Q4 2025 Earnings Call Transcript

Hello, and welcome, everyone, joining today's AMC Entertainment Holdings, Inc. Fourth Quarter and Full Year 2025 Earnings webcast. [Operator Instructions] Please note this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to John Merriwether, Vice President, Capital Markets. Please go ahead.

Thank you, Stephanie. Good afternoon. I'd like to welcome everyone to AMC's Fourth Quarter and Full Year 2025 Earnings Webcast. With me this afternoon is Adam Aron, our Chairman and CEO; and Sean Goodman, our Chief Financial Officer.

Before I turn the webcast over to Adam, I'd like to remind everyone that some of the comments made by management during this webcast 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 most recent public filings, including our most recently filed 10-K and 10-Q. Several of the 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 against relying 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 webcast, we may reference non-GAAP financial measures such as adjusted EBITDA and constant currency, among others. 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.

After our prepared remarks, there will be a question-and-answer session. This afternoon's webcast is recorded -- is being recorded, and a 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.

Before I begin today's call, I'd like to make a personal comment, if I can. As you undoubtedly know, in early December, upon my return to AMC's home base in Kansas City, I put out a press release, which advise you all that just before Thanksgiving, during a business trip to London, I suffered a minor stroke. Fortunately for me, I got immediate care at a superb London hospital run by the United Kingdom's National Health Service, and it was envisioned that I would have a speedy and full recovery. There was no cognitive problem at the time of the stroke, no issue with reasoning or logic or decision-making or memory other than that for a day or so, I completely lost my ability to speak.

That was 14 weeks ago. You can hear for yourselves my voice today. My voice is back. I am delighted to report to you all that I am in fighting shape and fully ready to do battle.

Speaking of which, let's talk about AMC. As we close the books on 2025, one thing is clear. This was a year of meaningful progress with AMC, both operationally and financially. While it is frustrating for us that the industry recovery unfolded at a much more measured pace than many, including ourselves, originally expected or hoped, even so, the trajectory clearly remained positive, and AMC once again distinguished itself through consistent outperformance, exceeding the expectations of many who guided us.

Even in a softer industry environment for the fourth quarter, of 2025, where the North American box office declined by some 4.4%, AMC nonetheless demonstrated strength and resilience. For the fourth quarter, AMC generated approximately $1.29 billion in total revenue, $134 million of adjusted EBITDA and notably, $127 million of cash from operating activities. Along the way, especially our domestic U.S. theaters once again delivered with a 140 basis points of industry outperformance as we continued to capture increased market share. That's a testament to the strength of the marketing and loyalty platforms at AMC, the growing consumer preference for our industry-leading premium large-format and extra large-format offerings and our commitment to deliver the very best in theatrical entertainment experiences.

We believe that AMC has a powerful and commanding market lead. Our market share confirms that AMC represents more than 1 out of 4 of all the box office dollars generated in the United States. AMC is about 50% larger in size than the second or the third largest U.S. players. And everyone else in our highly fragmented industry has only a 1% or 2% market share or even less than that.

Sean will discuss our full year financial results in more detail, but let me point you to this. In 2025, continuing an improvement trend that has been the case for several years now, we worked so hard at AMC to make our company more efficient. Globally, our attendance in the full year was down 2.1%, but our adjusted EBITDA was up 12.7%. That's a striking contrast.

And there's so much operating leverage in our company. I cannot emphasize this point enough. The operating leverage in our company is meaningful. Approximately 2/3 of the incremental revenue dollar drops down to the adjusted EBITDA line.

So if and when our revenues are growing, our adjusted EBITDA at AMC can grow and do so meaningfully. That's our expectation for 2026. No one's crystal ball is perfect, but most knowledgeable forecasters have the 2026 movie slate being considerably richer than that of the past 3 years -- the past 6 years. And that is so vital because candidly, the economic levels that we experienced in 2025 are simply not sufficient to carry the day. But we are optimistic and we are confident.

