AMC Entertainment Holdings, Inc.
Q2 2021 Earnings Call Transcript

Published: 9 Aug 2021

[Operator:]

Greetings, and welcome to the AMC Entertainment Second Quarter 2021 earnings webcast. During the presentation, all participants will be in a listen-only mode. Afterward, we will conduct a question-and-answer session. As a reminder, this conference is being recorded Monday, August 9th, 2021. I would now like to turn the conference over to John Merriwether, Vice President Investor Relations. Please go ahead.

[John Merriwether:]

Thank you, Kevin. Good morning -- or good afternoon, everyone. I would like to welcome you to AMC's second-quarter 2021 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-Q. Several of the factors that will 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 webcast, we may reference measures such as Adjusted EBITDA and free cash flow, 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 - question and answer session. This afternoon's webcast is being recorded and a replay will be available in the Investor Relations section of our website at amctheatres.com later today. With that, I'll turn the call over to Adam.

[Adam Aron:]

Thank you, John. Good afternoon, everyone, and thanks to you for joining us today. The second quarter of 2021 was another very important quarter for AMC. We have a lot to talk about on this call as to the considerable progress towards recovery that AMC is making, and we have some real news to break today as well that will be new information to all of you. Before we go there in detail, I first would like to express a very warm welcome to what, from past experience, makes us believe that more than 10,000 individual AMC investors will be listening live to this webcast. And another warm welcome to the at least hundreds of thousands, if not millions of our investors, who will be listing to replays, reading our press releases, and AMC Investor Connect communications or following on Twitter and other social media platforms, our Earnings report, and the accompanying new news that we'll be discussing later in the call. Realizing that is -- that it is these investors who now actually own control of AMC Entertainment Holdings, for the first time ever later in this call, we will answer a potpourri of questions that have been submitted to us directly by our shareholders. As to our second-quarter performance. I think you can see from the release that was issued after the market closed today, we are making tremendous progress as our business emerges from the impact of COVID-19. This progress can be seen not only in our operating statistics and financial performance but also by the significant strengthening of our balance sheet. AMC is stronger today than it has been at any point since the pandemic forced the closure of all our theaters in March of 2020. Our quarter-ending liquidity at the end of Q2 on June 30, is actually once again, at 100 years high. Now that's precisely what we said on the Q1 call when we reported to you that on March 31, we had $1 billion of the quarter-ending liquidity and that was the highest quarter-ending liquidity that AMC had ever had. In Q2, mostly May and June, we raised another $1.25 billion of fresh equity capital, and our cash burn was meaningfully less than we had previously experienced in recently passed quarters. So, we ended Q2 with some $2 billion of liquidity, that's cash in the bank and undrawn revolver. And just a short 3 months later from our last call, that $2 billion figure is literally double the Q1 mark, a new record doubling the old record that was set just 91 days prior. As for our earnings in Q2. Thanks to rising attendance, increased ticket prices achieved both through mix changes, and actual price increases, storing food and beverage revenues per patron, a relentless focus on cost containment, and the pruning of marginal theaters from our network, our financial results in Q2 were well ahead of our own, and consensus third-party expectations. In short, AMC crushed it in Q2. You've already seen some of the highlight headline numbers

[Sean Goodman:]

