Amc Entertainment Holdings, Inc. · NYSE:AMC
Amc Entertainment — Investor Day (April 2019)
70 slides from Amc Entertainment's investor day presentation, Apr 17, 2019
Slide 1: Investor Day
Investor Day April 17, 2019
Slide 2: Disclaimer
Disclaimer AMC’s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles ("GAAP"). Certain items contained in this presentation, including Adjusted EBITDA and Adjusted Free Cash Flows, are non-GAAP financial measures and are provided a
Slide 3: Company Representatives
Company Representatives Adam Aron Craig Ramsey Chief Executive Officer Chief Financial Officer Elizabeth Frank Stephen Colanero Mark Way Chief Content & Chief Marketing Officer President, AMC Europe Programming Officer 3
Slide 4: Agenda
Agenda 1 Executive Summary 2 Business Overview 3 Investment Highlights 4 Financial Outlook 4
Slide 5: Overarching Principles
Overarching Principles 11. Drive long-term Adjusted EBITDA and Adjusted Free Cash Flow growth • Leverage the AMC Platform to deliver the ultimate twenty-first century moviegoing experience to drive demand and spend per patron • Invest in high-impact growth and experiential initiatives to reinforce p
Slide 6: 1. Executive Summary
1. Executive Summary 6
Slide 7: World's Largest Network of Theatres & Moviegoers
World’s Largest Network of Theatres & Moviegoers World’s Largest World’s Largest Theatrical Exhibition Network Moviegoing Customer Base 1,000+ theatres and Most visitors in 2018 at 359M… (16% higher than next largest)(1) 11,000+ screens globally … Enhanced by the World’s Leading Moviegoing Loyalty P
Slide 8: The AMC Platform: Moviegoing Experience for 21st Century
The AMC Platform: Moviegoing Experience for 21st Century Personalized push notification to Stubs member on Friday to book showing Engagement with app post-show and Targeted Demand Generation Seamlessly browse & book ticket via receive data-driven recommendations mobile app under Stubs A-List Persona
Slide 9: High Impact Initiatives Drive Flywheel Effect
High Impact Initiatives Drive Flywheel Effect Transform AMC into a world class leader in customer engagement Subscription Program New Website & App Re-launch of Stubs F&B Mobile Ordering Targeted Demand Generation Deliver the best Personal Attend- in-person experience Recliner Upgrades Premium Large
Slide 10: A-List Subscription Offering Has Exceeded Expectations
A-List Subscription Offering Has Exceeded Expectations 750,000+ Members New demand generation ~$200M Annual Recurring Revenue & Subscription offering for modern era (1) ~$200M Additional Spend Expected in 2019 First mover advantage A-List Members Improves customer stickiness Normalizes box office va
Slide 11: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation AMC follows a highly disciplined approach to capital allocation with the goal of delivering the best results to our stakeholders: our investors, guests, employees, studios, and other business partners Our priorities include: 1– Invest Adjusted Free Cash Flo
Slide 12: Medium to Long-Term Financial Targets
Medium to Long-Term Financial Targets Medium to Long-Term Target Rationale 3% – 5% Outperformance driven by the AMC Platform Total Revenue Growth (2% – 3% box office growth + (e.g., Stubs, A-List, premium food & 1% – 2% industry outperformance) beverage, high ROI growth capex) 17% – 19% Adjusted EBI
Slide 13: 2. Business Overview
2. Business Overview 13
Slide 14: World's Leading Movie Exhibitor
World’s Leading Movie Exhibitor Largest movie exhibitor in the U.S., in Europe, and throughout the world 11,000+ Screens Operator in 21 of 1,000+ Theatres #1 or #2 25 largest U.S. metropolitan areas $5B+ Revenue #1 or #2 Operator in 12 of 15 countries 350M+ Attendees 14
Slide 15: Nearly a Century of Evolution and Growth
Nearly a Century of Evolution and Growth ~100 Years of History Transformation into Investing to Deliver Cultivating World- Leading Domestic the Largest Global the Best Moviegoing Class Leadership in Theatrical Exhibition Theatre Circuit Experience Globally Digital Engagement 15
Slide 16: Transformation Over the Past Decade
