AMC Theaters is still not yet out of the red, but the first quarter of 2023 saw a substantial year-over-year improvement in revenue that enabled the company to cut its loss for the period by 30%.
Revenue for the three months ended March 31 improved to $954.4 million thanks to early-year hits like “M3GAN” and “Puss in Boots: The Last Wish,” as well as March hit sequels like “Creed III” and “Scream VI,” AMC Entertainment Holdings said Friday. That was up 21.5% from $785.7 million in the first quarter of 2022 and beat projections of $936.1 million compiled by Zack’s Investment Services.
Shares were up 4% in premarket trading.
“Thank you above all, James Cameron, for ‘Avatar: The Way of Water,’” said CEO Adam Aron during the conference all to discuss results, noting that the film has grossed $2.3 billion globally to become the third-highest grossing movie in history.
Revenue from admissions leaped 30% to $328.7 million. AMC’s nearly 10,000 screens worldwide saw attendance rise to 47.6 million, a 22% gain, thanks to the strong film slate. In the U.S., attendance jumped 25% to 32.4 million, from 25.8 million last year. International attendance gained 15% to 15.3 million.
“The recovery in the European box office was even stronger in getting to pre-pandemic norms than that in the U.S.,” Aron said in a statement. “As I have said for years, when our studio partners showcase their magical storytelling, there is robust demand to be realized at AMC theaters both in the U.S. and abroad.”
The company posted a quarterly loss of $235.5 million or 17 cents per share, an improvement from last year’s loss of $337.4 million, or 33 cents per share. On an adjusted bases, the loss came to 13 cents per share, besting analyst projections for a loss of 17 cents per share, according to Zack’s.
“Make no mistake, we are not out of the woods yet,” Aron said on the call. “The box office, while elevated, is not yet back in 2019 levels.” He noted that he previously suggested the pandemic would have a five-year impact. “We just started the fourth year in our ramp up to eventual normality, but we are indeed on an improving ramp.”
In premarket trading, AMC shares gained 3.6%, after closing Thursday at $5.92, up 50% since the start of the year.
The company pointed to a “blistering pace” for spending at theaters, noting that food and beverage purchases per patron rose 7% during the period, to an average of $6.90 worldwide, and $7.99 in the U.S.
“Boy did they eat and drink,” Aron said on the call. “This is so far have been pre-pandemic consumption, and it’s occurring in a very high margin business for us.”
Average ticket price in the U.S. was $11.87, down from $12.05 last year, while worldwide average ticket price inched down to $11.22, from $11.36 last year.
The company said during the call that Imax and Dolby cinema premium large-format screens are a particularly strong draw. CFO Sean Goodman said premium format represented over 29% of domestic admissions and 24% of international admissions.
Given that popularity, Aron said the company is working to upgrade a significant number of Imax screens, and to add more Dolby screens. It is also working to expand laser projection, making screens brighter, sharper and more vivid and providing environmental benefits because they consume less energy and there are no bulbs to dispose. Aron called it “out biggest green initiative ever.”
Analysts don’t expect AMC to turn a profit until 2024, but they believe it will keep narrowing losses as the box office continues to recover. The second-quarter domestic box office is already close to $1 billion thanks in large part to “The Super Mario Bros. Movie,” which this weekend will become the third animated movie to gross $500 million in North America, after crossing the $1 billion mark worldwide lsast weekend.
That momentum should carry into a strong summer slate that includes May and June films like “Guardians of the Galaxy Vol. 3,” “The Little Mermaid,” and “The Flash.”
“We believe the first quarter of 2023 is just the tip of the iceberg for what’s to come in the remainder of the year,” Aron said. “With so many compelling movies coming just in the next few months … the remainder of the year promises something for everyone, and AMC stands ready to welcome movie-goers in significant numbers. We could not be more optimistic about the prospects for the 2023 box office, except to say that 2024 looks even better.”
In an interview with TheWrap at CinemaCon last week, AMC CEO Adam Aron said that he believes the worst damage wrought by the pandemic is behind AMC, and that as long as films continue to come out on a stronger frequency than last year, the theater chain will remain on a path to financial stability.
“The box office is on a positive ramp,” he said, “and if we have the ability to raise cash if we need to, I have no real fear.”