains like Alamo Drafthouse or ArcLight did not, is because at AMC, we've been maniacal in building up our cash reserves. For those trying to understand how AMC has successfully been defying gravity these past three and a half years, having ample cash on hand is the secret sauce. It is having sufficient cash reserves that has enabled AMC's resilience here before, and therefore, we will continue to seek equity capital when it appears smart to do so. As for our vastly improved contribution per patron, this is the real enduring lesson of AMC's third quarter results. Yes, we benefited from Barbenheimer, and from Mission Impossible: Dead Reckoning Part I, Sound of Freedom, and Indiana Jones and the Dial of Destiny among other films. But if you look at attendance, rather than box office dollars, the domestic industry attendance in Q3 was actually 16% down from the third quarter of 2019. And yet, AMC was more profitable, attendance down, profits up. This came from the cumulative impact of all the many actions we have taken, especially over the past three-and-a-half years to change our fate. Those actions include: one, our focus on expense management in a challenging inflationary environment; two, the pruning of our theater fleet by closing marginal theaters and opening successful new ones; three, cooperatively renegotiating many theater rents with our theater landlords; four, leading the industry with our having more customer-pleasing premium large format screens than any of our competitors; five, AMC's innovative moves to sell other things, everything from Barbie-themed pink Corvette models sold in our theaters for microwavable home popcorn sold on the shelves of Walmart; six, all of the many innovative marketing and pricing AMC initiatives, which have caused us to achieve dramatic increases in revenues per patron, especially in our high-margin food and beverage activities; as well as number seven, capitalizing on the many scale advantages and opportunities that accrue to AMC by being the largest movie theater company in the U.S., in Europe, and globally. Now, I'll pass this webcast over to Sean to provide more details on the financial results of Q3. Afterwards, I'll return to talk about some of our ongoing initiatives and AMC's thoughts about the future. Sean?

