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AMC Entertainment Holdings Inc (NYSE:AMC)
Q1 2019 Earnings Call
May. 9, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings and welcome to AMC Entertainment 1st Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, John Merriwether Vice President, Investor Relations.

John Merriwether -- VP Investor Relations

Thank you, Dana. Good morning. I'd like to welcome everyone to AMC's first quarter 2019 earnings conference call. With me this morning is I'm Adam Aron, our Chief Executive Officer and President and Craig Ramsay, Executive Vice President and Chief Financial Officer.

Before I turn the call over to Adam, let me remind everyone that some of the comments made by management during this conference call may contain forward-looking statements which are based on management's current expectations. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those that might be expressed today. Many of those risks and uncertainties are discussed in our public filings included in 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, the listeners are cautioned to not place undue reliance on these statements.

The company undertakes no obligation to revise or update any forward-looking statements as a result of new information or future events. On this call, we may reference measures such as adjusted EBITDA, adjusted free cash flow and constant currency, which are non-GAAP financial measures. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release issued earlier this morning. In conjunction with our earnings release, we encourage you to review the supplemental financial information for the 2019 first quarter that we published this morning on our website in tandem with the earnings release.

After our prepared remarks, there will be a question-and-answer session. This morning's call is being recorded and a webcast 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 M. Aron -- Chief Executive Officer and President

Thank you, John. Good morning, everybody. Thank you for joining us to review AMC's look at 2019 results. Since our most recent earnings call covering AMC's record setting full year 2018 results, we've gotten together telephonically to take you through with as much transparency as we're able, the impact of ASC 842 and the change in accounting rules surrounding our theater leases.

To reiterate, and as noted in our April 24 presentation, this is purely a non-cash accounting change with no impact on operations or total cash flows. In our view, it does not alter the past or future performance of this business in reality. As we did this morning for clarity, we will do our best for some time into the future to give you current and historic financials on both an actual and as adjusted basis for ASC 842.

In addition, we had the opportunity to get together in person at a well-attended Investor Day where we showcased the strength of the AMC platform and the ongoing transformation of AMC's delivery of the quintessential 21st Century out of home entertainment experience. We get there by combining our size and scale with market-leading technology and world-class marketing prowess to communicate, engage and sell through our guests on a frictionless, proactive and intentional basis. We're aided by AMC as having the largest consumer database of avid theater-goers as a result of our AMC Stubs loyalty program; enticing recurring revenue through our now profitable subscription service A-List, along with the network of theaters richer in guest-pleasing amenities than what is offered by anyone else.

At that Investor Day session, we laid out our competitive strengths and commanding market leadership position as well as our ongoing strategies to drive growth in adjusted EBITDA and adjusted free cash flow. In addition, we addressed our commitment to deleveraging to between 3.5 and 4.5 times within 36 months and thereafter to reaching our long-term leverage target of 3x net-debt to adjusted EBITDA, which we believe to be prudent for AMC in terms of driving equity returns and the optimal cost of capital for the company.

At the Investor Day, we also discussed in detail our view of capital expenditures for multiple years and set a marker in the ground giving you a framework to think about our medium- to long-term financial performance for AMC with targets that we believe are eminently achievable. While growth is not always a straight line linearly, we firmly believe that over three to for your five-year time frame AMC can reliably generate revenue growth of 3% to 5% per year or 1% to 2% in excess of expected industry box office growth. Combined with delivering margin expansion after adjusting for ASC 842 of up to 200 basis points.

As for CapEx, having already gone through much of the capital investment cycle domestically, we believe CapEx will settle in over the next three to five years to a more normalized CapEx investment level of $250 to $300 million annually. That's about $150 million in annual maintenance CapEx and $100 to $150 million for growth initiatives, especially those internationally. Note that this is down considerably from net CapEx investments of $500 million two years ago and $450 million anticipated for this year 2019. We encourage you to hold us to these targets. As we meet them, we should be generating meaningful free cash flow and creating attractive equity value for our shareholders. If you've not already looked through our Investor Day presentation, we encourage you to visit our Investor Relations website where you can download the full presentation and a transcript.

Now let's turn to 2019. The background context for 2019 results is that for the full year, we remain optimistic, confident, ebullient, why don't you pick your favorite robust adjective that in 2019 we can drive yet another record year for AMC both in terms of revenue and adjusted EBITDA both of which we expect to beat full year 2018 results as adjusted for ASC 842. We always expected that the 2019 year would get off to a slow start and that the year will be back-end loaded and that continues to be our view. This is exactly what happened last year. Despite being the second biggest first-quarter of all time, the domestic industry box office back in 2018 was actually down 2% year-over-year through mid-April but then AVENGERS: INFINITY WAR opened. When the dust settled at year end, the 2018 domestic industry box office finished up 8% and set a new all-time record. Looking at the 2018 film slate, we, many of you and other knowledgeable industry observers think that pattern will repeat again this year.