Disney and Universal have what looked to be fabulous movie slates. Warner Bros says that it will be releasing more movies in 2026. Paramount says that it will be releasing more movies in 2026. Amazon MGM says that it will be releasing more movies in 2026. Theatrically, even Netflix has the capability to be releasing more movies and smaller operations like A24 and Angel Studios, among others, also seem poised to embrace theatrical exhibition with ambition. With an increased count of widely released film titles coming out in 2026, it is our firm expectation at AMC that the industry box office will grow markedly in 2026, that AMC's market share will remain compelling and that the very real operating leverage inherent in our business will kick in, in such a way that it can cause dramatic improvement in AMC's financial results. 2026 has only just begun, but encouragingly, January was off to a strong start with the North American box office up approximately 16% compared to last year and growth in the European market has been even more significant.

Across the 12-month year ahead, the film slate is shaping up to be one of the most compelling in recent memory, anchored by an extraordinary lineup of films that can only be described as a parade of juggernauts that are ideally suited to AMC's industry-leading network of highly productive, high-grossing theaters. Based on the strength of the upcoming release slate, we believe that the North American box office in 2026 could increase by approximately $500 million to as much as more than $1 billion greater than was the case in 2025. And as I just articulated, and as previously reported AMC financial results prove out to be true with rising revenues, the growth in AMC's adjusted EBITDA can be substantial.

I'm not going to take you through the list of 2026 movies title by title. That impressive cavalcade should play out during the year. Suffice it to say, though, that we expect to see a rising industry-wide box office in 2026, the biggest since 2019. And with the operating leverage of incremental revenues translating to incremental adjusted EBITDA, rising 2026 revenues bode well to engender a material and positive impact on AMC. I do want to be clear, though, that we will likely need at least a strong 2027 film slate as well, which we do expect, by the way, for AMC to be cash flow positive in outer years, but the considerable progress that we expect to make in this year, 2026, should fill us all with heightened confidence as to our future.

Now let's turn from operating leverage to financial leverage and the improvements taking place within the AMC balance sheet. Strengthening the AMC balance sheet remains an extremely important strategic priority for this company. Since the end of 2020, AMC has reduced total debt by approximately $1.8 billion, including a $1.4 billion reduction in the principal balance of our outstanding debt and an additional $420 million repayment of COVID-related theater rental lease deferrals. During 2025, AMC continued to take capital markets actions to strengthen our balance sheet and prepare for the anticipated box office recovery that we think is coming this year.

In July of 2025, we closed a series of transformative transactions, including receiving more than $240 million in cash from new debt issuance and the equitization of $183 million in debt with the potential to equitize even more up to a total of approximately $337 million. These transactions address all, I repeat, all of our 2026 debt maturities, pushing them out to 2029. In addition, just last week, we launched yet another transaction to refinance another approximately $2.4 billion of our debt. If successful, that refinancing will extend the maturity of that debt from 2027 and 2029, all the way out to 2031. Simply put, at AMC, we continue to do exactly what we said we would do, take decisive action for AMC Entertainment to fortify our financial foundation, to bolster our cash reserves and to enhance our flexibility.

With that, I'll now turn the call over to Sean Goodman, our CFO. Sean?

Thanks, Adam, and good afternoon to everyone. As Adam noted, 2025 did represent a year of meaningful operational and financial progress. Although the industry box office did fall short of expectations, AMC performed exceedingly well in the areas that are within our direct control. For the full industry box office increased by a modest 1.5% and industry attendance in the European markets in which we operate declined by approximately 3% versus 2024. Nonetheless, at AMC, we grew consolidated revenue by 4.6% versus 2024 to more than $4.8 billion as we welcomed more than 219 million guests to our theaters across the globe and we grew adjusted EBITDA to approximately $388 million, a nearly 13% year-over-year improvement, all of this in an essentially flat industry box office environment.

We achieved these consolidated financial results with record-setting per patron revenue and per patron profit metrics. Admissions revenue per patron grew 5.9% to a record of $12.09. Food and beverage revenue per patron grew 5.1% to a record of $7.62, and total revenue per patron grew 6.8% to another record of $22.10. Importantly, our contribution margin per patron, this is defined as total revenue less film exhibition and food and beverage costs divided by attendance, this metric grew 7.2% to yet another record-setting $14.80. This measure of per patron profitability is now 51% higher than in pre-pandemic 2019, underscoring the meaningful improvements that we have made to the business over the last few years.

