AMC Entertainment’s shares rose 4% in expanded trading on Monday after the company posted a smaller-than-expected loss in the second quarter.
Though the cinema operator’s CEO warned the company still faces challenges, he said it could make a profit as early as the fourth quarter if the domestic box office hits at least $ 5.2 billion.
“AMC’s journey through this pandemic is ongoing and we are not out of the woods yet,” CEO Adam Aron said in a statement Monday. “While there are no guarantees of what the future will bring in a still infectious world, one can imagine a happy Hollywood ending to this story.”
Aron made a number of announcements during Monday’s conference call, many of which directly addressed the desires of his new investors, including new payment options like Bitcoin and a wider variety of content offerings like sports and recorded concerts.
Last year, AMC’s cinemas were closed for months due to the coronavirus pandemic. Theaters started reopening late last summer just to see Covid cases rise again and film studios postpone new releases again.
At the end of June, all of AMC’s 593 US theaters were open to the public and 335 of its international theaters, or approximately 95%, were operational. The crowd is returning, but the crowd has not yet recovered to pre-pandemic levels.
According to the AMC, 22 million guests visited its theaters in the second quarter. That was an increase from the 7 million guests who returned to theaters in the first quarter, but it was far from normal. In the second quarter of 2019, AMC sold 97 million tickets, which was a historic quarterly record.
“We’re not driving a winning lap … We’re still losing money, we’re still burning money,” said Aron during a phone call on Monday. “But we can see a light at the end of the tunnel.”
Loss in the second quarter diminishes
Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:
- Loss per share: 71 cents vs. 91 cents expected
- Revenue: Expected $ 444.7 million versus $ 382.1 million
For the second quarter, AMC recorded a net loss of $ 344 million, or 71 cents per share, compared to a loss of $ 561.2 million, or $ 5.38 per share, a year earlier. According to Refinitiv, analysts had expected a loss of 91 cents per share.
The cinema chain reported revenues of $ 444.7 million, more than analysts’ expectations of $ 382.1 million.
Aron announced that in late 2020, the company with Warner Bros. decided that Warner Bros. would release all of its 2021 films in theaters and through its HBO Max streaming service on the same day.
Exclusive content in theaters can help AMC to become profitable again.
These deals are particularly welcome at a time when the US is recording an average of more than 100,000 new Covid-19 cases per day for the first time since February. The highly contagious Delta variant triggers a resurgence of the virus, especially in unvaccinated populations.
Fears of closings re-emerge as many local governments have chosen to restore mask mandates. Some companies even ask their customers for proof of vaccination before it is delivered to them.
The AMC Burbank 16 and the bronze Batman statue in Downtown Burbank.
AaronP / Bauer-Griffin | GC images | Getty Images
Bring money to work
As of June 30, AMC had approximately $ 1.8 billion in cash and approximately $ 2 billion in liquidity, the company said.
AMC was able to avoid bankruptcy when its cinemas closed because it was able to raise cash in part from a “meme-share” madness. For months, fans of the stock who call themselves “monkeys” have helped propel the stock to record highs. These new investors stayed bullish on traditionally heavily short stocks like AMC and used their growing numbers to make waves on Wall Street.
Thanks to millions of these retail investors, the company’s shares have risen nearly 1,500% since January. However, the stock, which closed at $ 33.80 on Monday, has been halved from its high of $ 72.62 in early June.
AMC begins to put the money raised into work by buying or renting new theaters and upgrading its existing locations with better seating and amenities.
In the second quarter, the company took out leases for two locations in Los Angeles: the 14-screen cinema in The Grove shopping complex in Fairfax and the 18-screen cinema in the Americana at Brand in Glendale. Both were previously operated by Pacific Theaters and are owned by real estate company Caruso. AMC did not disclose the terms of the lease.
In 2018, The Grove Theater was the second highest grossing theater and Americana was the fifth highest grossing theater in the Los Angeles area. AMC is expected to reopen these theaters in August.
On Monday, Aron said the company was in the process of signing leases for up to 10 additional locations. Leases or letters of intent have so far been signed for six cinemas, he said. The theaters are located in Los Angeles, Chicago, and Atlanta. Four other locations are under discussion, he said. Eight of the 10 possible locations are former Arclight and Pacific theaters.
Aron also announced that AMC plans by the end of the year to have technology in place to accept bitcoin for movie tickets and concessions when paid for online.
Reveals Executive Share Ownership Proposal
To further underscore his commitment to the company and its new investors, Aron said he proposed a new stock requirement for top management positions at AMC. The recommendation, which will be discussed during the next board meeting, states that the CEO must hold a share value of eight years’ salary.
In Aron’s case, that would be roughly $ 12 million in shares that are either owned or granted by the company.
Under the proposal, he said, the chief financial officer would have to hold the salary for six years, the executive vice president position would hold the salary for four years, and a senior vice president would have to hold the salary for two years.
“At the same time, as I emphasize ownership, I would like to remind you that in the five full years that I have run this company, I have not sold any AMC stock, even though it was more than three-fifths of my annual salary,” said Aron.
