AMC eyes Hollywood box office boost in 2023 after first-quarter revenue beat

By James Rogers

AMC Entertainment Holdings Inc. CEO Adam Aron is confident Hollywood’s slate of movies coming in 2023 will mark the next chapter in the theater chain’s post-pandemic recovery

AMC Entertainment Holdings Inc. CEO Adam Aron is confident that Hollywood’s slate of movies coming in 2023 will mark the next chapter in the theater chain’s post-pandemic recovery.

Shares of the company are up 1.4% after AMC (AMC) reported better-than-expected first-quarter revenue and adjusted earnings before market open on Friday. AMC preferred shares rose 0.6% on Friday.

“There’s just an incredible array of really good movies coming out between now and Christmas 2023,” CEO Adam Aron said on a conference call Friday to discuss the company’s fiscal first quarter results. In its earnings release, AMC highlighted upcoming films such as Marvel’s “Ant-man and the Wasp: Quantumania,” “Creed III,” “Scream VI,” “Shazam! Fury of the Gods,” and ” John Wick Chapter 4″.

Of the films coming later this year, Aron noted Martin Scorsese’s “Killers of the Flower Moon” and Ridley Scott’s “Napoleon” as particularly significant during the earnings conference call.

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The CEO explained that the two films from Apple Original Films will be released exclusively in cinemas before being shown on Apple TV+. Last month, Amazon Studios’ “Air,” which chronicles the origin of the iconic Air Jordan basketball shoe, was also released exclusively in theaters. It will stream on Amazon Prime on May 12.

“These early releases from Amazon and Apple may just be the tip of the iceberg of new content for AMC,” Aron said. “There have been numerous press reports that these two tech giants each plan to spend around $1 billion a year on movies that will be released to theaters first, before hitting streaming platforms. … we look forward to presenting their films.”

The CEO also discussed the potential impact of the writers’ strike on AMC. “We are very sensitive to the real issues that exist for Writers Guild members,” he said. “We hope Hollywood producers and the Writers Guild can work in good faith to craft a solution that works for all parties.”

The impact of a “short strike” that lasts months, rather than days, will be felt mostly on television programming, according to Aron. “The movies for 23 and 24 have pretty much been written, in many cases they’ve already been shot,” he said. “Only a very prolonged writers’ strike would have a significant impact on the movie industry or on AMC.”

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During the first quarter, more than 47 million guests visited AMC theaters worldwide, up from 39 million in the same period last year. “47 million guests is a stark contrast to the naysayers and doomsayers,” Aron said, in a swipe at the company’s critics. “These 47 million people are telling us, as we’ve known for years and years, that movie theaters are very much alive.”

The company posted a net loss of $235.5 million in the first quarter, or a net loss of 17 cents per share, compared to a net loss of $337.4 million and a net loss of 33 cents per share at the end of the quarter. same period last year. On an adjusted basis, AMC posted a net loss of 13 cents per share, compared to a net loss of 26 cents per share in the same period last year. Analysts polled by FactSet were looking for a net loss of 14 cents per share, or a net loss of 16 cents per share on an adjusted basis. The results mark AMC’s 15th consecutive quarterly loss.

AMC posted sales of $954.4 million in the first quarter, compared to $785.7 million in the same period last year. Analysts polled by FactSet were looking for sales of $938.2 million.

“Our results for the first quarter of 2023 represent AMC’s strongest first quarter in four full years,” Aron said in a statement. “We kicked off 2023 by continuing our positive trajectory to recovery, with total revenue growing more than 21% and adjusted EBITDA improving by $69 million over the prior year.” The first quarter of 2023 and the fourth quarter of 2022 also mark AMC’s first two consecutive quarters of positive adjusted EBITDA since March 2020, according to the CEO.

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AMC wants to exploit new revenue streams. During the conference call to discuss the results, Aron described sales of the company’s branded popcorn at 2,600 Walmart Inc. (WMT) stores as “bright” and said the company was looking to make deals. agreements with other US retailers. “You can be sure we’ll talk to almost every major grocery store in the country,” he said. “We’ll be talking to convenience stores nationwide, we’re researching other possible places to buy AMC Perfectly Popcorn via e-commerce.” It was suggested that AMC sell it through Amazon.com Inc. (AMZN) and AMC’s own website, he added. The company was also looking for “unconventional places” to sell the popcorn, including sports stadiums and company cafeterias, according to Aron.

AMC, which introduced its APE units last year, also discussed its track record on Friday. During the first quarter, AMC raised more than $155 million of cash through the sale of APE units and reduced its principal debt balance by more than $200 million by purchasing debt or swapping APE units against debt. As of March 31, the company’s cash position was $495.6 million, compared to $631.5 million in the same period last year.

The movie theater chain has been on a rollercoaster ride over the past two years, taking it from beleaguered pandemic victim to meme stock phenomenon. AMC took advantage of the sharp rise in its share price to tap into the equity and debt markets, raising $917 million in January 2021.

-James Rogers

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05-05-23 1154ET

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