Thank you, Adam. And thank you to everyone for joining us this afternoon. As Adam just said, in the third quarter, we achieved two notable financial milestones. One, our best revenue and adjusted EBITDA since pre-pandemic 2019. And two, the highest revenue and the highest adjusted EBITDA for any third quarter in AMC's entire 103-year history. Of course, it also means that we beat pre-pandemic Q3 2019 adjusted EBITDA, and we did this by a resounding 24%. This is a remarkable achievement because our attendance was nearly 16% lower than in Q3 of 2019. Yet, despite having 13.5 million fewer guests, we grew revenue by 6.8% or $89 million, and we grew adjusted EBITDA by 24% or $37 million. This result clearly demonstrates the success of the actions that we have taken over the last four years to really elevate the guest experience, optimize our theater fleet, manage expenses, and improve our efficiency and overall profitability metrics. These results clearly illustrate our ability to deliver solid financial outcomes, even when the industry box office and attendance were below pre-pandemic levels. With a third quarter North American box office of $2.7 billion, which is 38% above the prior year, we grew revenue by 45.2% to $1.4 billion. We grew adjusted EBITDA by $206.6 million to $193.7 million. And we grew net cash provided by operating activities by $289.5 million to a positive $65.9 million. With this quarter's results, we've now extended our unbroken string of positive adjusted EBITDA quarters to four and for the first time since 2018, we've generated a second consecutive quarter of positive net earnings and positive earnings per share. Now, I'll turn to the North American business. Total revenue for the quarter increased by 41.2% compared to Q3 of 2022. This was driven by an attendance increase of 34.4%, which was helped by an increase in our market share. Admissions revenue per patron increased by 4.8%, and food and beverage revenue per patron increased by 4.1%. Note that the revenue generated per patron for this quarter was 30.1% above pre-pandemic Q3 of 2019, and the contribution dollars per patron, which is defined as the revenue per patron less exhibition, and food and beverage costs was 35.9% above Q3 of 2019. In the international business, on a constant currency basis, total revenue increased by approximately 50% compared to Q3 of 2022. This was driven by an attendance increase of 48.5%, admissions revenue per patron increased by 10.8%, and food and beverage revenue per patron increased by 10.5%. Note that international revenue per patron and contribution dollars per patron for the quarter were 18.4% above our pre-pandemic Q3 of 2019, as measured in constant currency. Moving to cash flow and the balance sheet, we ended the quarter with cash and cash equivalents of $729.7 million. Operating cash generated, a non-GAAP measure representing cash from operating activities after deducting capital expenditures and before both debt servicing costs and deferred rent payback was positive $109 million, an improvement of $288 million compared to Q3 2022. Capital Expenditure net of landlord contributions was $49.8 million for the quarter; this brings our year-to-date net CapEx to $137.5 million. Based on our expected CapEx spend in Q4, we now anticipate net CapEx for 2023 to be in the range of $175 million to $225 million. During the third quarter, we continued to actively manage our theater portfolio. We added one new theater and closed three. This brings the total number of locations that we have closed since the pandemic began to 156 and the total new locations opened to 57 for a net reduction of 99 locations. This portfolio rationalization together with ongoing landlord negotiations has unequivocally resulted in a more profitable theater portfolio. Just as an illustration of our effective rent expense management, it's worth noting that Q3 2023 rents were 5.6% below the same period in 2019 in constant currency. This despite the significant CPI increases over the last four years. Going forward while we continue to invest in our business and the guests experience, our top two capital allocation priorities must remain one, to ensure that we have sufficient liquidity to manage through our recovery period, and two, to strengthen our balance sheet. Now we've made considerable progress in these two areas. During the third quarter, we successfully raised $325.5 million of gross equity capital, we've repurchased $24 million of debt at an average discount of 28%, and we also repaid $22.3 million of deferred rent. The deferred rent balance at the end of Q3 was $74.2 million and we plan to reduce this balance by another $20 million by the end of this year. So year-to-date, 2023, we have now raised $550 million of gross equity capital, we've lowered the principal value of our debt by $289 million through debt repurchases or exchanges of debt for equity, and we've repaid $83 million of deferred rent. All told, we have reduced our debt and deferred rent liabilities by $372 million thus far in 2023, and a total of $764 million since the beginning of 2022. In summary, our results for this quarter clearly show the positive impact of the significant enhancements that we have made and will continue to make to grow and to strengthen the business. As we navigate through this recovery phase, which may be extended by the Hollywood strikes, our primary financial priority will be to ensure ample liquidity while concurrently continuing to make progress reducing debt and fortifying our balance sheet. Of course, we will also continue to pursue growth initiatives opportunistically as they make sense. We believe that this approach overall will best position us to thrive in the future.

