Top exhibitor AMC Entertainment offered a mixed third-quarter report card, with attendance records and an eye-opening $120 million in revenue from its Stubs A-List subscription program but also losses that were wider than Wall Street was expecting.
Shares in AMC dropped 6% in after-hours trading. They closed at $18.13 during the regular trading session, down 1%.
Diluted losses per share increased by 49 cents to 82 cents during the quarter, wider than the 33 cents a share for the same period a year ago and bigger than analysts’ consensus of 47 cents. Included in the loss was what the company described as “an increase in fair value of our new derivative liability” linked to private equity firm Silver Lake’s infusion of $600 million earlier this fall.
Thanks to a late-summer surge with The Meg, Crazy Rich Asians, and Mission: Impossible – Fallout as well as a robust beginning of fall with The Nun, AMC saw a record third quarter in terms of attendance, hitting 58.9M patrons worldwide. That pushed total revenue to $1.22 billion for the period ending September 30, which met Wall Street estimates.
Worldwide admissions revenues were nearly unchanged at $751.4 million compared to $753.5 million for the same period a year ago. Aside from great product in theaters, there was a decline in the U.S. average ticket price of 6.6%, which made tickets more attractive to customers and helped boost revenues. Food and beverage revenues increased 6.5% to $384.8 million, compared with $361.4 million, again primarily driven by attendance.
Adam Aron, CEO and President of AMC and not one known for holding back, predicted that 2018 would be the best full year in the company’s 98-year history. He noted the third quarter also saw a strategic milestone for the exhibitor, with Silver Lake buying in and joining the board of directors. Unmentioned by Aron was AMC’s accompanying plan to buy back Class B shares controlled by Wanda, signaling a retreat by the Chinese conglomerate after six years in the U.S. exhibition sector.
As the company had announced earlier this week, Stubs A-List is about to hit 500,000 subscribers. Aron said that projects to an annual run rate of $120 million in revenue.
The quarterly conference call with analysts to discuss the financials was dominated by talk of Stubs A-List. “This program is just a smash hit,” Aron said. Alluding to MoviePass, though not by name, he added, “We know there’s a lot of fear out there that since others have stumbled in this area, we too could stumble. That’s not going to be the case.”