Thanks, Adam. And thank you, everyone, for joining us this afternoon. As Adam noted, this quarter marked an important and very successful step along our pathway to recovery. Overall, our global attendance in Q2 was more than 3 times that of Q1. While this is approximately 77% below 2019's attendance levels, it is only approximately 45% below our 2019 attendance per show. This is an illustration of how we're actively managing our showtimes and associated costs to optimize the efficiency of our operations. We have a way to go before the business fully normalizes. But clearly, we are on the right path in making significant progress. In general, comparison of our results to 2020 and 2019 is not particularly meaningful, given that we are still in a ramp-up phase. However, there are certain metrics that are really very encouraging and worth mentioning. Compared to the second quarter of 2019, the domestic average ticket price was up more than 15% and food and beverage revenue per patron was up nearly 42%. To a very impressive $7.91. And this compares to $5.58 during the same quarter of 2019. Similarly, the international average ticket price was up 6%, and Food and Beverage revenue per patron was up nearly 33% compared to the second quarter of 2019. The Food and Beverage increase is primarily driven by a significantly higher percentage of guests choosing to purchase our Food and Beverage concessions. We are continuing to see strength in both average ticket price and food and beverage per patron as we move through the third quarter. Clearly, our guests are celebrating the event of going out to see a movie and enjoying the full immersive theatrical experience, the sights, the sounds, and innovative AMC concessions. Let's talk a bit about our balance sheet. As Adam noted, we ended the quarter with $2.023 billion of total liquidity. And this is comprised of $1.811 billion of unrestricted cash and $212 million available under our revolving credit facilities. This record liquidity level was made possible by our equity issuances during the quarter plus the completion of the sale of our remaining equity interest in theaters in Lithuania. On average, during the second quarter, our cash burn was $85 million per month. This is a significant improvement from Q1 when the average cash burn per month was $120 million. And this improvement in cash burn is a result of higher gross box office grosses, together with our very strong operating performance. And it's particularly noteworthy and an impressive improvement when one considers that our cash interest spends and deferred rent repayments were significantly higher in Q2 than they were in Q1. If we look at cash burn before the payback and deferred rent and debt servicing costs. It was approximately $40 million per month in Q2 versus a burn of $115 million per month in Q1, a very significant improvement. Note that our cash burn numbers are stated off after normalizing for the impact of capital raised during the quarter. And therefore, exclude the proceeds from the completion of the sale of our theaters in Lithuania, and the equity capital that we raised during the quarter. Regarding capital allocation, we're pursuing a balanced approach to capital allocation. And our priorities are as follows

[Adam Aron:]

