Industry Insider: AMC’s 3rd Quarter Victory in Earrings Call
The third quarter has relieved many transformative revelations for multimedia corporations in 2023. With the closing of the year creeping in, the entertainment industry seems to be adjusting to the unprecedented events that have caused instability within their financial sectors. It must be prefaced that a number of these corporations have explicitly stated; that although they were met with positive revenue flow, it was not a match to the predicted percentages for these final quarters. In large part due to the substantial impact that both the SAG-AFTRA and WGA strikes had on the companies. Yet, this may not be the truth for a company such as AMC (American Multi Cinema). Being one of the largest distributors for film it wouldn’t be impossible for them to feel the drawbacks of such events. So, when Adam Aron (CEO) and Sean Goodman (CFO) presented the findings for AMC’s third quarter overview on November 8th there may have been yet another revelation that the third quarter unmasked.
Aron starts strong with conviction in stating that this quarter’s results were the best, “results in AMC's entire 103-year history.” Rounding up the year with a $12 million net income and an overall posting revenue of $1.4 billion should reflect the level of success the company had. It was apparent that films such as Barbie, Oppenheimer, Talk to Me, and Mission Impossible would potentially be featured catalysts for July being AMC’s highest grossing month in the company’s history. This is cosigned by AMC’s patronage totalling at 73.4 million guests during the quarter. Of course, the Aron briefly mentions the company’s partnerships with the studios in relation to this accomplishment, however lists three prominent in house factors that will sustain the momentum as well.
the industry wide box office is finally showing some strength
we ended the quarter with $730 million of cash and we remain committed to ensuring that our cash reserves remain robust
MC's contribution per patron was up 30% from pre-pandemic norms.
In response to the 2019 pandemic, Aron explains that AMC focused on building cash reserves. The ability to have cash on hand provided a resource for the company to stay above water during the darker times. So, as previously stated, the films provided an impactful contribution to the overall performance. However, he clarifies that the attendance in comparison to 2019 displayed a 16 percent decrease for domestic attendance. With another list the company reinstates their internal efforts that have been developed prior to summer financial surge.
Our focus on expense management in a challenging inflationary environment.
The pruning of our theater fleet by closing marginal theaters and opening successful new ones.
Cooperatively renegotiating many theater rents with our theater landlords.
Leading the industry with our having more customer pleasing, premium large format screens than any of our competitors.
AMC's innovative moves to sell other things, everything from Barbie theme pink corvette models sold in our theaters to microwavable home popcorn, sold on the shelves of Walmart.
All of the many innovative marketing and pricing AMC initiatives, which have caused us to achieve dramatic increases in revenues per patron, especially in our high margin, food and beverage activities.
Capitalizing on the many scale advantages and opportunities that accrue to AMC by being the largest movie theater company in the U.S., in Europe, and globally.
Goodman spends the early part of the fiscal portions of the presentation comparing the returns from 2023 thus far to that of 2019 and 2022. So with the perspective of the list provided above, gross capital is revered as paramount for the company. Goodman makes it a point to share the highlights of the fiscal financial success, “we successfully raised $325.5 million of gross equity capital, we've repurchased $24 million of debt as an average discount of 28%. And we also repaid $22.3 million of deferred rate. The deferred rent balance at the end of qQ3 was $74.2 million and we plan to reduce this balance by another $20 million by the end of this year.” He finalized his thoughts by reinforcing Aron’s point that AMC and the entertainment industry as a whole remain in a recovery period. That this period will take time to adjust to and find space to reroute the intention that best adheres to that of the demand being voiced by the consumers.
