AMC cuts first-quarter loss by 30% ahead of summer’s big box office, beating Wall Street expectations

AMC Theaters is still not out of the red, but the first quarter of 2023 saw a substantial year-over-year revenue improvement that helped the company cut its loss for the period by 30%.

Revenue for the three months ended March 31 improved to $954.4 million on the back of early-year hits like “M3GAN” and “Puss in Boots: The Last Wish,” as well as to March hit sequels like ‘Creed III’ and ‘Scream VI’. AMC Entertainment Holdings said Friday. This represents a 21.5% increase from the $785.7 million in the first quarter of 2022 and exceeds the projections of $936.1 million compiled by Zack’s Investment Services.

The shares rose 4% in premarket trading.

“Thank you first and foremost, James Cameron, for ‘Avatar: The Way of Water,'” CEO Adam Aron said at the conference to discuss the results, noting that the film grossed $2.3 billion worldwide for become the third highest-grossing film in history.

Admissions revenue jumped 30% to $328.7 million. AMC’s nearly 10,000 screens worldwide saw attendance soar to 47.6 million, a 22% increase, thanks to strong movie selection. In the United States, attendance jumped 25% to 32.4 million, from 25.8 million last year. International attendance increased by 15% to 15.3 million.

“The European box office recovery has been even stronger in reaching pre-pandemic standards than that in the United States,” Aron said in a statement. “As I’ve said for years, when our studio partners present their magical storytelling, there’s a high demand for fulfillment at AMC theaters in the United States and abroad.”

The company posted a quarterly loss of $235.5 million or 17 cents per share, an improvement from the loss of $337.4 million or 33 cents per share last year. On an adjusted basis, the loss was 13 cents per share, beating analysts’ forecast for a loss of 17 cents per share, according to Zack’s.

“Make no mistake, we’re not out of the woods yet,” Aron said on the call. “The box office, while strong, has yet to return to 2019 levels.” He noted that he had previously suggested the pandemic would impact five years. “We have just entered the fourth year of our ramp-up to eventual normalcy, but we are indeed on a ramp for improvement.”

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In premarket trading, AMC shares gained 3.6%, after closing Thursday at $5.92, up 50% year-to-date.

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The company pointed to a “freaking pace” for spending in cinemas, noting that food and beverage purchases per customer increased 7% during the period, to an average of $6.90 worldwide. and $7.99 in the United States.

“Boy, they ate and drank,” Aron said on the call. “This is pre-pandemic consumption so far, and this is happening in a very high-margin business for us.”

The average ticket price in the United States was $11.87, compared to $12.05 last year, while the average ticket price worldwide fell slightly to $11.22, from $11.36 last year.

The company said on the call that the Imax large-format screens and Dolby cinema premium were a particularly strong draw. Chief Financial Officer Sean Goodman said the premium format accounted for more than 29% of domestic admissions and 24% of international admissions.

Given this popularity, Aron said the company is working to upgrade a significant number of Imax screens and add more Dolby screens. It’s also working to expand laser projection, making screens brighter, sharper and more vivid and providing environmental benefits as they use less energy and there are no bulbs to throw away. Aron called it “the greatest green initiative of all time”.

Analysts don’t expect AMC to turn a profit until 2024, but they think it will continue to cut losses as the box office continues to recover. The second-quarter domestic box office is already close to $1 billion thanks in large part to ‘The Super Mario Bros. Movie,’ which this weekend will become America’s third-grossing $500 million animated film. North, after crossing the billion dollar mark. around the world last weekend.

That momentum is set to continue in a strong summer slate that includes May and June movies like “Guardians of the Galaxy Vol. 3,” “The Little Mermaid” and “The Flash.”

“We think the first quarter of 2023 is just the tip of the iceberg for what’s to come in the rest of the year,” Aron said. “With so many exciting films to come in the coming months…the rest of the year promises something for everyone, and AMC stands ready to welcome moviegoers in droves. We couldn’t be more optimistic about the 2023 box office outlook, except to say that 2024 is looking even better.

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In an interview with TheWrap at CinemaCon last week, AMC CEO Adam Aron said he believes the worst damage from the pandemic is behind AMC, and that as long as movies continue to release at a frequency higher than last year, the cinema chain will remain on the path to financial stability.

“The box office is on a positive ramp,” he said, “and if we have the ability to raise money if we need it, I’m not really scared.”