The future looks 'cautiously optimistic' for AMC, Benchmark says

By James Rogers

Movie-theater chain and original meme stock AMC is well positioned for the upcoming slate of blockbuster movies, analyst says

AMC Entertainment Holdings Inc. is set to benefit from an upcoming slate of blockbuster movies and its large footprint of Imax Corp. screens, according to Benchmark analyst Mike Hickey.

In a note released Tuesday, Hickey noted the debt burden of the movie-theater chain and original meme stock but also highlighted the weapons in its arsenal. "With a significant $2 billion debt maturity looming in 2026, AMC benefits from having the largest Imax presence and potential growth in premium viewing formats," he wrote. "The future appears cautiously optimistic as the cinema sector prepares for upcoming blockbuster releases."

Speaking during the conference call to discuss AMC's (AMC) fourth-quarter results in February, CEO Adam Aron said that the company has the largest number of premium large-format screens of any movie-theater chain in the world. AMC, he said, accounts for 50% of all Imax (IMAX) screens and 100% of all Dolby Cinema screens in the United States.

Related: AMC CEO says domestic box office has 'finally turned upwards'

Aron has cited the lingering effects of last year's Hollywood writers and actors strikes in the first part of 2024 but recently said domestic box office has "finally turned upwards."

Major upcoming movies include "Kingdom of the Planet of the Apes" and the Amy Winehouse biopic "Back to Black," both of which hit theaters next month. Other major releases this year include Pixar's "Inside Out 2," which will be released in June; "Deadpool and Wolverine," which hits theaters in July; and "Joker: Folie à Deux," which is set for an October release. "Gladiator 2," the eagerly anticipated sequel to Ridley Scott's 2000 blockbuster, hits cinemas in November.

AMC's total debt, including finance leases, at the end of 2023 was around $4.56 billion, down from $5.01 billion at the end of 2022, the company said in its fourth-quarter earnings release. AMC has also faced bankruptcy speculation, although "an immediate collapse is deemed unlikely," according to Benchmark's Hickey.

Related: AMC CEO calls first part of 2024 'a slog to wade through'

"CEO Adam Aron has helped navigate these financial challenges, leveraging AMC's meme-stock phenomenon in 2021 to secure essential funds," Hickey wrote in Tuesday's note.

Last month, AMC filed to sell up to $250 million in stock. During the conference call to discuss AMC's fourth-quarter results, Aron highlighted the need for cash and pointed to the $418 million raised through the company's AMC Preferred Equity Units, which were converted to common stock in August 2023.

In December, AMC completed an at-the-market equity offering, raising approximately $350 million as it attempts to reduce its debt burden.

Related: AMC CEO Adam Aron's pay package grew to $25.4 million in 2023, but he says it's worth $16.5 million less amid share decline

Aron's compensation package increased to $25.4 million in 2023, from $23.7 million in 2022 and $18.9 million in 2021, according to a proxy statement filed with the SEC Friday.

After market close Friday, Aron said in a post on X, formerly Twitter, that the stock award is worth $16.5 million less than the amount stated in the filing, given the company's share price.

AMC shares are up 1% in premarket trading Tuesday. The stock is down 93.8% in the last 12 months, compared with the S&P 500 index's SPX gain of 26.6%.

-James Rogers

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04-09-24 0932ET

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