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AMC Entertainment Holdings (AMC 0.93%)
Q2 2022 Earnings Call
Aug 04, 2022, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings and thank you for standing by. Welcome to the AMC Entertainment second quarter 2022 earnings webcast. [Operator instructions] This conference is being recorded, Thursday, August 4th, 2022. And now I would now like to turn the conference over to John Merriwether.

Please go ahead.

John Merriwether -- Vice President, Investor Relations

Thank you, Scott. Good afternoon everyone. I'd like to welcome you to AMC's second quarter 2022 earnings webcast. With me this afternoon is Adam Aron, our chairman and CEO; and Sean Goodman, our chief financial officer.

Before I turn the webcast over to Adam, let me remind everyone that some of the comments made by management during this webcast may contain forward-looking statements that are based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. Many of these risks and uncertainties are discussed in our most recent public filings, including our most recently filed 10-K and 10-Q. Several of the factors that will determine 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 non-GAAP financial measures such as adjusted EBITDA, constant currency, free cash flow, operating cash burn, and operating cash generated among others. For a full reconciliation of our non-GAAP measures to GAAP results, please see our earnings release posted in the Investor Relations section of our website earlier today.

After our prepared remarks, there will be a Q&A Session. This afternoon's webcast is being recorded, and a replay will be available in the Investor Relations section of our website at www.amctheatres.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 one and all and thank you for joining us. Today we have tremendously exciting news to share with you. First, our results for the second quarter which were massively ahead of last year's second quarter and exceeded market expectations for revenues, adjusted EBITDA, and net income.

And second, our plan to issue later this month a special AMC preferred equity, non-dilutive stock dividend as it will all be going and only be going to our shareholder base as of the dividend date. This is a move that fundamentally and deeply strengthens our company and will give us enormous flexibility as we go forward. These are exciting times for AMC and for our investors. I'll start this webcast by talking about the business.

I'll then pass the call over to Sean Goodman, our CFO to talk about our financials in more detail and then I'll come back to talk about our special dividend announcement and the significant benefits that it brings for our shareholders. I cannot begin to put into words, how much progress AMC Entertainment made in the second quarter of 2022. Thank you to Doctor Stephen Strange, Tom Maverick Cruise, Elvis Presley, and to all those hungry people leading Jurassic dinosaurs, because they all graced our big screens at AMC. The second quarter was quite the success and our best second quarter in three years.

What's more and this is very important. They boosted Hollywood's confidence in theatrical exhibition and they boosted Hollywood's commitment to theatrical exhibition. Just as we predicted, our improving second quarter results boost our spirits and server to further convince that we indeed are making great strides on our path toward pandemic recovery. As you can see our press release, AMC exceeded expectations as people came back to movie theaters in droves.

Some 59 million moviegoers came to our AMC Theaters across the world in the second quarter, up 168% from the same quarter a year ago, that's more than two and a half times. They are taking us to new highs in our high-margin food and beverage business, and thanks to their patronage, we generated positive adjusted EBITDA of $107 million in the second quarter of 2022, a $258 million improvement over that figure in Q2 of 2021. We generated positive operating cash too in the second quarter of 2022 of $52 million. That was a $178 million improvement from the figure of the same quarter a year ago.

The second quarter marked the strongest North American box office since 2019. Numerous films shined brightly in the second quarter, but none shined brighter than Top Gun: Maverick. I've seen it myself four times now. Top Gun: Maverick is now approaching $1.3 billion in worldwide box office receipts and holds the Number one box office position thus far in 2022.

Maverick also broke all-time records by becoming the highest-grossing movie of all time to open on Memorial Day Weekend. It also is becoming the highest-grossing movie ever, both for Paramount Pictures and for a movie starring Tom Cruise. I have said all along, that people would come back to theaters in eye-popping numbers, and that is exactly what they did in the second quarter of 2022, and what they've been doing since. To the naysayers, who forcedly in our opinion have been predicting a secular decline of theatrical exhibition.

All I can say is, well, you've seen my feisty hashtags on Twitter, you know what I say. The second half of this year promises to be equally exciting, with a great mix of family friendly horror, action, drama, and comedy genres to please everyone from young to old, including Warner Brothers, DC Comics-based Black Adam starring Dwayne The Rock Johnson; and three Disney films, including the animated Strange World, and two very highly anticipated tent pole Disney sequels, James Cameron's Avatar 2: The Way of Water and Marvel's, Black Panther: Wakanda Forever. Just last week, the powerful and poignant trailer for Black Panther 2: Wakanda Forever was released and garnered a staggering 172 million views of the trailer in just the first 24 hours, becoming one of Marvel's Cinematic Universe's top ever trailer debuts. As Nicole Kidman reminds us in AMC's now iconic and revered advertising campaign, 'Given that Hollywood has great stories to tell.

