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Sub-Boffo Offerings Sink AMC Earnings

AMC's Leawood, Kan., headquarters

Leawood-based movie theater chain AMC Entertainment Holdings reported disappointing results for the second quarter ended June 30, blaming a dearth of blockbusters for drops in admission and food and beverage revenue.

In the fall of 2012, AMC was acquired by the Beijing-based Wanda Group.

Highlights for the second quarter 2016 include the following:

  • Total revenues were $764 million, compared to total revenues of $821.1 million for the same quarter of last year.
  • Admissions revenues were $481.2 million compared to $533.4 million for the same period a year ago. Average ticket price was $9.63 compared to $9.91 for the same period a year ago.
  • Food and beverage revenues were $243.5 million, compared to $250.5 million for the quarter ended June 30, 2015. Food and beverage revenues per patron increased 4.7% to an all-time high record of $4.87. This quarter marks nine of the last ten quarters AMC has set an all-time high record in food and beverage per patron.
  • Net earnings were $24 million and diluted earnings per share were 24 cents compared to $43.9 million and 45 cents, respectively, for the second quarter of 2015.

“It would ordinarily be difficult to be pleased with a quarter in which a lackluster film slate caused us to share in the industrywide box office revenue decline that was down domestically some 10.7 percent per screen year-over-year. However, we are encouraged that this trend has already reversed itself with industry box office revenues up more than 7 percent as of July 29th, and a potentially record-setting film slate being close at hand for calendar year 2017,” said Adam Aron, AMC president and CEO.

“However,” Aron added, “of far greater importance in our view, things that were within our control tell a much different story for AMC. We made progress at AMC in the second quarter in four significant ways. First, our theatre renovations featuring recliner seats, premium large-format auditoriums and a refreshed overall decor continued to lead the industry, enhancing our appeal to consumers. Second, thanks to continuing our innovation of the AMC theatre experience, food and beverage revenues per patron were an all-time record for us. Third, we wholly revamped our already popular AMC Stubs® loyalty program, and tested it in 40 theatres in six markets. The test was so successful that we have already rolled out the new program nationally across our entire network. Moviegoers are signing up to enroll in the new AMC Stubs® loyalty program at a rate two to three times than that for the previous program, and the number of our total active members is already up approximately 20 percent in just a few short months. We believe membership should continue to increase at a brisk pace, and this augurs brightly for AMC’s future. And fourth, our executives and staff worked tirelessly to put us in a position to announce in July our acquisition of Odeon & UCI Cinemas in Europe, as well as a new merger agreement with Carmike Cinemas here in the United States. When either of these acquisitions close, AMC then becomes overnight the largest movie exhibitor in the world. Taken together, this level of activity and progress is almost breathtaking, enabling AMC to be uniquely positioned to deliver additional value to our guests, associates and shareholders.”

The company also noted that, for the six months ending June 30:

  • AMC set all-time records for all revenue segments: total revenues, admissions revenues, food and beverage revenues and other revenues.
  • Total revenues increased 3.8 percent to $1.53 billion compared to total revenues of $1.474 billion for the six months ended June 30, 2015.
  • Admissions revenues grew 1.2 percent to $963.8 million compared to $952.1 million for the six months ended June 30, 2015.
  • Food and beverage revenues increased 8.1 percent to $487.7 million, compared to $451 million for the six months ended June 30, 2015. Food and beverage revenues per patron increased 5.2 percent to a new six-month record of $4.82.
  • Net earnings increased 4.4 percent to $52.3 million compared to $50.1 million for the six months ended June 30, 2015.

As previously announced on July 12, AMC entered into a definitive agreement to acquire the equity of the largest theatre exhibitor in Europe, London-based Odeon & UCI Cinemas Group, from private-equity firm Terra Firma in a transaction valued at approximately £921 million. The transaction is expected to be completed in the fourth quarter of 2016, subject to antitrust clearance by the European Commission and consultation with the European Works Council.

As previously announced on July 25, AMC has entered into an amended and restated merger agreement to acquire all of the outstanding shares of Carmike Cinemas Inc. (NASDAQ: CKEC) for $33.06 per share. The revised offer provides an additional $3.06 per share or 10.2 percent more than the previous offer. The transaction is valued at approximately $1.2 billion, including the assumption of Carmike’s net indebtedness, based on the closing trading price of AMC’s common stock on the New York Stock Exchange on July 22.

The 2Q press release, along with other news about AMC, is available at www.amctheatres.com. AMC routinely posts information that may be important to investors in the Investor Relations section of its website, www.investor.amctheatres.com.