AMC Entertainment Q4 Sales Dip, Losses Widen; CEO Sees 2023 Recovery But Says Shareholders Must Approve Key Cash-Raising Measures
Giant movie chain AMC Entertainment saw revenue dip 15% last quarter to $991 million and losses widen on a one-time impairment charge in a fourth quarter was tough on exhibition in general with Avatar: The Way Of Water hitting late in the year, and a few misfires. A fuller release sked led by a steadier stream of tentpoles is expected to nudge the box office towards real post-Covid recovery this year.
AMC “continued on a multi-year glide path to recovery,” said CEO Adam Aron, taking a bit of a dig at bankrupt Regal parent Cineworld. “In stark contrast to others in our industry who have faltered, AMC Entertainment has increased our liquidity profile and strengthened our balance sheet through equity capital raising, debt refinancing, debt exchanges and repurchases.”
However, the company is not out of the woods and much pivots around a crucial shareholder meeting coming up next month.
“We cannot stress enough how crucial it is that for AMC to remain viable, we must continue to be agile and nimble not only in running our business day to day, but also in our continued raising of cash and decreasing the debt load on AMC Entertainment,” Aron said.
“As we have been saying for a long time, the industry-wide box office will not return to pre-pandemic norms before 2024 or 2025 at the earliest. Therefore, this active management of our capital structure is vital for AMC to ultimately both survive the pandemic and to thrive over the long haul. Accordingly, we continue to urge our shareholders to ‘vote yes,’ voting FOR the recommended proposals at the March 14 special meeting of shareholders, which gives AMC the best chance to generate value for all of our shareholders in the months and years to come.”
Basically, the company’s debt is a big drag and Aron needs shareholder permission to issue new shares to sell them to pay it down. He thought he’d found a way around that last year by creating new preferred equity units, called APEs for short. He sold some but not enough or fast enough to make a difference before the APE price fell. His plan is to decommission the APEs in a conversion with a reverse stock split.
AMC shareholders will vote at a special stockholders meeting March 14 on two proposals: one calls for a increase in authorized common shares from 524 million to 550 million, the second for a ten-for-one reverse stock split. If both pass, holders can convert their APEs into common shares.
Assuming AMC stock holds, the reverse split could open the door to as much as $22 billion in equity capital, said analyst Eric Wold of B Riley in a note earlier this month.
He and others believe the votes will be there. That said, several shareholders are suing AMC in Delaware Chancery Court to block the process. A judge yesterday set a preliminary injunction hearing for April 27. So even if shareholders approve the measures in March, no action could be taken until after that.
AMC’s been in a bit of an odd position as a meme stock since early 2021, with millions of retail investors who have kept the stock afloat. CEO Adam Aron has been smart about keep them engaged as he branches out into related ventures like retail popcorn sales, a branded credit card, and taking over theaters here and there, and unrelated investments like a gold mine.
The company’s net loss widened to $288 million, including a non-cash impairment charge related to long-lived assets of $133 million. That compared to a net loss of $134 million in the year-earlier quarter, which included a $77-million charge.
Adjusted ebitda (earnings before interest, taxes, depreciation and amortization) fell to $14.5 million from $159 million.
Total debt was approximately $4.95. billion at year end — down by $220 million from the year before.
Operating cash burn for the quarter was $57.5 million a month.
Available liquidity at year end was $842.7 million — including $211.2 million of undrawn capacity and $631.5 million in cash.
Admissions revenue fell to $561.3 million from $666.6 million. Food and beverage sales dipped to $331.2 million from $380.5 million.
Execs will host a conference call at 5 pm ET.