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AMC Entertainment Holdings (AMC -5.17%)
Q2 2021 Earnings Call
Aug 09, 2021, 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Greetings, and welcome to the AMC Entertainment second-quarter 2021 earnings webcast. [Operator instructions] As a reminder, this conference is being recorded, Monday, August 9, 2021. I would now like to turn the conference over to John Merriwether, vice president, investor relations. Please go ahead.

John Merriwether -- Vice President, Investor Relations

Thank you, Kevin. Good morning -- or good afternoon, everyone. I'd 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 determine the company's future results are beyond the ability of the company to control or predict.

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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 -- 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.

Adam Aron -- Chairman and Chief Executive Officer

Thank you, John. Good afternoon, everyone, and thank 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 toward 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 listening to replays, reading our press releases at 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 these -- 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're 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 a 100-year high. Now that's precisely what we said on the Q1 call when we reported to you that at March 31, we had $1 billion of quarter-ending liquidity and that was the highest quarter-ending liquidity that AMC had ever had. Well, 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 past quarters.

So we ended Q2 with some $2 billion of liquidity. That's cash in the bank and undrawn revolver. And just a short three 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, soaring 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: revenues in Q2 of $445 million; consolidated food and beverage revenues per patron, up 44.1% over that same statistic of the second quarter of 2019, the comparable quarter pre-pandemic; a net loss of $334 million; an EBITDA loss of only $151 million; an EPS loss of only $0.71 per share; gross capex expenditures in Q2 2021 of only $17.9 million. These are very strong metrics, across-the-board performance by AMC compared to what many people, ourselves included, thought might happen in Q2 of 2021. And here are more operating statistics that also suggest things are improving at AMC as 2021 unfolds.

Overall ticket admissions revenue in the United States in 2021 versus 2019 pre-pandemic -- so this is overall ticket admissions revenue in the U.S., well, it was 13% of what it was two years ago in this year's Q1, but it was 29% of what it was two years ago in Q2 of '19. And so far, in the first weeks of Q3, we're running 45% of our two years ago levels. So Q1, it was 13% of what it was; Q2, 29% of what it was; Q3 so far, 45% of what it was. It's still down but the trend line shows significant improvement.

And even that's somewhat misleading because we've reduced so many showtimes at our theaters to save on theater operating expenses, which partially mitigate those revenue declines. So if instead rather than just looking at ticket admission revenues, if one looks instead at capacity utilization, that's the percentage of seats that we sold as a total of what was available for sale, you'd see that our capacity utilization was 41% in Q1 of 2021, of what it was two years ago in Q1. It was 61% of two years ago levels in Q2 and 68% of two years ago levels so far in Q3. Again, capacity utilization, 41% in Q1; 61% in Q2; 68% so far in Q3.

Again, that trend line is pointing up. We certainly have a way to go, but progress is clear. And we should be getting to play a lot more big movie titles in the balance of Q3 and Q4 2021, as contrasted with what was shown in our theaters in the first six months of this year. Incidentally, we see the same, exact positive trends at our European theaters.

Let's start with 2021 admission revenues. In Q1 of 2021, it was a pretty bleak 2% of 2019 levels, 2%. In Q2, it was 18% of 2019 levels. But so far in Q3, we're now running at 57% of 2019 levels; 2%, 18%, 57%, clearly an upwards trend.

The same holds true for that same capacity utilization statistic in Europe for us. In Q1, our capacity utilization in 2021 was 53% of the 2019 level; in Q2 was 56% of the 2019 level. But so far in Q3, it's 69% of the 2019 level; 53%, 56%, 69%, again up arrows, with ways still to go for sure but up arrows nonetheless. Despite the financial and operating results would suggest we're on a path to recovery, I want to assure you there are no victory laps being taken.

We are still losing money. We are still burning cash. We're burning less of it but we're using cash, not generating cash. So we're not out of the woods yet.

We do still live in a COVID-infected world. But fortunately, we can see a light at the end of this tunnel. Vaccination rates have climbed quickly in 2021. And the counterintuitive result of this new Delta variant is that vaccinations likely will continue to rise, and vaccination increasing is very important for AMC and for the movie theater industry generally.

