AMC 電影院 (AMC) 2020 Q3 法說會逐字稿

Greetings, and welcome to the AMC Entertainment Third Quarter 2020 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, John Merriwether, Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Victor, and good afternoon. I'd like to welcome everyone to AMC's Third Quarter 2020 Earnings Conference Call. With me this afternoon is Adam Aron, our President and Chief Executive Officer; and Sean Goodman, our Chief Financial Officer.

Before I turn the call over to Adam, let me remind everyone that some of the comments made by management during this conference call 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 public filings, including our most recently filed 10-K and 10-Q. Several other factors that will determine the company's future results are beyond the ability of the company to control or predict. 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 call, we may reference measures such as adjusted EBITDA, free cash flow, adjusted free cash flow and 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 question-and-answer session. This afternoon's call is being recorded, and a webcast replay will be available in the Investor Relations section of our website at amctheatres.com later today.

With that, I'll turn the call over to Adam.

Thank you, John. Good afternoon, everyone, and thank you for joining us today. Let me begin today the same way I began our Q1 and Q2 earnings calls by expressing my wishes that you and your families are all in good health in these difficult times. In starting today's call, may I also note the death of the legendary Oscar-winning actor, Sean Connery, this past weekend at the wonderful age of 90. In his honor, we will be showing Goldfinger and The Hunt for Red October at AMC theaters all across the country this coming weekend. Come join us and see for yourself how spotlessly clean our theaters are all across the nation.

Similar to the second quarter, COVID-19 continues to significantly impact the financial performance of companies across multiple sectors with the movie theater industry being among the very hardest hit, AMC certainly included. Thanks to our efforts in partnership with Clorox and in consultation with current and former Faculty of Harvard University's prestigious School of Public Health, we have made great strides at AMC to safely open our theaters where permitted by governments to do so. Attendance has been minimal though, of course stemming from virus concerns but perhaps more importantly due to the fact that only 2 major new films have been released theatrically since mid-March. But even so as we sit here today, since our theaters have reopened after the March closures, people have attended movies at AMC's U.S. and international theaters almost 10 million times, and we have not heard of even one instance where the coronavirus was spread in our cinemas.

As of September 30, quarter end, we had approximately 78% of our domestic theaters and approximately 90% of our international theaters open. At the end of September, our domestic theaters were open for business in 39 of the 45 states in which we operate, and our international theaters were open in every 1 of the 14 countries that we serve outside the United States. As of today, approximately 90% of our U.S. theaters are now open in 44 of the 45 U.S. states that AMC serves. However, the critical movie-leading markets of Los Angeles and New York City remain closed, awaiting governmental permission to serve moviegoers. Internationally, the numbers of opened theaters is going the other way. In the past few weeks and especially just in the last few days, we have been ordered to close our theaters for most of the month of November in the United Kingdom, Ireland, Germany, Italy and in a small portion of Spain, namely Catalonia where we have 10 theaters.

This afternoon, not unlike on our Q1 and Q2 2020 earnings calls, we're not going to spend much time on the actual third quarter financial results, but instead, we'll focus our comments and take your questions on what we believe is a primary interest to most of you, and that is to update you on the most recent actions we've taken to manage through this crisis and our general thoughts about the prognosis for our company looking forward.

In our industry, the gravity of our situation puts us all in almost a war-like position of resolve and determination. With that as context, I often find myself thinking of the extraordinary famous and defining speech that then British Prime Minister Winston Churchill delivered in the House of Commons on June 8, 1940 (sic) [June 4, 1940] when he laid out the challenge facing Britain early during the Second World War. He said in part, "We shall not flag or fail, we shall fight on the seas and oceans, we shall fight in the air, we shall defend our island, we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills." That is exactly where we are now at AMC. We are fighting this virus with all of our smarts and all of our might. We are a resilient, resourceful and creative bunch at AMC, and all of that energy is being deployed to fight the good fight.

To that end, the 4 priorities outlined during our previous earnings calls remain precisely our primary focus at AMC today: one, continue to take actions to bolster our liquidity and to deleverage our balance sheet; two, reducing our cost structure and spending posture, realizing that revenues will take quite some time to ramp up; three, reopening and subsequently operating our theaters as professionally as we can to ensure that we offer a safe and clean theatrical environment for our guests and associates, leveraging our energy-leading guest engagement platform and implementing a wide variety of strategies to optimize theater profitability and minimize their losses; and four, managing our business through whatever structural changes, world events or industry dynamics that are thrown in our direction.