Thank you, Sean. The successes of 2023 and the third quarter in particular have clearly illustrated the allure and power of theatrical exhibition movies in theaters on the giant screen. Before we move on to questions from our investors and from equity analysts, I would like to quickly update you on six specific topics. First, merchandise. You may recall that we started getting serious about merchandise sales in our theaters and on our website as a result of specific show or suggestions that came in from our retail investors. We embraced the idea thoroughly, and quietly it has become a pleasant success story. It was literally a non-existent business for AMC in 2021. In 2022, we grossed about $10 million in merchandise sales, but by the end of 2023, it will be more than a $50 million revenue source for us this year. Way to go shareholders, keep those good ideas coming in. Second, popcorn in the home. Our lines of ready-to-eat and microwavable AMC Perfectly Popcorn have been a huge hit. Our six-month exclusive deal with Walmart Stores and Walmart.com proved to us, proved to Walmart, and proved to other retailers that consumers find AMC's product offering in this area to be compelling. So in addition to continuing with Walmart, I am pleased to announce today that over the next two months, we will be rolling out AMC Perfectly Popcorn to Kroger stores, including their approximately one dozen brands of supermarkets around the country. And before Christmas, we expect to be placing it on the shelves of all Publix supermarkets as well. And if all goes according to plan, by Black Friday of this month, AMC Perfectly Popcorn will be available nationwide on Amazon.com as well. Third, given our success in branding our popcorn in November and December this month and next, we also will be introducing a new line of AMC-conceived and branded gourmet chocolate candies called AMC Cinema Sweets. Our first use will be chocolate-covered pretzels, chocolate-covered almonds, chocolate-covered peanuts, and chocolate-covered raisins. Essentially, our learning at this company in this area is that just about anything tastes a whole lot better if it's drenched in chocolate. AMC's strategy here will be to offer a top-of-the-line quality treat with some of the finest chocolate made, and lots of it. Even though ours will be a gourmet line, we will sell at the same price as mass-market brands. That's something that AMC can do, given the huge demand for candy products that exists within a movie theater environment, without a requirement for us to run up massive distribution or marketing costs. At least initially, AMC Cinema Sweets will only be sold at AMC theaters. And of course, in addition to carrying our own line of AMC Cinema Sweets, we will continue to stock on the shelves at our theaters the many name-brand candy products that are there today. Fourth, I'd like to address the situation that our industry has encountered for almost six months now due to the writers and actors strikes. It's gone on for almost half a year. The short-term impacts of the writers and actors strikes will cause additional and needless challenges for AMC in 2024. Projects will get delayed from 2024 and future periods. Without taking sides as to who is to blame for this labor stoppage or how the labor challenges should be resolved in negotiation, we strongly encourage all the parties involved to come to the negotiating table with the intent of reaching an agreement immediately. There has been and will be much collateral damage from these lengthy work stoppages. For the benefit of all involved in the movie ecosystem, AMC believes that this month-long disharmony needs to come to an end now, whether one thinks of a studio executive or a union member in the creative community, it is ever so important that everyone in Hollywood returns to the task of creating world-class entertainment that is admired and greatly enjoyed the world over. Fifth, I'd like to quickly comment on our laser projection upgrade. It is categorically accurate to say that the future for AMC continues to get brighter thanks to our ongoing transition to laser projectors at our theaters. They increase on-screen light levels by 50% to 100%. As a result, the images on the silver screen are getting sharper and brighter as every week passes. By the end of 2023, AMC will have converted more than 37% of our auditoriums across the United States to laser projection. Not only does this deliver improved picture contrast, more vivid color, and greater picture brightness for our guests, this is the biggest single green initiative ever undertaken by AMC. Laser projection is environmentally friendly because it eliminates the problem of having used Xenon bulbs. And it brings a significant reduction to our energy consumption efforts as we show movies to moviegoers. And finally, topic six, which is not the only thing we've been talking about around here the last five months. Taylor Swift, Taylor Swift, Taylor Swift, what can we say of our gratitude to Taylor for interesting AMC to distribute her Eras Tour concert to some 100 countries across the planet? As you'd likely know, with ticket sales expected to hover around $250 million, the Eras Tour is already the highest-grossing concert film in history. And at the domestic box office, Taylor Swift - The Eras Tour was the second highest-grossing movie of all time for any and all genres to be launched during the month of October. That's our role as distributor. As for our role as exhibitor, AMC's market share of ticket sales sold for Taylor Swift - The Eras Tour was unusually high. So both as distributor and exhibitor, AMC benefited handsomely both reputationally and financially from our having taken on this project, and that benefit will not be a one-time thing. As we announced just a few weeks ago, AMC Theaters distribution is following its success with Taylor Swift, The Eras Tour with a concert film release of Beyoncé's Renaissance World Tour. Renaissance of film by Beyoncé will be released globally on December 1. We are so privileged to be working with artists like Taylor Swift and Beyoncé as they bring their creative vision to their fans, and we do so, too, in the United States and around the world. For what it is worth, in working with two of the most admired pop stars on the planet, we already have touched lightning. All of us at AMC are now passing to Swifties and are probably in the BeyHive. We are optimistic though that this will lead to much more ahead. This is not just a one-time thing in 2023. We believe that we will have several more concert film products in 2024 and 2025. We intend to be working with some of the most known and most loved physical artists the world has ever known. For those of you who don't think that this will prove to be transformational for AMC, watch this space. If as and when more artists come on board, there is significant incremental profitability ahead for AMC from our going down this sizable fan-filled road. If one would think back to March of 2020, if I had to summarize our view as we sit here today, going back to a time when all theaters were shut. And think about what has transpired since? You'll note that the recovery of the movie industry and of the movie theater industry has not been a straight line. Indeed, to the contrary, it's been a wild ride with ups and downs that no one would have predicted. Through it all, though, AMC has clearly emerged as the leader of the pack, and we've done so backed by an army of enthusiastic shareholders. Looking ahead, there likely will be challenges for us to conquer still. A prolonged actor strike and rising interest rates are not helpful. We still have significant debt to pay down or to refinance, although that's mitigated somewhat because most but not all of our current maturities do not start before 2026. But looking again at sort of the glass half-empty, many of our shareholders are in sense, truly incensed by stock market practices that they do not trust. If that's not enough, there's war in Europe and there's more in the Middle East. The list of problems we dealt with goes on and on and on. But if there ever was a time to look past the immediately foreseeable challenges of the day for AMC, it might be right now right after reporting AMC's third quarter 2023 earnings. It was, after all, the single best third quarter for AMC in some 103 years. These were stellar results. To our shareholders listening in to this webcast, we hope you share our pride in the progress that's being made by AMC. This, after all, is your company. And we benefit in so many ways from your enthusiasm and from your passion for AMC. With that, Sean, let's now move to questions from our shareholders and industry analysts. And as a change of pace, let's start with questions from industry analysts in lead position, and then we'll take questions from our shareholders batting cleanup, so to speak, as we close out today's call.