No one has a perfect crystal ball, of course, but based on what we know and what we see today, we currently estimate that AMC's theater level cash flows will turn positive in Q4 of this year, assuming that we all see at least a $5.2 billion domestic box office cumulatively for the year. Now there are some naysayers who are quick to point out the size of our debt load. What they do not bother to mention, perhaps because it does not fit their narrative, is that we have smartly laddered that debt. We have no debt maturities at all until 2023.

And most of our maturities do not come before 2026. This gives us considerable time to deleverage our company to further strengthen our balance sheet and to refinance our liabilities and hopefully in better times. I'm reminded in all of this that there were those who were absolutely certain -- they just knew, that AMC would file for bankruptcy in calendar year 2020 or early in 2021. At AMC, we proved them wrong.

There are those who were sure that our recovery in Q2 would be slower than is the current reality. Again, the Q2 numbers for AMC have proved them wrong as well. But there are those still who continue to forecast the demise of the theatral exhibition business overall or maybe they just want to predict the demise of AMC. They say that streaming is going to beat us.

That's their conventional wisdom. Well, a lot of people mock conventional wisdom because so often, it's just plain out wrong. You've likely heard before this mantra, maybe even repeated it yourself, radio was going to kill off movie theaters. TV was going to kill off movie theaters.

VCRs was going to kill off movie theaters. DVDs were going to kill off movie theaters. Each time, movie theaters proved resilient. Americans went to a movie theater 1 billion times in 2019.

That's 1 billion with a B. And the global box office in 2019 was a record-high $43 billion. "Yes, there was a pandemic but now streaming is going to kill off theaters," we breathlessly hear. Well, at AMC, we intend with all of our might and brains and heart and sinew to prove those procrastinators and prognosticators wrong, too.

I'm now going to turn over the call to our chief financial officer, Sean Goodman, to give you some more insight into the progress we're making. And then I'll come back to break some news before we head to the Q&A. Sean?

Sean Goodman -- Chief Financial Officer

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 three times that of Q1. While this is approximately 77% below 2019's attendance levels, it is only approximately 45% below our 2019 attendance per showing.

This is an illustration of how we're actively managing our show times 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 are 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. This 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 spend and deferred rent repayments were significantly higher in Q2 than they were in Q1. If we look at cash burn before the payback of 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 after normalizing for the impact of capital raised during the quarter and therefore exclude the proceeds from 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: one, ensuring that we have sufficient liquidity to withstand any bumps along the road and the inevitable volatility as our industry recovers from the impact of the COVID pandemic; two, strengthening our balance sheet by reducing our debt and associated interest costs; three, investing in our business to enhance the guest experience; and four, opportunistically pursuing value-enhancing partnerships or acquisition opportunities. With our current solid liquidity position and the recovery that we are seeing in the business, we believe that it is appropriate to carefully deploy our cash in ways that are most beneficial for the long-term future of the business while, of course, we will continue to be ultra-focused on our operating efficiency. This will be right than focusing on short-term monthly cash burn. And what I mean in this regard is we expect going forward that we will choose to pay cash interest as opposed to payment in kind, or PIK, interest.

This will avoid any increases in our debt position. We also anticipate taking thoughtful actions to reduce our debt, including the deferred rent balance, all of this with a view to strengthen our company for the future. In addition, we will continue to actively manage our theater portfolio, closing underperforming locations. We've quietly closed more than 74 marginal or money-losing locations over the last 18 months and opportunistically pursuing attractive high-potential locations, which Adam will discuss when he comes back on.

Turning to our landlords. At the end of the second quarter, we had deferred rent obligations of $420 million, representing a decline in obligations of approximately $55 million compared to Q1 of 2021. For the second quarter, actual cash rent paid was approximately $55 million more than what is shown on the face of the income statement as we repaid deferred rent. While future cash rent payments will continue to be dependent on ongoing discussions with landlords, we anticipate cash rent paid in the second half of 2021 will be significantly higher than in the first half as we continue to work on reducing the deferred rent balance and we take advantage of opportunities that may arise to, for example, prepay rent in exchange for favorable lease terms.

For now, we continue to focus the substantial majority of our capital expenditures on maintenance spend. However, a small amount of growth capex could arrive from potential opportunistic high-return investments later on in the year. Capex for the second quarter was $10.5 million. This is net of landlord contributions.

