AMC 電影院 (AMC) 2015 Q1 法說會逐字稿

Greetings, and welcome to the AMC Entertainment first-quarter 2015 conference call.

(Operator Instructions)

I'd now like to turn the conference over to your host, John Merriwether, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone. I'm John Merriwether, Vice President, Investor Relations. I'd like to welcome you to AMC's first-quarter 2015 earnings conference call.

Before we get started with our prepared remarks, I'd like to point out a new format for the dissemination of some of our financial information for the first quarter. In an effort to assist analysts, shareholders, and potential shareholders with even more timely financial information, as referenced in our press release issued earlier today, we have posted a CFO commentary on the investor relations page of our website at AMCTheatres.com.

This new CFO commentary was posted to the website simultaneously with the issuance of the earnings press release and offers information normally provided during AMC's CFO, Craig Ramsey's, portion of the prepared remarks. We felt that providing this data-centric information ahead of time would allow listeners to focus on the qualitative portion of the call, rather than trying to pick out data points, and ultimately enjoy a better conference call experience.

I'd also like to remind you that some of the comments made by management during this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks, uncertainties, and assumptions, and are discussed in our public filings including our most recent 10-K.

Statements made throughout this presentation are based on current estimates of future events, and the Company has no obligation to update or correct these estimates. Listeners are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainty and that actual results may differ materially as a result of these various factors. We caution you not to put undue reliance on forward-looking statements, and the forward-looking statements made during this call speak only as of the date of this call.

In addition, some of the comments made on this call may refer to certain measures such as EBITDA, adjusted EBITDA, and adjusted EBITDA margin, which are not in accordance with GAAP. However, management believes these results more clearly reflect operating performance. For a full reconciliation of EBITDA and adjusted EBITDA to GAAP results in accordance with Regulation G, please see our press release issued earlier today and furnished as an exhibit to our Form 8-K, dated April 29, 2015, which is located under the investor relations area on our website at AMCTheatres.com.

After our prepared remarks, there will be a brief question-and-answer session. Joining me on the call today are Gerry Lopez, President and Chief Executive Officer; and Craig Ramsey, Executive Vice President and Chief Financial Officer. I'll now turn the call over to Gerry.

Thank you, John. And thank you, everyone, for joining us this afternoon. 2015 is off and running, as is everyone at AMC, keeping pace with a fast and furious, pun intended, start to the year and setting Company records with a strong first quarter.

As you all know, first quarter a year ago saw ours and the industry's best growth numbers of 2014, and because of that, I was a little nervous coming into the quarter this year. Overlaps can be so tough in this business. Well, I shouldn't have been such a Nervous Nellie.

Both our total revenues and adjusted EBITDA grew in Q1 2015 when compared to prior year with total revenues increasing 4.9% to $653.1 million and adjusted EBITDA growing 13.4% to $115.7 million. Both of those are Company records for any first quarter in our history. The strength of our strategic initiatives again proved that our guest experience leadership strategy is the right one for AMC, as it produces tremendous value for both us, our guests, and our shareholders.

I don't think many people anticipated the first quarter of 2015 would be as strong as it was, especially in light of the tremendous quarter the industry and AMC both had a year ago. And just to refresh everyone's memory, in the first quarter of 2014, AMC grew admissions revenue 6.8%, while industry box office grew 5.5%, a big number for the industry to be sure, but an even bigger number for us with that 3 1/3 point outperformance. Hence, my being a Nervous Nellie.

Now keeping those comps in perspective, when compared to last year, our 2015 first-quarter admissions revenue grew 2.4% and our admissions revenue per screen grew 1.7%. The two-year trend, then, is 9.4% growth in admissions revenue and 9% growth in admissions revenue per screen. The two-year trend is very strong, but it does mask some underperformance to the industry in 2015 as our year-on-year 2.4% box office growth fell short of the industry's 3.2%.

Disappointing, but the industry underperformance can the attributed to a couple things. First, as I mentioned moment ago, in 2014's first quarter, we grew admissions revenue 6.8% and an even greater 7.3% on a per-screen basis. The 6.8% was 135 basis point outperformance and the 7.3%, a 285 basis point, again, outperformance. Indeed, those were tough overlaps. The two-year trend does smooth out some of the spiking nature of the business, and it is very solid as we reflect a 51 basis point outperformance in total admissions and a 134 basis point outperformance in admissions per screen.

Secondly, the film concentration and mix also played a role. The strength of the first-quarter box office this year was centered on a few movies, with the biggest film, by far, being American Sniper, grossing nearly $100 million more than last year's top performer, The Lego Movie. And while American Sniper played well in our urban markets, and played very well in our IMAX screens, it played disproportionately better in the southern states and less urban markets in which we have a much smaller presence. So our real market share on Sniper was below our norm.

Likewise, several of the remaining big movies in the quarter were family oriented, Cinderella and SpongeBob most notably. When compared to last year's more action-oriented first-quarter slate, which played very strong in our urban market sweet spot, this year's family oriented lineup did not generate the same market share for us. The good news is family fare does drive food and beverage, and you'll see this reflected in our F&B numbers when I cover them in a few minutes.

As we look forward, having just returned from CinemaCon, there are a number of high-energy, edge-of-your-seat, action-packed movies slated for the balance of the year, many of which will be showcased in IMAX and our new Dolby Cinema at AMC Prime. Those movies will play right into our wheelhouse, and if Furious 7 is any indication, as I like to say, hold onto your seats.