Thank you. We will now begin the question-and-answer session. Your first question is from Alicia Reese from Wedbush. Please ask your question.

Hey, Adam and Sean, how are you guys doing? Nice quarter. Congrats on that.

Thank you. And to answer your question, we're doing well; it was a nice quarter.

It was, indeed. I have a couple of questions. First of all, I'm wondering if you could talk a little bit more quantitatively in terms of Taylor Swift. In terms of the distribution versus just exhibiting this film. And same for Beyoncé. If you could talk about that quantitatively, what's the benefit of distributing that in terms of market share or in terms of film rent and if not that, then a little bit more qualitatively about that, if you can.

Let’s start with some quantitative insights. We know the figures precisely, and they are substantial. However, we'll reveal those statistics during the fourth-quarter call instead of the third. In terms of performance, we have done exceptionally well and anticipate a significant profit from the quick conversion of what began as an in-stadium concert tour into a film for theaters. We are well aware of the numbers, which we review frequently with Taylor’s team. The ticket sales for us have been unusually high, likely due to our strong commitment to the project. It’s challenging to find a news source worldwide that doesn't associate AMC with Taylor Swift, with Beyoncé following closely behind. Taylor’s film has grossed $165 million domestically and about $220 million globally in just four weeks. It’s still showing in theaters, and we expect attendance to continue growing over the coming weeks. While we don't predict that Beyoncé's concert film will reach the same heights as Taylor's, we still expect it to perform well and positively impact our profits in 2023. Moreover, we're excited not only about this year's profit but also about our potential for 2024 and 2025. Since announcing the Eras Tour project on August 31, we've seen a surge of interest from some of the world’s top artists wanting to collaborate with AMC, similar to what Taylor and Beyoncé achieved. Clearly, this is a lucrative opportunity for us in 2023, and it promises to remain so in the years ahead. I also want to acknowledge that while AMC has led this initiative, the challenges from writer and actor strikes had caused some movies to be pulled from the fourth-quarter schedule, creating unexpected opportunities for us with the addition of Taylor's and Beyoncé’s films. We couldn’t have navigated this alone, and I want to credit our competitors, including Cinemark, Regal, Cinepolis, and Cineplex, who also decided to screen the films. Movie theater chains around the world, in roughly 100 countries, have embraced showing the Eras Tour and Renaissance tour, which benefits the entire industry by generating unexpected revenue. Regarding your specific question, Alicia, we will provide all the detailed numbers in our next call.

Yeah, that makes sense. Appreciate that. If I can ask one more, just wondering if you can give some commentary around the premium large format screens and the impact on your market share as the biggest footprint for IMAX, Dolby, and then how your proprietary PLFs are performing across your circuit right now.