Transformation Over the Past Decade Total Attendance Total Revenue Total Adjusted EBITDA +73% +139% +150% 359M (2018) $5.5B (2018) $929M (2018) 208M (2008) $2.3B (2008) $372M (2008) Food & Beverage Average Ticket Price Per Patron AMC Stubs Members (1) +21% +49% >7x $9.43 (2018) $4.66 (2018) 19.0M (C
Slide 17: 3. Investment Highlights
3. Investment Highlights 17
Slide 18: AMC Investment Highlights
AMC Investment Highlights 1 AMC is the #1 theatrical exhibitor in the U.S., Europe, and the world with benefits of scale 2 Theatrical exhibition is a stable and growing industry with an attractive and enduring value proposition 3 Industry leader in experiential and business model improvements with a
Slide 19: AMC is the Largest Theatrical Exhibitor Globally
1 AMC is the Largest Theatrical Exhibitor Globally… World’s Largest Circuit Largest exhibitor in the U.S., Europe, and Screens (as of 12/31/18) 11,091 the world 9,518 – $5.5 billion of revenue – $929 million of Adjusted EBITDA 6,048 5,812 5,279 3,784 2,898 AMC’s footprint: 2,446 1,686 1,117 852
Slide 20: With Leading Positions in the U.S. and Europe
1 … With Leading Positions in the U.S. and Europe… U.S.: Large Market and Customer Experience Leader Europe: Platform for Investment and Expansion AMC Major Market AMC Location #1 or #2 ~75% of #1 or #2 Position in 21 256 Million Position 103 Million Minimal Visitors Per U.S. Market Visitors Per of
Slide 21: And Significant Benefits of Scale
1 … And Significant Benefits of Scale Key attributes include: ▪ Breadth of Reach – More than 50% of the U.S. population lives within 10 miles of an AMC theatre – #1 or #2 operator in 3 of the 5 largest economies in Europe via ODEON brand ▪ Economies of Scale – Largest global procurer of theatrical f
Slide 22: Theatrical Exhibition is a Stable & Growing Industry
2 Theatrical Exhibition is a Stable & Growing Industry… North America Box Office ($B) The Domestic Box Office Has Demonstrated a Long History of “Slow and Steady” Growth… … Even as Multiple Generations of Home Entertainment Technologies Have Launched and Matured Recession year CAGR: +2.4% $11.9 $11.
Slide 23: Theatrical Exhibition is a Stable & Growing Industry (International)
2 Theatrical Exhibition is a Stable & Growing Industry… International Box Office ($B) The International Box Office Has Grown Even Faster, and is Now Larger, Than the Domestic Box Office CAGR: +6% $29.4 $29.2 $27.3 $27.4 $26.0 $25.0 $23.9 $22.4 $21.0 $19.3 $18.1 $16.3 $16.6 $14.3 '05 '06 '07 '08 '09
Slide 24: With An Attractive and Enduring Value Proposition
2 … With An Attractive and Enduring Value Proposition While Average Ticket Prices Have Grown … Moviegoing Continues to Retain its Attractive Around the Pace of Inflation… and Counter-Cyclical Value Proposition Average Ticket Price (North America) Average Ticket Cost for a Family of Four (1) $600 CAG
Slide 25: Attendance Levels Have Stabilized
2 Attendance Levels Have Stabilized Attendance Levels Have Largely Stabilized Over the Last 8 Years, with 5 Out of Last 7 Years Above 2011 Low North America Cinema Attendance ’18 Attendance Per Higher than 2011 Screen Growth AMC 6.9% Industry 3.5% 0.2% ‘11-’18 CAGR 54% of U.S. households Netflix lau
Slide 26: Underlying Fundamentals Are Strong and Improving
2 Underlying Fundamentals Are Strong and Improving… More Teens & Tweens Watch Movies Than Any Other More Consumers Go to the Movies Today Than in 2010 Age Group, And They Watch the Most Movies Moviegoers(1) as Percent of Domestic Population(2) Annual Attendance % Moviegoers Per Capita Source: MPAA (
Slide 27: With Avid Moviegoers More Engaged in Streaming
2 … With Avid Moviegoers More Engaged in Streaming Moviegoing is positively correlated with streaming → the most avid moviegoers spend the most time streaming Time Spent Streaming Avg. Hrs Spent Streaming 7 hrs / wk 8 hrs / wk 10 hrs / wk 11 hrs / wk 15+ hrs 15% 18% 26% 31% Hours Per Week 8-14 hrs 1
Slide 28: Theatrical Platform Differentiates Content
2 Theatrical Platform Differentiates Content… Scope of Frequently (2) Distributed Content Examples Hrs. of Content Production Value Brand Value Theatrical Exhibition ~25-50 hrs High High Tentpole Films Streaming Platforms Feature Medium / Films ~100 hrs Medium High Cable Premium TV Low / ~500 hrs Me