We have made significant progress in each of these focus areas during the year so far and especially during the third quarter, including: first, the safe reopening of our theaters in the United States and around the world. Indeed, we are seeing guest feedback ratings on our theater cleanliness that are demonstrably higher than anything we have ever seen in the decades and decades that we have been keeping such records. Thank you, Clorox. Thank you, Harvard School of Public Health.

Second, the successful $2.6 billion debt restructuring in July that we discussed on our last call, which included bringing in $300 million of fresh debt capital now on top of the $500 million we raised back in April, deferring cash interest to the tune of at least $120 million over the coming year and eliminating some $555 million of debt.

Third, the signing of a definitive agreement to sell 9 theater locations in Latvia, Lithuania and Estonia for approximately $77 million, representing a 9.3 multiple of budgeted 2020 EBITDA, a budget I might add that was set before the onset of the COVID-19 virus. So in looking to current actual EBITDA, the sale multiple price is actually infinite.

And fourth, the successful launch and completion of our at-the-market, or ATM, equity offering, which has raised approximately $98 million on the issuance of 30 million shares in a little more than 1 month. Having exhausted that offering and given its success, we are currently seeking again to raise additional equity capital.

And fifth, reaching a groundbreaking agreement this summer with Universal relating to participating in a new PVOD window. Specifically because of that agreement, Universal currently intends to release 6 movies theatrically in the fourth quarter, something that no other studio that does not yet have a PVOD window established has been willing to try. Incidentally, on the only one of those PVOD movies that has been released as of yet, our analysis is that AMC came out ahead financially, as we had modeled but much better than some of you had postulated or feared.

If you look at all of the actions that AMC has taken since March, it's almost breathtaking. In addition to all the work in first closing and then reopening our theaters, AMC has raised just under $1 billion of cash and gross proceeds from the issuance of new debt and equity along with including the Baltics theater sale. We have also secured over $1 billion in additional financial concessions that we have negotiated individually with theater landlords and with our lenders.

As I said before, at AMC, we're resilient and resourceful and we are certainly braced with determination and resolve. These significant accomplishments are why we are still here today. But to make it through this coronavirus-impacted winter, we will still need to secure additional liquidity. Our disclosures in this regard have been thorough and fully transparent.

There is more to discuss, but before we do, I'll now turn the call over to Sean Goodman, our CFO, to update you on the third quarter on some of the more recent actions taken by AMC. Sean?

Thank you, Adam, and thank you, everyone, for joining us this afternoon. I do hope that you and your families have been safe and well during these continued difficult and unprecedented times.

As Adam mentioned, our results for the quarter were once again severely impacted by the COVID-19 crisis, which necessitated the suspension of all theater operations in the U.S. for nearly 2/3 of the third quarter and significantly impacted our operations in international markets. This quarter was characterized by a dearth of new form content at historically low attendance levels across all markets. Overall, our domestic attendance was 97% below the prior year's third quarter, and our international attendance was 82% below the prior year's third quarter. Of course, this includes time periods when our theaters were closed. But even as theaters reopened, with the scarcity of big new titles, attendance levels in the U.S. hovered between 10% and 20% of last year's levels while attendance numbers in Europe were only somewhat better. A bright spot for us, so far in 2020, we have tripled our theater count in the Middle East and we expect to at least double that again in the coming half year.

Similar to our second quarter results, international average ticket price and food and beverage spend per person were again encouraging, holding up nicely with an average ticket price up more than 16% or 10% in constant currency; and food and beverage revenue per patron increasing by more than 15% or 9% in constant currency compared to last year. U.S. ticket prices in food and beverage results in the third quarter showed similarly encouraging trends with both food and beverage revenue per patron and average ticket price broadly in line with last year. These statistics are impressive when you consider the discounted pricing on library content and food and beverage promotions offered during the quarter. It's very clear based on our operating metrics, including customer satisfaction scores, that guests returning to the movies are extremely confident in our AMC Safe & Clean protocols and are comfortable with their theater experience and are enjoying our food and beverage offerings. However, with such extremely low overall attendance levels, our bottom line financial performance for the third quarter is once again almost irrelevant. More importantly is how we performed against our priorities and what we are doing to successfully navigate through these troubled times.