Breaking down our results by segment, starting with U.S. operations, we outperformed the North American box office, growing our admissions revenue by 3.9%, 240 basis points in excess of the overall industry growth. This outperformance helped drive total revenue growth of 4.6%, along with a nearly 15% increase in adjusted EBITDA. And consistent with the overall consolidated trends I referenced earlier, our U.S. theaters delivered record-breaking per patron metrics for admissions, food and beverage and total revenue with total revenue per patron growing 5.3% to $23.79. In addition, the business generated a record per patron contribution margin of $15.69, a 5.7% improvement over the prior year.

Domestic total revenue per patron is now 48% -- is now up 48% versus pre-pandemic 2019 and domestic contribution margin per patron is now up 56% compared to pre-pandemic 2019. Now turning to our international operations. Note that the results are impacted by an increase in foreign currency exchange rates of approximately 4.5% year-over-year. With attendance at our international theaters down 5.5% versus the prior year, revenue grew by 4.6% or was flat in constant currency, and adjusted EBITDA declined by 2.1% or 10% in constant currency. Our international theaters also delivered record-breaking per patron metrics for admissions, food and beverage and total revenue with total revenue per patron growing 10.6% or 5.8% in constant currency to a record-setting $17.97 and contribution margin per patron growing 11.3% or 6.4% in constant currency to a record-setting $12.61. Total international revenue per patron is now up 32% versus 2019, and international contribution margin per patron is up 37% compared to pre-pandemic 2019. Our results for 2025 reflect the effectiveness of our industry-leading loyalty programs, innovative pricing strategies, leadership in premium formats and innovative food and beverage offerings, complemented by a relentless focus on the efficiency of our operations and optimization of our theater footprint.

In that regard, we continue to execute a transformation of our theater portfolio, negotiating more favorable lease economics, exiting underperforming locations and selectively acquiring high-quality theaters that enhance our network. During 2025, we closed 21 locations, and we opened 3. Since 2020, we've now closed 213 locations and opened 65 locations for a net reduction of 148 theaters or roughly 15% of our portfolio. This ongoing reshaping of our footprint reflects our commitment to improve asset productivity, expand margins and position AMC for sustainable long-term growth. Now let's move to the balance sheet.

We ended the year with $428 million of cash. This excludes restricted cash. Our free cash flow for the year was a use of cash equal to $366 million. It's very important to note that this negative free cash flow was entirely related to the first quarter of 2025, and that for the 9 months ending December 31, 2025, we generated positive free cash flow of $51 million.

As you may recall, our traditional working capital cycle is closely tied to the seasonality of the box office. Generally, this has resulted in a positive cash impact from working capital in the second and fourth quarters with a negative cash impact in the first and third quarters, the first quarter typically representing the largest negative cash impact. This pattern held true in 2025. And assuming similar box office seasonality, we would expect this cadence to exist in 2026. As Adam said, strengthening our balance sheet has been and will continue to be a top priority. This includes maintaining robust liquidity and continuing to pursue opportunities to extend debt maturities, reduce debt servicing costs and decrease the principal balance of our debt.

As Adam noted as well, we recently launched a refinancing transaction targeting our $2 billion term loan due in 2029 and our $400 million Odeon notes due in 2027. This new debt offering, if successful, will address the vast majority of our 2027 debt maturities, extend a significant portion of our debt maturities to 2031, simplify our capital structure and reduce our debt servicing costs. In addition, we're also in the market with an at-the-market equity offering. Proceeds from the offering will be used to strengthen our balance sheet and also allow us to continue to invest in our core business to elevate and differentiate the moviegoing experience for our guests.

As of last Friday, we received $26.2 million of gross proceeds from this equity offering. Our capital allocation priorities are clear and consistent. First, maintain robust liquidity and strengthen the balance sheet; and second, invest in our core business to elevate the guest experience. This disciplined approach to capital allocation reflects our commitment to building an increasingly strong and resilient company to deliver long-term shareholder value.