It's clear that movie fans are ever so eager to enjoy those dazzling images on AMCs huge solo screens. On speaking of Nicole, our ad campaign was so effective that we signed her to be our spokesperson for another full year. The success in the second quarter has continued into the start of the third quarter. As with two examples of let the good times roll, attendance in the just completed month of July 2022 saw the highest number of guests visit AMC's U.S.

theatres since December of 2019, and our preliminary July food and beverage revenue numbers appear to be this biggest single-month figure at our U.S. theatres in our company's entire 102-year history. For full transparency, there is a dearth of new big movie titles being released in August and September. So things will slow for several weeks, don't expect too much of us for all of Q3.

But then comes the fourth quarter of 2022. Talk about star power, showing itself in movie theaters. These movies and more will all grace our screens in just the 13 weeks of the fourth quarter of 2022. Jamie Lee Curtis in Halloween Ends; Julia Roberts and George Clooney in Ticket to Paradise; Dwayne Johnson, Pierce Brosnan and Viola Davis in Black Adam; Jessica Chastain, Anne Hathaway and Sir Anthony Hopkins in Armageddon Time; Margot Robbie, Christian Bale and Robert De Niro in Amsterdam; Tom Hanks in A Man Called Otto; Brad Pitt and Margot Robbie in Babylon; and don't forget the ever-so-much anticipated sequels to Black Panther, Shazam, and Avatar.

So too the movie slate for calendar year 2023 should also make us all smile. Our current internal forecast is that the 2023 domestic box office, the basic metric suggesting the health of theatrical exhibition, both in the U.S. and globally is likely to be billions of dollars larger than that of calendar year 2022, billions of dollars ahead. We look forward to Q4 of 2022 and we look forward to calendar year 2023 with absolute glee.

There were other strides forward made at AMC in the recent months since our last quarterly call. We started the installation of the biggest environmentally friendly green initiative in our company's history, with the introduction of laser projection technology coming over the next few years to almost half of our U.S. Screens, and laser projection will make the pictures on those screens so much brighter and so much sharper that its certain to excite movie buffs going forward. We're already in test markets in Chicago and Kansas City with our partner.

Uber Eats for home delivery of AMC Perfectly Popcorn, and other concession items from our theaters. The early results are available, so we expect to roll out nationally in Q4 of this year. Similarly, recipe development for microwaveable and ready-to-eat popcorn is well underway, going extremely well and we look forward to being able to sell our popcorn products in grocery stores and/or convenience stores next year. We're also in active dialogue with the credit card issuer and hope to introduce a cobranded AMC Credit Card that can be launched nationally in early 2023 or possibly as early as late 2022.

And with the specific urging of our shareholders, we are stepping up our game mightily on AMC branded and movie branded merchandise. As for Hycroft Mining, Hycroft just announced its largest exploration program in about a decade. Remember that heretofore, Hycroft has explored only about 2% of its 71,000-acre mine site. We have every confidence that our Hycroft investment will pan out excusing the pun, to be quite lucrative for AMC.

Speaking of investments, our board of directors also has authorized us to establish a fund of up to $100 million for additional, transformative investments where AMC can seek to add value and thereby create meaningful additional value for our shareholders. Indeed as I've often said, previously we are absolutely committed to transforming AMC into a bigger, bolder, stronger, and more successful company that even the one that existed prior to the pandemic. With that said, I'll now turn the call over to Sean to discuss our financials in more detail. Sean

Sean Goodman -- Executive Vice President and Chief Financial Officer

Thanks, Adam and thank you everyone for joining us this afternoon. As Adam said, Q2 was a terrific quarter for us. We welcomed 59 million guests to our theaters around the world, and this is well ahead of the 22 million guests that we entertained during last year's second quarter and the 39 million guests that visited us in the first quarter of 2022. This attendance resulted in revenue of $1.17 billion.

This is more than 2.5x the $445 million of revenue we had in Q2 of 2021 and it's almost 50% ahead of the $786 million of revenue that we recorded in the first quarter of this year. But even more importantly we achieved positive adjusted EBITDA of $107 million, a very meaningful improvement over the EBITDA loss recorded in both the prior year's second quarter and also the first quarter of this year. All financial results clearly reflect the ongoing recovery of the industry and our business. As has been our practice during the recovery period, we believe that it's helpful to look at our financial performance metrics relative to pre-pandemic levels to best benchmark the dynamics and profitability of the business as our recovery progresses.

This analysis shows that our per guest performance metrics during the second quarter were universally substantially superior to pre-pandemic levels in 2019. For Q2 of 2022, on a consolidated basis total revenue per patron was $19.73. This is 27% higher than Q2 of 2019. This was driven by admissions revenue per patron growth of 19% and food and beverage revenue per patron growth of 32% and other revenue growth per patron of 65%.

This is all compared to the second quarter of 2019. In the domestic business, admissions revenue per patron increased by 22% compared to Q2, 2019 and in our international business the increase was 12%; and when we normalize for the strengthening of the U.S. dollar compared to 2019, international admissions revenue per patron increased 16% measured in constant currency. The admissions revenue per patron growth was driven by guests choosing to upgrade to the very best possible sight and sound experiences that are found at our premium large format offerings, such as IMAX, Dolby Cinema at AMC Prime.

