Barbenheimer was the big draw in the latest quarter, but AMC Theatres also credited management of its real estate among other reasons the world’s largest movie theater chain posted its best revenue and attendance numbers since the start of the pandemic.
Executives of Leawood, Kansas-based AMC told analysts this week the company has closed 156 locations and opened 57 since the start of the pandemic, and continued to chip away in its latest quarter on back rent owed to landlords dating to the pandemic’s earliest days of 2020.
The company operates about 900 theaters worldwide including 600 in the U.S., and AMC leaders said curating its real estate, with other moves to shore up its balance sheet with debt and equity shifts, have helped it ride a steady industry recovery in better shape than some of its competitors.
“For those trying to understand how AMC successfully has been defying gravity these past three and a half years, having ample cash on hand is the secret sauce,” CEO Adam Aron said Wednesday during a third-quarter earnings call. “It is having sufficient cash reserves that has enabled AMC’s resiliency before, and therefore we will continue to seek equity capital when it appears smart to do so.”
AMC reported third-quarter revenue and earnings that beat year-earlier numbers and “beat every third quarter results that AMC has ever reported” in its 100-year history, Aron told analysts. July was especially fruitful for the company, with moviegoers coming to see well received films including “Barbie,” “Oppenheimer” — many in the same day in the Barbenheimer phenomenon — and the latest “Mission Impossible” installment. Total attendance for the quarter rose 38.4% from a year earlier.
Revenue for the third quarter ended Sept. 30 topped $1.4 billion, up 45.2% from a year earlier. Net income was $12.3 million, compared with a net loss of $226.9 million a year earlier. While overall profits have yet to make a full recovery, executives said per-customer spending on tickets and food was up 30% from pre-pandemic norms.
In addition to steady box office improvements, AMC executives cited the ongoing pruning of its theater fleet since 2020, closing marginal theaters and opening more successful new ones, in several cases by acquiring locations vacated by other chains. Aron said the company has also been “cooperatively renegotiating many theater rents” with its landlords, and continues to invest capital in theater upgrades including enhanced projection and screen technologies.
AMC Chief Financial Officer Sean Goodman said the company’s deferred rent balance at the end of the third quarter was $74.2 million, and AMC plans to reduce that by another $20 million by year’s end.
The company expects full-year capital expenditures at its theaters to total between $175 million and $225 million. Goodman said the company opened one theater and closed three during the latest quarter, bringing its totals since 2020 to 156 locations closed and 57 opened. That means its total location count has shrunk by a net 99 from pre-pandemic levels.
“This portfolio rationalization together with ongoing landlord negotiation has unequivocally resulted in a more profitable theater portfolio,” Goodman told analysts, noting that AMC’s third-quarter rents on average were 5.6% below the same period of 2019.
U.S. box office revenues topped $2.6 billion in the third quarter, beating expectations by reaching 94% of levels for the third quarter of pre-pandemic 2019, according to an October report from equity research firm B Riley Securities. Theater executives and analysts generally predict a full recovery for the industry is at least another year away.
B Riley analyst Eric Wold said the movie theater industry continues to face headwinds including a shortage of new films brought about by strike-related production stoppages, with the number of films released so far in 2023 still 45% below the same period of 2019. But third-quarter results from several blockbuster movies showed theater operators are now able to generate operating returns on existing films that come close to pre-pandemic levels, he said.
Some of AMC’s rivals are seeing similar improvements. Cinemark Theatres executives told analysts last week that revenue increased nearly 35% in the third quarter compared with a year earlier, as attendance rose nearly 28%. July was Cinemark’s biggest single-month box office tally in company history, and quarterly net income topped $90 million compared with a net loss of $23.9 million a year earlier.
Some other operators have not fared as well this year. U.K.-based Cineworld, parent of Regal Cinemas in the United States, has been exiting numerous leases and closing locations nationwide as part of a larger financial restructuring after a bankruptcy filing.
Candace Carlisle of CoStar News contributed to this report.