Thank you, Sean. I've been saying publicly, ever since we raised that life-prolonging additional equity in May and June, that it was high time for AMC to start playing on our terms again. And earlier in this call, I promised you some news. So, here it goes quickly on 10 specific items. 1, you already know that with ArcLight and Pacific theaters' decision to permanently shut down. We announce that we've executed two leases with Rick Caruso's world-class real estate organization to add to the AMC fleet of theaters, two of Los Angeles ' highest-grossing cinemas, The Grove and Americana at Brand, were the second and fifth highest-grossing theaters in Greater Los Angeles as recently as the calendar year 2018. They should open later this month as AMC theaters. However, I can confirm today that the number is not 2 new theaters for AMC, it might be 10. We actually now have 6 new theatre pickups under lease or signed letter of intent. Note two, 3 of those are in Los Angeles, 2 are in Chicago, 1 is in Atlanta. And we also are currently in advanced negotiations to add 4 more, bringing the possible pickups to 10. 8 of the 10 would come from former ArcLight Pacific locations. Item 2, speaking of new theaters, in 2021, we will open about a dozen new build theaters in the U.S., Europe, and the Middle East that were all well underway before COVID struck. I'm happy to report that we do know something about designing beautiful and productive theaters. In the United States, for example, we opened 3 new theaters in 2021. The 2 in Los Angeles; AMC Porter Ranch and AMC Dine-in Montclair, are already each among the top 25 highest-grossing movie theaters in the entire United States. That puts each of these 2 theaters in the top one-half of the 99th percentile of highest-grossing U.S. cinemas. And that was achieved in just their first few months of operations. It's really astounding. Our new AMC Dine-In Theatre in Sunnyvale, California, also is doing amazingly well. It's in the 94th percentile of highest-grossing U.S. theaters. Item 3. Many of our new individual investors have showered us with great ideas about how we can strengthen and brighten the future of AMC. Among their ideas for AMC are that we show concert movies, professional sporting events, e-sports, and gaming events. Wasting no time, we've immediately started to implement these very good ideas. Our first 2 UFC matchups, which were in July, drew significant attendance to our theaters. Our first two concert movies, with Chance, the Rapper, and Halsey will show at AMC theatres across the country later this month in August. We're quite optimistic that this alternative programming can be built into a real revenue opportunity for AMC in future years, and we're chasing it hard. We also hope to engage in meaningful dialogue with professional sports leagues and collegiate sports conferences to see if we can obtain the rights to show more sporting events at our theaters. As for gaming opportunities, indeed, the president of Epic Games is a member of the AMC Board of Directors. And I cannot even count the number of times already that our shareholders have asked us to reach out and partner with GameStop. We're on the case, more to come. Item 4, many of our new shareholders also are quite enthusiastic about cryptocurrency. Though you may know that my best friend of almost 25 years duration in Europe, the billionaire former chairman and owner of Silversea Cruises formed a SPAC earlier this year called Centricus, and he asked me to join its Board of Directors. SPAC for those of you who don't know it stands for a Special Purpose Acquisition Company. That's a fancy name for a pool of investment capital in search of a Company to buy. Ironically, Centricus is contracted by a fascinating Company called Arquit, A-R-Q-U-I-T, which just happens to be on the very cutting edge of Quantum encryption and Blockchain technologies. It was initially funded by the British government. Its clients include British Telecom, the European Space Agency, and Verizon, among others. My role as a board member is merely to ensure that all loss and stack norms are being complied with when that acquisition of Arquit is completed, which will be soon, I would expect. I will then drop off the board of directors. However, to get to this point, I've had to learn more in the past 6 months about Blockchain and cryptocurrency than I learned about it in the entire decade before that. This increased knowledge has given me the confidence to tell you all today that AMC is hereby formally announcing on this call that by year-end, we will have the information technology systems in place to accept Bitcoin as payment for movie tickets and concessions if purchased online at all of our U.S. theaters. We also are in the preliminary stage of now exploring how else AMC can participate in this new burgeoning cryptocurrency universe and we're quite intrigued by the potentially lucrative business opportunity for AMC if we intelligently pursue further serious involvement with cryptocurrency, more detail will be shared publicly with you. But only if, as, and when our plans are firmer. Item 5, since we had to do the IT programming to accept Bitcoin anyway, we are simultaneously writing the code right now to accept Apple Pay and Google Pay for online purchases at our U.S. theaters, also. These new payment methodologies for us could also be implemented by year-end. Item 6. Again, speaking of our new shareholders. In June, we introduced a new program called AMC Investor Connect that got a lot of press attention. It's part of AMC Stubs and offers our shareholders who participate full stubs benefits. We are thrilled that almost 300,000 of our shareholders have already joined. Our goals with the program are simple. We'd like to improve the communications that we have with the people who own AMC. And we also want to convince many of the millions of people who are now our shareholders into becoming avid customers of our theaters as well. Hence, we already have made multiple free and discounted offers to participants in AMC Investor Connect. And we're setting up a program of special advanced screenings for our AMC Investor Connect members. To that end, a very special thank you to Sony Pictures for enabling our first such advanced screening in July, ahead of the scheduled theatrical release of Escape Room

[Q - Sean Goodman:]

Thanks, Adam. So, the first question we have is from Timothy and the question is; do you have any plans to offer a dividend again?

[Adam Aron:]

Thank you, Timothy. We appreciate the question. If you look at our path since going public in 2013, AMC paid a sizable quarterly dividend every quarter until we got close to the pandemic. And realizing that our liquidities would be stretched, we ceased offering a dividend. There are some commitments that we've made in some of our debt instruments that we cannot pay a dividend until at the earliest, about a year from now. Having said that, we do know that dividends are very much on the mind of our shareholders. So, we'll take that interest quite seriously when we have the ability to make dividends once again. We'll balance those shareholder desires against the other competing uses of our cash. What opportunities are available in M&A? How much do we need for liquidity? What can we do in the way to deleverage the Company? All the priorities that Sean talked about previously.

[Sean Goodman:]

Great. Thanks, Adam. And the next question is from David. The question is, will AMC consider partnering with GameStop to offer more theater experiences by local and national gaming competitions?

[Adam Aron:]

As I said in my remarks just a few minutes ago, I don't even think I can count the number of times people have asked me if we could partner with GameStop. We're certainly willing to do so. It seems to me it's one of these interesting ideas that's flowed in from our individual investors, and we're happy to reach out to GameStop and see if they have any interest.