Premium large format attendance represented 15.6% of domestic attendance in Q2, and this can be compared to 10.9% in the second quarter of 2019. And in our international markets, Q2, 2022 premium large format attendance represented 10.4%, and this compares to 6.4% in the second quarter of 2019. In addition, the second quarter admissions revenue benefited from a overall favorable Showtime mix, coupled with pricing adjustments including blockbuster and opening weekend pricing. From a food and beverage perspective, we enjoyed extremely strong food and beverage revenue per patron, as our guests continue to participate in the full in-theater entertainment experience.

In our domestic markets food and beverage spend per patron in the second quarter was $7.52; that is 55% higher than the average spending in pre-pandemic Q2, 2019. And in the international business, food and beverage spent per patron was $4.43, that's 22% higher than Q2 of 2019 and 26% higher on a constant currency basis. Our significant food and beverage outperformance continues to be primarily driven by an increase in the proportion of guests choosing to enjoy our industry-leading food and beverage offerings, combined with them purchasing more items per each order and both of which are made easy and convenient through our AMC apps. Compared to the second quarter of 2019, domestic other revenue per patron increased by 65% and international other revenue per patron increased by 63% and 69% in constant currency.

This reflects an increasingly higher percentage of guests choosing to reserve their seats and order their food and beverage using our industry-leading websites and apps, together with the benefit of growth and diversification initiatives such as renting out our theaters during off-peak times and revenue from various promotional and marketing initiatives. During the recovery period, we have been very agile in adjusting our payroll house and flexing show times to reflect market demand and optimize efficiency. Our Q2 domestic attendance represented 60.5% of Q2, 2019 attendance, but 85% of Q2, 2019 attendance per showing. Let's move to cash and liquidity.

We ended the quarter with a strong liquidity position of approximately $1.18 billion, comprised of $965 million of cash and cash equivalents and $211 million of undrawn credit facilities. This strong results for the quarter led to non-GAAP operating cash generated of $52 million as operating cash generated. This is a $178 million improvement, compared to Q2 of 2021. We recall that this non-GAAP operating cash generated measurement represents cash generated before debt servicing costs and before differed rent payback.

Looking ahead, we would expect to return to non-GAAP operating cash burn in Q3, as we experienced a seasonally strong softer box office together with working capital pressures relating to the strong Q2 box office. However, we do expect a return to positive non-GAAP operating cash generated in Q4 of this year. Regarding capital allocation, we continue to pursue a balanced and disciplined approach to capital allocation. Our main priorities remain unchanged: One, ensure that we have sufficient liquidity to manage through the recovery phase of our business; two; strengthen our balance sheet by reducing our debt and associated interest costs.

And three; investing in our business to enhance the guest experience. And finally four; opportunistically pursuing value-enhancing initiatives, including those that lead to divarication and growth of our business. As previously reported, during the quarter we quietly strengthened our balance sheet by repurchasing through the open market approximately $72.5 million of our 10% second lien subordinated secured notes that are due in 2026. We did this repurchase for approximately $50 million and this represented a 31% discount to the face value of the debt.

As a result of this transaction, we recorded a gain on debt extinguishment this quarter of $59 million and our annual interest cost will now be reduced by $7.25 million. During the second quarter of 2022 we also strengthened our balance sheet by repaying approximately $53 million of differed rent, reducing our deferred rent balance to approximately $219 million. Recall that back in March 2021, this differed rent balance was more than $470 million and over the last 15 months, we have lowered the differed rent balance by more than $250 million. We expect to further reduce this differed rent balance during the second half of 2022 by another approximately $70 million.

Actively managing our theater portfolio continues at AMC as we add new high-performing locations and at a same time eliminate low performance, all with the goal of improving guest satisfaction and enhancing our profitability. During the quarter we added another 12 new theaters and we closed three. This brings the total number of locations closed since the beginning-since the pandemic began to 98, and the total new locations opened to 45 for a net reduction of 53 locations. And I can tell you that the combined 45 new locations are not only substantially outperforming the 98 closed locations, but they are also nicely exceeding our underwriting expectations.

Capex net of landlord contributions was $36 million in the quarter, and for this year separate and apart from any M&A activity, we expect net capex to be in the range of $150 million to $200 million. Finally, before handing the webcast back over to Adam, I would like to share with you just how enthusiastic and excited myself and the entire leadership team at AMC is about the groundbreaking special dividend that Adam will now talk about in more detail. Adam?

Adam Aron -- Chairman and Chief Executive Officer

Thank you, Sean. We'll open up the call to questions in just a few minutes. But before we do that, I'd like to talk about the decisive and bold action we took earlier this afternoon. After months and months of work to get to this announcement, we broke the news in the last hour, that we will be issuing a one-for-one stock dividend of a new AMC preferred equity unit to our existing common shareholders as of the dividend date of August 19 later this month.

This is a major step forward for AMC. In my view, probably the biggest favorable development for our company in all the calendar year '22, both looking back and looking ahead. Looking at the long-term future of our company, we believe this is truly great news for AMC and not such good news for those prophets of doom who may be rooting against us. Indeed, I just spoke with someone I greatly respect at The Wall Street Journal, who saw our stock dividend announcement.