For sure 2019 this year started slowly. But that all changed with a record-shattering opening of AVENGERS: ENDGAME. Spoiler alert, I expect amazing title after amazing title after amazing title in the remainder of 2019. Our sense of the film slate from April to December of this year is that we could be seeing the busiest, biggest nine-month period is 106-year history of cinema and we would not be surprised in anyway if 2019 becomes the first year ever in which the domestic industry box office exceeds $12 billion.

You know the many consumer-appealing movie titles that will be in theaters near you throughout 2019. Among many others in May -- Rocketman, John Wick 3, Pokemon Detective Pikachu, and Disney's Aladdin, Secret Life of Pets 2, Men in Black: International, Annabelle Comes Home, and Toy Story 4 all open in June. Spider-Man Far From Home and Lion King what I think is going to be a huge movie to set July on fire. Fast and Furious Presents: Hobbs and Shaw and Angry Birds 2 highlight August; IT Chapter II, Warner's incredible horror movie will fill red balloons in September. Joker and Gemini Man open in October. Terminator: Dark Fate, another Charlie's Angels movie and Frozen 2 come in November. And of course, there is December with Star Wars: The Rise of Sky Walker along with the Jumanji sequel and Andrew Lloyd Webber's Cats, the legendary Broadway musical come to the big screen will all please audiences just before the holidays in December. It is a stunning list of movies and the 2019 film slate has something for everyone, young and old alike.

Importantly, as you heard in the list I just rounded off, family friendly movies tend to perform better for both our international and non-urban domestic markets. And with the greater mix of family friendly movies coming in the remainder of the slate this year, this should be a boon for AMC, both in the United States and around the world.

Just as was the case during the box office record-setting years of 2015 and 2016 and 2018, the massive current success of AVENGERS: ENDGAME demonstrates just how many people could be flocking to theaters in the remainder of 2019. When Hollywood turns out quality movies, moviegoers come in throngs to our theaters. Literally billions of times each year, people the world over enjoyed seeing movies communally in theaters on the big screen. You already know these mind-numbing stats for AVENGERS: ENDGAME, the highest-grossing domestic opening weekend of all time, bringing up more than $350 million domestically and $1.2 billion worldwide; and in just a week and a half, the fastest movie ever to reach $2 billion in global box office.

Our hats off to Disney on it's wonderful accomplishment, but we should all keep in mind with some glee that AMC Odeon generates more box office dollars for Disney than does any other single cinema operator in the world. So when Disney wins, AMC wins. And make no mistake, with its incredible skill as filmmakers and film marketers and now combined with Fox, Disney is going to continue to win. That's very good news for AMC. Happily, AMC's relationship with Warner Brothers, Universal, Sony, Paramount, Lionsgate, FCX, Annapurna, Amazon studios just about any filmmaker committed to theatrical exhibition is similarly typed.

We can certainly say that AVENGERS: ENDGAME show worked for AMC. In the United States alone we wound up playing the movie 63,000 times in just the opening four weekend days. That's a full third more than at AMC for the previous biggest opening film. To accommodate this unprecedented demand, we had 19 AMC locations open around the clock continuously from Thursday morning through Sunday night and about 180 AMC theaters with posted showtime starting after midnight. Starting after midnight for a 3.5-hour movie counting trailers.

Beyond admissions, we also set not one but two single-day US food and beverage revenue records during the Avengers opening weekend. More than $13 million was spent on food and beverage at AMC on the opening Friday. That new record lasted for all the day as was followed by an even bigger record set the next day on Saturday with $15 million spent. The AVENGERS: ENDGAME results were similarly thrilling for us for Odeon and AMC Theaters all throughout Europe and the Middle East.

You'll hear us talk about operating leverage on the call in a moment. After all, cinemas are a high fixed cost, low variable cost business. With shrinking revenues as we saw in Q1, profits are challenged. But when revenues are strong profits follow suit. AVENGERS: ENDGAME is a great example of how operating leverage works in good times to AMC's benefit and we have many more big movies coming in 2019.

Turning more directly to the first quarter of 2019. There are five shiny nuggets of information so far in 2019 that are highly encouraging to us as to what they portend for AMC in the balance of the year. In total though, the first quarter was a challenging quarter and one that we are thoroughly glad is behind us. As we had expected all along, based merely on the timing of releases within the 2019 film slate, the industry got off to a very slow start. A $2.4 billion Q1 2019 was the lowest US industry box office since 2013 down 16.2% in revenue year-over-year, down 14.8% on attendance. You're already aware that we had a tough comp with Black Panther opening in February 2018 and strong holdover titles from 2017 continuing into the first quarter of 2018 including Star Wars: The Last Jedi, Jumanji, and The Greatest Showman.

