AMC Entertainment (AMC) Earnings for the Third Quarter of 2022

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

The world’s largest movie theater chain is facing a massive debt load, diluting its inventory, and a short film release schedule. While the summer box office was strong, August and September were more tepid, with studios releasing fewer movies on the big screen.

For the period ending September 30, the company’s net loss rose slightly from a year ago to $226.9, or 22 cents a share, which wasn’t as steep as Wall Street had expected. Revenue rose and also exceeded expectations. AMC said the overall metrics per beneficiary were high when it came to admission revenue and increased consumer spending on food and beverages in its theaters.

Here’s what the company reported, versus what Wall Street expected, according to a Refinitiv poll of analysts:

  • share loss: Adjusted for a loss of 22 cents against an expected loss of 26 cents
  • he won: $968 million vs. $961.1 million forecast

The company’s stock is down nearly 4% in the trading period after the close.

AMC is working to ease its debt burden. In October, it refinanced and paid off some of its debt, extending its maturities to 2027, after completing a $400 million private placement.

The company came back from the brink of bankruptcy in 2021 thanks to the millions of retail investors who converted its shares into M shares. Since then, AMC has devised several plans to raise more capital to pay off its debts and invest in acquisitions, theater upgrades, and the popcorn business. Even a gold mine.

“We are not out of danger yet,” CEO Adam Aaron said on a Tuesday call with investors. “While the box office is unequivocally on the rise, it is still below pre-pandemic levels.”

While AMC has a large war cash fund, it continues to spend more than it makes each quarter on operations including franchise costs, film exhibition costs 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 theaters, modernizing movie screens and increasing the number of special effects screens, such as IMAX and Dolby Cinema, through its footprint.

Chief Financial Officer Sean Goodman said on a call Tuesday that the company expects liquidity burning 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 has been keeping an eye on its financially struggling movie theater competitors.

Earlier this year, AMC issued a dividend to common shareholders in the form of preferred stock called “APE”. But analysts say the company was not able to fully benefit from the sale of new shares before investors withdrew their support.

The company said it will sell up to 425 million of these preferred shares. As of Tuesday, it has sold approximately 14.9 million shares, increasing net revenue by approximately $36.4 million.

Audiences are back in movie theaters in the wake of the coronavirus pandemic and are spending more than ever on tickets and popcorn. However, the lack of consistent theatrical releases will greatly impact the industry during the final months of the year.

The domestic box office recorded $1.95 billion in ticket sales between July 1 and September 30, down 31% from 2019 levels, according to ComScore. The box office also saw fewer broad releases during the period than in pre-pandemic times, with just 19 films appearing in more than 2,000 locations during their opening weekends, down 24% from 2019.

AMC expects the upcoming Walt Disney movie Black Panther: Wakanda Forever to be one of the biggest box office hits of the year.

Theaters are expected to see a stronger slate of movie releases in 2023, and AMC should be able to weed out the release shortage until then due to its large cash stock.

AMC shares are down about 80% since January and hit a 52-week low on Monday, slipping to $5.17 a piece, ahead of the company’s earnings report on Tuesday. Aaron attributed the drop in AMC’s stock price to macroeconomic headwinds, specifically inflation, and the performance of competitors such as Cineworld, which recently filed for bankruptcy protection.

Correction: An earlier version of this story misspelled the name of the company’s chief financial officer, Sean Goodman.

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