He told me it was a "genius move". Somehow I don't think the journal is going to actually print that, but that is what he said. Earlier this year I said that AMC intended to take important and bold steps to strengthen our company and to address some of the grievances that many of our shareholders voiced repeatedly in social media and in other forms. I also said though, that the art form of leading the company is complex and one as much in the spotlight is AMC is knowing what to do and knowing what not to do; knowing when to do it, and knowing when not to do it.

I commented previously that in my opinion, we should patiently wait until at least the posting of AMC's second quarter 2022 financial results. I did know after all that Top Gun: Maverick and Jurassic World Dominion were coming. While we posted those results today and in our minds those results are incredibly encouraging as we show dramatically increasing attendance and increasing revenues along with positive adjusted EBITDA, so very much improved version of the same quarter last year. As I said before on this call, thank you Tom Cruise.

So as a result, AMC shareholders, I am happy to report to you that today we pounce. With the backdrop of AMCs Q2 favorable earnings in the second quarter, it is now time for us to take decisive and even valorous action, look at that work word in the dictionary, 'valorous.' Today, we announce that later this month AMC will be creating a new class of securities and will be issuing an AMC Preferred Equity Unit Stock Dividend payable only to holders of our 516,820,595 issued and outstanding company-issued common shares. This includes all of our U.S. and all of our international shareholders as well.

We will issue these new AMC preferred equity units on a one-for-one basis, investors will get one AMC preferred equity unit for each AMC common share that they own as of the record date in mid-August. Along with our common shares, which trade now and will continue to trade in the New York stock exchange under the symbol AMC. This new AMC preferred equity unit also will be a tradable security. It also will be listed on the New York Stock Exchange starting on August 22nd, 2022 under the ticker symbol APE, YF, AP, APE as in AMC, preferred P, equity, E, APE AP.

And informally, we will now refer to our two New York Stock Exchange listed securities as shares for the common stock and as APs for the AMC Preferred Equity Unit. For a variety of reasons a dividend distribution in just about any form has been a long standing request from our investor base. Today, we answered that call. So, to this issuance of 516,820,595 new APEs will essentially serve the same purpose as a much voiced request for "share count," as the new AMC Preferred Equity Unit will only go to holders of company issued and outstanding AMC common shares.

Again, today we answered the call. Because the dividend is only being distributed to our current shareholder base as of the dividend record date, there also is no dilution from this initial issuance of the APEs associated with the stock dividend, because these new APEs all go and only go to holders of company issued AMC common shares. The number of issued and outstanding AMC commercials shares will remain unchanged at 516,820,595 after the dividend is paid. But of course, each shareholder also will own one APE for every share of AMC common stock held.

So as of August 22nd, there will be another 516,820,595 APEs issued and outstanding. Think of this as being very similar to a two-for-one stock split. Except that in a stock split an investor would get two shares of new common stock for each one old common share owned. In the AMC case they announced today, however, given that this is a preferred equity stock dividend, an investor would own one share and one APE in lieu of owning just one common share.

Because this stock dividend being announced today is like a stock split, it's logical to assume that once a dividend is issued on August 22nd, the price of our common shares will fall. Vitally, however, and I cannot repeat this enough, for each owned share, investors would not own only a single share, but would own instead a share and an APE. So their economic interest in AMC, which is now just one share, would instead be the price of a share plus the price of an APE, both of which will trade on the New York Stock Exchange. And while no one's crystal ball can accurately predict stock market swings or volatility, the economic interest that our shareholders will have in both shares and APEs will be in a company that we believe to be considerably stronger than AMC is now, prior to this announcement being made this afternoon.

The issuance of APEs is made possible given the previously and repeatedly announced approval by AMC shareholders back in 2013, that the creation and issuance of AMC preferred stock could occur slowly at the AMC Entertainment board of directors' future discretion. While each APE is designed to have the same rights as a common share and can convert into a shared common stock, that conversion decision is still solely up to our shareholders. Conversion can only take place if at a future stockholder meeting the company proposes and shareholders, including APE holders vote to approve the authorization of additional common shares. That is still our shareholder's call to make down the road or not, it's up to them.

But here is probably the most important thing of all, in this announcement about the creation of APEs today. With the creation of APEs, AMC is deeply and fundamentally strengthening our company. We already have shareholder approval in hand, such that our board could decide we can issue more APEs in the future, above and beyond those going out with this initial dividend. Given the flexibility that being able to issue more APEs will give us, we believe that we would handily be able to raise money if we so choose, which immensely lessens any survival risk as we continue to work our way through this pandemic to recovery and transformation.

Rather than having to worry about survival, the flexibility accruing to us from APEs can instead let us continue our efforts to try instead for AMC to thrive and to soar. This new AMC preferred equity provides AMC with a currency that can be used in the future to further strengthen our balance sheet, including by paying down some of our debt and other liabilities. It also gives us the ability to seek additional shareholder value-enhancing and potentially transformative investment opportunities. I believe that all of this makes AMC vastly, and I mean vastly stronger.