Speaking of seats, our comfort and convenience strategic action front continues to impress our guests and keeps them coming back for more. At the end of the first quarter, we had refitted or installed recliner seats across 700 screens in 60 theatres. That's up 70% compared to last year. And best we can count, far more than even our closest competitors.

The productivity of this existing assets continues to improve, those 60 reclining theatres as a group, even though some of them are in their third year of operation, delivered an impressive 11.4% increase in admissions revenue per screen, while the industry saw an estimated 3.2% increase per screen. That's more than an 8 point outperformance against the industry for the quarter. Our guests have clearly spoken with respect to the comfort and convenience they receive from AMC's reclining theatres.

Those same guests have also spoken on how easy and convenient it is to purchase a ticket to see a movie at an AMC theatre, with more and more guests choosing to do so by buying online. Our first-quarter Internet ticketing revenues were up an amazing 42.4% over last year, as we sold 8.2 million tickets online, representing approximately 18.3% of our total tickets sold. This compares to about 12.6% of our total tickets sold a year ago, nearly a 50 percentage point improvement.

Importantly, our proprietary ticketing engine at AMCTheatres.com continues to perform well for our guests, accounting for about 37.6% of our online tickets sold in the first quarter. That's a remarkable adoption rate by our guests for a service that is not even a year old. We are glad to gain traction in this area, as it tells us that when we work to remain relevant to our guests, when we focus on their total retail experience, they respond with their support and their dollars.

Shifting gears and moving over to food and beverage, another very bright spot for us this quarter. AMC grew food and beverage revenue 10.3% to $200.5 million for the first quarter compared to the same quarter a year ago. It is easy to see that the accelerated capital that we deployed in food and beverage enhancements in the fourth quarter of last year it's already paying dividends. As impressive as that growth is, I'm even more excited by our 10.5% growth in food and beverage revenues per patron to another company record and all-time high of $4.48.

That's five consecutive quarters, now, every quarter since we've been public that we have reported a record quarter of food and beverage revenues per patron, a testament to the sustainability and strength of our enhanced food and beverage strategic action front. Just generating the revenue isn't enough. We need to see the throughput, and we did it again this quarter, as food and beverage gross profit per patron grew 10% to a first-quarter record of $3.84.

In order to sustain that growth, we want to make sure our guests have choice and convenience in our food and beverage offerings, and so we have continued to optimize many options and invest in a broad spectrum of innovative delivery systems to make it quick and easy to enjoy traditional movie-going staples like Coke and popcorn as well as fresh made full-service seat-side dinners with beer, wine, and cocktails.

It is no secret to anyone in the restaurant business that tastes change over time and so must our menus. Over the next few weeks and months, we will be updating and refining our dine-in theatre offerings to better serve our guests and improve efficiency. We are always looking for ways to improve our operations and exceed expectations.

Doing so means we need to know our guests and that brings us to our third strategic initiative, guest loyalty and engagement. We recognize the important of connecting with our guests and building the AMC brand because our guests have choices on where they spend their money and increasingly more important, where they spend their time.

We must provide information easily over a broad spectrum of channels and make it as convenient as possible to see a movie in an AMC theatre. We believe we do that better than anyone else through our AMC Stubs program and our social media outreach. With over 2.4 million paid members at quarter end, AMC Stub members continue to value the rich rewards of the program and outpaced the US -- the average US movie goer in both attendance and food and beverage spend.

As I mentioned on our previous call, we are currently exploring new innovations to enhance AMC Stubs, expand its scope, and drive additional utilization in the future. So stay tuned for announcements later this year. AMC Stubs' success is matched by our social network outreach through Facebook, Twitter, and YouTube. All of which combined to expand and drive guest loyalty.

AMC is by far the most socially connected US movie exhibitor with more Facebook likes, Twitter followers, and YouTube subscribers than the other three major exhibitors combined. And just this month, our AMC Movie News, the YouTube channel, with more than 130 million views and its host, John Campea, were nominated for three International Academy of Web Television Awards and came away with the win for Best Live Series. Congratulations to John and his team.

That brings us to our fourth strategic action front, the very exciting sight and sound news I alluded to on our last call. Simply put, be prepared to be blown away with the introduction of the new Dolby Cinema at AMC Prime experience. It will be unlike any other movie experience in the market today. Those of you in New York and LA, you'll get it first, in Burbank, Century City, and Times Square, to name just a few. What we're doing here is teaming up with Dolby to further enhance our position as the premium sight and sound leader in the exhibition industry.

In a nutshell, we are combining Dolby's spectacular Atmos sound system with their new high-dynamic range laser projection technology and then adding AMC's auditorium design expertise, our power reclining seats, and transducers in every chair so that movie goers can literally feel the action on the screen. It will be a truly immersive expense for our guests and one that we think will drive new business as well as greater repeat visits. Avengers, Terminators, Mission Impossible, you are not going to want to see them anywhere else but at an AMC.

In the first phase of the rollout, we are planning to convert our currently installed base of AMC ETXs and Prime locations to Dolby Cinemas at AMC Prime with the rollout of the first four by the end of May and an additional four sites by the end of June. Yes, that quick. We have to.

Dolby and Disney, as I'm sure you all noticed, have already announced Tomorrowland and Inside Out coming this May and June, respectively, as the first titles to be shown using this amazing technology. Ultimately, we intend to expand to 50 Dolby cinemas at AMC Prime by 2018 with options to do even more in the future. We believe our guests will love what they see, hear, and feel. This partnership is just one of the many ways we are getting guests excited about coming back to our movie theatres again and again.