Net capex for the whole of 2021 is expected to be in the range of $100 million to $120 million. Reflecting on our results and the financial position at the end of Q2, it is quite remarkable just how far we have come in a relatively short period of time. We believe that we are uniquely well-positioned for a strong and profitable recovery now that all our theaters are open. We had a backlog of exciting movie titles to be released and we have record levels of liquidity.

And with that, I'll pass the call back over to Adam.

Adam Aron -- Chairman and Chief Executive Officer

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 offense again. And earlier on this call, I promised you some news. So here goes quickly on 10 specific items.

One, you already know that with ArcLight and Pacific theaters' decision to permanently shut down. We announced 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 calendar year 2018. They should open later this month as AMC Theatres.

However, I can confirm today that the number is not two new theaters for AMC. It might be 10. We actually now have six new theater pickups under lease or signed letter of intent, not two, three of those are in Los Angeles, two are in Chicago, one is in Atlanta. And we also are currently in advanced negotiations to add four more, bringing the possible pickups to 10.

Eight of the 10 would come from former ArcLight/Pacific locations. Item 2. Speaking of new theaters, in 2021, we will open about a dozen newbuild 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 three new theaters in 2021. The two 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 two theaters in the top half of the 99th percentile of highest-grossing U.S. cinemas.

And that was achieved in just their first few months of operation, really astounding. Our new AMC DINE-IN theater 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 on these very good ideas.

Our first two 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 in 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 opportunity, 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. Some of 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 pooled investment capital in search of a company to buy. Ironically, Centricus is under contract to buy a fascinating company called Arqit, A-R-Q-I-T, who 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 laws and SPAC norms are being complied with. When that acquisition of Arqit 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 six 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 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 more firm. 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 should 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: Tournament of Champions. Item 7.

Also to heighten the information exchange with our new shareholders, as well as with the public at large, in April, I started actively tweeting again, which I've not done since my days when running the Philadelphia 76ers back in 2013, when Twitter was my social media platform of choice to interact with sports fans. My Twitter followers have more than coupled since April and now exceed 150,000. But what kind of blows my mind is that according to Twitter Analytics, my tweets, which I write personally, so far have been read more than 72 million times. In addition, I'm actively following almost 2,000 people who appear to be interested in AMC to get a better sense of what they're saying and thinking.

I also make it a point to check and read my inbound Twitter feeds personally. There are hundreds and hundreds of replies to any tweet that I publish, which I find give me a more sophisticated and better understanding of what's on the minds of AMC's new owners. Item 8. With labor costs going up in some places around the country, our costs are rising in the United States.

We've also noticed that there's appeared to be little price resistance to the increased prices currently being charged at our U.S. theaters. So just last week, we imposed an approximate 5% admissions ticket price increase at many of our U.S. theaters.

On average, that's about $0.50 or so of an increase in admissions ticket price. We think consumers will find that palatable, but hopefully, that will meaningfully strengthen the AMC bottom line. Item 9. There's a lot of talk currently about exclusive theatrical windows or the lack thereof.

You all know that AMC was way ahead of this issue, reaching a landmark and historic agreement with Universal in July of 2020 on their concept of premium video on demand. We were pleased then and we're still very pleased now with the outcome of the Universal-AMC agreement. And in our mutually working through that initially contentious issue, AMC and Universal are now very close. In fact, I think we have the best working relationship that we've had together in many years.

In this same vein, I'm also pleased to announce today that AMC just reached formal agreement with our friends at Warner Bros. to show all of their movies in calendar year '22, importantly respecting an exclusive theatrical window of 45 days prior to home release for all Warner Bros. films. It's no secret that AMC was not at all happy when Warner decided in December to take movies to the home on HBO Max simultaneously with theatrical release.

Therefore, it's especially gratifying that Warner is yet again embracing an exclusive theatrical window. And for us at AMC, it's especially pleasing to be working so harmoniously with Warner Bros. once again. We actually are in dialogue, active dialogue with every major studio on this very important topic.

We are hearing considerable support in Hollywood that an exclusive theatrical window is an important way to build big and successful movie franchises. Clearly, though, this whole subject is quite topical. It's very much a work in progress. We will keep you posted as things turn out.