Anything that moves AMC so far forward in single step is bad news, bad, bad, bad news for those who wish us harm. Having said all of that, there are a myriad of details and cautions related to our announcement today. So I strongly urge investors to carefully read our press releases and their SEC filings on these matters which are incorporated herein by reference. To celebrate this milestone and as a token of our appreciation, for our shareholders continued support, we also will be offering a free 'I Own APE' NFT to all existing AMC Investor Connect members and to new members joining by August 31, 2022.

Incidentally, we have some 765,000 people who have joined AMC Investor Connect in the past 13 months. Likewise, based on the popularity of the original 'I Own AMC' NFT that we issued back in January to AMC Investor Connect members, to those who are in AMC Investor Connect or to those who joined the other August 31st, 2022, they will also be entitled to receive a free updated version of that I own AMC NFT, make it a pair. When I think about this pandemic and the journey we have all been on together for the past two and a half long years, I am ever mindful of our shareholder's dedication to AMC Entertainment and if I could speak personally for a second of their trust in me as its CEO. I want everyone listening to this webcast today or on replay later, to know once again that my every decision and my every action is intended to work for the long-term benefit of all of our shareholders.

I act and think like a shareholder because I too am a shareholder and a big one at that. At the current AMC share price, I now own outright approximately $15 million of AMC stock and counting in also my previously granted but unvested shares, assuming they vest at so-called target vesting levels. I have more than a $50 million economic stake in AMC. This is pretty obvious stuff, but that is a powerful incentive for me to do what is right for all of our shareholders.

All throughout this effort I've always been candid; I've always tried to keep my word to our shareholders, always. I promised only a few months ago that we would be bold. And to that end, a few months ago I promised that at the right time we would pounce. Well, today we pounced.

John, let's move to questions, both from shareholders and from analysts.

John Merriwether -- Vice President, Investor Relations

Great. Adam, there's a question that just came in and it reads as follows. It says I saw in the press release that you said that this APE dividend will fundamentally strengthen AMC and has tremendous potential to create meaningful value for both AMC and for shareholders. Is this really as big and important as you claim it is?

Adam Aron -- Chairman and Chief Executive Officer

Thank you for the question, John. Well, I didn't put it in the press release if I wouldn't believe it. You know those -- lawyers read those press releases pretty carefully and they make sure that I want to -- I'm able to back up what I say. But I'm actually going a surprise everybody and I'm going to say on this call right now, no, it's not as big and as important as I said in the press release.

It's bigger and it's more important than I said in the press release. As I mentioned in my prepared remarks, I think this is the biggest single step forward that AMC is going to take in 2022. It essentially takes near-term survival risk off the table. You can never say never in the world, there are always uncertainties, but I believe that the flexibility that we will get from the creation of this new preferred stock will allow us to raise cash that we needed.

It will allow us to reduce our debt; it will allow us to do intriguing M&A opportunities. This is an enormous step forward for AMC. This is very good news for AMC and we all know, there are a lot of people out there in the world who are not rooting for AMC. This is not good news for them.

John Merriwether -- Vice President, Investor Relations

Thanks, Adam. And there's actually another one that just came in through via Twitter. It's probably an international shareholder saying, won't international shareholders get the chance to fully participate in this APE dividend?

Adam Aron -- Chairman and Chief Executive Officer

The answer to that question is absolute, yes. It's one of the things that we made sure would be the case. You know one of the things that has bothered me over the past year and a half is that we've gone with lots of offers to our shareholders, often through Investor Connect, but often separate and apart from Investor Connect, and often we are giving benefits at our U.S. theaters.

That's because we have one I.T. system across all of our U.S. theaters. You know we operate in a dozen countries and we have a different I.T.

system and operate in with different brand names, all across Europe and the Middle East. It makes it very difficult to make global offers because we can't necessarily program it through all these disparate information systems. In addition to that, with respect to voting rights, there's something that's quite odd to us in the United States, which is many international brokerage firms don't have the capability to facilitate shareholder voting, and so many of our international shareholders are -- they feel somewhat either disenfranchised because they are not getting the offers, you know a free popcorn, a free icy, a free cup of coffee or early advanced screenings that we've offered to our U.S. Investor Connect members or they've been deprived of their chance to vote, because they are -- not because we are depriving them, but because their brokers are.

And so we made absolutely sure that when we issue this AMC preferred equity unit, it will go into the accounts not only of our U.S. shoulders, but our Canadian shareholders, our European shareholders, and our shareholders scattered all over the world. I've received so many comments on my inbound Twitter feed from so many different countries, where we have AMC shareholders. I must say, I enjoy your devotion to our company and appreciate reading your comments to me.

So yes, this new APE, this AMC preferred equity unit will be available to our international shareholders as well.

John Merriwether -- Vice President, Investor Relations

Adam, I will just read the next question, because I think it's quite self-explanatory here. The question is, it says that now that the box office is recovering from the pandemic, how do you see the relationship between streaming, movie theaters, and home studios? How has it all changed compared to before the pandemic and where do you see things going in the future?