Sure. I believe this represents one of the key success stories for AMC. Our premium large-format screens, including IMAX, Dolby Cinema, and Prime in the U.S., as well as iSense in Europe, are our most successful screens. They not only sell more tickets but also generate higher revenue than regular screens. In fact, each premium large-format screen is comparable to about four regular screens in terms of box office earnings. On average, our premium large-format screens are earning roughly four times more than standard screens, and AMC operates 550 of these screens globally, far more than any other company. Approximately half of all IMAX screens in North America are located at AMC, and we host all Dolby Cinema screens in the U.S. This represents a significant achievement for us, and we are committed to expanding this area. We have not only increased the number of premium large-format screens but also enhanced their quality. Most of our Dolby Cinemas have been installed within the last eight years, while some of our IMAX screens are older. We've invested in upgrading our IMAX screens with IMAX laser technology and improved sound systems. Additionally, we aim to increase the number of locations for both IMAX and Dolby. We also plan to grow our proprietary brand, iSense in Europe, and Prime here, with the potential to add around 150 more screens to our current 550. However, our ability to pursue these growth opportunities is primarily influenced by available cash, as we need to balance investing in growth with maintaining liquidity and reducing debt. The main challenge lies in determining how much to invest in growth initiatives versus paying down debt or saving for future needs. Nevertheless, we are confident that there are substantial opportunities ahead, and we believe that AMC is the premier destination for premium large-format screens, a position we intend to maintain and enhance in the coming years.

Adam, with that, should we go to some questions from our shareholders?

Please let's do.

Unless there are any questions from equity analysts. But I think at this point as questions from our shareholders. So the first question, Adam, is about alternative content, and we've spoken a lot about Taylor Swift. But the question is, can you talk more about future opportunities? And what other sort of content are we considering to bring into our theaters?

In one of our key initiatives in alternate content, we recently added $0.25 billion to the global box office, with $165 million coming from the United States alone. I believe no one is pursuing diverse content more aggressively than AMC. We've recognized strong demand for concert films and are committed to pursuing them diligently. However, our efforts aren't limited to concert artists. I see significant potential in professional sports for the movie theater industry. If watching a football game on a 45-inch, 55-inch, or 65-inch TV at home looks impressive, just imagine how much greater it would be on a 45-foot, 55-foot, or 65-foot screen at an AMC theater. Beyond concert films, we will also be focusing on sports. It has taken us several years to obtain the rights, but we are actively working on it now. Additionally, there are numerous other content opportunities, including ethnic films like Bollywood, Asian language films, or Hispanic language films, which we are already pursuing in the U.S. While our year-over-year growth in these segments is small, the increase has been significant. We've had a longstanding partnership with a company that brings diverse content to our screens as well. Clearly, there is a substantial opportunity here, as demonstrated by Taylor Swift's success, which shows it can generate considerable revenue if executed correctly. This remains a priority for AMC.

A lot of interest in our food and beverage offerings. And there's a question about other than popcorn, what are our other food and beverage initiatives and what plans do we have to bring other AMC food and beverage products through retail distribution channels?

At AMC, we take great pride in the changes we've made to our food and beverage business over the past few years. Before the pandemic, we averaged about $5 in food and beverage spending per guest, and that figure has risen to around $8 per guest since then. This $3 increase is significant, especially considering our high-margin food and beverage operations. I often joke that we mainly sell air and water, along with popcorn and soft drinks, which makes this segment quite profitable for us. The rise in spending per patron is advantageous. While other chains have also seen increases in their food and beverage sales, I believe that our mass market brand has the highest capture ratio in the industry among theater chains, particularly those that aren't small dine-in venues. This success is intentional; we offer a wide variety of products both at our dine-in theaters and on the concession shelves in our non-dine-in locations. There's still room for growth. Currently, I am excited to announce our upcoming launch of AMC Silver Suites this month and next, featuring a unique pretzel dessert with an abundance of chocolate. We're optimistic about this new offering starting in our theaters. Just as we proved with our AMC Perfectly Popcorn, should we see strong sales for AMC Cinema Sweets, we may consider extending this product to retail markets, similar to how we introduced Perfectly Popcorn at Walmart, Kroger's, Publix, and Amazon.com. Our success in this area has been remarkable, and we aim to keep expanding. Additionally, it’s impressive how well our movie-themed merchandise is selling at our concession stands, with sales ranging from 100,000 to 1 million items each weekend, all at a substantial profit. Whether it’s a $10 popcorn tub themed around Taylor Swift’s movie or a pink Corvette for the Barbie movie, these creatively themed items are driving significant business, which we plan to sustain into 2024.