From a capital expenditure standpoint, our 2025 CapEx net of lease incentives totaled $200 million, exactly at the midpoint of our previously communicated $175 million to $225 million range. And we expect 2026 CapEx net of lease incentives to be between the same range of $175 million to $225 million. Looking ahead, we see an exceptionally strong film slate in 2026 and beyond. And the operating leverage inherent in our business, coupled with continued success in growing that per patron revenue and per patron profit metrics means that we are very well positioned to meaningfully increase adjusted EBITDA, improve free cash flow and strengthen our balance sheet with the box office growth that is anticipated in 2026 and beyond.

And with that, I'll turn this call back over to Adam.

Thank you, Sean. Our 2025 results and our optimism for 2026 underscore that AMC remains firmly playing on offense, focused on bold strategic initiatives that elevate the moviegoing experience and reinforce AMC's position as the clear leader in theatrical exhibition. One year into our forward-looking AMC Go Plan, the results are both tangible and encouraging as AMC continues to delight our guests and AMC continues to position ourselves for sustained growth in 2026 and beyond. As one example, laser projection with its brighter, sharper screen images now exists in fully half of our U.S. theater circuit.

And how can we not revel in the leadership position that AMC enjoys in the availability of premium large-format and extra large-format screens. As you know, they command sizable price premiums, and they're about 3x more productive than a standard screen. It's no accident that AMC has more premium large-format screens and more extra large-format screens than any other exhibitor on earth. So it's obvious why we are so glad that our count of IMAX screens and our count of upgraded IMAX with laser screens is growing, that our count of ever so popular Dolby Cinema screens is growing.

You know that with CJ's ScreenX and 4DX offerings as well as for increases to the numbers of our PRIME and iSense house brand PLF offerings. I am especially pleased to by the story surrounding AMC's XL or extra large-format screens. They were created out of thin air and piloted by our Odeon team in Europe less than 2 years back. And given their success, we now are expanding the reach of XL broadly across our U.S. theaters as well.

We now have just right around 170 or so XL screens globally, and I would expect that, that number will literally double by the end of 2026. Moving beyond the auditorium, our world-class AMC marketing and loyalty programs continue to evolve smartly in 2025. In January 2025, we introduced a new successful AMC Stubs loyalty tier called AMC Premiere GO that allows consumers to trade up to Premier status or a modified Premier status through increased patronage at our chain without having to pay an added fee. That's taken our member enrollments all the way up to some 39 million households in the United States accounting for an impressive 51% of our total U.S. attendance during the year playing for points in our frequent moviegoer loyalty program.

That level of engagement not only deepens guest loyalty, but also provides valuable insights given our extensive database containing as it is a myriad of purchase transactions guest by guest that enable us to smartly and more targeted basis, create marketing efforts to our best customers on an ongoing basis. Another important pricing action within the scheme of our loyalty program was price increases, considerable price increases in our A-List loyalty program -- subscription program that occurred in the month of May. And while those are examples of price rises with a keen focus for having raised prices during peak demand periods and to the most frequent of our guests, it is also true that AMC simultaneously has remained committed to appealing to the value-conscious consumer as well.

So in July of 2025, our marketing team reimagined our long-standing discount Tuesdays program by launching an intriguing and attention getting new 50% off Tuesdays and Wednesdays initiative. Importantly, our analysis shows that the incremental attendance generated on these 2 weekdays now has not cannibalized our weekend attendance and to the contrary, has increased the business generated in our theaters midweek, an outcome that benefits both AMC and our studio partners and of course, benefits the movie going public in addition. And we did not stop there. At the end of 2025, we introduced the AMC Popcorn Pass to our loyalty members an innovative annual offering that allows AMC Stubs members to enjoy 50% off pricing all year long on a large AMC Perfectly Popcorn for a onetime fee of $29.99 plus tax per year.