Many might wonder how this premium format fits into our IMAX strategy. We are, I'll remind everyone, the nation's largest IMAX exhibitor with approximately 150 screens and a 45% market share, and we plan to add even more screens in 2015. We love the IMAX brand and we believe Dolby Cinemas at AMC Prime is complementary to our IMAX offerings. Our new premium format gives our guests more options and gives us programming flexibility.

It is a win-win, and winning is good. Winning with our guests means great customer service, greater engagement, and in general, exceeding their expectations. From our crew members at the theatres to our leadership at the theatre support center, guests are our first priority. We believe in that approach, and we believe our guests notice. At least, that's what our top box satisfaction scores are telling us and doing so resoundingly.

For the first quarter, our top box score was 60.5, an all-time high for the Company. The first time we finished a quarter above 60 and a whopping 270 basis points higher than last year, simply an amazing number in the retail service industry. Very proud of it. As good as that is, we can always improve, and that's just what we intend to do.

We must continue to increase productivity of our existing assets and differentiate ourselves from the competition through innovation to maintain our leadership position. With only 7% of the nation's theatres, and even less in terms of screen count, AMC has earned 21% of the last 12 months' box office share. That's what we would call productivity.

When we look even deeper and measure ourselves against the competition, within a 20-mile radius of our buildings, we are seeing nearly 6 percentage points of box office per screen outperformance dating back to April of 2011. This metric shows in a detailed per-screen level that our customer-centric approach is the right thing to do for our guests and our shareholders over the long term.

As we look ahead to the rest of 2015, the prospects for record box office continue to look great. For those of you who keep score, yes, I called for an $11.25 billion year for the industry in 2015, and I have seen nothing through the first four months of the year to dissuade me. The table is set for a wide variety of blockbuster franchise films and good calendar spacing and appeal to every segment of the audience.

But at AMC, we can't just rely on the next big movie. We rely instead on ourselves and our capacity to innovate. 3.5 years ago, we were talking recliners, and some of the same people who were calling us crazy back then, are now unveiling their own recliner plans.

We said exclusive Internet ticketing arrangements were silly and were even sued for it. But guess what other folks are just rushing to do now? Progress inevitably evolves change and with it, disruption and pain. But done correctly, it also involves winning, and you guys know how I feel about that.

We're already working on the next big thing or things. We aim to surprise and delight our guests and give everyone else something new to talk about. In other words, when it comes to the innovations to improve the guest experience, we're just getting started. We have plans to test launch several new and exciting concepts in 2015.

You already know we are exploring alternative pricing models like subscriptions, unlimited tickets, and dynamic pricing. Expect increased experimentation in this area. We will also continue expanding our Internet ticketing and eCommerce efforts, all in an attempt to drive convenience and with it, customer conversion.

With conversion, we also aim to increase loyalty, so AMC Stubs will also see new features, in effect, a doubling down beginning before the year is out. On these and others, trust us to keep you posted and our guests engaged and excited. This is just a sampling of the unrelenting innovation taking place at AMC.

So to our guests and shareholders, thank you for your continued patronage and support. We'll continue to focus on being the customer experience leader in movie exhibition, and in doing so, we look to drive value for you. The 2015 box office leg looks good, real good. We are excited by it, and even more so by how our strategy plays right into it.

Thank you for listening. I'd like to turn the call back over to our operator so we can take a few questions. Craig is here, and we're eager to hear from all of you. Operator?

(Operator Instructions)

Eric Wold, B. Riley.

Thank you, and good afternoon. Two questions, if I may. One, how should we think about the film expense line as you head into the summer blockbuster period? You seem to be at least a little bit higher than what I was expecting in the first quarter.

There are already reports out there of some German theatres boycotting Avengers because of what Disney was looking for in terms of film rent. As you get into the meat of the summer and the movies that are well expected to be blockbusters, how should we think about trends towards film rent? Similar year-over-year increases as we see in Q1?

You want to ask the second question or you just want us to handle that first one first?

Sure. The second one, Gerry, on G&A, obviously with the pull out of the gain as an offset to G&A, what would kind of normalized G&A in Q1 have been, and how should we think about that going forward as well?

Let's tackle them in -- go ahead.

I'll go back on the FEC and give you some thoughts on that and some of which may repeat points Gerry made. Certainly, film exhibition costs were up 53.3% in this quarter compared to 51.9% last year, and a lot of that due to concentration. And by that I mean the top films -- top five films in the quarter this year were 38% of the box office and about 31% last year.

So clearly American Sniper was great because of the volume created. But certainly it does put its pressure on film costs, because as we've talked before, we are on scales and generally speaking -- each studio is different. But generally speaking, the more box office a film produces, the higher percentage of film rent that we will pay.

In general, though Eric, what I would say is the trend you saw in the first quarter for the next three, will continue at about the same pace. The movies are going to continue to be big. It's not clear that the concentration, to what Craig was just saying, will be as severe or as acute or as strong as it was in the first quarter in the quarters to come. There's just more product period and it shouldn't be as concentrated.

But we have a lot of big movies coming, and those big movies do command the higher end of the scale. What you saw in the first quarter is not unreasonable to suspect the next three -- it may not, obviously it may not be at the exact same level and they'll go up and down, 0.5 point either way, but it is a big movie year and with it, the high end of the scale will come.

The other thing I would add to that, Eric, is that the unknown about the future film play off is there's a lot of publicity about the large pictures, and that segment of the film slate is pretty well nailed down and written on. What we don't know about is the strength of the other pictures. The other 100 or so pictures we pay that are from film 20 to film 100 and how much -- and clearly those produce lower film costs and just what kind of a contribution that we would get from them at lower film rates to kind of mitigate. That's an unknown that we hope will mitigate some of the upper pressure as well.