[Sean Goodman:]

The next question is from Ryan. The question is

[Adam Aron:]

Ryan, that's a great question, and the reason I say it's a great question is, I asked that same question last July. And we went through an exhaustive analysis of drive-in theaters. And, honestly, we came to the conclusion that they're a bad economic idea. It sounds appealing, yes, to your stay in your car, but there are 2 problems. Go into a parking lot and look at how much asphalt is needed to put a lot of cars in a lot. The viewing experience at a drive-in theater is not necessarily great, because many people are quite far from the screen. Additionally, drive-in theaters are very seasonal. They're not popular in the winter, in colder locations in the United States. And in the summer in the much-United States, it doesn't get dark before 8 o'clock or 9 o'clock PM, which means that you really can only use the drive-in screen for 1 showtime a night. The economics aren't there. It's unlikely that we would go for it. It sounds like it's a great idea, but it isn't, actually.

[Sean Goodman:]

Thanks, Adam. And the next question is from Terrill (ph). The question is

[Adam Aron:]

When I think back over the last year, I think the thing that I'm most proud of is that we prevented a catastrophe at AMC which so many were predicting. But right there, right up there along with it, I am so proud of the safe and clean protocols that we developed in partnership with The Clorox Company and current and former faculty of Harvard University's prestigious School of Public Health. To our knowledge, there's not been a single transmission of COVID to an AMC guest over the last year. And so, the first thing that we're doing is staying very strongly committed to our safe and clean protocols to continue to operate our theaters safely and cleanly as we go forward. In addition to that, I think we also can hope that there may not be a large-scale COVID surge that would force the kind of lockdown or shutdown that we saw in the United States and countries abroad a year back. Now, most scientific experts will tell you that the virus will increase in the winter, compared to the summer. But the big change between this winter and last winter is vaccination. And fortunately, that the number of vaccinations, especially among the most vulnerable population, has been so extensive that we're optimistic that we won't see the kind of lockdown of society this winter that we saw last. We also hope that vaccination continues. There is the no more important thing that any of you can do to protect yourselves, your families, your friends, and the country as a whole. There's nothing more important than you can do than to get vaccinated. And I know that many of our shoulders are younger who think that they're invincible. It is true that older people are more susceptible to get COVID than younger, but no one is totally invincible against this virus. The solution for AMC is vaccination. I would remind each of you the solution for each of you is vaccination, too. Next question.

[Sean Goodman:]

Arun asks, are the ways you are considering to reduce the Company debt without issuing new shares?

[Adam Aron:]

Yes. Some of our debt is trading at a discount. We might be able to buy it back at a discount. Some of our landlords where we have deferred rent obligations, that stretch out for years and years have indicated to us that they might be willing to take a reduction in what we owe them if we're willing to pay them in cash now. Unfortunately, we do have this $2 billion of quarter-ending liquidity. Once we have satisfied ourselves that we have the liquidity to get through COVID, no matter what COVID throws at us, we then we'll be turning to debt reduction and see if there's an opportunity there.

[Sean Goodman:]

The next question is from Mike. Mike asks, how does AMC plan to combat day-and-date releases of movies on streaming platforms, and theaters?

[Adam Aron:]

Well, this is such an important topic and I addressed it earlier in my remarks that we're especially pleased that Warner Brothers has decided to move away from day-and-date releases, and commit to an exclusive theatrical window, as well. We're having private conversations with every major studio in Hollywood, on this very important topic and we're seeing a lot of consensuses emerge that an exclusive theatrical window is a good way to build major motion picture franchises. It's a fluid situation. A lot of studios that have experimented with day-and-date say that they are doing it only in pandemic times. We'll all see how, together, this plays out. But we know that studios are going to do what's in their financial interest. They're not going to just help out AMC charitably. So, we are also making sure that our marketing programs are as vibrant and powerful, and as potent as they can possibly be. AMC has been a marketing leader in this industry for the past five years. And we've got a few tricks up our sleeve coming. We intend to continue to be a bold pioneer and lead the industry and marketing, hopefully driving audiences to our theaters. Hopefully selling more tickets, which then in turn hopefully convinces our studio partners that the smartest thing for them to do, give us their movies first and let us help them build their brands.

