AMC Entertainment (AMC) earnings Q3 2022

AMC Entertainment It reported another quarterly loss on Tuesday, even though revenue was up from a year ago as it spent more on operating costs.

The world’s largest movie theater chain is facing a huge debt load, stock dilution and short release times for blockbusters. While the summer was strong at the box office, 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 rose slightly from a year ago to $226.9, or 22 cents a share, not as steep as Wall Street had expected. Revenue growth also exceeded expectations. AMC said its overall metrics per customer rose in terms of admission revenue and consumer spending on food and beverages in theaters.

According to a Refinitiv survey of analysts, the company reported something different from what Wall Street had expected:

  • Loss per share: Adjusted loss of 22 cents vs. expected loss of 26 cents
  • income: $968 million vs. $961.1 million expected

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

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AMC has been working to reduce its debt load. In October, after closing a $400 million private offering, it refinanced and repaid some of its debt, extending its maturity to 2027.

The company recovered from the brink of bankruptcy in 2021 as millions of retail investors turned its stock into a meme stock. Since then, AMC has made plans to raise more money to pay down debt and invest in acquisitions, theater upgrades, popcorn operations and even gold mines.

“We’re not out of the woods yet,” Chief Executive Adam Aron said on a conference call with investors on Tuesday. “While the box office is undoubtedly up, it’s still below pre-pandemic levels.”

While AMC has a large cash hoard, it still spends more than its revenue each quarter on operations that include franchise costs, movie screening costs and rentals. 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, upgrade movie screens and increase the number of special effects screens such as IMAX and Dolby Cinema in its footprint.

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Chief Financial Officer Sean Goodman said on a conference call on Tuesday that the company expects its cash burn to improve in the fourth quarter. While reducing debt and increasing liquidity are key moves, the company is open to exploring “attractive opportunities” and has been keeping an eye on its financially troubled cinema rivals.

Earlier this year, AMC paid a dividend to common stockholders in the form of preferred stock called “APE.” But analysts said the company couldn’t take advantage of the opportunity to sell new shares until investors pulled out of support.

The company said it would sell as many as 425 million of those preferred shares. As of Tuesday, it had sold about 14.9 million shares, raising net proceeds of about $36.4 million.

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

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The domestic box office grossed $1.95 billion between July 1 and September 30, down 31% from 2019 levels, according to ComScore. The box office was also down compared to the pre-pandemic period, with just 19 films opening their opening weekend in more than 2,000 locations, a 24% drop from 2019.

AMC management expects Walt Disney’s upcoming “Black Panther: Wakanda Forever” to be one of the highest-grossing shows of the year.

Theaters are expected to see more films released in 2023, and thanks to its large cash reserves, AMC should be able to weather the lack of releases until then.

Shares of AMC have fallen nearly 80% since January and hit a 52-week low on Monday before falling to $5.17 a share ahead of the company’s earnings report on Tuesday. Aron attributed the decline in AMC shares 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 incorrectly stated the name of the company’s chief financial officer, Sean Goodman.

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