The second question on G&A, it looks like the run rate is about $15 million if you adjust for the $18 million, and it's down a little bit from last year's G&A in the quarter. About $2.3 million down.

Perfect. Thank you both.

Ben Mogil, Stifel.

Good afternoon. Thanks for taking my question. I just want to make sure I heard the last comment right. If you strip out the $18 million that you got a benefit from and the $4 million that sort of you got hit on the settlement, we should thinking about G&A in the $15 million a quarter run rate. Is that correct?

Yes. $15 million probably to $18 million. It's going to depend a lot on -- as an example, incentive compensation, which can fluctuate depending upon results. But that's probably a good way to look at it.

And any way you look at it, it's still down from last year's quarterly run rate. Is that correct?

Yes. Somewhat.

Two questions. When you look at market share, and I get that in any given quarter, your market share will move around a little bit. When you look at market share quarter to date, and I get that it's only been one month, but also you have some obviously visibility on advanced ticket sales coming out of Avengers, do you feel your market share is kind of back to where it should be based on historical trends, screen count, et cetera?

Yes. To be clear on the market share, Ben, our market share in our proximal areas, in those 20 miles that we measure from each one of our buildings, it's very, very stable and it has been increasing since all the way back to 2011 when we began to deploy all of these customer-centric initiatives. In the markets in which we compete, the market share is very stable, very predictable, et cetera. What varies is how big would the films be elsewhere?

So with a film like Sniper, which surprised everybody, I don't think anybody pegged it take it run the $350 million in box office that it's going to wind up running or it has already run. In our proximal markets, in our 20-mile radius, we're going to get our 32%, 33%, 34% market share, day in, day out, not a problem. It is just that the film does so much other business elsewhere that our national share then gets depressed because those markets where we don't play wind up getting -- performing beyond the norm.

So the market share gain is not, one, that it's driven by the performance of our buildings. It's driven by the performance of the movie in those areas of the country, like the Southeast for example, where we simply don't have enough theatres. We're good in Atlanta, but fine there, but we only have one in Charlotte, for example, one in Alabama, one in the Florida Panhandle. That's barely a footprint to compete when you have a movie like Sniper that plays so well in those markets.

So, that's what's driving that share performance. It's nothing fundamental to the buildings. It's more the way that the movies play out based on the audience they appeal to.

Thank you for that. And then on the online ticketing front, beyond the cost savings of not having to share revenue with Fandango or MovieTickets.com, maybe you can talk conceptually what traffic through your site, as opposed to third-party site, gives you beyond just a simple cost savings?

Greater engagement with the guests, and ultimately that's what we are really seeking. When they buy on our site, the transaction, the experience with AMC begins right then and there, and as retailers that we are, we'd just as soon that the number of intermediaries between us and our customer be as few as possible. Fandango still does the lion's share of our business, MovieTickets does a bit.

We want them. We just assume that they will be on our site, that way we own the transaction, we own the relationship. Anything goes wrong, it's on us. Everything that goes right, also on us. We try to envelop the experience as much as possible. We just assume that they will be on our site.

At the end of the day though, and as much as we like that, Ben, to be honest, so long as they buy a ticket for an AMC, whatever is their preference. The most important job is for them to buy a ticket. We assume an attitude of -- we projected an attitude to all of the ticketing vendors out there that, hey, although we have a preference, our number one job is to sell the tickets.

And if a customer has a relationship with Fandango, we'll be happy to do it that way. If they have a relationship with MovieTickets.com, Flixster, where we're also selling tickets, we'll do that. It's exciting because there are other folks now emerging, other people bringing ticketing apps and ideas that are not quite out in the marketplace yet that we think are going to continue to expand that convenience element, that availability element.

We have nearly 1 million seats in the circuit. We start almost five shows a day on average across that 1 million seats. That's 5 million sales opportunities a day. As many people as would want to have a shot at selling tickets for those 5 million sales opportunities, we're going to support it, we're going to encourage it, and we'll do business with everyone.

We do have the preference though, and we would like to -- for our site because we would like to have that relationship beginning to end, be with AMC, but in the end, we'll support them all. Does that make sense?

That's great. I really appreciate the color. Thanks guys.

Eric Handler, MKM Partners.

Thanks for taking my question. Following up on Ben's question a little bit on the industry stats. I like what you're doing with the theatre renovation and it's clear how those theatres are outperforming. I understand that certain quarters there is some exogenous events that can cause you to gain or lose market share.

But when you look at the numbers now, in three out of the last four quarters you've actually underperformed the box office, which suggests your non-renovated theatres are losing a pretty good amount of market share. With that being said, do think maybe some of those theatres need to be shuttered or is there a way to accelerate the renovation process so that you could stop the bleeding from some of these theatres? Is this the right way to think about it?

Parts of it, yes. Parts of it, no. Let's start with the part that I don't think we would agree with and that is the notion of shutting theatres down. We don't have that situation. We don't have any theatres that we would consider underperforming or they are at the point where a shutdown would be called for.

We do have some sites where the leases are coming up, where we don't see an improvement in the trends, perhaps, or where the landlord is not willing to contribute to a capital improvement and so on. And so we're always in those kind of negotiations at any given point in time. In the renegotiation of a lease extension, things are not going where we want them to, yes, we may give up a site here or there. We haven't really done a heck of a lot of that over the last couple of years because these remodels have turned some of these underperforming assets into something a heck of a lot more attractive.