In the first quarter of 2019, this year, AMC on a consolidated basis generated $1.2 billion of total revenues, which was down 13.2% compared to last year and down 11.2% on a constant currency basis. This was driven primarily by a 12.2% decline in attendance globally. For AMC, domestic attendance was down 11.1%, domestic admissions revenue in the United States was down 14.8%. Fortunately, however, we continue to see strong returns from our U.S. food and beverage initiatives with AMC's U.S. food and beverage revenues per patron up 3.9% as moviegoers enjoyed our popular Feature Fare menu variety and as strategic price increases took hold.

On the international front, we saw an attendance decline within our network of 14.5% and an admissions revenue decline of 13% year-over-year adjusted for currency, largely due to the same industry dynamics that we've noted earlier in the United States. As also was the case in the U.S., international food and beverage revenues benefited from a 9% constant currency increase in food and beverage revenue per patron as we continue to implement theater innovations, new food and beverage initiatives and take our domestic food and beverage know-how into international markets.

As I mentioned a moment ago, our business has significant operating leverage, which benefits our profitability during strong attendance periods, but adds pressure during weak attendance periods. As a result of the industrywide attendance declines in Q1, AMC generated first quarter adjusted EBITDA of $108.2 million down considerably from the prior year. As we stated in the press release issued earlier today, the comparability between this year and last year is complicated by, one, sizable prior-year rent benefit related to a lease modification that did not recur this year; two, a reduction in cash distributions received this year related to the sale of our ownership in National CineMedia last year; and three, a meaningful non-cash impact related to the adoption of the new lease accounting standard ASC 842. Adjusting for these three items, adjusted EBITDA was down $111 million from the prior year, which is slightly below the decline in gross profit over the same period of $117 million reflecting the operating leverage in our business.

Just to spend one extra minute on ASC 842. For those of you who have not yet updated your models for ASC 842, at our Q1 2019 adjusted EBITDA not been impacted by the new lease accounting standard, our total adjusted EBITDA of $108.2 million would have been higher by $22.7 million.

Well, if that's the tough news for Q1, so what are those five bright spot so far in 2019 that I referred to earlier that we find intriguing and compelling. First, in Q1, AMC outperformed the U.S. industry across some crucial and key metrics, including that AMC outpaced the industry on attendance per screen by approximately 570 basis points. And we outpaced the industry by more than 700 basis points on attendance per screen if you compare AMC to non-AMC, meaning, you exclude AMC from the U.S. industry statistics so it's not us against ourselves and the other guys, it's us against just the other guys. We also outperformed on admissions revenue per screen by approximately 340 basis points, by about 450 basis points comparing AMC to non-AMC on admissions revenue per screen.

Second, I mentioned earlier in the call the strength of our F&B spend per patron in the quarter up 4% domestically and up 9% internationally, currency adjusted. In the United States, we were pleased to see that F&B spend actually increased to $5.23 per patron which is higher than that realized by other major cinema operators and represents a new first quarter F&B revenue per patron record for F&B for AMC.

Third, memberships in our AMC Stubs loyalty program is soaring. We will cross 20 million member households in AMC Stubs in the next few weeks, up from 2.5 million member households only three years ago. Stubs is especially important as it allows us to collect unique data around the viewing preferences and purchasing behavior of our customers on an individual account by account basis. And then enable us to personalize the customer experience as they engage with us both inside and outside the theater. Before they arrive, when they're there, and after they get home.

Fourth, it is now formally time for us to declare to you that AMC Stubs A-List, our subscription program is a winner. As of today we currently have more than 785,000 A-List members, 787,342 to be precise, which is light-years ahead of our early projections when we launched the program less than 10 months ago. And if you're counting, that's roughly 85,000 more subscribers than when we spoke on the fourth quarter call at the end of February. And roughly, 180,000 more members in A-List than we had at the beginning of the year. A-List member accounts keep growing handsomely even though we launched nationwide at double the price of competitors and more recently implemented in January of 2019, an additional 10% to 20% price increase on new members in various parts of the United States.

Here's another important metric. A-List frequency of visits per member per month in the first quarter was 2.6 times, right within our desired sweet spot of 2.5 to 3.0 visits per member per month. Average week frequency per member Q1, 2.6. But that was admittedly in a slow movie-going quarter. We can now report that average A-List frequency for April and the first eight days of May, which includes the first two weeks that were heavily attended for AVENGERS: ENDGAME also was 2.6 times, exactly as it was for the January to March quarter and right where we want it to be.

Additionally, we are also pleased to report that the A-List program was profitable and was accretive to adjusted EBITDA in the first quarter of 2019. We continue to believe that by the end of the year, A-List will be $3 accretive to adjusted EBITDA on a per member per month basis. Again, that is way beyond our original expectations. We have good history now, 10 months in, to A-List, and we think we have good visibility into A-List going forward. And as I said, it is a winner for AMC.

