AMC Entertainment (AMC) earnings Q3 2022

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

The world’s largest movie theater is struggling with a huge debt burden, shrinking its inventory and short release schedules 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 increased slightly from a year earlier, to $226.9, or 22 cents per share, which was not as wide as Wall Street had expected. Earnings rose and beat expectations. AMC said all of its patronage metrics have increased when it comes to admission revenue and increased consumer spending on food and beverages in theaters.

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

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

The company’s stock fell nearly 4% in after-hours trading.

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AMC is working to reduce its debt load. In October it refinanced and repaid some of its debt, extending its 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 converted their shares into memo stock. Since then, AMC has made several plans to raise more capital to pay off its debts and invest in acquisitions, theater upgrades, popcorn businesses and even gold mining.

“We’re not out of the woods yet,” CEO Adam Aaron said on a call with investors on Tuesday. “While the box office is undoubtedly on the rise, it is still down to pre-pandemic levels.”

While AMC has a sizable cash war chest, it continues to spend more each quarter than it does on operations, including amortization costs, movie theater costs and rent. The company said it burned through more than $179 million in cash during the third quarter.

The company will continue to invest in its cinemas, improve movie screens and increase the number of special effects screens, such as IMAX and Dolby Cinema, across its footprint.

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CFO Sean Goodman said Tuesday that the company expects cash burn to improve during the fourth quarter. While reducing debt and increasing its liquidity are its key initiatives, the company is open to exploring “attractive opportunities” and is eyeing its movie theater competitors that are struggling financially.

Earlier this year, AMC issued a dividend to common shareholders in the form of preference shares called ‘APE’. But analysts said the company was unable to fully invest in the new share sale before investors withdrew their support.

The company said it would sell up to 425 million of its preferred shares. As of Tuesday, it had sold nearly 14.9 million shares, raising net income of $36.4 million.

Audiences are returning to theaters in the wake of the coronavirus pandemic and spending more than ever on tickets and popcorn. However, the lack of consistent theatrical releases will weigh heavily on the industry in the final months of the year.

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

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AMC management expects Walt Disney’s upcoming release “Black Panther: Wakanda Forever” to be the biggest box office performance of the year.

Theaters are expected to see a strong slate of movie releases in 2023, and AMC should be able to ride out the lack of releases until then thanks to its significant cash reserves.

AMC shares have fallen nearly 80% since January and hit a 52-week low on Monday, falling to $5.17, ahead of the company’s earnings report on Tuesday. Irwin attributed AMC’s low stock price to macroeconomic headwinds, namely inflation, and the performance of competitors such as SeaWorld, 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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