[Sean Goodman:]

Next question. Would you consider selling AMC merchandise at theaters and on online platforms? I think it will be profitable.

[Adam Aron:]

We would consider it. This is again one of these ideas I've gotten -- I've received a lot of commentary about it in the last few weeks. It's intriguing. It's complicated to send merchandise to 600 retail locations. We have to make sure that it sells, that we can get stuck with inventory that makes it a less profitable business than you might think. But we're going to take a hard lookout.

[Sean Goodman:]

Next question from Amy

[Adam Aron:]

Yes, yes, and yes, Amy. But not on Hamilton because that's already come and gone. But we are experimenting right now with these 2 concert movies by Chance the Rapper and Halsey, each of whom has a huge following. And we're already in discussions with major musical entities and talent about whether this could become a permanent line of business for AMC to have this intriguing alternative programming at our theaters. And it's not such a new concept. There is something -- there's a Company called Fathom Events that we own a third of. And they've been showcasing some kinds of orders in terms of content at movie theatres for decades. The metropolitan opera being the biggest example. But I think there's a real opportunity here and we're going to chase it. The same with sports, the same with gaming. There's really a possibility here to find a new source of revenue that AMC has not tapped before.

[Sean Goodman:]

Petra asks, can AMC partner up with GameStop for gaming competitions on the big screen?

[Adam Aron:]

I think that question was asked and answered. It takes two to tango. We're willing. We have not reached out the GameStop yet, but we intend to do so.

[Sean Goodman:]

Mark asks, "Do you plan on reinstating dividends? They tend to mean a lot to a certain type of investors that could potentially outdraw non-ag investors and larger holders?

[Adam Aron:]

We've touched on that too, Mark, and the answer is we know it's important. Sean's a shareholder too, I'm a shareholder too, we'd like to get those dividend checks if we could. But we do have to adhere to the commitments in our debt instruments. And we do have to use our cash wisely. That's a decision for next year. It's not a decision for today.

[Sean Goodman:]

Aaron asks

[Adam Aron:]

Well, AMC has been around for 100 years. We don't actually have a mascot. That's an interesting question. I don't know. I know why you ask it. I think we're probably going to go without a mascot. But I will tell you this, there is a tremendous amount of branding work going on at AMC right now. I said a few minutes ago that we intend to be the best, strongest marketer around. Watch what we're doing with our marketing programs over the coming weeks and months and years. I think you'll be pleased when you see AMC leading the way yet again.

[Sean Goodman:]

Next question from Buddy, has AMC considered partnering with a movie studio in order to produce their own films?

[Adam Aron:]

Yes, we have, and recently. And the notion of making exclusive content is an interesting one. Some you may not know this, but about 5 years ago we were in a joint venture -- 6 years ago we are in our joint venture with another operator -- theatre operator, to co-fund something called Open Road Films. Open Road Films made a movie called Spotlight which won the Oscar as the Best Movie of the Year a few years ago. We have some experience with this. Making movies is a risky business. Movies aren't cheap to make and they do take Capital. I made no secret of the fact that I personally thought it'd be very wise for AMC to have sold more shares to raise more equity to build up our war chest so that we could entertain some of these more capital-intensive ideas. It was very clear to me in following social media as I do, that our shareholder base was quite split on that issue. A lot of people thought it was a great idea, a lot of people didn't want to touch it. And I didn't want to go forward than I did. That is important where our shareholder base was split and not unified so we tabled that motion and did not have a Shareholder vote on it. But some of these more capital-intensive ideas will require that the Company have more Capital. So, we're watching it, but again, the priorities right now, Sean mentioned before, have liquidity, get through COVID, deleverage, prove the quality of what we offer, look for opportunistic possibilities. Making content is one of the possibilities that are on our list, but I don't think we're going to rush into it.

[Sean Goodman:]

And next question from Jonathan, "Will AMC keep holding viewing parties for mainstream sporting leagues?"