Now, the part that you're correct about is that the traditionally seated theatres, the core seated theatres, those will fluctuate a lot more with the industry and those we are cannibalizing ourselves. When we go into a market like Chicago and start renovating some of our own theatres, we do wind up shifting some share around from our traditionally seated theatres, from our core theatres, into these new remodels which were older assets that were more at the end of their lease life. We are stealing -- we are kind of doing it to ourselves a bit when we go remodel one and because of the concentration that we have traditionally had into the major markets, we're cannibalizing ourselves.

We're on record and continue to see that in these remodeled theatres, about 60% or so of the increased attendance comes from share shift in some cases, ourselves, and about 40% is increased behavior on the part of the customer. Some of that 60% some-odd, 55%, 60% that is share shift is indeed coming from our own height. We'd rather it be us doing it to us than somebody else doing it, or worse, the customer not enjoying the experience and not engaging in that repeat behavior.

The only thing I'd add, too, is that, we try to get some statistics on it, but if you do go -- one thing that affects the core circuit for us probably brings some volatility is IMAX. And for example, last year for the full year, and I don't have it by quarter, but last year IMAX was down 8%. And our core circuit is really where those screens are sited versus the reseats. The reseats generally wouldn't have IMAX screens in them.

As you looked at June and maybe December last year and are thinking about underperformance, that's driving a good chunk of it, given our dominant position. Now, in the current quarter, you would say well, but Craig, it turned around in terms of IMAX, and Sniper drove performance above and beyond the IMAX performance of last quarter.

Yes, indeed it did. It was offset, however, by the point we've made on American Sniper that we just earned an overall lower share there because of where that film played and the strength of what the play off of that picture. See, you have a lot going on.

I think we look at our concentrate and focus on our core circuit. We think it performs in line with other core circuits around the country. And rest assured that we are -- what we are trying to do in the near term is deploy as much food and beverage bars, expanded food and beverage and menu items to our core circuit, and to the extent possible and as rapidly as possible, convert those that make sense to recliner reseats.

That's helpful. And just a quick follow-up. So you're not seeing any evidence of a competing circuit coming in, building a newer, fresher theatre versus your core theatre and taking market share from you there?

No, I didn't say that. I said our core compares favorably with other core circuits. And there's a little bit of a trick about that because in our core circuit, we strip out what would otherwise be new build. Our development, our new build is kind of reseats and we segment those so we have kind of a pure core circuit.

If you compare that against other circuits that aren't maybe as aggressive in reseats and that are new build, those get blended into their core so that it may appear that they're performing better because -- I don't know if that's helpful. I didn't say that -- our core circuit does experience competitive build against it, absolutely. But I think everyone's core circuit experiences competitive new build or reseats, when you strip out reseats and new build from the basic -- from the total circuit and look at really what's going on with the core circuit unaffected by those two initiatives, I think we're in line with those.

Here's a way to think about it, Eric. For total revenues, because we don't break out the segments and so on, and we don't to start that. But the way to think about it a little bit is total revenue line for that core circuit, what we would call a core circuit, for the quarter was flat versus our DITs, which we have 17 of those, and those were up in the mid-teens versus our reseats where we now have 60 of those and those were up in the mid-20s.

That gives you a sense of where the three segments of the business are, the core, the DIT, and the reseats. We track them separately. We think of them separately. Obviously, the vast majority of the buildings are core.

About 250, some are up, 52 of them, I think 53, and those were revenue wise flat versus the mid-teens or the mid-20s for the other two segments. The trick is to deploy the initiatives at the right time in the right place in the right buildings, and while maintaining the stability in that core.

Thank you very much. It's very helpful. Thank you, guys.

Barton Crockett, FBR Capital.

Thanks for taking my question. I wanted to ask, at risk of getting buried in too many numbers about this, but you guys have been reporting the performance trend in your reseated theatres since you came public, you've been talking about a performance trend that seems like it's decelerated a lot.

I mean, it was initially close to triple digit, high-double digit, and now I think you're reporting 11%. What's driving that kind of deceleration? Is it seasoning? I was wondering if you could just break that down for us a little bit.

I think if we went back to the fourth quarter, we talked about 13.8% for that segment of theatres. It is down, 11.4% is down from 13.8%. What we're seeing, and what we've talked about fairly consistently is, as you get over two years into that kind of the maturation cycle of those assets, their year-over-year growth goes to mid-single digits.

And so the larger that population of theatres gets, I guess the larger the impact of mid single-digit growth has. I think you would refer to that as seasoning. It's the same thing. That's certainly a contributing factor.

But we are still seeing what we've said mid-single once you get out over a couple of years, mid-teens in the over year, and the first year is a bit of a mixed bag because you've got some that are nine months and you got some that are just a couple, three months. Those are kind of mixed bag in terms of their year-over-year growth. But I think, certainly, this movement from 13.8% to 11.4% is more seasoning than anything.

What we're seeing, Barton, just to give you some more color on it is the first 12 months after the remodel, the impact it's about the same as we've always seen. Very site-specific of course. A lot of it has to do with the prior performance of that building.

How low was it or exactly how many people were we attracting on a per-screen basis, and if you're converting something that was a theatre that was in the mid-20,000 average screen attendance over the course of the year, you remodel, yes, those guys saw tremendous increases but you went from a 20 to a 40. Great. We're now converting buildings that instead of starting out in the mid-20s, you're starting out in the mid-30s and the mid-40s and even a couple in the 50s.