And the fifth point, well, we certainly saw a negative adjusted EBITDA swing in Q1 against the soft industry backdrop. We're already beginning to see the positive uplift in earnings on the heels of the AVENGERS: ENDGAME in April. We expect to continue to see strong positive operating leverage throughout the rest of 2019 as the box office ramps. Accordingly, let me reiterate, that we believe 2019 as the potential to be another record-breaking year for AMC. And as a result, we now expect that our full year 2019 adjusted EBITDA will exceed that of 2018 adjusted for ASC 842.

I have one final update for you before we close. I'm pleased to point you to our announcement yesterday of our addition of a new Independent Director joining the AMC Board of Directors, Adam Sussman. As part of the strategic investment from Silver Lake last September, we agreed to elect a Director with significant technology experience and knowledge and we couldn't have picked a better candidate. A Harvard MBA, Adam Sussman is currently the GM of Direct Digital and Geographies at NIKE, with over 20 years of digital consumer experience at major global brands including Disney, Electronic Arts, and Zynga. We look forward to his valuable ideas and contributions to AMC.

In conclusion, before we turn to your questions, looking at the totality of AMC, increasingly, AMC is the delivering a movie-going experience to our customers that is frictionless and leverages data to create meaningful and personalized communication and experiences between AMC and our guests. We are marrying our global and upgraded physical footprint with a rapidly growing customer database along with modern technology interfaces, data-driven insights, and innovative consumer engagement practices. Clearly, we continue to see in Q1 that this is all measurably driving attendance surges at AMC. With a strong movie slate coming and increasing consumer loyalty to our company we look forward to the remainder of 2019 and what will hopefully be another record-breaking year for AMC. And as I said before, what we might -- what we just think might be the biggest nine months in movie history.

With that, thank you for listening. And, Craig, and I are happy to take your questions.

Questions and Answers:

Operator

At this time we will be conducting a question-and-answer session. (Operator Instructions). Our first question comes from the line of David Miller with Imperial Capital. Please proceed with your question.

David Miller -- Imperial Capital -- Analyst

Yeah. Hey, guys. Adam, question on surge pricing for you. You recall a couple of years ago, you guys did an analyst event in San Francisco where you detailed all kinds of surge pricing strategies around multiple days and multiple formats and multiple types of genres in films. You reiterated that I think briefly at your Analyst Day a couple weeks ago. With that being said, what kinds of surge pricing strategies and tactics have you been using with this Avengers juggernaut that continues and will those continue going forward into the back half of the year? Thanks very much.

Adam M. Aron -- Chief Executive Officer and President

Sure. David, so this is a complicated question. There are so many things that are on the table --

David Miller -- Imperial Capital -- Analyst

Right.

Adam M. Aron -- Chief Executive Officer and President

-- for pricing strategies. And let me -- I'll mention some that we've done and some that are on the drawing board. A year and a half ago, we already introduced weekend surcharges at hundreds of our most visited theaters and those have been in place now for a long time. Consumers have accepted them and we're doing just fine, so that's one. Second, as you know, we charge a premium for PLF and it's a very healthy premium. We get a 70% price premium at Dolby and IMAX; about a 40% premium, 45% premium for AMC Prime. We get a, on average, a 33% premium for 3D. And we have leaned into 3D and premium formats bigger than anyone else in the country. And as an example, couple of years ago, we had 155 PLFs. We have over 350, I believe, in the United States currently. All those auditoriums were commanding those pricing premiums for AVENGERS: ENDGAME. In addition to that, we created, as you know, the first ever pricing department in the history of the movie industry and that pricing department looks at the chart prices we charge at every single theater on a constant basis.

And we moved pricing around building-by-building all the time, trying to optimize pricing, facing, taking price up where we're able and taking price down where we need to. Knowing that AVENGERS: ENDGAME was coming, we certainly looked hard throughout the latter half of 2018 and the first four months of 2019 to make sure that the overall box office pricing theater by theater was well-positioned.

Beyond that, we've had two major pricing actions in the last 12 months as, again, as you know. We call it Discount Tuesday, which launched nationwide at $5 on Tuesdays and turned Tuesday into the second biggest attendance day of the week at AMC. Actually, when we launched the program last year, we called it $5 Tuesdays. We renamed it Discount Tuesdays at the beginning of 2019 because very quietly we've been taking price increases on Tuesday pushing Tuesday from $5 to anywhere between $5 and $7 depending upon the theater.

And then, of course, there's A-List, which is a dramatic change in pricing philosophy that's affected so far 787,342 of our happiest customers. As we look ahead, there's still more that we can do, obviously, not that we did in time for the AVENGERS: ENDGAME opening but we continue to think hard about what we call zone pricing, charging different prices for different seats as we do in Europe. We looked hard at what we call, in Europe, blockbuster pricing where we charge different prices title by title just as we did in Europe on AVENGERS: ENDGAME. And then also, we're looking at the timing of pricing, the possibility of charging more at the beginning of a movie's run when obviously demand is at its peak and charging less at the back-end of a run when demand is weakest just before it leaves theaters and goes elsewhere into the ecosystem.

