In this morning’s formal release of Q2 results, Aron says that he’s “extremely disappointed” in AMC performance. He adds, though, that it’s “well positioned for the future.”
Execs will hold a conference call with analysts later this morning.
AMC lost about a quarter of its market value this week after it unexpectedly pre-announced ranges for Q2 earnings, and a 2017 forecast, that were far worse than investors expected.
The company, owned by China’s Dalian Wanda Group, sought to demonstrate its optimism by approving a plan to repurchase $100 million of AMC’s publicly traded shares over the next two years.
Aron added that he plans to personally buy an unspecified amount of AMC shares over the next 60 days “under the advice of counsel” and coordinating with the company’s buy-back.
The official Q2 report — which includes the recent purchases of Carmike Cinemas and the UK’s Odeon and UCI Cinemas — shows a net loss of $176.5 million, down from a profit of $24 million in the period last year.
With the acquisitions, revenues increased 57.4% to $1.20 billion.
The performance “fell well short of expectations,” Aron says.
He adds that potentially strong films coming in Q4, including Star Wars: The Last Jedi, create “the opportunity to lessen the angst surrounding box office weakness industry-wide in the second and third quarters of 2017.”
In addition to Hollywood’s disappointing performance this summer, the CEO says that AMC had “higher operating expenses” as it refurbishes theaters with plush recliner seats and other amenities.
Box office sales at the Carmike theaters it bought, including many in rural areas, underperformed the rest of the industry.
And AMC took a $203 million impairment charge for its stock in cinema ad sales company National CineMedia, which has lost about 54% of its market value this year.
Aron says that AMC will “streamline operating costs and implement revenue enhancement efforts” that he says will lift pre-tax earnings by at least $30 million. It will cut capital expenditures by $100 million later this year, and by $100 million more next year by culling “lesser priority projects.”
AMC also plans to sell $400 million worth of “non-strategic assets” over the next two years. About half will come from the sale of 30 million NCM shares — about 80% of AMC’s stake — that it already agreed to do to win Justice Department approval for the Carmike deal.