From a liquidity point of view, as of September 30, 2020, we had $418 million of cash plus $11 million of restricted cash. Our total cash burn for the third quarter was $324 million. This number normalizes for the debt exchange and capital raising in July. It also normalizes for the $37.5 million of partial proceeds received from the sale of our Baltics theaters and $2.8 million of net cash raised from our ATM program during the second quarter. The average monthly cash burn in Q3 was $108 million. This is slightly above the approximately $100 million monthly cash burn during the second quarter. This increased cash burn is due to costs associated with theater reopenings, including our AMC Safe & Clean protocols, and increased rent payments as theaters began to reopen for business.

Many have questioned whether it is financially wise to keep theaters open with such very low attendance levels that we are currently experiencing. So this is something that we, of course, analyze very carefully, and I can tell you that we have very sophisticated operational initiatives in place to align theater opening hours to attendance levels. For example, about half of our U.S. theaters are open for weekend showtimes only. And all of our theaters, when they are open, are averaging between 1 and 2 showtimes daily instead of the normal 4. This saves a tremendous amount of operating costs while still giving guests a sense that we are open and preventing the stress on our buildings that stems from prolonged periods of closure. Accordingly, we are confident that with our flexible operating model, it is economically sensible for our theaters to remain open even in the current low-attendance environment.

The obvious next question is how long our liquidity runway will be in the current distressed environment. When we last spoke, I shared with you that we believed that we had sufficient cash to last through to the beginning of 2021. Despite the number of movie titles subsequently shifting out of 2020 and continued low attendance levels associated with an absence of new titles, we continue to have sufficient liquidity to last through to the beginning of 2021, even in a worst-case scenario where the current low attendance situation continues. Of course, if the current form slate holds, including movies scheduled for the Christmas holidays, and our current attendance levels increase accordingly, our liquidity runway could be meaningfully extended. It is worth noting that given the low attendance levels, our current cash burn is not significantly impacted by the recently announced theater closures in Europe.

Now while our liquidity runway in the worst-case scenario is limited, this is only if we are not able to raise additional capital. And our goal is to raise additional capital. Throughout the coronavirus crisis, we have taken deliberate and decisive actions to navigate through the storm. In a period of only 7 months, we have raised approximately $900 million of gross proceeds from new debt and equity, we've raised more than $80 million from asset sales, and we've negotiated more than $1 billion of concessions from creditors and landlords. And we are not finished. Our ATM equity process, which was launched at the end of September, has already raised $98 million. And we are continuing to seek opportunities to generate additional liquidity and reduce our leverage.

One of our most significant expense categories is rent. Our long-term relationships with landlords have enabled us to successfully negotiate meaningful concessions during this COVID crisis. By the end of the third quarter, we had deferred rent of approximately $325 million. Repayment terms are on average 24 months, although a number of agreements have repayment periods that extend through the remaining lease term, which, in some cases, is well in excess of 10 years. It's worth a reminder that the rent expense shown on the face of the income statement represents our rent obligation for the quarter. For the third quarter, actual rent payments were approximately $120 million less than what is shown on the face of the income statement. While future cash rent payments will depend on our reopening schedule and level of attendance, based on our current agreements, we anticipate that cash rent paid in Q4 2020 will be meaningfully higher than in Q3 while still being well below the income statement rent liability. We continue to have constructive discussions with our landlords as we work together to effectively manage through this crisis. And as always, as we've said before, the terms that we have agreed with our landlords are confidential and specific to particular facts and circumstances for each landlord and each theater.

Shifting to capital expenditures. We have continued to reduce capital expenditures to minimum maintenance levels, eliminating all but essential CapEx and previously committed growth CapEx. During the third quarter, our CapEx spend was approximately $22 million net of landlord contributions. Most of this was committed to prior to the outbreak of the pandemic. This is approximately $72 million lower than the same quarter a year ago. And we now expect 2020 net CapEx to be between $130 million and $150 million.

And finally, before handing the call back over to Adam, it's worth noting that we are using these unprecedented times as an opportunity to intensely examine every single category of our spending and all plausible opportunities to enhance our efficiency and improve our profitability for the long term. While the closure of our theaters is temporary, the learnings and the actions that we are taking will have an enduring long-term benefit for AMC. Adam?