David Miller -- Imperial Capital -- Analyst

Right.

Adam M. Aron -- Chief Executive Officer and President

Just to show you how dramatic this all is, I just want to give you an example of the theater that I attended the opening of the AVENGERS: ENDGAME. It was the Odeon Leicester Square in the heart of London. For opening weekend of Avengers, we charged anywhere from $15 to $51.63 per ticket; for the opening weekend of Avengers end game, based on where you set in the theater. With more than half of the seats in the theater priced at north of GBP33 per ticket, close to $40 a ticket or higher. So pricing is something we think we understand a lot about at AMC. We've already taken a lot of actions over the past couple of years and this will continue to be an active area of revenue opportunity for us going forward.

David Miller -- Imperial Capital -- Analyst

Wonderful. Thank you.

Operator

Our next question comes from the line of Eric Handler with MKM Partners. Please proceed with your question.

Eric Handler

Yes, good morning, and thank you very much for the question. Adam, I wonder if you can dig in and maybe provide us a little color about the bring-along that you're seeing with A-List subscribers.

Adam M. Aron -- Chief Executive Officer and President

Eric, we know exactly what it is and I don't think we've released a statistic publicly. But -- and if I'm wrong, I'm happy to say what it is in the call. But people are nodding that we haven't released a number publicly. But there are three -- there are four numbers that really drive the profitability of A-List. And those people who were at our Investor Day presentation or those who've looked at the Investor Day presentation realize that the level and detail of analysis that we have in the A-List is huge. But the big numbers that drive the profitability program are what's the price we're charging, what's the frequency per month at which members are going, what's the take-along percentage, and how much food and beverage spend are they buying. And literally, we are now sophisticated enough in our A-List analysis that we're able to track those statistics literally account by account, member by member. And we have a very good feel of who's profitable and who is not profitable and what the average profitability of that portfolio is. So while we haven't released that specific that yet and, therefore, I don't want to set a precedent today, rest assured that we know it, we track it literally daily. And as a result of all this, we are very confident in putting forward the two comments that AMC Subs A-List was accretive in Q1. And by the end of the year it will be accretive to the tune of $3 per member per month, that's $36 million a year If we add 1 million members in the system. I should also add, that while we are not releasing the exact stat. It is a meaningful number. There are a lot of A-Listers who are being joined by non-A-Listers.

And one of the many technical enhancements that we're making in the AMC app right now as we speak is making it easier and more seamless, more frictionless for AMC A-Listers to bring along guests at full revenue so they can do it in a single transaction without pain. The easier we can make it to use our app, the more incentive it will provide those A-Listers to bring people along with them.

Eric Handler

Great. And just as a follow-up, not sure what you'll be able to provide. But among families, how many subscriptions are you seeing per family on average? And secondly, what percentage of ticket purchases are seeing upgrades?

Adam M. Aron -- Chief Executive Officer and President

When you say, upgrades, what do you mean by that? Oh, PLF upgrades?

Eric Handler

PLF, yeah, yeah.

Adam M. Aron -- Chief Executive Officer and President

Again, we track that stat hourly and I don't think we release that stat, we don't. But we know exactly what it is and it's pretty close to where we modeled it and it's a big exciting feature of our program to the guest. They use our PLFs. They like IMAX. They like Dolby Cinema. They like getting it without having to pay that the normal 70% premium that we charge. And it's one of the things that is, I think, driving the major appeal of A-List. With respective families, the average member is between one and two members per household are AMC Stubs members, so we have a lot of couples both of whom are members. We also have a lot of single members. While we have some children members, we don't have as many as you might think because we imposed as a rule of the program when we launched back in 2018, a minimum age which we lowered down to 2016 (sic) but we still have a minimum age of 2016 (sic). And you may wonder why. The reason is, literally, every time an A-Listers shows up at our theater, we require that they show us a government-issued photo ID, which generally is a driver's license. And obviously, if you are under the age of 16, it's not going to be so easy to get a driver's license. We've done this because we wanted from day one to make sure there was not fraud within the A-List program. Others in subscription who failed pretty spectacularly were saying that they saw a massive fraud because they were not checking identification and people were passing their cards around.

I'm also pleased to say that we are working right now to program family membership capability within our website and app. And essentially what we're going to do is program a photo upload capability, so that you can store your picture with us so you won't have to show us the government ID for us to know that you are actually the member because we'll have your picture loaded on file and while you will be able to change your picture from time to time, it will be infrequently. So maybe once a year or something, so that we don't open ourselves up to fraud.