So let's talk a little bit more about the operating improvements that we have done since the beginning of 2020, which are clearly evident in our results for this quarter. And the questions about those operating improvements that we've made that will really allow AMC to thrive in the future.

We had to get more efficient because we faced no revenues during the pandemic. Our company has become much leaner than ever before, with a significant reduction in headcount at our corporate headquarters and in our theaters. In Europe, we have automated many theaters with automated box offices and food and beverage operations, and we're starting to implement these automation features in the United States as well. We had no choice but to improve efficiency, and we accomplished that. We renegotiated our rents downwards with landlords, resulting in tens of millions of dollars in annual benefits. Additionally, we've streamlined our fleet, closing approximately 150 marginal theaters and replacing them with 50 successful ones. The new theaters are generating substantially more revenue than the ones we closed, yet our operating expenses are only a third of what they were when we managed three times the number of theaters. Overall, this company has become leaner and more efficient, which has positively impacted our strong third-quarter results. Although attendance was down 16% compared to 2019, we are still significantly more profitable in 2023 than we were in 2019 due to our efficiency improvements. This newfound efficiency is permanent, and it will continue to influence our financial performance moving forward.

Yeah. And there's a final question, which I think relates very much to what we just discussed about operations, but just about the use of technology to really enhance the customer experience. And you mentioned some of that about the kiosks. And I guess there's other things that we're doing on using technology as well, right?

So, we joke that we can't go do the math of this company without programming in the computer first. But you would think this is a pretty simple business. You have a building, you turn on the lights, you have a projector, you shine a picture on a wall, maybe you add people to cut off Coca-Cola or popcorn on the way in the door. And yet it's surprisingly intricate and complicated. One of the reasons for that is literally everything that goes on in our theaters is automated in some shape or fashion. And we've used technology to our advantage. We have a loyalty program, Stubs and A-List, where we track the purchase history of our best customers and reward them for it. The reason we can pull that off is because our tech is so good. Very quietly during the pandemic, we put mobile order on our website and smartphone app so that literally every guest who buys a ticket online has the opportunity to prebuy their AMC food and beverage. Our experience shows we're selling more food and beverage products to the people who are using mobile order. Again, that could happen, but for our tech. The way we distribute movies to theaters. Christopher Nolan still likes 70-millimeter film, but everybody else, including Chris Nolan, everyone else sends their movies to our theaters digitally via satellite and they are received on a computer server. That's a direct result of our tech. So I do believe that from a technological standpoint, we're pretty sophisticated as an operator today, and we're committed to continuing to invest in technology both to benefit the guest to make the experience better, to make ourselves more efficient, which means we can squeeze out more profitability on the same revenues. I was also to stay ahead of the curve in an era where all things seem to be affected by tech.

Terrific. That concludes the questions from investors.

Let me conclude the call by stating that the third quarter of 2023 was exceptional. We exceeded market expectations by approximately 50%. It was a profitable quarter despite anticipations of a loss. Revenue growth was significant, but our success was also attributed to effective expense management. I do hope that the actor strike in Hollywood comes to an end soon and that we don't see movies being postponed from 2024 to 2025. However, I am very optimistic and confident about the future of the movie industry. AMC is at the forefront of it, and we are performing well. The third quarter of 2023 highlights that when everything falls into place, this industry can be highly profitable. Thank you all for joining us. If you haven’t seen Taylor Swift's movie yet, I encourage you to go watch it. If you haven’t purchased a ticket for Beyoncé's movie, please do so. We look forward to welcoming you to our theaters as Christmas movies will be released in just a few weeks. Many big films are on the horizon, and movie theaters will be bustling in December 2023 and beyond. Happy holidays to everyone, and we will see you next quarter.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.