AMC Theaters Boosts Revenue, Looks to Pay Debt Faster, As Moviegoers Return
AMC Theatres more than doubled its revenue while trimming its net losses in its second quarter, as the world’s largest theater chain announced it would issue new preferred shares that would allow it to pay down debt and possibly pursue more acquisitions as customers head back to the movies.
Executives said Thursday that Leawood, Kansas-based AMC Theaters, with 950 locations including 550 in the U.S., still owes about $219 million to its retail landlords for deferred rents, down from $450 million two years ago when deferrals were first arranged as pandemic lockdowns shuttered theaters nationwide.
CEO Adam Aron said the company could be paying off more of that balance, along with other debt taken on as part of financial restructurings since the start of the pandemic, after declaring a special dividend that it is calling AMC Preferred Equity. The equity is planned to be issued to common stockholders at an initial value of $0.01 per share, and AMC has applied to list it separately on the New York Stock Exchange starting Aug. 22 under the symbol APE.
In a conference call with analysts, Aron said issuance of the tradable preferred units is “perhaps the single biggest action we will take in all of 2022 to fundamentally strengthen AMC for the long term.” Aron said the move “dramatically lessens any near-term survival risk for AMC, as we continue to work our way through this pandemic.”
The company may also pursue further acquisitions along the lines of several announced during the past year, as it took on several leased locations of departed rival theater chains in cities including Los Angeles, San Diego and Chicago.
Cinema industry analysts have projected that pre-pandemic attendance and revenue may not return until 2023 at the earliest, even after a significant rebound of the past year. North American box office revenue nearly doubled in 2021 from the prior year, topping $4.5 billion, but was still down 60% from 2019’s $11.4 billion, according to media data firm Comscore.
In a July report, equity analyst Eric Wold of B Riley Securities noted that the second-half schedule of expected Hollywood blockbusters generally bodes well for 2022 box office returns. However, the equity firm is reducing its 2022 and 2023 box office projections “to provide a more realistic recovery ramp and some additional conservatism” based on other factors in the economy.
Wold estimated that U.S. box office revenue will come in 28% below the pre-pandemic level in 2022 and 7% below the pre-pandemic level in 2023, still topping $10 billion for 2023.
“With the heightened risk of a domestic recession in recent months, we continue to believe the exhibition group can be viewed as somewhat of a safe haven within the consumer and entertainment spending segments and should not be experiencing the same stock pressures as other discretionary consumer sectors,” Wold said, noting movie-going is still relatively low priced compared with other live entertainment outside the home.
AMC Theatres executives told analysts the company had attendance of 59 million globally in the quarter ended June 30, up 168% from 22 million in the year-earlier quarter, as per-visitor spending on higher-margin food and beverages tracked ahead of pre-pandemic levels.
That helped the company post total revenue of $1.2 billion for the quarter, more than doubling the $444.7 million for the year-earlier quarter. Its quarterly net loss was $121.6 million, marking an improvement from the net loss of $344 million in the year-earlier period.