Thank you, Sean. So everybody, it all really comes down to one thing. We believe that we will need to raise more capital to assure ourselves that we can lengthen our financial runway at least in the next summer. The simple question becomes will we raise that needed capital or not. We've had considerable success in creatively raising money so far this year, and our shoulders are at the grindstone yet again. Medical experts are telling us that in the Western world, our populations will be well vaccinated before next summer. Studios are telling us that they have boatloads of blockbuster titles for us before next summer as well. By our count, while some movies have been shifted or sold off to streamers, some 44 major film titles have been deferred from 2020 and will be rescheduled to play theatrically in 2021 instead.

In the words to me privately from one major studio CEO, he said, "You're LaGuardia Airport, Adam, in a big thunderstorm. And there are zillions of planes in the air circling, and they all have to land. We've got to get the movies that we've already made and which already are in the can out into the market for moviegoers to buy tickets and go see" -- he paused for effect and then said, "in your theaters. When I relayed his comment to another major studio CEO this very weekend, he said and I quote, "Wait a second. He stole my line. I've been saying for months now that you're an airport in a storm and there's tons of planes circling overhead." So at AMC, it is our considered opinion that there is good news down the road. Once the movies start flowing next year, there will be a new big title almost every single week.

To that end, AMC's capital raising efforts and cash conservation efforts -- because every dollar we save is -- offsets $1 that we would not need to raise. Those capital raising efforts and those cash conservation efforts are in full swing. We are currently seeking to raise additional equity capital right now. We have commenced discussions -- we've counted them, more than a dozen strategic investors about their taking an equity interest in AMC. We are also talking with our existing lenders to gauge their interest in further bolstering our liquidity as they did this past summer. And we've started dialogue with many of our landlords again about helping us abate or defer rent as they also did in the spring when movie titles are still few in number and when theater traffic is light. It is too early to know whether these efforts will bear fruit and if so -- or should I say and when so, by how much. But our days and nights are busy ones at AMC. And we absolutely are not sitting on our hands bemoaning the lousy handed cards that the coronavirus has dealt us. Instead, we are out trying to raise money, something at which we're quite skilled, as we have demonstrated on multiple occasions so far this year.

On to a completely separate subject. Lest you think we're distractive -- distracted from innovating in how we market the consumers, we know that some portion of the populace is concerned about sitting intermixed with strangers. So a few weeks back, we soft-launched a private theater rental program where consumers can book an auditorium all to themselves and use up to 20 tickets in that auditorium for a fixed price of between $99 and $349 plus tax, depending upon the movie, the format and the market. We've already had more than 80,000 inquiries from potential guests about private theater rentals, and that number will grow markedly once we formally announce the program with a press release and marketing support, which should launch later this month.

Before we open the call for your questions, I'd like to take a moment to recognize the truly exceptional achievements of the AMC management team. Just 7 months ago, many were predicting that AMC would not survive past spring. They underestimated the sheer will of our management to power through this crisis if that is at all humanly possible. And even I am incredibly impressed by the skill of our theater teams who have first shut and then reopened the world's largest collection of movie theaters with extraordinarily -- with extraordinary professionalism and commitment. To ensure that this leadership team continues to have incentives that are meaningful and which completely align the interests of all our senior officers and junior officers with those of our shareholders, we have detailed in the 10-Q about to be filed that our Board has decided to use its discretion to vest in this current fourth quarter some previously granted AMC equity. However, that new vesting includes a 1-year lockup that prevents the sale of such equity until a full year from now. Our entire officer corps has substantial incentives, therefore, to keep and to increase the equity value inherent in AMC's shares.

In addition, our Board also wanted to recognize and reward some 2,000 AMC managers across our system in the U.S. and abroad. Almost all of them took between 20% and 100% salary reductions for almost half a year and who all are leading our theaters and our company in a time of considerable duress. They're also doing more with much less in the way of resources to get leaner. Almost incredibly, we have reduced by about 1/3 the number of management staff on our payroll both in our headquarters operations and at our theaters than we had at the beginning of last year. With the goal of retaining our key managers so they do not abandon AMC at the most crucial time when we need them the most, our Board further authorized the creation of a modest bonus pool in lieu of the formal 2020 annual incentive plan. It's equal to approximately 30% of their annual bonus targets. Individual awards will range from 20% to 50% of target. Depending upon the individual, the most common award will be 20%. We believe this will buy us considerable loyalty amongst our strongest and most needed performers and at a most critical time.

With that, let us leave you with a laser-like focus on that which matters most to AMC at the moment: the need for us to increase our liquidity, to raise new cash or to conserve cash spending that will allow us to bridge from this moment to much deeper into 2021. We do, after all, have our Churchillian charge. We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills. And may I remind you all not to forget that Great Britain was on the winning side of that war.

