00:00 Speaker A

So we want to get an analyst take on the stock from the lone AMC bull actually on Wall Street. Alicia Reese is joining us, Wedbush Securities Vice President of equity research. Alicia, thanks for being here. So, as we look at these AMC numbers, which look impressive, as I mentioned, part of what drove them were just movies that people wanted to see in the theaters. So, I’m curious in terms of what AMC There’s obviously a lot AMC can’t control. They don’t make the movies.

00:34 Alicia Reese

Sure.

00:35 Speaker A

But in terms of what they can control, what did they do well? How did they execute well this quarter?

00:43 Alicia Reese

So the reason for our recent upgrade has largely to do with our um bullish view on IMAX. AMC has the largest IMAX footprint in North America and they’re leaning in. Um they’re doubling down um on not just IMAX, but there are other large screens as well, and people are going to those large screens. And I think the content that we have in 2025, especially in Q4, and then throughout 2026 positions AMC to gain more market share and to print some really fundamentally positive numbers, particularly all of their per caps. So as the people who tend to go to those large screen, premium IMAX um viewings, also spend a little bit more on concessions. And AMC is also doing really well with their loyalty programs. And so again, more per caps, um higher revenue per attendee and they’re doing really well with that. And so that there’s some really nice leverage on that, and they can get back to historic ebitda levels and ebitda margins without getting that same level of attendance that we saw pre-pandemic, which was really peak for the movie industry.

02:25 Speaker A

Interesting. So, in other words, if I’m going to get off my couch, go see a movie, I have to want to go see the movie, but B, it has to be more of that bigger experience, right? The screen is big. I’m buying some stuff to eat while I’m there. It’s, you know, it’s more of a day or a night out, I assume, and, you know, how much more does AMC have room to lean into that kind of experience, you know, in terms of the percentage of its theaters who offer that kind of bigness of the night out?

03:30 Alicia Reese

Yeah, well, so they have quite a few already and they can lean in and add more IMAX screens which they plan to do, but a lot of them are upgrades of um screens that they already have. And it’s interesting because what you think is that AMC is really raising price and that they’re trying to, you know, raise price on concessions and that’s not really what they’re doing. They’re offering um higher priced options for people to opt for and people are opting for those. They’re offering more merchandise like the popcorn buckets and other things, other items and people are opting for those. Um and people are opting for those larger um screen tickets. So they don’t necessarily have to raise price. They’re also offering cheaper ticket days, like the discount Wednesdays and Tuesdays, and allowing people who are more price sensitive to still go to the movies and that should draw more attendance and more concessions purchases, which we all know are significantly higher margin, and that all leads to ebitda expansion ultimately for AMC.

05:21 Speaker A

You mentioned a moment ago that um movie attendance was peak pre-pandemic. Will we ever get back to those kinds of numbers?

05:31 Alicia Reese

Yeah.

05:32 Speaker A

I don’t think we’ll get back to those attendance levels necessarily. We could. Um it’s certainly possible, but that was like peak Marvel, um, you know, Infinity War and Endgame and so much volume of content. Now the studios were very, you know, relatively healthy back then and there’s a lot of competition right now, and a lot of the the theaters are putting more and more to their streaming services. What they’ve realized since then though is that that can all coexist. So there’s not so much, you know, drama anymore about what they put on their streaming services because by and large, if they put it on the screen, uh it shows really well on their streaming services as well. There’s a real good, you know, coexistence there and good marketing as a marketing tool if nothing else. Um so, you know, I do think there is, you know, a significant case for attendance rising to a normalized level close to that, but the ebitda um should surpass that because you get just get better leverage on it and you get better per caps.

07:06 Speaker A

And Alicia, finally, I got to ask you, we’ve gone through this whole interview talking about the fundamentals of this company. We haven’t talked about the sort of meme-ness that the stock has historically had. Has it moved past that? Is it less relevant now? How do you think about that?

07:34 Alicia Reese

Yeah, so yeah, it certainly was tough to invest as an institutional investor, um as a retail investor. It was um surely a fun ride. Um the share issuances and dilution, you know, over time have chased away a lot of retail investors. There’s still many in the stock. Um I’d say right now it’s finally fundamentally sound. Um the the share price which it’s trading um is reasonable for institutional investors to get back in. The concern is are they going to issue more shares? And there is, you know, more share issuance already planned around the December shareholder meeting. It’s an exchange for some debt, and AMC still has significant debt that it needs to work through. It already worked through all of the debt that it had to repay through 2026, so there’s nothing imminent, but, you know, if the box office goes through any sort of slump, they may have to resort to that. So that’s really the question here. We need to work through that. I think they have a lot less to do now in terms of dilution. They could do it with um just money they earn from their theaters. And so that really took away a lot of the the overhang for us.

09:08 Speaker A

Got you.