[Adam Aron:]

I certainly hope so. We've had very good luck with UFC and there's every indication that they'd like to see us continue. We've talked before to some of the major professional sporting leagues and they have not yet been willing to grant rights to movie theatre operators to show movies in theaters -- to show sporting events in theaters. I do think the holy grail on this one would be if we could secure 1 of the 4 major leagues -- secure rights from 1 or more of the 4 major sporting leagues to show live sporting or live professional sporting events at our theaters. Also, there is some collegiate football that draws 100,000 people in the football stadiums all over the country. College football would be something elsewhere I think would be a really powerful draw at AMC. 2 years ago, we experimented showing some NFL games at our theaters just for 1 year and I can tell you, categorically, seeing an NFL game broadcast on a 40-foot-high screen is just amazing, unbelievable. The quality is so good of the image. I know that if we can secure the rights affordably, I think it would be a big hit.

[Sean Goodman:]

Next question is, "Have you considered expanding AMC to family entertainment center experience? You could include bowling, an arcade, laser-tag parties, and family dining.

[Adam Aron:]

So, this is actually an interesting question too. And on some of this stuff, we've already experimented a little bit. Obviously, we have family dining at our dine-in theaters, we have 70 of them or something around the United States. A couple of years back, we greatly expanded through what we call AMC to feature fair, the hot menu items that are normally served at our concession stands, at our non-dine-in theaters, trying to give families better dining choices. We put in Freestyle Coca-Cola machines with their 150-ish flavors at all of our theaters in the United States, including all of the Carmike theaters that we bought in the United States with massive investment and Coke-Freestyle. Similarly, we've experimented with virtual reality through an entity in which we invested called Dreamscape. We have a Dreamscape Virtual Reality auditorium experience at our -- one of our theaters in Dallas, one of our theatres in Columbus, Ohio. We're opening soon at one of our theaters in Northern New Jersey. It would be pretty inexpensive actually to decommission an auditorium if we have the surplus capacity and put in a laser tag parlor. Kind of fun. But if you're talking about the full-blown entertainment center as described in this question, don't underestimate how much capital that an idea like that would need. Especially if you want to do it not just in one theatre somewhere but you want to do it at 50 theaters or 100 theaters or 200 theaters. And again, it's ideas like this one why I thought that AMC should raise more Capital. Our shareholder base wasn't ready for that yet. Honestly, to do something as you envision, that's going to have to come down the road when we have a larger capital base. At this point, Sean, I'm looking at my list. I think we've answered a lot of questions.

[Sean Goodman:]

Yup.

[Adam Aron:]

And I'm mindful of the time. I'd like to thank our shareholders for sending these in, for voting on them to see which ones we should answer first. This experiment for us, if you like this idea, we'll do it again at future costs. But let us -- let us know. Having said that operator, if we could see if any of our analysts have a question, we don't -- we're already over time. It's after 6

[Operator:]

Very good. So that question comes from Chad Beynon with Macquarie. Please go ahead.

[Chad Beynon:]

Hi. Adam, Sean, thanks for taking my question. Thanks for all the commentary up to this point. Wanted to ask about some of the metrics you were talking about with respect to industry admission revenue. Adam, you talked about the first quarter 13% of two years ago and now we're up to 45% of 2 years ago. So maybe just a broad question on if you have an updated view on where this can get to, whether it's 2022 or 2023. What's changed in your crystal ball? Is it 80%, 90%? Can we get back to peak levels as you put all these things in your blender? Thanks.

[Adam Aron:]