Slide 29: And Creates Enduring Brand Value
2 … And Creates Enduring Brand Value Tentpole Films Examples Film Theme Corporate Franchise Parks Partnerships Merchandise Video Games TV Series 29
Slide 30: 2018 Set a New Industry Box Office Record
2 2018 Set a New Industry Box Office Record Record Box Office Performance in 2018 North America Box Office ($B) +7% $11.9 $11.4 $10.9 $11.1 $11.1 $10.4 2013 2014 2015 2016 2017 2018 2018 was the largest North America box office year ever at nearly $12 billion Source: MPAA 30
Slide 31: AVENGERS: ENDGAME Is New Presale Record Holder
2 AVENGERS: ENDGAME Is New Presale Record Holder… On April 2, 2019, AVENGERS: ENDGAME set a new U.S. first-day presale record, surpassing the previous record established by STAR WARS: THE FORCE AWAKENS by ~50% AMC Presale Tickets Sold On Day One AVENGERS: ENDGAME beat previous Sequel record by ~50%
Slide 32: One of Many Highly Anticipated Releases in 2019
2 … And One of Many Highly Anticipated Releases in 2019 32
Slide 33: Industry Leader in Moviegoing Experience
3 Industry Leader in Moviegoing Experience… AMC’s mission is to deliver the world’s best theatrical experience for moviegoers Investments in Experiential Infrastructure Have Produced AMC Stubs Loyalty Program Provides Attractive Rewards Best-in-Class Amenities & Facilities and Value-Added Services t
Slide 34: Industry-Leading Theatre Productivity
3 … Resulting in Industry-Leading Theatre Productivity Average Ticket Price in 2018 Average Concessions Per Patron in 2018 Total Revenue Per Screen in 2018 ($M)(1) Domestic Attendance Per Screen Growth (2018 YoY) Excl. Carmike acquisition Source: Public filings Note: Cineworld reflects pro-forma res
Slide 35: Previous Era's Moviegoing Experience
4 Previous Era’s Moviegoing Experience Coincidentally see … Stand in line at … Order popcorn … Arrive at theatre … View movie billboard or print movie theatre box and soda at 30+ minutes early or running on 35 mm advertising for new office to purchase concession stand … scramble to find film project
Slide 36: AMC Platform: Moviegoing Experience for 21st Century
4 AMC Platform: Moviegoing Experience for 21st Century Personalized push notification to Stubs member on Friday to book showing Engagement with app post-show and Targeted Demand Generation Seamlessly browse & book ticket via receive data-driven recommendations mobile app under Stubs A-List Personali
Slide 37: Redesigned Website & App Drive Engagement
4 Redesigned Website & App Drive Engagement Re-launch of AMC Website and Mobile App Initiative Details & Results BEFORE ✓ New website and mobile app launched at end of 2016 ✓ More graphically rich, user-friendly interface and more robust content – Ability to browse movies, buy tickets, select seats
Slide 38: Stubs Now Yields Unique Insights into Guests
4 Stubs Now Yields Unique Insights into Guests Relaunch of AMC Stubs Initiative Details & Results ✓ Re-launched improved AMC Stubs loyalty program in 2016 ✓ >7x members since re-launch in 2016 ✓ Implies nearly 50 million Americans(1) are enjoying the AMC experience through AMC Stubs ✓ Nearly 50% of
Slide 39: New Tech Initiatives
4 New Tech Initiatives Reserved Seating Food & Beverage Mobile Ordering ✓ Reserved seating in all AMC and AMC Dine-In ✓ Moviegoers can order their snacks ahead of branded theatres by Memorial Day of this year their arrival and skip the line ✓ Advances mobile ordering initiative and drives ✓ Recent r
Slide 40: AMC's Subscription Offering: A-List
4 AMC’s Subscription Offering: A-List 750,000+ Members • AMC Stubs A-List is a subscription offering focused on increasing consumer attendance, spend, and loyalty ~$200M Annual Recurring Revenue & ~$200M Additional Spend Expected in 2019 (1) – Up to 3 movies per week (1) A-List Members – ~$20-24 / m
Slide 41: A-List Average Frequency: 2.6x Per Month in Q1'19
4 A-List Average Frequency: 2.6x Per Month in Q1’19 Average visits per month under A-List continue to outperform status quo ante Average Frequency of Entire A-List Membership Base Visits Per Month A-List Prior to A-List Target (1) 6.0x By 4.7x Q3’18: 3.8x Q4’18: 3.2x Q1’19: 2.6x Quarter 4.5x 4.0x 3.
