AMC Entertainment Posts Sharply Lower Earnings, Yet Meets Expectations
The cinema giant had a tough comparison with the first quarter of 2016, when 'Deadpool' and 'Zootopia' played on its screens.
Cinema giant AMC Entertainment on Monday posted sharply lower earnings for the first quarter, due in part to acquisition costs following recent dealmaking.
AMC CEO Adam Aron, while reiterating his company's support for current talks with the major studios on their premium VOD plans, also highlighted possible threats to the exhibition industry from day-and-date VOD releases and home entertainment that the cinema giant would be quick to counter.
"We at AMC agree that there's a real opportunity to work cooperatively to increase the bottom line of movie studios, but also the bottom line of AMC," Aron told analysts during a conference call. "Having said that, I need to state as strongly and clearly as I can: At AMC, we have a backbone and a firm one at that. If we cannot forge agreement on a new window that advances our interests, we will take any and all necessary actions to vigorously protect the long-term interests of AMC."
Studios and theater owners are having ongoing discussions about shortening theatrical windows, the amount of time films play exclusively in theaters before they are made available for home viewing.
AMC, which is owned by China's Dalian Wanda Group, during the latest quarter had a tough comparison with the first quarter of 2016, when it had strong box office from Deadpool, Batman v. Superman: Dawn of Justice and Zootopia on its screens.
"The [Hollywood movie] slate for the remainder of 2017 looks strong for us," Aron told analysts during the conference call after the latest results were unveiled.
First-quarter earnings came to $8.4 million, down 70 percent from a year-earlier $28.3 million. The exhibition giant during the latest quarter recorded $26.2 million in one-time after-tax merger and acquisition costs related to recent takeover deals, in particular for Carmike Cinemas.
The latest results follow additional deals by AMC to acquire the U.K.-based Odeon & UCI Cinemas chain and the European cinema giant Odeon & UCI Cinemas Group to become the world's largest exhibitor.
AMC set first-quarter records for admissions, which were up nearly 70 percent to $817.3 million, with U.S. attendance jumping to 66.8 million, against a year-earlier 51.09 million. Food and beverage sales rose 63 percent to $398 million.
The average ticket price per-patron dipped in the U.S. market to $9.27, compared to a year-earlier $9.42, as less lucrative Carmike cinemas were brought into the AMC fold. The average ticket price rose in international markets to $7.46, against a year-earlier $7.38.
Excluding the acquisition costs, AMC said first-quarter earnings rose 7.5 percent to $34.6 million. Earnings per share were 7 cents, down from 29 cents per share in the year-ago period.
AMC met a per-share earnings consensus from analysts at 7 cents. During the quarter, AMC posted $1.28 billion in overall revenue, blowing past a year-ago $766 million in revenues.
"As we now move to make what we expect will be highly lucrative investments in guest-facing initiatives like powered recliner seats, enhanced food and beverage offerings and the expansion of premium large-format experiences, we are as confident as we could be in the future earnings potential of AMC," Aron said in a statement ahead of the conference call with analysts.
During the call, Aron signaled to investors the media giant aimed to continue expanding its circuit, enhancing its theaters with recliner seating and to "engage our guests through world-class marketing activity."