In only the first 2 months after launch, more than 120,000 guests have already paid us this $30 fee for a Popcorn Pass. Beyond delivering exceptional value to the guest, the Popcorn Pass also encourages more frequent theater visits and deeper guest engagement. If those were things that we did in 2025, I would like to tease you today with one of what I think will be one of AMC's best new marketing ideas for 2026. Later this year, AMC will introduce preferred so-branded premier seating where we will block and reserve the best seats in the house in our theaters to be accessed first only by our A-List and our Stubs premier members.

That's the 2 VIP tiers within our Stubs program. At no added charge at AMC, we will assure that the best seats in our auditoriums are held out only, at first anyway, for our best customers. We think it will be a considerable consumer benefit that our most frequent guests will notice and greatly appreciate, further cementing their brand loyalty to AMC. There are 2 other things I'd like to highlight before turning this call over to your questions.

First, you may recall that a few months ago, AMC and Netflix made the joint decision to partner together. This was a significant departure from our 2 companies staying at arm's length from each other over a period of many years. That effort started in bringing Netflix's popular K-Pop Demon Hunters to AMC theaters over the Halloween weekend. That collaboration between AMC and Netflix proved highly successful with AMC delivering to Netflix approximately 35% of the film's total attendance during that holiday weekend time frame.

Building quickly on that momentum, our dialogue with Netflix continued, resulting in AMC's hosting the series finale of Stranger Things in some 231 AMC theaters across the United States over New Year's Eve and New Year's Day. The response to that AMC Netflix offering in theaters wildly exceeded all of our expectations. We initially only put on sale about 105,000 seats or so, but one with all done a month later, AMC had the privilege to welcome more than 753,000 Stranger Things fans, collecting approximately $15 million in cash from Netflix fans watching the Netflix product in an AMC theater. In just 2 days, it was a powerful demonstration of the demand for shared theatrical experiences tied to culturally significant content.

The success of our recent collaboration with Netflix highlights the strategic opportunity that lies ahead, and I am certain that we'll have more adventures together cooperatively with Netflix. With roughly 2/3 of AMC Stubs loyalty members also subscribing to Netflix, the audience overlap between our 2 companies is both significant and compelling. As a result, our companies -- our 2 companies should be the best of friends. And I can confirm to you that AMC is enthusiastic about the prospects of expanding our relationship with Netflix.

We look forward to working together to create innovative, mutually beneficial theatrical events that drive value for both companies. The second thing that I like to mention before closing, with the recent meteoric rise in the share price of Hycroft Mining Company, I could not be more pleased to report to you that our investment in Hycroft has met and exceeded attractive financial hurdle returns. In November of 2025, we monetized just more than $24 million from a partial sale of our Hycroft stake. But importantly, at the time, we said that we would retain a significant number of shares and warrants to continue to experience upside.

Those remaining shares and warrants in Hycroft are worth right about $39 million at today's market closing price. So that $63 million or so in total compares quite favorably to the $29 million that we invested in Hycroft 4 years ago. For those of you who scoffed at our Hycroft investment at that time, and there were many of you, you were wrong and we were right. As we conclude, AMC's resilience continues to set us apart.

While the industry recovery has progressed more gradually than anyone might have originally anticipated or wished to see it the curve. Even so, AMC has remained agile, disciplined and firmly focused on long-term value creation. AMC has demonstrated our ability to navigate a dynamic environment. Some would say an extremely difficult and challenging environment, but all the while we did so, we also strengthened our competitive position, and we emerged poised to capture gain from the opportunities that we believe are ahead.

That opportunity is now at hand. We expect the box office to rise in 2026. And please remember from this call, the 2 most important words that are relevant to AMC, operating leverage. An increase in our revenues in 2026 has the prospect of leading to many a smile as we watch our adjusted EBITDA levels as the year unfolds. As we have had to say far too many times over the past 6 years, we are not out of the woods yet, and there are challenges ahead still, but the signposts for 2026 are indicating a significantly strengthened year ahead.

With that, let's turn the call over to our operator to pull analysts for their questions from equity research analysts. And then Sean, I'll give the podium to you, and you and I will review some questions submitted by our retail investors.

[Operator Instructions] Our first question comes from Chad Beynon with Macquarie.