Thank you, and we now look forward to taking your questions. Operator?

(Operator Instructions) Our first question comes from Eric Wold with B. Riley FBR.

Adam, I guess -- it seems though we've seen more of a willingness of exhibitors to kind of bite the bullet and open theaters in less-than-optimal conditions. I guess the most recent being San Francisco with a lack of concessions. From the conversations you've had with those studio heads that view you as LaGuardia, so to speak, is there a point where they start taking some of that risk-taking upon themselves well before a vaccine or something meaningful in that regard?

Yes. And it's already happening, Eric. So Universal, specifically because of our PVOD deal with them, is going to release Croods: A New Age just before Thanksgiving. That's accompanied by 5 other Universal films, only one of which has already been released. So Universal has got 5 more coming out in November and December. We've had significant conversations with Warner. We know that they're definitely trying to hold on to their Christmas release of Wonder Woman. And with all these studios, we're expressing our desire and eagerness to lean in and do whatever we can to support their movies and to be flexible in how we consider various strategies for not only us to prosper but for our studio partners to prosper as they release movies as well. So yes, it's already happening.

And with respect to San Francisco, I would point out, we actually opened Philadelphia and Boston without food. And within 3 to 4 weeks, those municipalities agreed to let us go forward with concessions as well. So it's a very fast-evolving landscape as to what individual jurisdictions are allowing us to do, and we're going to continue to fight the fight.

All right. And just one follow-up, if I may. I know you've been operating under a lot of restrictions around capacity and obviously limited film slate. Is there any way to kind of give us a sense of the percentage of the circuit that has reopened that's been able to do so -- a positive figure, level of cash flow, kind of what that attendance kind of breakeven point is going to look like?

Yes. We said on the last call that for theaters to have individual profitability at a theater level, we need about 25% attendance to be generating cash rather than losing cash. I can tell you that, number one, the capacity restrictions, which in most cases are 40% of available seats, which is an AMC-imposed constraint -- we have a lot of jurisdictions that are letting us go to 50% but we've chosen to stay at 40%. I don't think we've lost a single customer because we're limited to 40% of our seat capacity. We should be so thrilled to be anxious about losing the 41st or 51st percent of our seat capacity. As Sean said, we're hovering down between 10% and 20% at those theaters that are open in the United States. We're higher than that in Europe and the Middle East.

But where we need to get to is around 25%, and then those theaters are generating cash rather than burning cash. Now that assumes that we're paying rent. And we already did say on this call that not only did we defer and abate rent in Q2 and move a lot of rents in Q3 to percentage of revenues, but we are going to be going back to our landlord community again and talking about further abating and deferring rent given low attendance. But why don't we assume that we get up to 25% or more so that we are generating cash? Remember that -- and I've said this on multiple occasions. Movie theaters are not sports stadiums that typically sell out or Broadway theaters that typically have every seat full. Movie theaters are more like churches built for Easter Sunday. Last year, AMC -- this is 2019, all pre-COVID. AMC sold more tickets for movie theaters than anybody else in the planet, and we only sold 17%, 1-7, 17% of our available seats. So this notion that seat limitation is going to cripple us is just wrong. We modeled that even a 50% seat limitation, which we will move to once demand rises to levels where we need more than 40% of our seats, would cost us only single-digit attendance. And that's before people re-spread themselves around to pick available showtimes on different days with better seating availability.

So the seat constraints are not the issue. The issue is demand on the one hand related to virus fears, but I think even more than that is the availability of movie titles. That's the thing that we need. We -- I've said on TV that -- interviews that we're a new car dealership, and we're in the business of selling new cars and Detroit stopped shipping us new cars 7 months ago. The showroom is a little bare. It's pretty hard to sell new cars when there are no showroom -- no cars on the showroom floor.

Our next question comes from Jim Goss with Barrington Research.

Adam, I'm wondering. Challenging time, no doubt but...

Oh, yes. All we got to do is raise a little money, we'll be just fine.

Well, do you have any thoughts or analysis -- and those films that so far have shifted from a theatrical run, such as a couple of the Disney films, in terms of their ability to recapture what they might have had if they did have a theatrical release? In terms of how that might strengthen your argument against passing up any further situations like that.

