AMC eyes 2023 Hollywood box office boost after Q1 revenue beat

By James Rogers

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

The company's stock is up 1.4% after AMC (AMC) reported better-than-expected first-quarter revenue and adjusted earnings before market open Friday. AMC's Preferred Equity Units rose 0.6% Friday.

"There is just an incredible array of really great movies that are coming out between now and Christmas of 2023," CEO Adam Aron said during a Friday conference call to discuss the company's fiscal first-quarter results. In its earnings release, AMC highlighted forthcoming movies such as Marvel's "Ant-man and the Wasp: Quantumania," "Creed III," "Scream VI," "Shazam! Fury of the Gods" and "John Wick Chapter 4."

Amongst the movies 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 movies from Apple Original Films will be released exclusively in cinemas before streaming on Apple TV+. Last month, Amazon Studios' "Air," which recounts the origin of the iconic Air Jordan basketball shoe, was also released exclusively in cinemas. It will be streaming on Amazon Prime on May 12.

"These initial releases by Amazon and Apple could be just the tip of the iceberg of new content for AMC," said Aron. "There have been numerous press reports that these two tech giants each plan to spend about $1 billion per year on movies that will be handed first to theaters, prior to going on streaming platforms ... we can't wait to showcase their films."

The CEO also discussed the potential impact of the writers' strike on AMC. "We're very sympathetic to the real problems that exist for members of the Writers Guild," he said. "We are hopeful that the Hollywood producers and Writers Guild can work in good faith to craft a solution that's good for all parties."

The impact of a "short strike" that last months, rather than days, will mostly be felt on television programming, according to Aron. "The movies for 23 and 24 have pretty much been written, in many cases, they have already been filmed," he said. "Only a very prolonged writers' strike would have material impact on the movie theater 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 stands in stark contrast to the naysayers and doom-tellers," Aron said, in a jab at the company's critics. "Those 47 million people tell us, as we have known for years and years, that movie theaters are very much alive."

The company reported a first-quarter net loss of $235.5 million, or a net loss of 17 cents a share, compared with a net loss of $337.4 million and a net loss of 33 cents a share in the same period last year. On an adjusted basis, AMC reported a net loss of 13 cents a share, compared with a net loss of 26 cents a share in the same period last year. Analysts surveyed by FactSet were looking for a net loss of 14 cents a share, or a net loss of 16 cents a share on an adjusted basis. The results mark AMC's 15th straight quarterly loss.

AMC reported first-quarter sales of $954.4 million, compared with $785.7 million in the same period last year. Analysts surveyed 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," said Aron, in a statement. "We kicked off 2023 by continuing on our positive glide path to recovery, with more than a 21% growth in total revenues and a $69 million improvement in Adjusted EBITDA compared to the previous year." The first quarter of 2023 and 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 is keen to tap into 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 "brisk" and said that the company was looking to forge deals with other U.S. retailers. "You can be sure that we will be talking to just about every major grocery store in the country," he said. "We will be talking to convenience stores in the country, we are looking at other possible places to buy AMC Perfectly Popcorn through e-commerce." It has been suggested to AMC that they should sell it through Amazon.com Inc. (AMZN) and AMC's own website, he added. The company was also looking at "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 balance sheet Friday. During the first quarter, AMC raised more than $155 million of cash through the sale of APE units and reduced the principal balance of its debt by more than $200 million in repurchasing debt or exchanging APE units for debt. As of March 31, the company's cash position was $495.6 million, down from $631.5 million in the same period last year.

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

-James Rogers

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05-05-23 1154ET

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