Slide 42: A-List Unit Economics Expected To Be Accretive
4 A-List Unit Economics Expected To Be Accretive AMC Stubs A-List also offers meaningful strategic value beyond expected dollar accretion in 2019 Incremental A-List Unit Economics (Avg. Subscriber Per Month) Highlights & Benefits Post- A-List vs. Pre- A-List (as of Q4 2018) New demand generation Bri
Slide 43: A-List Drives Profitability
4 A-List Drives Profitability Member Admissions Revenue Food and Beverage Bring Along Attendance OR Frequency of Visits Profitability Goal is to drive profitability, not to reduce frequency 43
Slide 44: Significant High ROI Investment Opportunities
5 Significant High ROI Investment Opportunities Attendance Avg. Spend Growth Improvement(1) 1) Recliner seating renovations ✓ ✓ 2) Premium large format screens ✓ ✓ Experiential Enhancements 3) Premium food & beverage ✓ 4) Optimized pricing ✓ ✓ 5) Social & community initiatives ✓ ✓ Footprint Expansio
Slide 45: Continued Recliner Reseat Enhancements
5 Continued Recliner Reseat Enhancements Experiential Enhancements Recliners drive traffic & premium pricing, with an average ROI of >25% in U.S. and >50% internationally U.S. recliner upgrades are nearing saturation; however, long runway remains in Europe Global Renovation ROI Statistics(1) Worldwi
Slide 46: Premium Large Format Screens
5 Premium Large Format Screens Experiential Enhancements Premium Large Format (PLF) screens enhance the movie viewing experience, driving attendance, higher average ticket price, and greater willingness to spend on food & beverage ✓ Immersive large-format theatrical experience with cutting-edge reso
Slide 47: Premium Food & Beverage
5 Premium Food & Beverage Experiential Enhancements AMC’s premium F&B offerings range from premium concessions to true “dine-in” services and bars Premium F&B investment has driven higher take rates and diversified AMC’s business mix ✓ Gourmet F&B options expand Growing F&B Take Rates… selection far
Slide 48: Optimized Pricing
5 Optimized Pricing Experiential Enhancements Optimized pricing drives demand during off-peak periods and enhances monetization in peak situations Discount Tuesdays Weekend Surcharge Existing Optimize Pricing Drive Traffic on for Popular Initiatives Low Utilization Weekend Days Via Price Screenings
Slide 49: Social & Community Initiatives
5 Social & Community Initiatives Experiential Enhancements AMC is committed to promoting the cultural aspect of moviegoing and fostering sustainability across the org. Free Screenings of KING: A FILMED Piloting Green Initiatives in Europe RECORD…MONTGOMERY TO MEMPHIS • UK & Ireland: Replaced plastic
Slide 50: Selectively Expand Footprint
5 Selectively Expand Footprint Footprint Expansion Opportunity exists to selectively add theatres in underserved / high density locations ✓ New Builds: New theatre construction, generally in high traffic location with high expected ROI opportunity 2-4 Theatres Domestic ✓ Spot Acquisitions: Opportuni
Slide 51: Selectively Expand Footprint: Case Study
5 Selectively Expand Footprint: Case Study Footprint Expansion Strategic new builds, such as ODEON Oslo, satisfy latent demand and deliver strong ROI New luxury theatre in Oslo, Norway opened in 2018 and is already the highest grossing theatre in Norway This, combined with the opening of ODEON Alesu
Slide 52: ODEON Oslo: A Quick Tour
5 ODEON Oslo: A Quick Tour Footprint Expansion 52
Slide 53: Case Study: ODEON Luxe Lee Valley
5 Case Study: ODEON Luxe Lee Valley Located in London, ODEON Lee Valley re-launched as a fully-reclining ODEON Luxe cinema in July 2018 and has posted impressive results post-renovation Post-Renovation Uplift Attendance: +87% Average Ticket Price: +2% Food & Beverage Per Patron: +24% Annualized ROI:
Slide 54: Case Study: ODEON Luxe Lee Valley (Cont'd)
5 Case Study: ODEON Luxe Lee Valley (Cont’d) Renovations include 970 luxury, handmade recliner seats across 12 upgraded screens BEFORE AFTER 54
Slide 55: Case Study: ODEON Luxe Lee Valley (Cont'd)
5 Case Study: ODEON Luxe Lee Valley (Cont’d) Full interior overhaul, with the foyer and retail area undergoing a complete refurbishment All-new Oscar’s Bar serving a range of alcoholic and non- alcoholic beverages 55