When we have the photo upload capability, that will then allow us to lower the minimum age down to let family members enroll not only for a husband and wife but also for their children. So that's -- and that's yet another one of these bells and whistle adds to A-List coming down the pipe that will make A-List even more attractive to more people, which I think will cause it to continue to grow as a program into the future. But I wouldn't be surprised if that photo upload capability is a 2020 initiative rather than something that will happen this year in 2019.

Craig R. Ramsey -- Executive Vice President And Chief Financial Officer

Eric, it's Craig. I have to add and just kind of the repeat to a point that Adam, maybe embellish it a little bit. We actually, for the quarter, plan, as we look, as we plan 2019, we thought the second quarter, the A-List program would actually be slightly dilutive on an EBITDA basis. So we thought it would be better than it performed in 2018, but still a little bit dilutive. The fact that it was by a meaningful number accretive, I think was to really in Q1 was an indication of kind of the strength and contribution of all the factors, frequency really in line, bring along exceeding expectations, and so, it's a combination of a lot of things that are driving the improvement well above what we expected at this point in time and why we again think run rate at the end of the year, it's going to be $3 of contribution per member.

Eric Handler

Thank you very much.

Adam M. Aron -- Chief Executive Officer and President

Can I just add one more thing because obviously A-List is such an important topic. I'm an old geezer. I'm 64 years old. I have been in business for 40 years. I've worked for probably 10 different companies over the course of my career. I have never been more proud of an organization in my entire career than I am of AMC's marketing organization and its ability to analyze A-List and understand what's going on. The sophistication of our understanding of A-List is a big reason why it's profitable. We designed the program right. We were prepared to change the program as needed to make sure that it would become profitable and stay profitable. And obviously, the early returns are just way ahead of our expectations, positive on every dimension. And they they rip this program apart every single day. We understand it well. We know what's going on. We have it under control. It's performing well and we will do whatever we need to do to change the program to keep it that way. But as I said, right now program is very profitable and way ahead of timetable.

Eric Handler

Much appreciated.

Operator

Our next question comes from the line of Jim Goss with Barrington Research. Please proceed with your question.

James C. Goss -- Barrington Research -- Analyst

Thanks. I might as well stay on the A-List theme for a moment. You attempted to rightsize the frequency with price increases, and I wondered if you can talk about how that calculation changed the frequency in New York or Chicago or LA as you raise the prices.

Adam M. Aron -- Chief Executive Officer and President

So we didn't see any change in frequency in the five states where we went up to $24 that I detected. But we -- and the five states were California, New Jersey, New York, Connecticut, which is Metro New York and Massachusetts which is Metro Boston. We then went up went up $4 a month in those markets. We went up $2 a month in another 10 states plus the District of Columbia. It's not so much that it right-sized frequency. It just got us more revenue. If we're getting $4 more per head per month, it's $48 more per year, and that's $48 more that we either can afford to pay our studio partners and film rent or put in our pocket, or a combination of the two. And we needed to get that additional price increase because we want this program to be profitable and we got a lot of people single item of these (ph) 2.6 per month per -- in the quarter and we want to price it right. Plus, I guess the other comment on pricing it right, it's just also a function of demand. The membership applications have been so solid, when you've got demand you can afford to raise the price and we had demand so we figure we might as well raise the price.

James C. Goss -- Barrington Research -- Analyst

Right. And Adam, does the 2.6 times frequency mainly create profitability by bring-along box office or by added concession sales? And when you do the accretive calculation, what are you accounting there, accounting into that?

Adam M. Aron -- Chief Executive Officer and President

So, it's both, because it's the sum of all these metrics, right. Money is fungible, right. If we didn't have the bring-along factor, we wouldn't have the $3. If we didn't have the F&B increase, F&B spend, we wouldn't have the $3. We do have the bring-along factor; we do have the F&B spend, hence the $3. The $3 meaning the $3 per member per month of incremental EBITDA. What we're doing is we're comparing the program to the money that it's bringing to us now versus what the money that would have come to us anyway if we didn't have the program. So that's this calculus. Because for an enormous subset of this group, I'd say in the neighborhood of half, we knew what their frequency with us was prior to creating A-List because they were already Stubs members. So they were already tracking our purchases with us. So we are able to compare -- and remember Stubs gives them points not only on their own tickets but on other tickets they buy for bring-alongs and brings them points for F&B spend. So we knew exactly what they were doing before A-List and we know exactly what they're doing after A-list. And you can adjust that for the change in the box office so you can size it to make sure that the box office is comparable in dollar volume. And you can analyze exactly how much money was coming in the door beforehand and how much was coming in after and that's what this incremental calculation is.

