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As AMC Theatres sees rebounding October attendance figures for its movie screens, parent AMC Entertainment Holdings shrunk its flow of red ink on Monday, even as the cinema giant warned pandemic challenges still remain.
The world’s largest movie theater chain recorded a $224.2 million net loss, or 44 cents per share, on $763.2 million in revenue. During the year-ago period, the company reported a loss of $8.41 per share and an overall third-quarter revenue of $119.5 million.
The latest quarterly performance beat an expected loss per share of 51 cents from analysts, and revenue for the quarter estimated to reach $717.1 million.
AMC president and CEO Adam Aron said in a statement his company hosted just under 40 million guests in movie theaters in the U.S., Europe and the Middle East during the third quarter of 2021, which bodes well for the exhibition giant’s performance into 2022.
“We are also encouraged by the results from the beginning of the fourth quarter of 2021. Indeed, as we announced just a week ago, our October theatre admissions revenues were the highest of any month since before the global pandemic forced the closure of our cinemas more than a year and a half ago. That is just one more good sign among many we have seen in 2021,” Aron added.
During an after-market investors call, Aron insisted AMC was on a sustained path to recovery, judging by key metrics from the first three quarters of 2021. “The upward trend is clear and unmistakable,” he argued.
During the latest quarter, admissions revenue climbed sharply to $425.1 million, against a year-earlier $62.9 million. Food and beverage revenue also rebounded to $265.2 million, compared to $29 million during the same period last year.
The latest financial performance by the cinema giant represented an improvement on the third quarter of 2020 when AMC was reopening theaters to weather the coronavirus pandemic and stay in business. But the latest quarterly revenue line is still well down from the $1.31 billion in overall revenues recorded by AMC in the third quarter of 2019, when it sold 87.1 million movie tickets worldwide, before the pandemic impacted its business.
AMC and rival exhibitors have seen strong October movie ticket revenue as consumer confidence underpins a strengthening theatrical film market as the pandemic’s grip on the industry eases. And with a strong theatrical release schedule heading into Christmas, analysts are increasingly bullish on theatrical box office into 2022 and beyond as major studios are far less likely to push back tentpole releases at the local multiplex or rely on hybrid releases.
“We remain optimistic about the exhibition industry as attendance begins to rebound. Q3 attendance began to meaningfully pick up once top-tier titles were released to theatres after extended delays, and Q4 quarter-to-date box office has been very encouraging,” Wedbush analyst Michael Pachter wrote in a Nov. 4 research note.
Hollywood’s day-and-date model for most tentpoles during the pandemic dented theatrical box office as the major studios pushed a host of big releases into late 2021 or 2022. At the same time, exhibitor stocks have rallied of late as investors look beyond the impact of the Delta variant on theater-going due to increasing vaccination rates and the box office performance of new film titles like Venom, Dune and No Time to Die.
But a box office rebound notwithstanding, Wall Street analysts remain bearish on volatile AMC shares after it used its status as a meme stock thanks to rogue retail traders on Reddit and other social media hubs to raise fresh cash at a steep market premium to ensure survival and pay down debt and interest expenses.
“The cost of the company’s liquidity lifelines … carried a very high price and will serve as a major headwind for several years to come,” analyst Eric Handler of MKM Partners argued in a Nov. 4 research note about the recent debt and stock offerings underpinning AMC’s new capital structure and a stock standing at a steep premium to those of its industry rivals.
Despite an earnings beat, shares in the cinema giant were trading lower in after-market trading, down 92 cents, or around 2 percent, at $44.14, as investors continue to weigh whether a rebounding exhibition industry warrants a volatile AMC share price, or whether the company will lag its peer as the theatrical market enjoys a better-than-expected recovery in the face of streaming competition.
In response to those market jitters, CEO Aron on the conference call told investors: “However, even amidst such good news, we are not yet where we want and need to be. We wish to emphasize that no one should have any illusions that there is not more challenge ahead of us still to be met. The virus continues to be with us, we need to sell more tickets in future quarters than we did in the most recent quarter, and adjusted EBITDA is still well below pre–pandemic levels.”
To diversify away from movie exhibition, Aron also told analysts that AMC is exploring how to accept cryptocurrencies for online payment and even possibly launch its own cryptocurrency. And the cinema giant is exploring with major Hollywood studios how to use blockchain technology to turn commemorative movie theater tickets into NFTs, or non-fungible tokens.
Aron added AMC was considering launching its own branded credit card for consumers, and even getting into movie production. “We’ve made content before, and in this day of age, when so much content is being created, it’s interesting to consider whether AMC should fund content, and whether AMC should fund its own content that might only be seen at our own theaters. These are all possibilities,” he said during a conference call where AMC execs answered questions virtually entirely from retail shareholders, with only one taken from a Wall Street analyst.
The AMC boss was also asked about plans to pay down the exhibition giant’s enlarged debt burden to get through the pandemic. “Of all the things that have kept me up at night in the last two years, our debt load is not one of them,” he told investors, while adding AMC has no major debt maturities due before 2026, allowing time to rebuild the company’s balance sheet with debt refinancings.
And Aron touted a recent deal with Warner Bros. to return to an exclusive, 45-day theatrical window in 2022 as he discussed the major studios moving away from a reliance on day-and-date film releases during the pandemic. “I think you’ll see a revival of an exclusive theatrical window and that’s clearly to the benefit of AMC,” he argued.
AMC went into the market release of its third quarter financial results on Monday with its stock price having climbed 8 percent, or by $3.35, to end the day at $44.06.
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