AMC releases Q3 earnings; reports revenue of $763m

AMC Entertainment Holdings Inc. the leading movie theatre operator, released its third quarter earnings on November 8, 2021 after the market closed. This was first time since the fourth quarter of 2019, substantially all of AMC’s worldwide theatres were open for the entirety of a calendar quarter.

Here is an overview of the company’s disclosure.

  • Revenue: $ 763 million vs $708.3 million expected
  • EPS: -$0.44 adjusted vs -$0.53 expected
  • Cash Availability: $1.8 billion including cash and undrawn revolving credit lines
CEO’s Statement

“For the first time since the fourth quarter of 2019, substantially all of our worldwide theatres were open for the entirety of a calendar quarter. Thanks to an increasingly appealing film slate, rising COVID-19 vaccination counts, our commitment to robust health and safety protocols and our own greatly increased marketing activity, AMC’s theatres in the U.S., Europe and the Middle East safely welcomed back 40 million guests during the third quarter of 2021. These guests generated significant revenue per patron growth, which when combined with our cost control efforts, generated financial results that were well ahead of market expectations. More important than beating expectations, however, is the significant progress AMC has been making with those financial results. Admission tickets sold, consolidated revenues and net income in the third quarter of 2021 all show marked improvement over Q2 of 2021 and the prior year period. And our Net Loss and Adjusted EBITDA for the most recent quarter saw a 34.8% and 96.4% improvement over the second quarter of 2021, respectively, and a 75.2% and 98.4% improvement over the comparable third quarter of 2020 a year ago, respectively.”

Aron said, “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, “Our quarter-ending liquidity as of September 30, 2021, of more than $1.8 billion, including cash and our undrawn revolving credit lines remains at near-record levels, and also gives us comfort. Incidentally, we do not anticipate having to borrow under those lines of credit in the next 12 months. This strong liquidity position provides a foundation for us to innovate, as well as imaginatively grow and diversify our business. At the same time, our improving financial results and solid liquidity position are enabling us to take steps to reduce our financial leverage.”

Aron concluded, “Our financial results continue to improve. More and more major films are on the docket for release in the remainder of 2021, and throughout 2022. One can see and feel that our industry and our company are on a path of recovery and improvement. Therefore, our spirits are upbeat. 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.”

Analysts Estimate

The Zacks Consensus Estimate for loss per share is pinned at $ 0.42. Even though the figure is not positive, it indicates a growth of 40% than that of the second quarter. In addition, the estimate also indicates an increase of 92.63% year-over-year.

The Earnings ESP (Estimated Surprise Percentage) is pegged at 6.69%. This rightly suggests that AMC’s reported earnings would surpass the estimates.

The estimated revenue is pinned at $768.63 million. This indicates a whopping growth of 543.21% from the previous year. The figure is higher than other analysts’ estimates of approximately $720 million. This indicates that Zacks’ estimate is anticipating a higher revenue growth than other analysts. Also, if the company is successful in hitting the estimate, it will surpass previous quarter’s operating cost of $740 million. It will be another green signal in the company’s overall performance.

However, the analysis report also mentions that the earnings over the past five years has declined by 269%. The number is huge but the company has been performing better in the recent quarters. It is expected to overcome its negative earnings trail soon.

Earnings History

The company’s second quarter earnings had surpassed the estimates by 22%. It was the first quarter to beat the estimates after more than three quarters that failed to meet the estimates. The reported loss per share was $0.71, much less than the expected loss of $0.91.

The reported revenue was $444.7 million, much higher than the estimate of $382.1 million. The net loss narrowed to $344 million compared to a loss of $561.2 million last year.

Key financial highlights for the second quarter include:

  • In April 2021, launched an At-the-Market (ATM) equity program to sell up to 43 million shares of Class A common stock and raised approximately $427.5 million before commissions and fees.
  • During May 2021, received the remaining cash consideration of approximately $31.9 million on the completion of the sale of our remaining equity interest in our theatres in Lithuania.
  • In June 2021, raised $230.5 million of cash from the sale of 8.5 million shares of Class A common stock to Mudrick Capital Management, L.P.
  • During June 2021, launched an ATM equity program to sell 11.55 million shares of Class A common stock and raised approximately $587.4 million before commissions and fees. This brings the total ATM equity raised in the second quarter of 2021 to approximately $1.246 billion, before commissions and fees.

The first quarter’s performance, however, was not in the same line as the second quarter. AMC’s economic performance had taken a downturn due to the Covid-19 pandemic. The company reported a net loss of $567 million and a loss per share of $1.42 which was higher than the consensus estimate of $1.38. Prior to this quarter, the company had revealed that its revenue for FY20 had declined by a huge 88% year-over-year. CEO Adam Aron then stated that AMC was facing “most challenging market conditions in the 100-year history of the company”.

Future Forecast

Analysts estimate the loss per share for the fourth quarter to be $0.19 against a loss of $5.70 last year. It indicates a growth of 93.97% year-over-year. The estimated revenue is $1.12 billion against a revenue of 162.5 million. This suggests a huge growth of 589.54% from the previous year.

The Annual Forecast estimates loss per share for the year to be $2.69 against a loss of $16.15 last year. It indicates a growth of 83.34% year-over-year. The revenue is estimated at $2.48 billion against a revenue of $1.24 billion last year. This indicates an increase of 99.79% than last year.

AMC and Cryptocurrency

The leading movie theatre operator recently announced that it would accept digital currencies or cryptocurrencies as payments for theatre tickets. The cryptos it is considering include Bitcoin, Ethereum, Lithium and Dogecoin. Adam Aron, AMC’s CEO recently tweeted asking whether they should take Shiba Inu into consideration or not. More than 81% people voted in favour of Shiba Inu.

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