Adam, great to hear that you're feeling and sounding much better here. I wanted to ask, I know, Sean, in the prepared remarks, you talked about the screen or the theater count reduction in '25 and in the past couple of years. How are we thinking about your fleet or portfolio at this point given the strong outlook for content in '26? And then related to that, are there expected to be any new builds that are in that CapEx number?

Chad, as I've said in my prepared remarks, we've done significant activity, closing over 200 theaters over the last 6 years and opening around 65-odd. We will continue to take actions to close theaters, to reduce leases as we go forward. About 10% of our leases come up for renewal each year. So that's about 85 leases coming up for renewal.

And each time these leases come up for renewal, we have that opportunity to improve our overall theater economics. The portfolio has improved significantly over the last 6 years. It's one of the reasons that our per patron metrics and our per patron profitability is so much higher than it was before. But we believe there continues to be a very significant opportunity.

Like most organizations or companies with a retail footprint, our theaters are a kind of normal distribution, and there is a tail of underperforming or loss-making theaters. And we see an opportunity to close those theaters or renegotiate leases and then take on new theaters that are significantly -- very significantly more profitable. So I think you're going to see the similar sort of pace going forward. We'll be closing more theaters than we open, but the new ones that we opened are generating significantly more profit than the ones that we closed.

And to your question about sort of the CapEx level, there'll be a small number of new theater locations in 2026 and going forward, and that is included in our CapEx projections in the $175 million to $225 million range.

I might add that look, everything we've been doing smartly over the past few years, we've been capital-light. So you specifically used the phrase new build theaters. New build theaters are considerably more expensive than what we call spot acquisitions, where we can take over a theater where most of the capital has already been spent, and we maybe pop $500,000 to $1 million just to upgrade it and bring it into the AMC fleet and apply our marketing programs and our product experiences and expertise. And when we've done this in the past, we've seen substantial rises in the revenues of the theater and the efficiencies of the theater that we've taken over.

So as Sean said, I'm sure we'll close some underperformers, which makes us money. It doesn't cost us money. And we'll probably add a handful of spot theaters -- spot acquisitions as well.

And maybe it's worth pointing out the example of the growth, right, which in Los Angeles that we took over as a spot acquisition. And that theater used to be #28 in the country in terms of annual box office receipts. Now we're adding the AMC secret sauce that theater is now #5 in the country in terms of receipts. And that's just one small example of the benefits that we bring and the attractiveness of AMC as a tenant for landlords in their developments.

Okay. Great. And then my unrelated follow-up. I think you mentioned most are expecting the U.S. box office to be up somewhere between $500 million and $1 billion.

I think that's where most analysts are in this high single-digit, low double-digit growth rate. International is a little harder for, I think, us in the industry to pinpoint. Do you have a gut feel if international admission revenues could be higher or lower than kind of what we're seeing in North America this year?

Well, we've completed 7 weeks or 8 weeks of -- almost 8 weeks of '26, and we know already that Europe is recovering faster than the United States from the 2025 box office. So if I had to be a betting man, we'd say Europe is going to be stronger than the U.S. And some of you like to report in constant currency and some of you like to report as the dollars come in. The dollar has been pretty weak, which means that our overseas revenues and overseas EBITDA is coming back in U.S. dollars in even stronger levels.

So this could be -- year-over-year, this could be Europe's best year of the last 6.

I'm showing no additional questions at this time. I'd like to now turn it back to Sean Goodman for retail shareholder questions.

Thank you, operator. Adam, we have a couple of questions here. Firstly, relating to the food and beverage business. As you and I both know, our food and beverage per patron numbers have just been spectacular post pandemic.

And I think there's really exciting opportunities for us ahead there. But the question is sort of what future changes of innovations can people expect on the food and beverage side?

This is really important because if you look at why this company has been able to navigate really turbulent waters over the past half decade. Our strength in food and beverage sales has been a big reason. If you look at our contribution per patron, it's up not quite 50%, but almost 50%, which means that we don't actually need the box office to recover all the way back to 2019 pre-COVID levels. And that's a direct result in part because of our food and beverage success.

