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 costs.

The world’s largest movie theater chain is grappling with a massive debt burden, diluting its inventory and a movie release schedule short on blockbusters. While the summer box office was strong, August and September were more tepid as studios released fewer films on the big screen.

For the period ended Sept. 30, the company’s net loss widened slightly from a year ago to $226.9, or 22 cents a share, which was not as steep as Wall Street had expected. Revenues rose and also exceeded expectations. AMC said its overall per-patron metrics were higher when it came to admissions revenue and increased consumer spending on food and beverage at its theaters.

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

  • Loss per share: loss of 22 cents adjusted versus a loss of 26 cents expected
  • Income: $968 million versus $961.1 million expected

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

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AMC has been working to ease its debt burden. In October, it refinanced and paid down part of its debt, extending its maturities to 2027, after completing a $400 million private offering.

The company came back from the brink of bankruptcy in 2021 thanks to millions of retail investors turning its shares into a meme stock. Since then, AMC has hatched various plans to raise more capital to pay off its debt and invest in acquisitions, theater upgrades, 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 the box office is undeniably on the rise, it still falls short of pre-pandemic levels.”

While AMC has a sizeable war chest of cash, it still spends more than it makes each quarter on operations, including concession costs, film exhibition 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 theaters, upgrade movie screens and increase the number of special effects screens, such as IMAX and Dolby Cinema, across its footprint.

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Chief Financial Officer Sean Goodman said on Tuesday’s call that the company expects its 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 has been eyeing its movie theater rivals that are struggling financially.

Earlier this year, AMC issued a dividend to common stockholders in the form of preferred stock called “APE.” But the company was unable to fully capitalize on the sale of the new shares before investors pulled their backing, analysts say.

The company said it would sell up to 425 million of these preferred shares. As of Tuesday, he had sold about 14.9 million shares, netting about $36.4 million.

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

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

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AMC management 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 a stronger slate of film releases in 2023, and AMC should be able to make up for the lack of releases until then due to its substantial cash hoard.

Shares of AMC have fallen nearly 80% since January and hit a 52-week low of $5.17 a piece on Monday, ahead of the company’s earnings report on Tuesday. Aron attributed AMC’s falling 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 chief financial officer, Sean Goodman.

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