Thank you. That's a $64,000 question and nobody knows the answer for sure and we're all going to learn it together. We've already put out a number for 2021 that we hope the industry box office can get back to $5.2 billion in 2021, which is actually a fairly sizable recovery in the second half because the industry box office was like a billion dollars in the early part of the year, very, very, very low. If you look at the industry box office, this -- and this, for those of you who don't know the term, the domestic industry box office is movie theatre ticket grosses in the United States and Canada. It's the basic metric of measuring the size of the industry. I went and looked pre-COVID starting in 2019, not 2020. In the five years, 2019 going back, all five of them, the box office was greater than $11 billion. The 5 years before that, it was $10 billion. I think it may have been 6 years was $10 billion or more. And I think it's 6 of the 7 years before that, it was greater than $9 billion. Literally, for the past 17 years, the box office has been -- first, it was steady between 9 and 10 billion then it was steady between 10 and 11 billion then it was steady between 11 and 12 billion. And nobody knows where it's going to be in 2023. I've seen estimates all over the map. I've seen people who think it's going to be $8 billion. I've seen people who think it's going to be $10.5 billion. Nobody's crystal ball is good enough to know. But obviously, it's a very important question because we will be more profitable the higher the box office is. We know that with the cash that we raised, we could survive in an $8 billion box office for a year or 2 maybe. But we'd sure be much more healthily profitable if the industry box office rises back up to 9 billion, 10 billion, even 11 billion or more in 2023 and 2024. 2022 is probably still going to be a transitional year between the very low $5-ish billion numbers that we're thinking will occur in 2021, and where it's eventually going to settle in 2023 or 2024.

[Chad Beynon:]

Okay. Great. And then a quick follow-up, and then I'll pass it off. With respect to the Food & Beverage strength that you saw in this quarter and I think even in the first quarter from a per-cap standpoint, can you talk about where that's coming from? Is that the mobile ordering initiative? Is that a mix of products? And then have you taken prices up, given some of the commentaries that you made with respect to ticket pricing? Have you done the same thing for Food & beverages yet? Thanks.

[Adam Aron:]

Thank you. Well, we'll first tell you the -- what we think the reason is, and then we'll tell you how it's got -- we're getting there. It feels just like people who have been away from theatres for a year when they're coming back to theaters after it's been a long wait, and they are so happy and eager to be back at a movie theatre that they want the whole experience. They want the whole enchilada. They are splurging. And so, there are four drivers that are causing our food and beverage revenues to be up so much. And remember when I say up so much, this is the food and beverage spend at -- in the movie theatre industry is quite a mature thing. And AMC was producing more Food & Beverage revenue than any other major mass operator. But we would have considered a good quarter if our Food & Beverage spending per patron was up 2% or 3% or 5%, it's up 44% over the pre-COVID levels. And it's coming basically from 4 different things. And it's an equal contributor as to what's driving it. One, mobile ordering is certainly something that people like. We only had mobile ordering in place at about 50 of our U.S. theaters, for example, 2 years ago. And during the shutdown of theaters in COVID, we had time on our hands, so we developed this technology to be able to roll out mobile ordering across the whole of our system. It's now in place at all of our AMC and all of our AMC Dine-In branded theaters. We also thought it would -- was very helpful for the AMC safe and clean protocols because if people were ordering their F&B in advance, there'd be less contact back and forth on payment. So, mobile ordering is popular. That's one of the reasons. Next, we did raise prices. That's one of the reasons. Next, when people are going to theaters, they're buying more items. And we just -- we see the statistics every single day, and it's true all across the country. They're buying more stuff. If before they bought a soda, now they buy a soda and popcorn. If before they bought a soda and popcorn, now they buy a soda and popcorn and candy, or the soda, popcorn, and nachos. Or they're opting for some of the more intriguing menu items that we put in place through a feature fair, my favorite being the flatbread pieces. And the fourth factor, which is really encouraging for us, is that more people are actually going to the concession stand and buying from us at the concession stand. There are many people, a lot of people who go to a movie theatre -- and when I say a lot of people, I mean like 100s of millions of people a year. Would go to movie theaters, not just at AMC, but go to movie theaters and don't buy anything at the concession stand. They buy no Food & Beverage. All they buy is a movie ticket, and that's the experience they get. What we've seen as people are returning to sort of us as more and more people are going to the concession stand, they're buying Food & Beverage products because they want the whole experience. It's already 12 after the hour. We've run long. I would like to thank you all for joining us on this call and webcast today. I have something very simple to say. Ladies and gentlemen, see you at the movies at AMC Theatres sometime soon.

[Operator:]

And that does conclude our call for today and we thank everyone for participating. And you may now disconnect.