Another quarterly deficit was recorded on Tuesday despite an increase in sales from the previous year due to an increase in operational costs.
The largest movie theatre chain in the world is dealing with a heavy debt load, stock dilution and a lack of blockbuster movies. August and September box receipts were down from the summer due to fewer movies being released.
The company’s net loss for the three months ended September 30 was $226.9 million or 22 cents per share, a little rise from the same period last year but less than Wall Street had anticipated. The increase in revenue was higher than anticipated. Overall, AMC reported higher per-patron figures for admissions revenue and greater consumer spending on food and beverages.
Compare the company’s actual results with those predicted by analysts polled by Refinitiv, and you get the following:
- Adjusted loss per share of 22 cents compared to forecast a loss of 26 cents
- Sales came in at $968m, exceeding projections of $961.1m
- In after-hours trading, shares of the corporation fell by almost 4%
AMC has been making an effort to reduce its debt levels. After raising $400 million in a private placement last October it refinanced and reduced its debt extending its maturities until 2027.
Millions of retail investors in 2021 saved the company from the brink of bankruptcy by turning its shares into a meme stock. Since then AMC has come up with a number of schemes to increase its cash flow so that it may reduce its debt and finance future investments including purchases, renovations, new theatres, a popcorn company and even a gold mine.
On Tuesday’s discussion with investors, CEO Adam Aron warned, “We’re not out of the woods yet.” The box office is unquestionably on the upswing, but it has yet to recover to its pre-pandemic levels.
Despite its large financial reserves AMC continues to lose money each quarter due to operating expenses such as concessions film showings and rent. In the third quarter, the corporation spent more than $179 million in cash.
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The Company wants to Renovate and install more IMAX and Dolby Cinema Screens Across its Territory
On Tuesday’s call CFO Sean Goodman said the company anticipates a reduction in cash burn during the quarter ending in December. The company’s primary goals are to decrease its debt and increase its liquidity, but it is also interested in “interesting opportunities,” and it has been keeping an eye on its struggling movie theatre competitors.
Prior to this year, AMC distributed a dividend to its common shareholders in the form of preferred shares, which it has designated as “APE.” However, analysts say the corporation was unable to reap the full benefits of the sale of the new shares before investors abandoned ship.
The maximum number of preferred shares that can be issued by the corporation is 425 million. On Tuesday, it said that it had raised around $36.4 million via the sale of 14.9 million shares.
People are going to the movies again after the coronavirus pandemic and spending more money than ever on admission and concessions. However, the business will suffer in the last few months of the year due to the absence of consistent theatrical releases.
For the period of July 1 through September 30, the domestic box office grossed $1.95 billion, which is 31% lower than 2019’s figures. The number of films premiering in more than 2,000 theatres during this time period was also far lower than it was before the pandemic, with only 19 films doing so.
The executives at AMC are confident that “Black Panther: Wakanda Forever,” produced by Walt Disney, will have a huge opening weekend and become one of the year’s most successful films.
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AMC should be able to weather the lack of movies until 2023 because of its large cash stockpile. 2023 is predicted to see a stronger slate of film releases for theatres.
Before the release of earnings on Tuesday AMC stock dropped to a 52-week low of $5.17 a share on Monday a decrease of roughly 80% from January. Aron said that inflation and the success of AMC’s competitors like Cineworld which recently filed for bankruptcy were to blame for the stock’s decline.
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