AMC Entertainment (AMC) Q3 2022 Earnings

AMC Entertainment On Tuesday, it reported another quarterly loss despite higher revenue than a year ago as it spent more on operating expenses.

The world’s largest movie theater chain is struggling with a heavy debt load, reduced stock and a shortened release schedule for blockbusters. While the summer box office was strong, August and September were cooler as studios released fewer films on the big screen.

The company’s net loss for the period ended Sept. 30 widened slightly from a year earlier to $226.9, or 22 cents per share, which was not as sharp as Wall Street had expected. Revenue increased and exceeded expectations. AMC said its overall performance per patron was up, when it comes to admissions revenue and increased consumer spending on food and beverages at its theaters.

Here’s what the company reported compared to Wall Street expectations, according to a survey of Refinitiv analysts:

  • Loss per share: An adjusted loss of 26 cents is expected, versus a loss of 22 cents
  • Income: $968 million vs. $961.1 million expected

The company’s shares were down about 4% in after-hours trading.

AMC is trying to ease its debt burden. In October, it refinanced and paid down some of its debt after completing a $400 million private offering, extending the maturity to 2027.

The company bounced back from the brink of bankruptcy in 2021 thanks to millions of retail investors turning their shares into meme stocks. Since then, AMC has made several plans to raise more capital to pay off its debts and invest in acquisitions, theater improvements, a popcorn business and even a gold mine.

“We’re not out of the woods yet,” CEO Adam Aron said on Tuesday’s call with investors. “While box office is definitely on the rise, it’s still not reaching pre-pandemic levels.”

Although AMC has significant cash, it continues to spend more than it earns each quarter, including concession costs, film exhibition expenses and rent. The company said it burned more than $179 million in cash during the third quarter.

The company will continue to invest in its cinemas, upgrade cinema screens and increase the number of screens with special effects such as IMAX and Dolby Cinema.

CFO Sean Goodman said on Tuesday’s call that the company expects cash burn to improve during the fourth quarter. While reducing debt and increasing liquidity are its main initiatives, the company is open to exploring “attractive opportunities” and is eyeing its financially troubled cinema rivals.

Earlier this year, AMC issued a dividend to common shareholders in the form of preference shares called “APE”. But analysts say the company was unable to take full advantage of the new share sale before attracting investor support.

The company said it will sell 425 million of these preferred shares. On Tuesday, it sold about 14.9 million shares, netting about $36.4 million.

Audiences have returned to movie theaters after the coronavirus pandemic and are spending more than ever on tickets and popcorn. However, the lack of sustained theatrical releases will hit the industry hard in the final months of the year.

According to ComScore, the domestic box office totaled $1.95 billion in ticket sales from July 1 to September 30, down 31% from 2019 levels. The box office saw fewer wide releases during the period compared to pre-pandemic times, with just 19 films debuting in more than 2,000 locations during their opening weekends, down 24% from 2019.

AMC expects the upcoming release of Walt Disney’s Black Panther: Wakanda Forever to be one of the biggest box office shows of the year.

Theaters are expected to see stronger movie releases in 2023, and AMC should be able to make up for the lack of releases by then due to its significant cash reserves.

Shares of AMC have fallen nearly 80% since January and hit a 52-week low on Monday, falling to $5.17 a piece ahead of the company’s earnings report on Tuesday. Aron attributed the drop in AMC’s stock price to macroeconomic headwinds, namely inflation and the performance of rivals such as Cineworld, which recently filed for bankruptcy protection.

Correction: An earlier version of this story misstated the name of the company’s CFO, Sean Goodman.

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