AMC’s Q2 earnings showed record-breaking results for the spring and summer movie seasons, despite lingering concerns over the amount of its long-term debt. The exhibitor exceeded Wall Street’s expectations across all major areas, with a rise in attendance, profits, and revenue per patron. Overall revenue increased by 16% while expenses rose only by 2.5%. While attendance is still trailing 2019 levels, AMC is generating more revenue per patron due to increased concession sales and higher ticket prices, particularly from demand in its Premium Large Format auditoriums.
This report only shows results from the second quarter, in which THE SUPER MARIO BROS. MOVIE was the leading title, followed by FAST X, GUARDIANS OF THE GALAXY VOL. 3, and SPIDER-MAN: ACROSS THE SPIDER-VERSE. More good news is expected for Q3 when an additional revenue bump from the success of BARBIE and OPPENHEIMER will be recorded. At this pace, some analysts see a path for AMC to return to pre-pandemic revenues over the next two years.
However, there are still two dark clouds hanging over the world’s largest exhibitor. First, the current labor strikes in Hollywood could have a significant impact on earnings for the upcoming quarters if studios react by pushing back release dates for their major new releases between scheduled through the end of the year. Second, AMC is still on the hook for over $5 billion in debt that it built up in a spending spree of acquisitions before the pandemic.
AMC CEO Adam Aron has emphasized that the company “must be in a position to raise equity capital. I repeat, to protect AMC’s shareholder value over the long term, we MUST be able to raise equity capital” or bankruptcy was “on the table.” To this end, encouraging news came on Friday when a Delaware court approved a shareholder settlement that allows a special class of AMC Preferred Equity (“APE”) shares to be converted to regular, common shares.
This will clear the way for a reverse stock split, and then issuance of new shares to raise additional capital. This series of financial maneuvers was approved last March by a majority of shareholders, but its execution has been held up in legal wrangling until Friday’s ruling.