AMC Entertainment returned to a profit for the second quarter Tuesday, reversing a year-ago loss as the nation’s largest theater chain saw audiences return to seats as the post-pandemic recovery picked up pace, but the CEO warned of potential liquidity challenges ahead.
The Leawood, Kansas-based company posted net income of $8.6 million, or 1 cent per share, compared with a loss of $121.6 million, or 12 cents per share, in the second quarter of 2022.
That was a solid beat over the 5 cents per share loss projected by analysts polled by Zacks Investment Service.
Riding hit films like “The Super Mario Bros. Movie,” “Guardians of the Galaxy Vol. 3” and “Spider-Man: Across the Spider-Verse,” revenue came in at $1.35 billion, up 15.5% from $1.17 billion last year, and a strong beat of the $1.29 billion forecast by Zacks analysts.
In U.S. theaters, revenue jumped nearly 20% to $1.09 billion.
“While we still have much work ahead of us on this front, AMC’s glide path to eventual recovery continued with significant pace in the second quarter of 2023 as our results set new records and represent AMC’s strongest second quarter in four full years,” CEO Adam Aron said in a statement.
“Our ongoing progress is obvious and ever so encouraging,” Aron continued. “Combining AMC’s commitment to innovation with a notable increase in both the number and quality of movie titles from our studio partners, movie theaters are once again captivating audiences and driving attendance back to AMC theaters.”
He noted that the chain pulled in more than 66 million customers in the quarter, “our highest quarterly attendance number since the fourth quarter of 2019.”
Revenue from admissions rose 14% to $744.1 million, up from $651 million last year as attendance at the company’s 9,879 screens worldwide rose 12% to 66.4 million. That split between 50 million customers in the U.S. and 16.3 million in international markets.
Average ticket price edged up 2% to $11.21, with the average in the U.S. rising to $11.78.
Concessions purchases per patron leaped 9.7%, to $7.36 worldwide and $8.22 in the U.S.
Aron said the draw of premium large-format screens helped push per-patron revenue higher, and it “far exceeded pre-pandemic norms.” Dine-in theaters helped drive concession results higher, he said.
The CEO looked to the current box-office phenomena of “Barbie,” “Oppenheimer” and “Sound of Freedom” as a solid indicator for the current quarter, though the Hollywood strikes could create some headwinds later in the year, he said.
“With the first half of the year now behind us, the 2023 domestic industry box office is 20% ahead of last year, and we believe the second half of the year could be even better unless the current writers/actors strikes wind up delaying the release of movie titles into next year,” he said.
“The third quarter of 2023 is off to an explosive start,” he said, adding that the popular titles combined to give AMC its highest monthly revenue in its history for July.
During the quarter, AMC raised $34 million in cash through the sale of preferred stock units known as APE, and chipped away at its debt by $42 million. But following up on a letter to investors last month that warned of financial instability in the wake of a court ruling that limited the company’s financial maneuverability, Aron said in Tuesday’s release that it still faces challenges.
“While I am so very proud of the progress we have made since the depths of the pandemic, we continue to have a climb ahead of us,” he said. Even with our $643 million of quarter ending liquidity, our ability to continue to raise capital and remain agile are absolutely vital to maintaining our strong recovery trajectory. There are real and potentially severe liquidity hurdles on the horizon that we will need to overcome.”
In premarket trading, AMC Entertainment shares, which are popular with day traders, gained 4%, after closing Monday at $5.12, up 24% for the year.