And finally, 10. I'd like to thank the board of directors of AMC for electing me in July to serve as chairman of the board, as well as CEO of AMC Entertainment. You know all that. And you've also heard that former U.S.

ambassador to the United Kingdom, Phil Lader, was elected to serve as the board's lead director. It would be no surprise to any of you that we have a highly able, experienced, and dedicated board. I feel fortunate to serve with them all. But the news on this point is that at our first meeting of the board in my new role, I discussed with the board that I think it is extremely important that company insiders maintain a significant financial ownership stake in AMC through owned and/or granted shares so that insiders have financial interests that are directly aligned with those of our shareholders.

Our board members already have a policy in place that they must hold any granted shares for at least one full year. But there was no such plan currently in place for the company's 19 most senior executives. Therefore, I will be recommending to the board a new policy. Without going through all the nuances -- and it's kind of complex but to simplify it and break it down, I will propose that I as CEO be required to hold a number of owned or granted shares at least equal to eight years of my salary.

In my case, eight years of my salary would mean that I would be required to have at least a $12 million ownership stake in AMC of owned or granted AMC shares. Sean, our chief financial officer, would be required to hold six years of his salary. Our executive vice presidents will be asked to hold four years of their salaries in owned or granted shares, and our senior vice presidents will be asked to hold two years of their salaries in owned or granted shares. The board will consider this proposal as new policy at its next regularly scheduled meeting.

At the same time as I am emphasizing share ownership, I'd like to remind you that I have not sold one share of AMC stock in the five full years I've been running this company even though it represents more than three-fifths of my annual -- when I say it, when stock represents more than three-fifths of my total annual compensation. Other than gifting a small percentage of my AMC ownership stake to my two adult children earlier this year, I also did not sell any AMC shares in March when I could have. I did not sell any AMC shares in June when I could have in 2021. I similarly will commit that I do not intend to sell any AMC shares in September of 2021 when I'm legally permitted to do so.

But as much as this pains me to admit, in September, I'll be celebrating my 67th birthday. I'm going to be a young, vibrant 67, but hey, it's 67 nonetheless. Two months ago, more than 85% of my net worth was in AMC stock, and proper estate planning for a 67 year old suggests I should diversify my assets a bit. But I don't want any of you ever to think that I have anything but full confidence in AMC's future.

So I will do so under the auspices of the parameters of what is called a 10b5-1 plan, where I pass off all the share trading control of the shares that I own or I'm granted to an independent third-party bank based on parameters of the plan that I only partially set. The plan would not go into effect until toward year end at the earliest, and only a small percentage of my owned or granted shares could get sold in any one month. And that would then be repeated over a period of at least several months. This way, I really have passed on the decision-making to someone else on this important topic.

Additionally, whatever is sold or not sold by an independent third party, I still will have millions of AMC shares that either are owned by me personally or have been previously granted to me personally. My economic incentives are very much aligned with yours: to increase shareholder value for all the owners of AMC. What's more, I so fully believe in transparency that I'm letting you all know this well in advance even though current U.S. law does not require me to make this or even any public disclosure now at this time or at any time soon prior to any shares actually being sold.

Well, there you go. That's the quarter. That's 10 items of news. Our second quarter was a very encouraging one for AMC.

We believe we're in a road to recovery, and we're ever so grateful to our friends and allies who share our passion that AMC's best days should be those that are coming. You can take comfort that our deeper financial reserves allow us to stay the course, to innovate again, and to capitalize on the opportunities that we see around us. We fundamentally believe that ours is a future that is bright because there is nothing as magical as seeing dazzling images on a huge silver screen. We're now going to turn this call to the questions that were submitted and upvoted with the greatest shareholder interest on the Say Technologies platform, and then we'll take some questions from analysts if we -- if you all can spare us the time.

I should point out that this is an experiment, this Say Technologies platform, for us. It works really interestingly, but it only works with some brokerage firms, not all. So many of our U.S. shareholders and especially many of our international shareholders may not have had a chance to ask their questions on this call.

Still, we've had quite a bountiful array of questions posed to us to answer. Sean, what's the first question?

Sean Goodman -- Chief Financial Officer

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 -- Chairman and Chief Executive Officer

Thank you, Timothy. We appreciate the question. If you look at our path since going public in 2013, AMC paid sizable quarterly dividend every quarter until we got close to the pandemic. And realizing that our liquidity 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 -- Chief Financial Officer

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

Adam Aron -- Chairman and Chief Executive Officer

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 flowed in from our individual investors, and we're happy to reach out to GameStop and see if they have any interest.