I think at this point, there's a lot of finessing that's going on within our food and beverage operation where we're using menu experimentation to please the guests and help our bottom line. As one example, we just introduced in the fourth quarter of '25, freshly baked chocolate chip cookies, which not only taste great, but smell great in the theater lobbies, and they replaced doughnut holes, which we're not selling as well at our concession stands. We just introduced at our dine-in theaters a much better pizza than we've had in modern memory. It looks like real pizza.

It tastes like real pizza. It is real pizza, and it's really good. I've tested it myself in the kitchens, and I'm a pizza buff. But -- so those are 2 examples.

Another thing that's really important, though, of what's happened in our concession stands is not what you eat, but what you buy 3 years ago, AMC didn't sell essentially any movie-themed merchandise. And our movie-themed merchandise now has become a sizable business for us. In 2025, it was $65 million in the United States, another $10 million to $15 million in Europe. This was a business that didn't drive literally $0.01 of revenue or EBITDA 3 years ago, and it's now doing $80-ish million of business today and the profit margins in this thing are -- it's about 50% or so margin business, like that's substantial.

And I think that this movie-themed merchandise business is poised to grow again dramatically in 2026. I wouldn't be surprised if it grows by 20% or more as we enter our fourth year of successful effort in and around our concession stands in our theaters.

So there's a lot going on in the industry at the moment. And there's questions about -- just for you to comment on our relationships and relations with studios, what's going on with windows, update on union negotiations and the potential for a strike later this year?

Sure. When you talk about what's our relationship with studios, it sure helps when you sell more movie theater tickets for every single studio than anybody else on earth, especially if you combine the ticket selling in quantity with the amount of effort that AMC devotes to our studio interactions. I can say with confidence that AMC enjoys a very strong special relationship with each and every studio, every single one, we think highly of them because our lifeblood depends on it. And I believe that they think highly of us because that they know at the end of the day, we're going to outperform for them above everybody else.

So in terms of studio relations, it's all great. An interesting development when I think of studios is not just the traditional studios, the majors, but we've had surprisingly good interactions of late with some of the streamers who historically were not major theatrical exhibitors. Last year, we had real success with Apple in their film F1. We leaned into it in a big way. We were very successful with the film.

They were very successful with the film. We appreciate our relationship with them. I know they appreciated the support that we put forward. I'm looking forward to big things coming from Apple original films going forward.

Amazon is now telling us that their goal is to release 15 theatrical movies in 2027 and that they'll probably get up to 10 to 13 theatrical movies on their slate in 2026. That's news. Amazon MGM was only good for a movie or two 5 years ago. They've become a real player in Hollywood. And then there's Netflix.

We had this September meeting where we sorted through how we could work together and that it would be advisable to work together. And the first 2 efforts out of the shoot were extraordinarily positive. I know that we're excited about doing more with them, and I know that they were pleased with AMC's effort on their behalf towards the end of 2025. You mentioned in your question, union negotiations. For good or for bad, we're not a party to those union negotiations.

We have a vested interest in their outcome, but we're not at the table. I do know that the studios have taken these negotiations seriously. They've started the negotiation process earlier than they did last time around. I think the general consensus is that the 2 strikes a couple of years back were devastating to everyone connected to the movie business, devastating to the members of the union, have devastated -- devastating to movie makers.

I would sure hope that we don't have to repeat anything like that and that the union studio negotiations transpire in such a way that deals are met and that the production of movies goes along without interruption.

And then our final question here is on CapEx spend. We've guided to $175 million to $225 million a year, which is the same in 2026 as it was in 2025. Just questions on how we're allocating our CapEx spend, sort of what are the focus areas for our CapEx spend?

Well, very round numbers, right, very round numbers. $150 million of that number is what I'll call maintenance capital to keep our theaters in good shape. Roofs aren't leaking, HVAC systems working, IT systems being overhauled as needed to continue to have AMC be a strong player from an IT standpoint. AI is capturing some of our money now because there are ways to make our company more efficient through the adoption of AI techniques. Beyond that, though, in a capital-light way, we continue to be very committed to upgrading the theater experience.

