AMC Entertainment (AMC) earnings Q3 2022

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

The world’s largest movie theater chain is grappling with massive debt, shrinking stock and a release schedule short of blockbusters. While the summer box office was strong, August and September were hotter as studios released fewer movies on the big screen.

For the period ended Sept. 30, the company’s net loss rose slightly from a year earlier to $226.9, or 22 cents a share, missing Wall Street expectations. Revenues rose and exceeded expectations. AMC said gross per-customer figures rose as admissions revenue and food and beverage spending at its theaters increased.

What the company reported compared to Wall Street’s expectations, according to a survey of analysts by Refinitiv.

  • Stock loss: A loss of 22 cents compared with an expected loss of 26 cents
  • Income: $968 million versus expectations of $961.1 million

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

AMC is working to reduce its debt load. In October, it refinanced and paid down some of its debt and extended the term to 2027 after a $400 million private offering.

The company came back from the brink of bankruptcy in 2021 thanks to millions of retail investors who turned their shares into meme stocks. Since then, AMC has come up with a series of plans to raise more capital to pay down debt, including acquisitions, theater renovations and investments in popcorn businesses. and even a gold mine.

“We’re not out of the woods yet,” Chief Executive Adam Aron said during a call with investors on Tuesday. “The box office is definitely up, but not at pre-pandemic levels.”

AMC continues to spend more than it earns every quarter on operations like concessions, exhibition expenses and rent, even though it has a lot of cash on the warpath. The company said it burned through more than $179 million in cash in the third quarter.

The company will invest in its theaters, upgrade its movie screens and increase the number of special effects screens such as IMAX and Dolby Cinema.

CFO Sean Goodman said on Tuesday’s call that the company expects cash burn to improve in the fourth quarter. While reducing debt and increasing liquidity are its key initiatives, the company is open to exploring “attractive opportunities” and has been keeping an eye on 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 failed to fully utilize the new stock by selling it before investors could get support.

The company said it will sell up to 425 million shares of these preferred shares. As of Tuesday, approximately 14.9 million shares were sold for a net profit of $36.4 million.

Audiences are returning to movie theaters after the coronavirus pandemic, spending more than ever on tickets and popcorn. However, the lack of regular release of theatrical releases will put a lot of pressure on the industry in the final months of the year.

According to ComScore, domestic ticket sales from July 1 to September 30 totaled $1.95 billion, down 31% from 2019 levels. The box office also saw fewer openings than it did before the pandemic, with only 19 films opening in more than 2,000 locations on its opening weekend, 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 performances of the year.

In 2023, theaters are expected to see stronger opening numbers, and AMC should be able to hold off on releases until then, given its large cash reserves.

AMC shares have fallen nearly 80% since January, hitting a 52-week low on Monday and trading at $5.17 a share ahead of the company’s earnings report on Tuesday. decreased to dollars. Aron attributed the decline in AMC’s stock to macroeconomic headwinds, including inflation and the performance of rivals such as Cineworld, which recently filed for bankruptcy protection.

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

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