Sean Goodman -- Chief Financial Officer

The next question is from Ryan. The question is, would AMC ever consider reestablishing drive-in theaters. With the current state of the world, it would bring a lot of revenue with little worry for people trying to social distance.

Adam Aron -- Chairman and Chief Executive Officer

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 that you stay in your car, but there are two 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 much of the United States, it doesn't get dark before eight or 9:00 p.m., which means that you really can only use the drive-in screen for one showtime a night. The economics aren't there. It's unlikely that we would go forward. It sounds like it's a great idea, but it isn't actually.

Sean Goodman -- Chief Financial Officer

Thanks, Adam. And the next question is from Terrell. The question is, how is AMC preparing for a possible large-scale COVID surge that could potentially shut theaters down again?

Adam Aron -- Chairman and Chief Executive Officer

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 & 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 & 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, 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 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 that you could do to get vaccinated. I know that many of our shareholders are younger, who think that they're invincible. It is true that older people are more susceptible to 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 -- Chief Financial Officer

Arun asks, are there ways you're considering to reduce the company debt without issuing new shares?

Adam Aron -- Chairman and Chief Executive Officer

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 liquidity, get through COVID no matter what COVID throws at us, we then will be turning to debt reduction and see if there's opportunity there.

Sean Goodman -- Chief Financial Officer

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 -- Chairman and Chief Executive Officer

Well, this is such an important topic, and I addressed it earlier in my remarks that we're especially pleased that Warner Bros. has decided to move away from day and date releases and commit to an exclusive theatrical window as well. We are having private conversations with every major studio in Hollywood on this very important topic. And we're seeing a lot of consensus 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're doing it only in sort of 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 in 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 -- Chief Financial Officer

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

Adam Aron -- Chairman and Chief Executive Officer

We would consider it. This is again one of these ideas I've gotten -- I've received a lot of commentary about 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 stock with inventory that makes it a less profitable business than you might think, but we're going to take a hard look at it.

Sean Goodman -- Chief Financial Officer

Next question from Amy. Could live theater and concert events be streamed to theaters? Based on the streaming success of Hamilton, I expect this would be a real seat-filling success.

Adam Aron -- Chairman and Chief Executive Officer

Yes, yes, yes. And yes, Amy, but not Hamilton because that's already come and gone. But we are experimenting right now with these two 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 kind of intriguing alternative programming at our theaters.

And it's not such a new concept. There's something -- there's a company called Fathom Events that we own a third of, and they've been showcasing some kinds of alternative content at movie theaters 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 -- Chief Financial Officer

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

Adam Aron -- Chairman and Chief Executive Officer

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

Sean Goodman -- Chief Financial Officer

Mark asks, do you plan on reinstating dividends? They tend to mean a lot to certain type of investors. They could potentially help draw non-ape investors and larger holders.

Adam Aron -- Chairman and Chief Executive Officer

We've touched on that, too, Mark. And the answer is we know it's important. Sean is a shareholder, too. I'm a shareholder, too.

We'd like to get those dividend checks if we could. But we do have to use our -- we do have to adhere to our -- 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 -- Chief Financial Officer

Aaron asked, I promise not a sarcastic question, but can you guys make the AMC mascot officially a gorilla?

Adam Aron -- Chairman and Chief Executive Officer

Well, AMC has been around for 100 years. We don't actually have a mascot. This is an interesting question. I don't know.

I know why you asked 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 -- Chief Financial Officer

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

Adam Aron -- Chairman and Chief Executive Officer

Yes, we have and recently. And the notion of making exclusive content is an interesting one. Some of you may know -- not know this, but about five years ago, we were in a joint venture -- six years ago, we were in a joint venture with another theater 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.

So we have some experience with this. The making of movies is a risky business. Movies aren't cheap to make, and they do take capital. I've made no secret of the fact that I personally thought it would be very wise for AMC to have sold more shares to raise more equity to build up our war chest so that we can 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 with an idea that 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 on our list, but I don't know that we're going to rush into it.

Sean Goodman -- Chief Financial Officer

Our next question from Jonathan, will AMC keep holding viewing parties for mainstream sporting events?