Slide 56: Demonstrated History of Revenue & Adj. EBITDA Growth
6 Demonstrated History of Revenue & Adj. EBITDA Growth… Revenue Adjusted EBITDA (1) $5.5B $929M $5.1B $823M $602M $3.2B $536M $2.9B $464M $2.7B 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 (1) See Appendix for reconciliation 56
Slide 57: And Significant Adjusted Free Cash Flow Generation
6 … And Significant Adjusted Free Cash Flow Generation Adjusted Free Cash Flow (1) (1) See Appendix for reconciliation 57
Slide 58: Flexible and Attractive Capital Structure
7 Flexible and Attractive Capital Structure AMC’s capital structure is free of significant debt maturities until 2024 Debt Maturity Profile Weighted Average Duration of ~6.8 years Covenant-Lite Capital Structure No material maturities for 5+ years $2,000M $634M (1) $600M $600M $595M $475M 2019 2020
Slide 59: Disciplined Approach to Capital Allocation (Reprise)
7 Disciplined Approach to Capital Allocation (Reprise) AMC follows a highly disciplined approach to capital allocation with the goal of delivering the best results to our stakeholders: our investors, guests, employees, studios, and other business partners Our priorities include: 1– Invest Adjusted F
Slide 60: Capex Expected to Fall to Normalized State Over Time
7 Capex Expected to Fall to Normalized State Over Time AMC is currently in an elevated capital deployment state as company invests against high ROI opportunities; capex expected to fall to normalized level as highest ROI projects are executed Gross Capex By Maintenance vs. Growth (1) Historical Gros
Slide 61: 4. Financial Outlook
4. Financial Outlook 61
Slide 62: 2018 Financial Performance
2018 Financial Performance AMC delivered record-setting financial results in 2018, the best-ever in its 98-year history Total Attendance Total Revenue Total Adjusted EBITDA $929M +13.0% $5,461M +7.5% +3.5% 359M $823M 347M $5,079M 2017A 2018A 2017A 2018A 2017A 2018A Pro-forma Growth: 2.0% Pro-forma G
Slide 63: Medium to Long-Term Financial Targets (Reprise)
Medium to Long-Term Financial Targets (Reprise) Medium to Long-Term Target Rationale 3% – 5% Outperformance driven by the AMC Platform Total Revenue Growth (2% – 3% box office growth + (e.g., Stubs, A-List, premium food & 1% – 2% industry outperformance) beverage, high ROI growth capex) 17% – 19% Ad
Slide 64: AMC Investment Highlights
AMC Investment Highlights 1 AMC is the #1 theatrical exhibitor in the U.S., Europe, and the world with benefits of scale 2 Theatrical exhibition is a stable and growing industry with an attractive and enduring value proposition 3 Industry leader in experiential and business model improvements with a
Slide 65: 5. Appendix
5. Appendix 65
Slide 66: Additional Value in Minority Investments & NOLs
Additional Value in Minority Investments & NOLs Minority Investments Facilitated the deployment of digital cinema Curates storytelling for brands, exhibitors and infrastructure to domestic theatres. Since this audiences at US movie theatres. joint venture has achieved its objective, it is Digital Ci
Slide 67: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (in millions) Predecessor Successor 53 Weeks Ended Year Ended April 3, 2008 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 Net earnings (loss) $41.6 $63.8 $103.9 $111.7 ($487.2) $110.1 Plus: Income tax provision (benefit) $12.
Slide 68: Accompanying Notes
Accompanying Notes 1) We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certa
Slide 69: Adjusted Free Cash Flow Reconciliation
Adjusted Free Cash Flow Reconciliation 2014 2015 2016 2017 2018 Net cash provided by operating activities $297.3 $467.6 $431.7 $537.4 $523.1 (+) Merger, acquisition & transaction costs (2) 1.2 3.4 47.9 63.0 31.3 (–) Loss on NCM recorded in merger, – – – (22.6) – acquisition and transaction costs (2)
Slide 70: Accompanying Notes
Accompanying Notes Starting in the fourth quarter of 2018, AMC disclosed a new “Adjusted Free Cash Flow” metric as a measure of our liquidity. We believe this measure is indicative of our ability to generate cash in excess of maintenance capital expenditures and certain other non-operating costs and
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