Craig R. Ramsey -- Executive Vice President And Chief Financial Officer

Yeah, Jim, I might add, I'd say it's fully loaded. And by that I mean, in this comparison that Adam is describing, the program, the A-List program versus how the member attended before A-List, we also consider any additional fees, ticketing fees that may be waived. So we're putting that factor in, all the film cost, all of food and beverage costs, operating expenses, we're loading any incremental operating expenses whether they may be even credit card fees as an example, not to -- this isn't an exhaustive list, but we're putting in some overhead costs that are incurred in the program from this office. So I think it's a realistic view of incremental revenues and also incremental costs that are associated. So we're trying to be as transparent, I guess, as we can, and intellectual honesty is a good thing. We're trying to be intellectually honest with how it is performing in -- by building in all the costs as we compare pre A-List to post A-List.

James C. Goss -- Barrington Research -- Analyst

Okay. To one smaller, non-A-List question. I noticed you had a few more Dolby Cinema openings, and I think one IMAX opening. And I assume that IMAX is pretty much largely in place or is it, do you have more room for IMAX and do you think most of the PLF increments will come from Dolby and perhaps your prime area and how aggressive will you be?

Adam M. Aron -- Chief Executive Officer and President

Jim, so look, AMC is in love with IMAX. And AMC, for that matter. is in love with Dolby Cinema. We are the largest IMAX exhibitor in North America. We have about half of all IMAX installations in North America. We did a major announcement, I think a year ago, might have been two years ago, but I think it was a year ago, that we going to look to add 25 IMAX locations throughout Europe.

Similarly, we're the only Dolby Cinema operator in North America or in the United States and we have about 130 Dolby Cinemas by now open in the United States, the Odeon Leicester Square is a Dolby Cinema in London. We would like to add as many IMAX and Dolby Cinema locations as we can. We have room for in the U.S., Europe, and the Middle East, maybe 100 to 150 more theaters could take an IMAX or a Dolby installation, I would think. I'm sure that we will add more IMAX locations. I'm sure that we'll add more Dolby Cinema locations. We're also going to add more prime locations. We're all -- and without being too specific, we're also looking at other large format ideas that we find fascinating that might not require as much capital, as an IMAX or Dolby or prime installation. And so, we would -- but because consumers are willing to pay premiums for the better sight and sound experience in the theater, we're working hard to figure out how we can maximize the number of the premium site and sound technology auditoriums that we have because we're getting handsomely compensated by the customer for them.

James C. Goss -- Barrington Research -- Analyst

All right, thanks a lot. Appreciate it.

Operator

Our last question comes from the line of Mike Hickey with the Benchmark Company. Please proceed with your question.

Mike Hickey -- Benchmark Company -- Analyst

Hey, guys, thanks for taking my questions. A couple on A-list. You noted the frequency was 2.6 for Q1, obviously, not the most compelling slate during that period. And you mentioned that 2.6 through, it looks like, May 8, and obviously, that includes Avengers. And I think intuitively you sort of think frequency would go higher. Maybe it's just a case we haven't stretched long enough into the 10-fold season of enough weeks of Avengers. But why do you think frequency, I guess, haven't stepped up given more compelling film content? And in a similar level, I guess, you would anticipate, I guess, Avengers would be a driver of A-List sales, I'm curious what relationship you've seen there in terms of Avengers being a catalyst for A-List sales or at least did that meet your expectations? And I have a follow up.

Adam M. Aron -- Chief Executive Officer and President

So, it is our supposition also that frequency would rise with Avengers. And the last stat that I saw, 73% of A-List members went to see Avengers, which is a pretty amazing statistic. But it didn't actually change the number of movies that they saw in a month. And I think it might be because they -- 2.6 movies a month is you're going every week and a half, it may have to do more with their lives than the titles that are out there. But I wouldn't be surprised if the frequency goes up a little bit between now and December. But it sure feels to us like it's -- I called 2.5 times to 3.0 times per month the sweet spot for this program, it sure feels to us that it's staying within that bound even with the stronger box office going forward. And if it were ever to raise higher than that, we would raise the price to make sure that the profitability of the program stays in balance, but so far so good. And it doesn't go up to 2.7 or 2.8 with higher -- with this better slate of movies coming, it's possible. But it doesn't look like it's going to soar beyond that. And I've said -- as I said, we always look at a pricing mechanism that we could pull if we need to.

Mike Hickey -- Benchmark Company -- Analyst

Okay. And then I guess the question was on Avengers, what influence it had on --?

Adam M. Aron -- Chief Executive Officer and President

Oh, I'm sorry, you asked that question too, Mike, yeah, yeah.

Mike Hickey -- Benchmark Company -- Analyst

Yeah.

Adam M. Aron -- Chief Executive Officer and President

We did see a certain -- when Avengers, we saw a surge in member applications but not an enormous surge. I mean, it was up. It was up. It was a higher number. But, remember, we added 100,000 from January 1 to Feb 28. And we added 80,000 from March 1 to May 8. And January 1 to Feb 28 was a slower movie-going season. But it's still zooming. It's still zooming. That's -- we thought we would be lucky to get the 500,000 by June of '19 and we got to 500,000 in 4.5 months. And we've added 180,000 in the first four months of the year basically. 185,000 in the first four months of this year. And that includes the slow movie-going season in the first quarter. So, Mike, we're not done. They're still signing up.