Adam Aron -- Chairman and Chief Executive Officer

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 theater 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 one of the four major leagues -- to secure rights from one or more of the four major sporting leagues to show live sporting -- live professional sporting events at our theaters.

Also, there are -- there's some collegiate football that draws 100,000 people into football stadiums all over the country. College football would be something else where I think it would be a really powerful draw at AMC. Two years ago, we experimented showing some NFL games on our theaters -- at our theaters and that's for -- just for one 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 -- Chief Financial Officer

Next question is, have you considered expanding AMC to a family entertainment center experience. You could include bowling and arcade, laser tag, parties, and family dining.

Adam Aron -- Chairman and Chief Executive Officer

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 Feature Fare, the hot menu items that are normally served at our concession stands, at our non-DINE-IN theaters, trying to get 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. We have a massive investment in 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 theaters 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 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 theater 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. So to -- 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 -- Chief Financial Officer


Adam Aron -- Chairman and Chief Executive Officer

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 is an experiment for us. If you like this idea, we'll do it again on future calls.

But 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 6:00 in the east.

So we might only have time for a single question.

Questions & Answers:


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

Chad Beynon -- Macquarie Group -- Analyst

Hi. Thanks for taking my question. Thanks for all the commentary up to this point. I wanted to ask about some of the metrics you were talking about with respect to industry admission revenue.

Adam, you talked about first quarter, 13% of two years ago, and now we're up to 45% of two years ago. So maybe just kind of 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've put all these things in your blender?

Adam Aron -- Chairman and Chief Executive Officer

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 $1 billion 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 the movie theater ticket grosses in the United States and Canada. It's kind of the basic metric of measuring the size of the industry. I went and looked, pre-COVID, meaning starting in 2019, not 2020, the five years, 2019 going back, all five of them, the box office was greater than $11 billion. The five years before that, it was $10 billion.

I think it was -- or maybe six years was $10 billion or more. And I think six of the seven years before that, it was greater than $9 billion. So literally, for the past 17 years, the box office has been -- first, it was steady at between $9 billion and $10 billion, then it was steady between $10 billion and $11 billion, then it was steady between $11 million 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 million. Nobody's crystal ball is good enough to know.

So -- but obviously, it's a very important question because we will be more profitable the higher the box offices. So we're -- we know that with the cash that we raised, we could survive in an $8 billion box office for a year or two 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 -- Macquarie Group -- Analyst

OK, great. And then a quick follow-up, and then I'll pass it off. With respect to the food and 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 commentary that you made with respect to ticket pricing? Have you done the same thing for food and beverage yet? Thanks.

Adam Aron -- Chairman and Chief Executive Officer

Thank you. Let me first tell you what we think the reason is and then we'll tell you how it's -- how we're getting there. It feels to us like people who have been away from theaters for a year, when they're coming back to the theaters after it's been a long wait and they're so happy and eager to be back at a movie theater 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 a food and beverage spending at -- in a movie theater experience, quite a mature thing. And AMC was producing more food and beverage revenue than any other major mass operator.

But we would have considered a good quarter if our food and beverage spending per patron is up 2% or 3% or 5%. It's up 44% over the pre-COVID levels. And it's coming basically from four different things. And it's kind of 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, two years ago. And during the shutdown of theaters and 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 was very helpful for the AMC Safe & Clean protocols because if people are 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 a popcorn. If before they bought a soda and a popcorn, now they buy a soda and a popcorn and a candy or they have soda, popcorn, and nachos.

Or they're opting for some of our more intriguing menu items that we put in place through Feature Fare, my favorite being the flatbread pizzas. 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, the concession stand. There are many people, a lot of people who go to a movie theater -- like when I say a lot of people, I mean like hundreds of millions of people a year who go to movie theaters not just in AMC, but go to movie theaters and don't buy anything at the concession stand. They buy no food and beverage.

All they buy is a movie ticket, and that's the experience they get. What we're -- what we've seen as people are returning to cinemas is more and more people are going to the concession stand. They're buying food and 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.

See you at an AMC theater sometime soon.


[Operator signoff]

Duration: 76 minutes

Call participants:

John Merriwether -- Vice President, Investor Relations

Adam Aron -- Chairman and Chief Executive Officer

Sean Goodman -- Chief Financial Officer

Chad Beynon -- Macquarie Group -- Analyst

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