So I do have a lot of thoughts but I think it's more appropriate for the studios to talk about the success or lack of success of their shifting titles to streaming or PVOD, but let me say this. The conversations that we're having with every major studio is that AMC, as we proved with the Universal deal, is not stuck back in 1955. We are willing to consider alternate models. We understand that the world of streaming is upon us. We believe that it optimizes our profitability and studio profitability if they can have a combination of theatrical releases and streaming that, that combo is far more lucrative for them and certainly for us than if they pick streaming only and ignore the $43 billion, $43 billion of revenues that movie theaters generated globally last year for the makers of film. And we also understand though that the combination of theatrical and streaming will be more lucrative to them but could also be more lucrative for us if we can somehow get participation in that streaming world as we did with Universal. So look, I think there's a very compelling case to be made that is in the studio's best financial interest not to choose the streaming world over the theater world but to figure out intelligently a creative path that lets them navigate towards being able to benefit from both at the same time. And AMC has clearly expressed a willingness and an eagerness to play in that arena.

Okay. Along the lines of what you're suggesting, the larger the movie and the bigger the budget and the P&A, the less likely it is to be vulnerable to a streaming fate. But as you go down that continuum, you hit some smaller films that might be more susceptible to that. Do you have any sense as to where those lines might be drawn?

No. But talking about a small movie, Universal released a movie called Kajillionaire last month. I think its theatrical run was single-digit millions. That counts in your world as a small movie. They took that movie first theatrically and then PVOD in 17 days. And we, AMC, made more money with that theatrical streaming combo -- or theatrical-PVOD combo than we would have if it had just exclusively been in theaters with a 74-day window.

Maybe just one other one, and I'll take the other questions...

You'll get as many as you want, Jim. We got all that.

No. This is -- others want to ask questions. So is there any thought or capability to sell any of your theater properties and be able to exit leases in a favorable way as you do try to look at ways to raise funds?

Yes. Number one, we did, in the quarter, sold 9 theaters in the Baltics for $77 million at a 9.3 multiple. There's a lot more than we're going to be given credit for on Wall Street of our budgeted EBITDA, let alone the infinite multiple of our actual EBITDA. We have a number of leases of nonproductive theaters that expire every year. And very quietly, although I did tell you a couple of conference calls back this was our plan, we've probably ducked out of 40 theaters within the United States and Europe where we were losing money. And so as opposed to being behind -- so we didn't renew those theater leases we're ahead. And we will continue to have conversations with landlords about getting out of unproductive agreements.

Okay. And -- but you generally would have a certain number of theaters -- leases expiring every year. So you have that choice. Are there any other issue beyond that you would look at as potential sources of funds?

Yes. And we already have but probably not appropriate for me to quantify it on this phone call. But yes, conversations have been held with multiple of our landlords about getting out of theater leases where we think it's in our interest do so and where the landlord might have a higher and better use for the real estate.

Our next question comes from Eric Handler with MKM Partners.

A few questions for you on liquidity. Any chance you could update us about where you ended October in terms of cash?

Eric, it's Sean. I can't update you as to where we ended October. October obviously just ended last week. But I can give you some guidance on liquidity for the remainder of Q4, which hopefully will be somewhat helpful. And I think the way to look at it's -- probably the best way to look at it is look at it in a worst-case scenario, in a worst-case scenario where the current level of attendance continues, right? So we have no new movies released and we just continue with the current level of attendance. In that scenario, our monthly cash burn during Q4 will be a little bit higher than during Q3, and the reason it will be a little bit higher is really one thing. It's the additional lease costs that we have in Q4 versus Q3 based on the current arrangements that we have with our landlords. But if you just look at -- so with that, it will be higher -- and just to quantify that, to be even more helpful there, is if you think about our cash burn in July and August, around $115 million a month, it will be closer to that number than the average that we were for the quarter and maybe around 5% to 10% higher than that. It just depends -- and this is the key point.

That's based on worst-case scenario, current agreements with landlords. But if you're forecasting our cash position based on that, I can tell you right now, you're going to get it wrong because, as we said in our prepared remarks, we have already raised, through the ATM equity program, $95 million that came during the month of October. We've already got additional parcel proceeds from the Baltics sale. That's about $8 million. We have been selling real estate. We've sold about $7 million of real estate during October. We plan, as Adam said, to be back in the market with the ATM process. We're in discussions with landlords, et cetera, et cetera. So I've really given you the worst-case scenario, but all these actions that we're taking will offset that worst-case scenario.

