AMC Entertainment Holdings has increased its latest quarterly loss on higher overall revenues and sharply increased attendance as the movie exhibition giant took advantage of a Hollywood box office rebound in its theaters.
In the third quarter, the theater chain, amid an industry upheaval brought about by the pandemic and the streaming era, reported total revenue of $968.4 million, up 27 percent from $763.2 million in the year-earlier quarter. That just beat a Zacks Consensus Estimate for revenues at $967 million.
But AMC reported a net loss of $226.9 million, up nearly 3 percent on a net loss of $224.2 million a year ago. The loss per share in the latest quarter was 22 cents, unchanged from the same period in 2021. Zacks Consensus Estimate predicted a loss per share of 25 cents.
During the latest quarter, attendance reached 53.1 million people, compared to a year-earlier 39.9 million, leading admissions and food and beverage revenues to improve.
“Exactly as anticipated and foreshadowed on our last quarterly earnings call, our third quarter results were impacted by a particularly soft industry-wide box office in the latter two-thirds of the 2022 third quarter, but encouragingly our overall per-patron metrics for both admissions revenue and food and beverage spending remain well above pre-pandemic levels, growing a sizable 12 percent and 30 percent, respectively, compared to the third quarter of 2019,” AMC Theatres CEO Adam Aron said in a statement.
Despite that improved industry backdrop for AMC, investors are left puzzling over the cinema giant’s future, given current box office trends and its high debt load. “We’re not out of the woods yet. While the box office is unmistakably on the rise, it’s still falling short of pre-pandemic levels,” Aron told analysts during an aftermarket call as he touted a better Hollywood slate in the current fourth quarter and into 2023 with titles like Black Panther: Wakanda Forever and Avatar: The Way of Water on the immediate horizon.
Aron also pointed to rising inflation and interest rates impacting the wider U.S. economy and consumer spending as investors look to see whether entertainment will be insulated from recessionary impacts, as has been traditional, or whether the launch of cheaper ad tiers on streaming platforms run by Netflix and Disney will reduce traffic to the local multiplex.
“Theaters and streamers can thrive, simultaneously, and can thrive together,” Aron told analysts as AMC looks to do business with streaming platforms. If anything, the AMC boss said a major hurdle for his exhibition circuit remains too few tentpole titles out of Hollywood headed to his multiplexes.
“That’s the major challenge facing the movie industry right now, above all else, and there can be optimism that more movie titles, rather than fewer movie titles, are our future,” Aron told analysts after he held recent conversations with major Hollywood studio suppliers.
In early 2021, AMC became a popular stock among retail investors, after the company appeared close to bankruptcy amid the pandemic fallout at movie theater chains. The stock surge helped the company strengthen its financial position, and diversify its revenue streams — the latest is to hold Zoom meetings in select cinemas — as executives seized the opportunity to sell shares, repurchase debt and pay down its deferred theater rent liability.
Other new ventures for AMC to bring down its high debt load include buying a 22 percent stake in a gold mine, Hycroft Mining Holding Corp., pushing for its popcorn to be sold in retail stores in the first half of 2023 and creating a special stock dividend, called APE, for the retail investors who rallied around the stock and helped the company avoid bankruptcy.
On Tuesday, AMC reported a loss of $11.8 million in the value of its investment in Hycroft Mining Holding during the latest financial quarter, which was offset by $36.4 million in net proceeds received from the sale of 14.9 million shares of its AMC Preferred Equity Units.
Aron also told analysts that AMC Theatres On Demand, which allows consumers to rent or buy movies to be viewed on digital platforms, would be phased out or a joint venture partner would be brought on board to share investment expenses.
But as the company’s fortunes continue to hinge on theatrical exhibition to stem future losses, last year’s stock momentum has faded, even as shares in AMC Entertainment rose by 29 cents, or just over 5 percent, to $5.62 on Tuesday, before in after-hours trading falling back 20 cents to $5.42.
Aron, who is a daily user of Twitter to engage his company’s retail investors and cinema patrons, discussed Elon Musk’s recent takeover of the social media platform. “I hope Elon Musk does good things with Twitter, because it’s a very valuable national asset if run well,” he said.