AMC Entertainment Suffers Another Quarterly Loss on Tuesday Despite Increasing Sales

AMC Entertainment suffers another quarterly Loss on Tuesday despite having increased income compared to the same period a year earlier. This was because the company spent more on operational expenditures.

The largest movie theatre chain in the world is currently dealing with a significant amount of debt, the dilution of its equity, and a film release calendar that is lacking in blockbuster movies. Although the summer box office was quite successful, August and September were less successful because movie studios released fewer pictures in theatres.

The company’s net loss for the period that ended on September 30 was $226.9, or 22 cents per share, which was a modest rise from the previous year but was less severe than what Wall Street had anticipated it would be. The revenue increased and also exceeded projections.

According to AMC, its total per-patron metrics were up when it came to admissions revenue and higher consumer spending on food and beverages at its theatres. This was the case both in terms of admissions revenue and increased consumer spending.

According to a study conducted by Refinitiv of industry analysts, the following is what the company reported in comparison to what was anticipated on Wall Street:

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

During after-hours trading, the stock of the corporation experienced a decline of roughly 4%.

AMC has been attempting to lower its debt load. After completing a private offering for 400 million dollars in October, it refinanced part of its debt, paid down some of that debt, and extended the maturity dates of that debt out to 2027.

AMC Entertainment Suffers Another Quarterly Loss
AMC Entertainment Suffers Another Quarterly Loss

It was because of the millions of retail investors who turned the company’s shares into a meme stock that the corporation was able to pull itself back from the verge of bankruptcy in 2021.

Since that time, AMC has developed several strategies to increase its capital to pay down its debts, make investments in acquisitions, theatre upgrades, a popcorn business, and even a gold mine, and fund these activities by raising further capital.

Adam Aron, the CEO of the company, told the investors on a call on Tuesday that “We’re not out of the woods yet.” Although there is little question that business at the box office is improving, it is not yet back to the levels it was at before the pandemic.

Although AMC has accumulated a sizeable cash reserve, the company continues to incur more operating expenses than it generates during each quarter. These expenses include rent, concessions, and the cost of showing movies. The corporation said that it used up more than $179 million in cash during the third quarter of the fiscal year.

The firm plans to keep making investments in its theatres, including the installation of new movie screens and the expansion of the number of screens capable of special effects, such as IMAX and Dolby Cinema, located throughout its territory.

During Tuesday’s conference call, the company’s CFO Sean Goodman stated that the organisation anticipates an improvement in its cash burn during the fourth quarter.

The company’s primary goals include lowering its debt and raising its liquidity; nevertheless, it is open to investigating “interesting options” and has been keeping a close eye on its movie theatre competitors who have been experiencing financial difficulties.

At the beginning of this year, AMC distributed a dividend to its common shareholders in the form of “APE” preferred shares. According to the analysts, however, the corporation was not successful in fully capitalising on the sale of the new shares before investors withdrew their support.

The corporation has indicated that it intends to sell anywhere from 425 million to 425 billion of these preferred shares. As of this past Tuesday, around 14.9 million shares had been sold, resulting in approximately $36.4 million in net proceeds.

In the aftermath of the coronavirus outbreak, moviegoers have begun returning to theatres in record numbers, and they are shelling out more money than ever before for admission and popcorn. Nevertheless, there won’t be a regular stream of theatrical releases, which will be a major problem for the industry in the last few months of the year.

According to ComScore, total ticket sales at the domestic box office came to $1.95 billion between July 1 and September 30. This is a 31% decrease from 2019 levels.

In comparison to the time before the pandemic, there were fewer broad releases at the box office during this period, with only 19 films making their premiere in more than 2,000 venues during their opening weekends. This is a 24% decrease from 2019.

The management team at AMC is anticipating that the next release of “Black Panther: Wakanda Forever” from Walt Disney will have one of the most successful box office performances of the year.

AMC should be able to ride out the dearth of film releases until 2023 since it has a big cash hoard, which should allow it to get through the time before a stronger slate of film releases is projected to hit theatres.

AMC’s stock has lost about 80% of its value since January and hit a new 52-week low on Monday, falling to $5.17 per share. This happened in advance of the company’s earnings report, which will be released on Tuesday.

Aron ascribed the decline in the price of AMC stock to macroeconomic headwinds, specifically inflation, as well as the performance of AMC’s competitors, such as Cineworld, which has just filed for protection under bankruptcy laws.

Conclusion

AMC’s income went up by 27%, to $968.4 million, as the movie theatre chain spent more on admissions and food and drinks. The company’s net loss grew slightly to $226.9 million, or 22 cents per share. As of Tuesday, AMC said that it had sold 14.9 million of its “APE” preferred shares.

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