What Sean did not mention, that also -- that assumed that we have -- that we stay at today's level of attendance. If the Christmas movies hold, then our level of attendance should increase and our revenue should increase as well. So -- and you -- it was in the press release, we had $418 million of cash at the end of September. So obviously, we want much more than that. We need much more than that. We extend -- we have a goal of extending our financial runway deep into 2021, not early into 2021.

Yes. Thanks, Adam. And that actually clarifies our internal forecast would be much better cash burn than that because we're basing it on the film slate as it currently stands and we believe will hold.

That's helpful. And then I assume that -- whatever that burn rate is, in excess of $100 million, what is your -- on average, your monthly cash interest expense of that total.

That's included in the numbers Sean just gave you.

Right. And how much is that?

Well, look -- and it varies -- our monthly cash interest expense right now is -- let me just take that then -- running around $20 million a month, but that is included in the numbers.

Great. And the last question, the equity shelf that you filed today, do you already have a sponsor in place like you did with Goldman and Citi for the ATM deal? Or are you negotiating with others? And then secondly, along with that, why just 20 million? I mean right now, 20 million shares will get you a little over $40 million. You would probably need much more than that. Why not do a larger shelf offering?

Eric, to avert gun-jumping concerns, we can't make any comment at all on the filing made this morning with the SEC.

Okay.

Not wanting to duck your question but being ordered by the government of the United States to duck your question.

Understood.

Thanks, Eric.

Our next question comes from Alan Gould with Loop Capital.

I've got a few questions. First, there was some trade speculation on your sale of your European theaters, not the Baltics but the bulk of the remainder of the European theaters, the Odeon chain, et cetera. Is there any comments you can make about that?

No. We do not comment on rumors and speculation.

Okay. My next one, for Sean. I believe your debt covenant waiver with the banks expires in March. Have you already started discussions there? And can you remind us what the covenant returns to after March?

Sure, absolutely. So as you rightly say, we have a debt covenant holiday through March. Actually, the first time that we'll have to calculate our debt covenant numbers is at the end of June. So that will be up after the second quarter. And after the second quarter, the debt covenant will be calculated by taking Q2's number, multiplying it by 4. So it's annualization of Q2. So everything in terms of where we sit relative to that debt covenant will depend on the performance in Q2. The covenant is 6x secured leverage, 6x EBITDA secured leverage ratio. The amount of secured debt that we have at the moment is $3.7 billion. I will point out that the EBITDA that we use for the debt covenant calculation that's in the credit agreement is different to the EBITDA that is disclosed from financial reporting point of view. It tends to be higher. And so that's going to be our situation with the debt covenant. It's all going to be dependent on Q2 2021's performance.

Okay. And then, Adam, when will we know -- when will we have a better idea whether or not Warner is going to release Wonder Woman 1984 on Christmas? When would they have to start marketing it? I guess that would be our first sign of whether it's -- we know the exact date that it's going to come out.

They're going to start -- look, I can tell you categorically, they want to release on schedule. Their marketing will begin sometime this month, I would guess. When will we know exactly that Wonder Woman is opening on December 19 or December 20? I think on December 19 or December 20.

Okay. And then my last question for Sean. How much higher are the fixed costs today than they were, say, pre-COVID? So if we come out of this to the other end, how much higher is -- are the fixed costs for the company? I know your rent is less. Your interest expense is more. I'm just trying to put it all together. Maybe your rent is more when you start having to pay back the deferred.

Look, I think in general -- so a couple of things I'll say. One is to start with our fixed cost is going to be pretty similar, but firstly, the rent is probably going to be lower based on the negotiations that we've had with landlords, right? The second thing is what I mentioned in my prepared remarks, is the actions that we are taking, looking at every single cost area that we've had -- that we have in the organization. And we do see significant benefits there. We're targeting between $300 million and $400 million of cash benefits there. Now that's cash benefits that include reducing our CapEx. So there's significant benefits on that side. Cash rent does go up but only in 2022, right, because of the PIK interest that we have in 2021.

Our next question comes from Meghan Durkin with Crédit Suisse.

One for Sean. I wanted to know if you could give us a breakdown of where the cash burn is overseas versus the U.S. And is there a minimum level of cash that you need on hand to keep running the business?

And then I just -- one more on market shares. How are things holding up where you are open? Has Regal closing helped you take share in those areas? How is that going?