Adam Aron -- Chairman and Chief Executive Officer

So, this is not a new question or a new problem. This has been -- this whole issue of not streaming necessarily, but windows and Hollywood studios commitments of theatrical exhibition has been a live topic really ever since the summer of 2017 and we've been in active dialogue with studios ever since. Nothing really happened to change theatrical exclusivity. With all that discussion in 2017 and '18 and '19, nothing really happened until the pandemic showed up in 2020.

And just as theaters were closed, Hollywood did not pursue with their movies. And so studio after studio experimented with different releasing strategies of their movies that are already in the can, including some other attempts away from theatrical exhibition. Some studios released films only the streaming, some issued movies to streaming and theaters simultaneously, some issued movies to theaters, but on a much shorter basis. Well, this experimenting went on for two years, but here's what I believe that everybody learned, especially starting with Sony's Movie, Spider-Man: No Way Home which debuted in December of 2021.

If you look at what's happened over the past eight months, with the Spider-Man and Uncharted and the Batman for Warner Brothers, and then this big range of hits, one after another, after another Doctor Strange, and Top Gun: Maverick and Jurassic World Dominion and Elvis, Thor and Minions. Hollywood has realized again how much money can be made by releasing movies in theaters exclusively first. In addition to that, it's kind of well-known that the share price of some major streaming companies started to take a hit, and they start to lose subscribers, and there's a lot of speculation that while the market might be big enough to support one streamer or two streamers are maybe even three stainless, it's not going to support 10 streamers or more. And I believe that you take all this together, and Hollywood is turning away from streaming, Wall Street is turning away from streaming; Hollywood is coming back to theoretical exhibition.

We have agreements now in place with every major studio to take their movies that are released in our theaters on a theatrical basis exclusively for a sufficient period of time where we believe the studio and AMC can make money. And if that new window, which is like a month and half of exclusive theatrical access, if that's too long, we'll be willing to shorten it with studios, and if it's not long enough, we'll be beating down the doors of studio saying to lengthen it. But you take all of it together, I think this is all very good news for AMC, we have a parade of hits on our hands that either started last December or last March or last May depending on where you want to start. And remember when I said looking forward, it is going to be a pretty tough slow August, September, so don't get -- let's not get over our skies in being too optimistic about third quarter numbers.

But look at the movies are coming in the fourth quarter of 2022, it's going to be monster hit, after monster hit, after monster hit, after monster hit. And if you think the box office is big in 2022, it's going to be billions of dollars more in '23 if our current estimates are accurate. So again, we're quite bullish as we look to the future.

John Merriwether -- Vice President, Investor Relations

Thanks, Adam. Question here from a shareholder and Investor Connect member saying what are the bonuses and perks that are offered by AMC to its investors?

Adam Aron -- Chairman and Chief Executive Officer

A lot. Well, the first -- the first perk is we all just announced that -- we announced that you are all getting a stock dividend in a couple of weeks. And by the way, if I can just add to my answer about our international shareholders, you should get one too, but if you don't get one, definitely contact your broker to determine how you should get one because you are entitled to one. In addition to the new stock dividend that's coming out, we did set up the AMC Investor Connect program.

We got more than three-quarters of a million of people who have signed up and its first 13 months. That's available to U.S. and international shareholders. One of the benefits of that is free good communication from us about what's going on.

For our U.S. shareholders, look at what we've done and announced at Investor Connect. Some free offers, we have our concession stands, we've had a new sort of major movie screening every month, almost every month in advance of its public release. In the world of movies fans and bragging rights, you can see a big important movie ahead of its general release, that's good bragging rights.

We've done that month, after month, after month. Another fun one, fun one for me anyway is we've announced through Investor Connect that I as Chairman and CEO of AMC have been hosting movie screenings personally, scattered around the United States for a chance to watch a movie together with our shareholders. I've done it in seven cities, L.A., New York, Chicago, Kansas City, Dallas, Miami, and Washington DC. I'm expecting to do many more in the fourth quarter and I can announce today with some delight that sometime between September and Christmas, I expect to hold my first overseas Investor Screening, probably in London, although it's possible to go somewhere else in Europe as well.

And you know at these ones that I attend, I shake every hand in the room, I take a selfie picture with everybody who wants one. I've autographed everything from shirts to -- I've even autographed a banana for one of them. It's a great opportunity to meet our shareholders individually one-on-one. It's been seven of the happiest evenings I've had all year.

We will continue to look for more ways to reward our shareholders and especially on my plate is to figure out how to get some of these offers that we are routinely making at our U.S. theaters, available to our investors overseas as well.

John Merriwether -- Vice President, Investor Relations

Question Adam about our expansion plans. The question says will see AMC theatres in Canada for example or more expansion within Europe?

Adam Aron -- Chairman and Chief Executive Officer

Well in Europe for sure, because as you said in your comments earlier on the call, you know the last couple of years we opened 45 theaters. Most of those were in the U.S., but many of those were in Europe and we keep on signing agreements. One attractive piece of real estate to open new theaters, we just opened a theater a couple of months ago in Finland and it's already one of the most successful theaters in Finland. And that's true that we are looking for new opportunities in all the countries that we currently serve.

