AMC Entertainment (AMC) earnings Q3 2022

AMC Entertainment reported a consecutive quarterly loss on Tuesday despite higher revenue from a year ago as it spent more on operating expenses.

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

For the period ended Sept. 30, the company’s net loss rose slightly to $226.9, or 22 cents a share, from a year earlier, not as sharply as Wall Street had expected. Revenue has grown and exceeded expectations. AMC said its overall per-patron numbers increased when it came to increased admissions revenue and customer spending on food and beverages at its theaters.

According to a survey of analysts by Refinitiv, the company reported that, compared to Wall Street expectations:

  • Loss per share: A loss of 22 cents was adjusted against an expected loss of 26 cents
  • Input: $968 million vs. $961.1 million expected

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

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

The company bounced back from the brink of bankruptcy in 2021 thanks to millions of retail investors who turned its stock into a meme stock. Since then, AMC has made several plans to raise more capital to pay off debt and invest in acquisitions, theater renovations, a popcorn business and even a gold mine.

“We’re not out of the woods yet,” CEO Adam Aron said in a call with investors on Tuesday. “While the case is definitely increasing, it is still not at pre-pandemic levels.”

Although AMC has a significant amount of cash, it continues to spend more than it spends on operations each quarter, including concession costs, film exhibition costs and rent. The company said it burned through more than $179 million in cash in the third quarter.

The company will continue to invest in its theaters, upgrading movie screens and adding special effects screens such as IMAX and Dolby Cinema.

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CFO Sean Goodman said on Tuesday’s call that the company expects its cash burn to improve in the fourth quarter. While reducing debt and improving its liquidity is its main focus, the company is open to exploring “attractive opportunities” and is keeping an eye on struggling cinema rivals.

Earlier this year, AMC issued dividends to common shareholders in the form of preferred shares, known as “APEs”. But analysts say the company could not take full advantage of the new share sale before investors showed support.

The company said it will sell up to 425 million of those preferred shares. As of Tuesday, it had sold about 14.9 million shares, bringing in about $36.4 million in net proceeds.

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

The domestic box office generated $1.95 billion in ticket sales between July 1 and September 30, down 31% from 2019 levels, according to ComScore. There were also fewer wide releases at the box office than before the pandemic, with only 19 films debuting in more than 2,000 locations over the weekend, a 24% drop from 2019.

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

Theaters are expected to see a strong slate of movie releases in 2023, and AMC should make up for the lack of releases by then due to its substantial cash reserves.

AMC shares have fallen nearly 80% since January and hit a 52-week low on Monday ahead of the company’s Tuesday earnings report, falling to $5.17 a share. Aron attributed the decline in AMC’s stock price to macroeconomic changes, particularly 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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