Meghan, it's Sean. Just talking about the split of the cash burn between domestic and international, it's pretty normal for the relative size of the business. There's nothing dramatically different there than what we're seeing on both sides of the Atlantic. And I think the second part of your question was, is there a minimum level of cash. There clearly is a minimum level of cash but it's low. And that minimum level of cash is more in Europe just because of the structure of the European organization, but we can run at pretty low levels of cash overall.

And Meghan, yes, our market share obviously has increased given the closure of lots of other theaters. But as Sean said in his prepared remarks, we've modeled this thing extensively. And those theaters where we're open -- and half of them in the United States, they're only open weekends. Most of our theaters are only doing 1 or 2 showtimes a day, not the normal 4. So we're really pulling operating hours down, which is saving a ton of expense. It's not really much different financially for us to be open, managing tightly the way we are than closed. But the benefits are that we're still giving the sense to consumers that our theaters are open, that they can see movies when they primarily want to see them, which is weekends currently. And also, it's much less stressful on the buildings to have them open every single week than to have them closed for a couple of months on end. When you try to reopen a building after it's been completely buttoned down for months on end, there's a lot of extra expense that comes from starting back up from a dead stop.

So we think we're doing it the right way and we are benefiting in the marketplace because our share is rising.

Our next question comes from Jason Bazinet with Citi.

I just had 2 questions. Have there been any studios that have been willing to give you, let's say, 100% of the ticket value at least until you get through this crunch period and sort of maybe cume up the difference in arrears and pay it back to the studios at some later date?

And then my second question, is there any sort of wild card here in terms of government assistance that could sort of help you through this crunch period?

Thanks. So on your first question, we have been able -- I have yet to find a studio that would like to graciously give us 100% of the ticket sales, but I will tell you that studios have been very flexible on payment schedules. So we've been able to hold on to money a lot longer, in some cases an incredibly a lot longer. That would be the norm, which helps our liquidity.

As for the -- a wild card, given that there is an election tomorrow, I don't think anybody can predict anything right now. But I do know that there has been discussion amongst certain political leaders of certain parties that if they're in power post election, they might step up their activity to support the industry. But I think it's premature to get a sense of whether that will bear any fruit for our industry or our company since nobody really knows what's going to happen tomorrow, until tomorrow comes and we may not even know tomorrow.

Our next question comes from Chad Beynon with Macquarie.

This is Jordan Bender on for Chad. So hopefully, we get a vaccine here and return to normal somewhat soon. Once things do start to normalize, what's the CapEx environment going to look like? Are you going to have to kind of front-load some of this maintenance CapEx into these theaters that you pushed back over the last 2 quarters?

Thanks. So let me -- since it's sort of a -- let me hit your premise. So we are in touch with medical experts quite directly both through Harvard University School of Public Health, and I separately have had contact as recently as this past week with the former head of the FDA and members of the Boards of Directors of certain pharmaceutical companies working on vaccines. I think there is a lot of confidence that there will be a vaccine approved by the U.S. government in November or December, that inoculations will begin in December or January and that a sizable percentage of the U.S. population could be vaccinated as early as March or April. Whether those predictions pan out to be true, only time will tell. But people who are very knowledgeable in the field are telling us those are all likely scenarios.

In terms of CapEx, back when we were spending $500 million a year, we said if we ever needed to turn CapEx off, we could do it on a dime, and boy did we prove that to be the case. And if you ignore projects that were committed in prior years, we haven't even spent $50 million of CapEx on maintenance this year. I think you should assume that we will continue to button down CapEx to the lowest conceivable number, potentially under $100 million, as we go forward if that's what is required to maintain the liquidity of the company. So is there any deferred maintenance that we're nervous about that's going to suddenly unleash a flood of CapEx spending? Absolutely not. It's the other way around. We're just not going to spend any money until we're out of the woods.

Okay. Perfect.

Remember, as I said before, $1 of cash conserved is of equal value to AMC of an extra dollar raised.

So operator, I think that's the last question. Is that correct?

Yes, sir. That is the last question. I'd like to turn the floor back over to you for any closing remarks you may have.

Very brief. Thank you, everybody. As we close the call, I remind you that Goldfinger and The Hunt for Red October with Sean Connery will be at AMC all weekend. And remember this: we shall fight on the beaches, we shall fight on the landing grounds, we shall fight on the fields and in the streets, we shall fight in the hills. Thank you for joining us today.

Ladies and gentlemen, this concludes today's web conference. You may now disconnect your lines at this time. Thank you for your participation, and have a great day.