And we're going to add more IMAXs. We're going to add more Dolby Cinemas. We're going to add more PRIMEs and iSenses. We're going to double the number of XL screens.

This is all good. At the same time, a decade ago, AMC was quite experienced and practice in renovating whole theaters expensively, ripping out seats, putting in the so-called recliner seats, which are very popular with guests. But we have a problem. And the problem is we have a number of theaters that -- where the volumes are so high that we can't afford the seat loss of pulling a lot of seats out of the auditoriums.

It reminds me of the old Yogi Bear quote, "Nobody goes there anymore because it's so crowded," as he once said. So there's -- it was easy to decide how do you renovate a theater if you got to rip everything down to the studs and put them in recliner seats with 6 feet of leg room for row. But now we're at a point where that's pretty much behind us. And we're looking at how do we keep the product top flight in some of our highest volume theaters where more traditional seating is going to be the norm.

And we came up with what we think is the answer. And interestingly, Sean, it's also a capital-light solution. We had a theater in Burbank that was the single highest grossing theater in the United States, but it was in kind of ratty condition 2.5 years ago. The seats were tired and old and stained.

And we knew we had to replace all the seats, the Burbank Theater, but we also knew that we -- the volumes were so high at the theater, we were going to need a similar seat count to what we have at the time. So we -- a lot of studies, we investigated dozens and dozens of different potential seats. And we came up with what is now -- if you look at our website and app, is branded as the AMC Club Rocker. It's a very comfortable seat and much superior than anything that's in our traditional seating theaters today.

It's kind of a leathery look. I'm not sure it's actually leather, but looks like an leather, it feels like leather, it smells like leather. It's got a lot of padding and cushioning. It's wider than the older seats, and it rocks.

It moves around a little bit, so people can adjust the seat to their own comfort. And it was a massive hit when we put it in Burbank 16. So we took that same exact seat, and we put it into our Empire Theater in Manhattan -- in our Lincoln Square theater in Manhattan. And week after week after week, I was seeing in our reports that of our 550-ish theaters in the country, the 3 highest grossing for AMC were Burbank, Empire and Lincoln Square, week after week after week. What is them common, the Burbank seat.

We have since put it into some of our other theaters. For those of you who are knowledgeable about a theater on the upper East side in Manhattan called Orpheum 6, we're going to put that seat into Orpheum 6 sometime this year. We're going to greatly expand the legroom to 48-inch seat pitch, which is a lot. I love to say 4 feet for your 2 legs.

And the combination of a lot of legroom and that very comfortable new club rocker seat is going to turn that theater into what is now a tired substandard old Loews theater from ages ago into a real powerhouse on the Upper East side. And we're also going to look to take that club rocker seat into others of our theaters as well. And it's a very inexpensive effort to redo a theater and make it nice, but do so in a smart capital-light way. So those are examples of where the money is going.

There was an earlier question about will we just crack theaters or will we add some? We will do both. So when we take over a theater, we might spend $0.5 million or $1 million to bring the theater into our system if it's in relatively good shape. If it needs a little bit of renovation money, maybe we work with the theater landlord to jointly put up $2 million, $3 million, $4 million to bring some theaters into our fleet in very good condition.

Hopefully, the landlord would pay a significant chunk of that cost through tenant allowances and the like. So that's another thing that's going on within the CapEx budget. But as you said, we've got a fairly tight constraint. A couple of years ago, we were spending $400 million, $450 million, $500 million of CapEx.

We believe that rounding to the $200 million range is something that we can -- plus or minus $25 million is something that we can do going forward in the near term. So that's the update.

And that concludes the retail investor questions.

So let me just end the call by thank you all for listening to us today and participating with us. It is going to be the strongest slate of moviegoing that this industry has seen since 2019. The year is starting up in double digits, which is a nice way to start. And I leave you with this one thought that's dominating our thinking and my comments on this call, that notion of operating leverage, as revenues rise, EBITDA rises, and it does so at a geometric pace. So we won't be all the way to where we need to be at the end of '26, but we expect to make a dramatic amount of progress.

So this should be a year that makes us all smile. Thank you for joining us today. See you at the movies.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.