But for us to enter Canada or other countries in Europe where we're not now present, you pick it, the Netherlands, Poland, wherever we may not be, the best way to do it is not go into a country and open a theater and be a irrelevant player in that country. The best way to do it would be to acquire something of some size and scale. And prior to today, even though we had $1 billion of liquidity available to us at the end of this most recent second quarter, being very careful how we spend it and invest it because we wanted to make sure that our cash was always strong. With this new preferred stock currency that we now have, we can get much more aggressive on the acquisition front.

And so it's conceivable, not definite, there are no current plans, but it's conceivable that we could do some international acquisitions. This is not a new concept to AMC or to me. All during the history of AMC, AMC has grown through acquisition, three years ago -- six years ago when I joined AMC, six and a half years ago, in my first year we did three major acquisitions that took us from being the second largest movie theater chain in the U.S. to the largest movie theater chain in the U.S., the largest movie theater chain in Europe and the largest movie theater chain in the world.

Recently, just in the last year we bought about a third of the Arclight Pacific Circuit, which had not reopened after the COVID pandemic, and that's going very well so far. The Grove and The Americana theaters in L.A. for example are already two of the 13 most, highest-grossing movie theaters in the entire United States under our management. We just bought five-eighths of the Bow Tie Cinemas circuit in the Northeast and that allowed us to double our presence in the state of Connecticut, which is a major bedroom community to New York City where we have a significant market share, and already the theaters in our Bow Tie acquisition are performing about 20% better ahead of the projections we made in our modeling when we went forward with that acquisition.

So we know we're dealing with acquisitions, we are good at it. Now that we have new preferred stock currency at our disposal, we'll keep our eyes open on acquisition opportunities as well.

John Merriwether -- Vice President, Investor Relations

Adam, I have more investor questions, but why don't we take a moment to shift and see if there are any analyst questions at this point.

Adam Aron -- Chairman and Chief Executive Officer

Absolutely.

Questions & Answers:


Operator

Yes. We have a question from the line of Eric Wold with B. Riley Securities. Please go ahead.

Your line is open.

Eric Wold -- B. Riley Securities -- Analyst

Hey. Good afternoon, guys. It's Eric Wold, a couple of questions. I guess one, obviously, there has been use of this new currency to potentially accelerate the deleveraging in the company and kind of pay down some of the debt that's been taken on in recent years.

You know aside from any new actions you may have taken, major acquisitions or new entries, just the current state of the company, what do you view as the optimal leverage for a company like yours right now and giving your outlook into next year?

Adam Aron -- Chairman and Chief Executive Officer

Eric, the optimal leverage for our company is a lot less than we're currently leveraged. And, throughout the pandemic, we've taken actions to reduce debt. You may recall that in July of 2020 we did a sophisticated bond exchange, where we traded equity for debt and we wiped out, by memory I think it was $555 million of debt with a stroke of a pen, gone. Similarly, just a few weeks ago we announced that in the second quarter or July, I forget the actual date, I know announce it.

I forget the actual day we bought the debt. I think it was in the second quarter, that we bought $72.5 million worth of debt for $50 million, got a 31% discount on that debt. Now $72 million out of $5 billion; it's like a drop in the ocean, but being able to get our debt back at a 31% discount, that was certainly a good day for AMC. And just as we did a sophisticated bond exchange in the summer 2020, if we had debt holders who would like to give us our debt back at a discount in exchange for AMC stock, that is a great trade for our shareholders.

Similarly, you all have asked us on previous calls about the deferred rent obligations that we took on with landlords, theater landlords, where we owe rent from calendar year 2020 or 2021, this year, next year, year 2024, and in the future. We've already been in contact with several landlords, who said that they wouldn't mind getting paid early and they wouldn't mind getting paid early at a discount if we could swing it, but we've been very mindful of holding on to our cash load, that war chest as I described it, because we want to make sure that we were always fundamentally in a strong position with liquidity at our side. But we now have a preferred stock currency that we might be able to use to reduce some of that -- those landlord obligations, again, at a discount. How quickly we can delever Eric, I don't -- you know this is only -- we're in the first hour of having this new currency at our disposal.

So I'm not sure we can give you an exact number of how much debt we can bring down over the next three months, six months, 12 months, 24 months, 36 months. What I can tell you is that we are pretty creative advantage as a team. We've taken on a whole host of challenges since 2020 and strengthened our balance sheet, and getting a better debt-to-EBITDA leverage ratio is very much in our value. So it should happen and we'll able to report more do you as we ourselves learn more.

Eric Wold -- B. Riley Securities -- Analyst

Sounds good. Thanks, Adam, congrats.

Operator

There are no further questions on the phones.

Adam Aron -- Chairman and Chief Executive Officer

We are going to go -- sorry, operator.

Operator

There are no further questions from the analysts.

Adam Aron -- Chairman and Chief Executive Officer

Well, we are going to go back to John. Do you have any last ones from our shareholder base?