It's a lot tougher to go from 50 to 100 than it was to go from 20,000 people per screen to 40,000 people per screen. And even when you do that, you're still only at 40,000 per screen. What we're seeing is that in the first year, the impact continues to be overwhelming positive. It ramps up.

In some cases, it's more immediate than in others but pretty much the pattern has remained true, which is tremendous high double-digits, in some cases, 70s and 80s as we saw early, early on. In some of the newer ones, not in every one. But then in year two, yes it comes back, and then in year three, then it's now down to the single digits. Of course, off of a much higher level, much higher performance bar.

Now, when we only had a dozen of these and they were all in that first 12-, 14-, 16-, 18-month ramp, that's where those numbers came from, those 60s and 70s. Now we've got 60, and 40 of them are already above two years. And I'm using round numbers. Don't write them into a model.

But the vast majority of those buildings are now -- we have a portion of them that are in their third year, that first dozen or so that we did. And we've got a big chunk of them that are into their second year. That's going to continue as we carve out more and more of the circuit for the remodels.

Those seasoned theatres, as you called them, quite correctly, are just not going to grow as fast. It doesn't slow us down because every time that we remodel one of these things, the impact is so positive that it's just tough to pass by.

Okay. And thanks for that. To switch gears a little bit on the question on the capital deployment. One of the things I think jumps out as you kind of highlight the underperformance of American Sniper because of the lack of Southern and rural mix. Is it if you owned Carmike, you might have outperformed on Sniper.

I don't expect you to comment specifically on that theatre change process of putting yourselves up for sale, but generally when you IPOd, your preference for capital looked like I think you will go with your existing plan versus acquisitions seem to be a lower priority. Is there anything in this environment that changes your thinking or is that still kind of the way we should look at you guys?

To be honest with you, no. Nothing has changes our thinking. We advertised, during the IPO roadshow in the 1.5 years or so since, 1.25 years since, that we have a very, we think, stepwise process on how we think about these things. The first as we've always said is the financial analysis. What are you buying? What comes with it? What is the cash flow? And all of those other things you would expect us to look at.

Will it be accretive? How are you going to pay for it? Are you going to drive up your leverage? Are you going to use -- how much equity will you use? You know, all those kind of things. Exactly what you would expect.

The second filter is the government, it's the DOJ. As you know, historically, they have reviewed every transaction that matters down to the individual building level. And then for us, more specifically, the third filter that we look at is, okay, and what you are buying that once you get past the government process, you're keeping, what does it mean to you?

In our case, it means how will we deploy these strategic initiatives, the reseats, the enhanced food and beverage, the IMAX, and all the Dolby Cinema, now that we've announced it, into those buildings that you get to keep. And for us, that's where the real price is. How can you take some of these assets that you are now bringing into the fleet and turn them around and experience some of the same upside that we've seen in our existing fleet?

If anything has changed at all, Barton, in all candor, it's that middle filter. As you know, the Screenvision and National CineMedia merger was blocked. That's indicative to us of the Department of Justice Antitrust Division that is very active and very much scrutinizing things.

We would take an extra pause when we go to that filter to think very carefully about what will the government behavior be? What will they let us keep? A transaction may look great after the first filter, accretive, et cetera, et cetera, but ultimately is what you get to keep that really adds value to our shareholders.

And if we think that getting through that second filter, it's too onerous or it will be too detrimental to the transaction, chances are we would not go with it. We are traditionally have been acquirers. We hope to continue to be so. Opportunities will come and go.

At CinemaCon, people asked me about Carmike had put itself up for sale. I was not aware of a formal process on that front. I was aware of the rumors, but not of a formal process. Those are different things. And we're always going to be taking a look around and active in that front.

But we will be very thoughtful and very careful about any transaction, certainly one of that size and magnitude and that process that we've advertised, it's true. We will be true to it and not cut any corners or skip any essential steps. Craig, you want to add something.

The only thing I'd add, and it's not acquiring, I don't mean to equate this to acquiring a big circuit like Carmike. But I do want it to be clear that we talk a lot about the reseats. And it is kind of the primary point of emphasis for us in our capital deployment. But since we had our call in the first quarter of last year, we've built and opened three new theatres, so we continue to build theatres. And I think we continue to look for new theatre sites across the country and including in the South and the Southeast.

We've also what we've called spot acquisitions. We've stepped into leases in five theatres, where they do kind of become a reseat or a remodel, but you could also think of those as acquisitions. We've done five of those and a couple of those in Florida and a couple in the South. And frankly, I think as we go into the coming year and we look at 2015 and we think that number could double.

It's incremental. We are adding buildings. We're building them, and we are out stepping into them, and there may well be some other acquisitions that are available as we go into -- through 2015. But we are interested in new sites to complement the remodels that we are doing as well.

Three years ago, Barton, we were shedding 2% screens every year, 1.8% to 2.1%, in that range. We are now adding about 1 point, 1.5 point screen count to the circuit every year. We think that's about right. And of course, the bulk of the work is really in the remodels. We started this remodel journey on the reseats alone three years ago, a little over that, and we've done 60 buildings. We started dine-in theatres, really begun focusing on them three years ago, a little over that. We've done 17 of those.

So 77 buildings out of a 342 building fleet, we've done significant capital work in. That is really -- we're going to look at acquisitions and the spots are great finds and nice jewels that we add to the fleet. The truth is 77 out of 342 buildings have been remodeled or reseated or dine-in theatres are or something along those lines. That's where the bulk of the attention on the capital is going.

That's great. Thank you very much.

