On the heels of Regal Cinemas new movie subscription service, AMC Theatres reports a stellar second quarter with revenue of $1.51 billion, a 4.4% increase year-over-year. The company also reported net earnings of $49.4 million, an increase of 122.5% year-over-year, and record ticket sales of 97 million, a quarterly high for the company. In addition, the company now has over 900,000 subscribers to its AMC Stubs A-List subscription program, launched in June 2018, exceeding the companys expectations.
In a quarter that generated the second largest domestic industry box office for any quarter in the past 100 years, we are especially gratified that AMC outperformed the rest of the U.S. industry (meaning comparing AMC with the rest of the U.S. industry, excluding AMC) in attendance per screen by 800 basis points and in admissions revenue per screen by 400 basis points, said Adam Aron, AMC CEO and president, in an August 8 news release.
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We continue to drive this performance by leveraging the power of the AMC platform: from experiential initiatives and enhancements at our theatres to a frictionless use of technology to communicate, engage and sell to our guests, Aron added.
At the end of the quarter, AMC owned, operated or had interests in 639 U.S. theatres and 365 theatres internationally. Twenty-one theatres (15 in the U.S. and six internationally) received premium recliner seating, including two new theatres. The company also added eight new Dolby screens, one new IMAX screen and one new Prime at AMC screen during Q2. Also, during the quarter, 878 screens were converted to reserved seating.
Other quarterly highlights include the following:
- Attendance of 97.0 million, compared to 91.2 million this time last year, a 6.3% increase and a Q2 company record
- International markets attendance of 25.1 million, compared to 21.5 million this time last year, a 16.6% increase
- Record U.S. food and beverage per patron of $5.85, a 5.5% increase yoy, and total food and beverage per patron of $5.08, a 3.9% increase yoy
- More than 1 billion website and smartphone app visitors annually
- Net cash from operations was $152.2 million, compared to $131.7 million for the same period last year
In its news release yesterday, AMC Theatres said the U.S. box offices generated $3.2 billion in admissions, down 3.7% yoy, but it was still the second largest U.S. box office quarter in industry history. AMC exceeded industry averages for attendance per screen and admissions revenue. Box offices in Europe saw record-breaking attendance because of Avengers: Endgame.
Of particular note is the success of the companys Stubs A-List movie ticket subscription service. Expanding its AMC Stubs loyalty program, Stubs A-List has signed up over 900,000 subscribers, just 100,000 shy of its one-year goal of 500,000 subscribers. The program continues to be successful despite price increases, including a 10% increase in 10 states and a 20% increase in five more. A-List members attend movies about 2.85 times per month. Their subscription revenue, guest admission revenue and food and beverage spending have made the subscription profitable during the first half of the year.
The company also announced a reduction in capital expenditures and a profit improvement plan targeting cost savings and incremental operating income of $50 million, including $5 million to be achieved in 2019. The goal is to become more efficient and to help the company reach medium- and long-term targets. Cost savings are expected to come from general and administrative line items, operating expenses, rent and the generation of additional revenue.
AMC Theatres is the one company who has movie ticket subscriptions figured out. MoviePass and Sinemia couldnt make it work. Cinemark launched a movie club which seems to be doing all right, and Regal Cinemas just started, so it is too soon to tell. However, a year in, AMC Theatres has surpassed its benchmarks and returned the company to profitability. If they add cost savings and operational efficiencies of $50 million over the next few years, they are well positioned for the future.