John Merriwether -- Vice President, Investor Relations

Yes, I do. Let me take a quick look here. There is a question here, I think I'll just cover three more quick questions from the shareholders. There's a question here about Highcroft and what is your timeline for the investment and are there any anticipated interactions between Highcroft and AMC?

Adam Aron -- Chairman and Chief Executive Officer

So there is a, Highcroft. I am so convinced. When the story is finally written, this is going to be a good one for AMC. I put out a kind of macho tweet a few months back that said, when the dust all settles, there will be a lot of crow eating about the Highcroft investment.

I wasn't going to be the one eating crow. I still believe that to be the case, in part because Highcroft has raised all the cash it needs to stay in business for years and years and years. Second, in terms of our interaction with Highcroft, I hear that Highcroft has picked up a very smart new member as its board of directors; that would be you, Sean, because Sean Goodman, our CFO is now a member of the Highcroft board. But third, one of these were so intriguing about Highcroft, is it operates on 71,000 acres of land in Northern Nevada that's mineral rich, and it is only explored in the 40 years it was around, 2% of its 71,000 acres.

Gold and silver doesn't just exist in a small place, it spreads and Highcroft just announced, in part because of the cash, one part. Because of the cash that we enable it to raise, Highcroft just announced that it's starting the biggest exploration program of more of its land than it has done in a decade. And while we won't know what the results of that exploration will be until they do it, you and I are hopeful that they will find a lot more mineral reserves that should be quite lucrative. As far as the timeline for the investment, we got in a great low market price.

We got an amount of warrants in the same quantity as the number of shares that we bought. So we basically double our economics without having to put up double the cash. And when we went into Highcroft, we didn't do it for a 90-day hit. If we wanted to do a 30-day or 90-day hit, we could have doubled our money in a couple of weeks.

But that's not why we entered in the Highcroft investment. We think there's a much more there ahead of it for us, and so I think our timeline with Highcroft is sort of like a private equity firm. Hold it for two to seven years and see what kind of value we can create for AMC shareholders, sometime in that time line is when I would expect. We know we got and that's when I would expect we would get out, some number of years from now.

John Merriwether -- Vice President, Investor Relations

And a question here about AMC's growth initiatives. A person says I'm particularly interested in branded merchandise, retail popcorn, credit cards, NFTs, and alternative content.

Adam Aron -- Chairman and Chief Executive Officer

You know I tried to mention it in my prepared remarks and in the interest of time, I'm just going to say quickly that we're making progress in each of these fronts. I gave some timing in my earlier comments. I think whether it's our popcorn business or our credit card business, our merchandise business, you're going to see increasing activity beginning in the second half of this year and the first half of next year on all fronts.

John Merriwether -- Vice President, Investor Relations

And the final question that I will ask this afternoon is investors are asking for an update on our green initiatives.

Adam Aron -- Chairman and Chief Executive Officer

So, you know the buzzword in the corporate world these days is ESG, and the E stands for Environment, and with good reason. Many of us are quite concerned about what's happening to the climate on this planet. Here in the Midwest in the United States, it was over 100 degrees for a lot of time over the last few weeks, that's hot, and it would move all of us to respect our planet, that we'd like our kids and our grandkids have a planet to live on. The laser projection announcement that we made is not a small announcement.

It represents putting in $0.25 billion of new projectors into our theaters, and the benefits are numerous. One of course is that for movie going, to make for a much better movie going. It increases the light levels on screen by 50% to 100%, makes the pictures brighter, sharper, clearer, crisper, movie goers got a lot it. But environmentalists would like it too because laser projectors consume far less electricity and we have thousands of them and they operate you know throughout the day 24/7, not 24/7 but seven days a week.

And they take a lot less energy and a little known factor of our current 10-year-old projection technology is that they use halogen bulbs, and halogen bulbs burn out, and they burn out often and so they need to be replaced, which happens to be expensive and laser lights don't burn out any time as quickly as halogen bulbs. But once you have a burned-out halogen bulb, guess what you do with it. You put in a landfill and I think I'm told it has a half-life of about 5 trillion years, that's not really true, but the point is not having to discard. I mean it is true that they are going to have life, but it's just not 5 trillion years.

But not having to discard halogen bulbs is very good for the plant. We consume less energy, it's an expensive step for AMC, but it's a good one environmentally and it's a good one for movie growers.

So I think, you said that was your last question and I'm going to wrap, and I'm going to wrap. To all of you listening today, thank you for your affection and your passion for AMC Entertainment. We've been listening to all the things you've been telling us for the last year and a half. We've taken a lot of actions that reflect your thinking and we took one today with the creation of APEs that will trade on the New York Stock Exchange in just a few weeks under the symbol APE.

It's an enormous positive step for AMC. We're thrilled that we're doing it. We think you should be thrilled that we're doing it. Over the long haul, we know that this company will benefit, and so this is a very good day at AMC because today we did pounce.

Thank you one and all. We're signing off.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

John Merriwether -- Vice President, Investor Relations

Adam Aron -- Chairman and Chief Executive Officer

Sean Goodman -- Executive Vice President and Chief Financial Officer

Eric Wold -- B. Riley Securities -- Analyst

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