Chad Beynon, Macquarie.

Thanks for taking my questions. Gerry, within your prepared remarks, you talked about some strong enthusiasm and momentum from CinemaCon, mainly with respect to the spacing and product in 2015. We all know that these were small issues in 2014.

Could you elaborate a little bit on your view if this is a one-year phenomenon or if the studios have changed their view on spacing? We're all trying to figure out how this industry looks beyond 2015 which appears to be a perfect positive storm. If 2016 will be a difficult year if the industry kind of goes back to their old ways. Thanks.

I don't think industry goes back to its old ways. 2016 is -- heck, let's just say we have an active office betting pool on what Avengers is going to do this weekend. So worrying about 2016 is beyond the scope sometimes.

I'm not even going to worry about that. We're worried about what Avengers will run for three days coming up. And by the way, the over and under line is $200 million for all of those of you out there who are starting your own pools in your own offices.

What I think you're seeing, Chad, is an industry that has learned a few key lessons. When you see a movie like Furious 7 opening up to summer-like numbers and running summer-like numbers, in April, I think people stand up and take notice. When you see a movie like Sniper opening up in a handful of theatres in December but really having the run -- the bulk of its run in Jan and Feb and running up to $350 million, people stand up and take notice.

Whatever criticisms people want to throw at this industry, the one thing I will tell you having been in many others, and including other aspects of the entertainment business, is people in this business stand up and take notice and learn lessons. Whether they happen because of their own movies or because their happening to somebody else's movies. People have learned that spacing matters. People have learned that appealing to different segments of the audience matters.

People always knew that triple crown of programming, that's not a new trick. But the new lessons learned are that big movies don't just open Labor Day and Fourth of July. That there is life in these other months, that we are indeed in a 52-week-a-year business. As exhibitors, I think I've been saying for a long, long time. Those are not lessons that I would suspect are going to get lost.

When these studious lay out the kind of capital they lay out for the production, and subsequently the marketing of the movie, they are of course going to want to play it safe and try to assure themselves of a return. I think that, by itself, will lead to this better spacing, this greater spacing than we've seen in years past. When the movies will come, when the movies will be ready, that's a different ballgame and that's where you see some movies getting delayed and we speculate endlessly about when will the next Avatar come, and things like that. You will see dates moving around because of that.

But I think by and large, you'll see studio behavior modify the way that -- continuing its learning and modify itself the way that it has based on the lessons that are getting learned right now. I don't anticipate a return to the old days or people doing things that they know don't work as well. So we are encouraged by that, we're encouraged by the slate, not just the movies. We got to see a bunch of extended clips in Vegas last week. We're encouraged by how nicely spaced they are.

That's, we think, a big deal and we think it's going to work for them. Once, if it plays out that way and if it works, the studios are smart. They're not going to go backwards. They'll move forward. That will be my guess. Does that answer your question, Chad?

Yes, that's perfect. Thank you very much, guys.

Stan Meyers, Piper Jaffray.

Thanks guys. Gerry, just on dine-ins. You guys have 17 dine-ins now, 96 MacGuffins under your belt. How is your strategy evolving? I believe you mentioned maybe some menu changes. And I guess, should we expect some improvement in margin in those dine-ins as you increase the volume?

The answer is yes. I think it would be reasonable to expect an improvement on margins there. Our strategy on dine-ins, the overall strategy continues unchanged, and that is to deploy the dine-in theatres in those locations where we believe the demographics and the real estate support it. It needs to be the right location, we need to have the right physical plant to do it in. Laying in a commercial kitchen is not the easiest thing to do. Sometimes you have the space, sometimes you don't.

If your theatre is surrounded by a bunch of restaurants, well maybe that's not the best place to go in and put in our own restaurant. But if there's not that many -- there's all sorts of factors like that. What kind of audience are you serving? Will they be supportive? Will the township allow you to have a liquor license? And how difficult or onerous is the process to secure one of those?

All of those figure into the calculation into the site selection as to where we deploy the DITs. The strategy will remain steady and unchanged. We will select the sites where we believe it makes sense. So far, the criteria that we've used has worked for us.

I think what you'll see, change is coming. Is in how we manage the menu and how we manage the workforce. We are learning that sharing a plate matters a heck of a lot more than we thought. You would think it's perfectly obvious, and we thought so ourselves, but it turns out that eating in the dark matters a lot more to our guests than we had anticipated.

We need to -- as we evolve the menu, the different between us and a restaurant company is that a restaurant company may evolve the menu for taste, for new ingredients, for what's trending out there, things of that nature. You will see us focus on menu but mostly focus on quality, and then focus on ease of eating in the dark, ease of sharing more than on developing the next trendy foodie. I don't think you'll see us at the cutting edge of the next Sriracha wrap or something like that. You'll see us work burgers and you'll see us work fundamental food very well with high quality, but with a focus on what our guests are telling us, which is I have to be able to share it, and I have to be able to eat it in the dark.

Those are not the kinds of things that normal restaurant people are worrying about. Not a lot anyhow. We do. And that's our tactical execution that it's really evolving and changing as we learn more, but strategically we're going to remain on path.

Great, thank you.

Jim Goss, Barrington Research.

Hi. My questions also have to do somewhat with the concessions issue. You had a pretty good pop in food and beverage per patron and somewhat of an offset in the concession gross margin. I know you have multiple strategies, including the dine-in theatres, so I was wondering what the mix issues were that led to this and is that the sort of trend in both metrics we ought to expect as the year unfolds?