And I think one of the reasons they're still signing up, we're doing a very good job of promoting A-List in our theaters on the website. We sold more than 20 million tickets a month at our theaters, that's 20 million eyeballs a month that we're promoting A-List to. Between the smartphone app and the website, we're getting somewhere between 50 and 80 million visits a month, depending upon the month. Those people are hearing about A-List. So -- and interestingly, this marketing is pretty inexpensive to us because they're already on our website. They're already in our theaters. So it's practically free and yet it's a lot of exposure and to a very targeted audience too.

Craig R. Ramsey -- Executive Vice President And Chief Financial Officer

Hey, Mike, it's Craig. The thing that strikes me with the great success of the program, we're seeing, as we've talked about, we are seeing the CapEx cycle kind of coming to maturation certainly in the U.S. and in over the next couple of years we'll price is the same thing in Europe. We'll spend a little more in Europe here, but it will tail off and we see the 250 to 300 in three to five years. This is the type of strategy A-List, which is a low capital strategy to drive movie-going whereas before it was physical improvement to the theater, costing capital, earning good returns. Now , we're really focused on marketing programs and this A-List programs has got so much headroom to it where we can drive growth and drive attendance on a low-capital spend and I think that is an additional big benefit from the program.

Mike Hickey -- Benchmark Company -- Analyst

Cool, thanks guys. Last question from me, I guess, when you're close to sort of 800 subs now and I think the bogey may be a million by year-end. I'm not sure if you gave that, that's just worth thinking, but sort of the 200,000 incremental subs to bridge from where you are today to that million wherever it is, whenever it is, any thoughts in terms of what that demo would look like that's sort of we're at and sort of the new buyer movie behavior pattern, any particular geos that you feel like it's sort of under-indexed and maybe step up, and I guess, do you feel like you have to pull more from non-AMC patrons than perhaps where you had before?

Adam M. Aron -- Chief Executive Officer and President

Well the official bogey is, I said 500,000 by June of '19 and 1 million by June of '20. And I think I'll live with that and these expectations, again, better to under-promise and over-deliver. But, yes, if we're already at 785,000, you would think we're going to get to 1 million before June of 2020. In terms of demos, the thing that I find interesting is that about a quarter of them are millennials, and by the way, the age is all over the place. We've got senior citizens who were getting senior citizen discounts before and now they're not getting their -- now, they're paying the same price as everybody else. We've got millennials. A couple of years ago, people in this industry were lamenting that maybe millennials were not going the movie theaters and were more geared to subscription services, well, lo and behold, AMC now has a subscription service and millennials are coming to AMC. So I find that particularly interesting. It is also interesting to us, I don't want to release the stat, but how many of our A-List (ph) members are coming from the five states that's where we are charging the highest price. Clearly we have struck a chord with moviegoers in New York and California. That's very good for us. We have a lot of theaters in those states. And if we can lock in brand loyalty to AMC -- it's good wherever we lock in brand loyalty. But it's especially good in states where we have a lot of theaters.

And then from geographies, beyond -- I mean, that was geographies. Then the other stat that's interesting is that about half of the members for A-List were coming into the program having already been Stubs members but what was so interesting is about half of the members coming to A-List were not Stubs numbers. Now, some of those people might have been coming to AMC anyway but coming with very low frequency, once every three or four months and now they're coming once every couple of weeks. Or they might have been coming from other chains where we've been taking share. But there's a lot going on. We're tracking it very closely. We have a pretty solid understanding of what it is. And there's really -- there is not a single red flag within A-List right now. Just, wherever we turn, we're pleased with what we're seeing.

Mike Hickey -- Benchmark Company -- Analyst

Thanks, guys. Best of luck.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session and I would like to turn the call back to Adam Aron for closing remarks.

Adam M. Aron -- Chief Executive Officer and President

Great. Thank you everybody. Thanks for joining us today. Let me just close with a couple of points that we made during the call. Our attendance was 700 basis points better than the competition in the United States. That's a whole new world. And as we continue to drive attendance at a time when the movie slate is robust, and we believe that the movie slate from mid-April to the end of December will be quite robust, we think while the first quarter was a tough one and we all understand that, boy, this could be a great year for our company. And we are, we've never been more upbeat, more confident, and more excited to let the next several months play out and post good numbers for the benefit of our shareholders. With that, thank you very much. We're glad you joined us today.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 65 minutes

Call participants:

John Merriwether -- VP Investor Relations

Adam M. Aron -- Chief Executive Officer and President

Craig R. Ramsey -- Executive Vice President And Chief Financial Officer

David Miller -- Imperial Capital -- Analyst

Eric Handler

James C. Goss -- Barrington Research -- Analyst

Mike Hickey -- Benchmark Company -- Analyst

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