AMC's Q2 Results Reflect Strategic Resilience and Growth, Analyst Says

Barrington Research analyst James C. Goss had a Market Perform rating on AMC Entertainment Holdings, Inc AMC.

In the second quarter, AMC Entertainment reported revenues of $1.35 billion, surpassing the estimated $1.29 billion. While the overall industry box office was down 18% from 2019, AMC's total revenue only decreased by about 10% compared to Q2FY19. 

EBITDA reached $183 million, resulting in a 13.5% margin, exceeding expectations. Domestically, AMC outperformed the industry with a 17.5% increase in total box office revenues, compared to the industry's 15.2% growth. 

This success was courtesy of a diversified film slate that attracted a wider audience.

Concessions spending domestically played a significant role in the outperformance, with a 9% increase in per capita spending, setting new records. 

AMC is exploring opportunities to enhance its concessions offerings, including food and beverage variety and alcohol sales, particularly in previously restricted regions. 

However, strikes have introduced an additional element of risk to the box office recovery.

AMC's emphasis on premium amenities, including IMAX and Dolby Cinema locations, has supported attendance and ticket prices. About 5.3% of AMC's screens are premium formats, contributing to over 19% of Q2 box office revenue. 

The preference for premium experiences and the growth of high-margin concessions led to a 40% increase in gross profit per patron compared to 2019.

Despite improvements in liquidity, AMC focuses on optimizing its financial position. The company ended the quarter with $435 million in cash and has been actively repurchasing debt below par. 

AMC is open to issuing additional common shares to enhance liquidity further. The company is also working to reposition its capital structure and address deferred maintenance and projector replacement needs.

AMC has been streamlining its footprint by disposing of around 350 screens while acquiring only a few new ones to improve cash flow quality.

The company continues to repay deferred rent accrued during the pandemic and plans to repay about $40 million of deferred rent by year-end. The acquisition of pandemic-stressed locations has proven successful, with these acquired sites outperforming retired theaters.

Price Action: AMC shares traded lower by 2.85% at $4.95 on the last check Wednesday.

Photo via Wikimedia Commons

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.