We're going to try and dig up some numbers for you. I don't that I would call 10% up on our per patron concessions an issue. Probably just some other word. Our gross profit grew double digits as well.

The one thing that we are doing and we've always advertised, Jim, is that as we introduce more items, certainly hot foods into the concession -- into the traditional concession stand, as these dine-in theatres become a greater part of our food and beverage mix, yes, the margin will compress, but the dollars will expand, okay.

The average concession -- the average food and beverage per patron in a dine-in theatre is running near $10. In a regular concession stand, it's running closer to $4, above $4 but still closer to $4. So that's our range. The $4 and the $10 come at different gross margin levels.

To Gerry's point, last year -- and it's incremental, but DITs were about 10.7% of the food and beverage total. This year they're up to 11.7%. So we are growing a piece of the business that's delivering a lower percentage margin. But to Gerry's point as well, the total gross profit per patron from food throughout is 10%. So even though the percentage margin may be down, the overall take on the food is improving.

I was just wondering, are you -- like in the IPO stage, you had a number of different initiatives you were trying. Are you starting to clarify which ones seem to be making the most sense and those are the ones you're going to be running with? And that's how we ought to be thinking about it? Because it was pretty complex at that time, and it seems like there's a little more focus now on just what -- how things will roll out.

We are pretty confident that the strategies that -- we're pretty confident that the executions that we have in our portfolio, whether it is the, at the one end, the refreshing of a traditional concession stand primarily by introducing hot foods, at the other end are dine-in theatres. In the middle stage, we may marry those two in some location by location, put in the flexibility kind of thing.

We are fairly, fairly confident that what we're doing on the food and beverage front is working pretty well for us and for our guests. They carry different executional complexity; that's always been the case. They carry different gross margins because a burger that we sell you for $13, $12 and change is going to come at about a 70% gross margin versus a popcorn that I may only sell you for $5 or $6 or $7, well that comes at a 90%.

So yes, we will trade-off. Well, we've always advertised and so we will trade-off gross margin points for incremental gross margin dollars. So I will gladly sell you a $13, $12.5 burger at 70 some-odd points of margin versus an $8 bag of popcorn at 90 points of margin. That's what we're doing and we're going continue to do that.

It's tactically complex, here at the theatre support center. It is not in the building itself. I don't mind complexity here. I don't want complexity at the point of execution with the guests which is the theatre itself.

This may help as kind of supplement what Gerry is saying. We had about a $0.43 bump in our concession per head, and we look at it in a couple of pieces. One is just kind of pricing, and by the way, the tax-on-top strategy that we talked about in the fourth quarter rolls forward and has a year-over-year impact in this first quarter of 2015, and will in second and third as well. That's just under half of the $0.43 was in that element or that piece of it. That tax-on top-pricing and some other concession pricing.

The other half, basically, is from the initiatives. And let's say it's $0.20, $0.21, $0.22 just kind of round numbers relates to the initiatives that we've talked about. And that's dine-in theatres and that's FreeStyle, the Coke machines that give you multiple choices. And that's MacGuffins, and that's the kiosk. And so we're getting a good chunk of the lift.

And it's all kind of spread evenly among the four that I just mentioned. The initiatives on kind of a per-head basis. They're all kind of working, and the clarity is some are working better than others. Alcohol is probably contributing a little more than kiosk, but kiosk is contributing, and back to the point someone made earlier, what are you doing with those core theatres that aren't maybe doing -- well that's where the kiosk is deployed.

That's -- as well as the MacGuffins. I don't know that we're -- the clarity we're getting is that they all seem to be contributing, some a little more than others on the initiative front. But we're actually pretty pleased with all of them.

The trick, Jim, is to figure out what to deploy in each location based on the circumstances that are specific to that location. Left to our own devices, we would have 342 bars already in the circuit. Well, guess what, securing those liquor licenses, it's easier in some jurisdictions than in others.

We're going to be thoughtful about that but we're not -- the size of the price in food and beverage is such that we are going to continue to deploy and handle the complexity that may come and keep it simple at the execution point, regardless of what we need to deal with back here at the office. I'm sorry, I cut you off. What were you going to ask or say?

I was just wondering it, too, then if reserved seating because of the high propensity to sell out the more limited number of reseats is sort of reinforcing all of these mechanisms too?

To a degree. What we have with reserved seating is that it changes our guests' behavior. The prime shows, which are the 7 o'clock in the evening kind of shows, have never been an issue for our capacity utilization. It's all of the shows prior to it, and all of the shows after it. With reserved seating, what we see is a smoothing out of the peaks, so that people now come to those later shows or people plan their day and come to the earlier shows.

We've seen situations, for example in New York and Queens. We have a little seven screen theatre that has as high a capacity utilization on certain weekend evenings in the shows that start at 10:00 PM as they do in the shows that start at 7:00 PM. That's unheard of. That's never happened in our business before.

That's what happens with reserve seating. You give people -- you remove that level of uncertainty from the experience and people respond accordingly. And we like that because they come more often.

I appreciate your thoughts.

You bet. Thank you for the question.

Thank you. I'll now turn the call back over to our speakers for closing comments.

I want to just thank everybody for their time and attention this afternoon. Hopefully, you've liked the new format where we make some of the comments, certainly some of the data-rich comments from Craig available a little earlier, and that way we eliminate some of the quick scribbling and trying to figure out some of the numbers and everything else.

If that works, we'll continue doing it in the future. Look forward to your commentary in the months ahead. And make sure you go to a movie, we have a summer full of them for you, and enjoy them at an AMC. See you guys soon.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.