AMC Q1 2021 Conference Call Q&A

KEY TAKEAWAYS:

1. Executives thought that the recovery was at hand. Compared with the level before the pandemic, AMC is still the industry leader that the US market share has soared by about 25%.

2. Although profitability is not good, AMC's liabilities are being greatly reduced, and the overall development is moving in a good direction.

3. The cash flow situation in the second half of the year will be better than that in the first half.

4. In summer, AMC will recruit 5,000-10,000 more employees.

Come and see what happened in $AMC Entertainment(AMC.US)$'s Q1 2021 earnings call!

This article is a script from the Q&A session of AMC's earnings call on May 7. To facilitate reading, we have made appropriate cuts. If you want to know more details, you can click here to re-watch the earnings call.

Adam Aron, CEO of AMC: Almost all of our U.S. theaters are now open and ever so important, our theaters in New York and Los Angeles are open, wherein both markets AMC is the number one player and which together represent about a third of our total U.S. business activity. And our market share in the United States has soared increasing by about 25% compared to pre-pandemic levels.
As of March 31st, we had $813 million of cash, $29 million of restricted cash, and approximately $212 million available under our revolving credit facility, given that we paid down our revolver balance during the first quarter.
This gives us total liquidity on March 31st, 2021 of $1.025 billion. This is the highest amount of quarter and liquidity that AMC has ever had in our 101-year history. The monthly cash burn in Q1 came out at approximately $120 million per month.
Now that this is after normalizing for the impact of capital in the quarter. Of course, it goes without saying that with all the debt and equity capital that we raised during the quarter, our cash position greatly increased during the quarter, not decreased.
At the end of the first quarter, we had deferred rent obligations of approximately $470 million. This is up from $450 million at the end of Q4, 2020.

Q1: Are you still expecting to crossover and turn cash flow positive in Q4 2021? 
A2: On the cash flow forecast for 2021, firstly that our overall forecast for 2021 remains the same as it was when we last spoke on the previous earnings call. There's an assumption behind that. The assumption is that the domestic box-office is around $5 billion level and international is somewhere -- some of that. The timing of the cash flow is going to be very dependent on the timing of specific leases.
What we see from the timing on the predictions for the remainder of this year is that our Q2 cash flow will be pretty similar to Q1. The second half of the year overall will be significantly better than the first half of the year, but you're going to see Q3 is going to be better than Q2, quite a lot better than Q2 and Q4 is going to be better than Q3, but exactly whether or not we will be breaking Q4 does depend on how the final film slate ends up at the end of the day here.

Q2: What you're seeing in the current labor market and hiring hourly employees to come back to the theater? Are you needing to push up wage rates with all due track workers? Eventually, will you have the same number of hourly workers on hand, kind of when things ramp back up as you did 19, or will the number be lower?
A2: Let's talk about how difficult it is or is not to hire. In the next several weeks, we're going to be hiring between 5,000 and 10,000 people to beef up our staffing levels, as we approach the summer season, when we see a lot of new movies being released and a lot more people coming to our theaters. Fortunately for us, AMC has always been a very happy place to work. Morale with our theaters has always been high.