Despite a net loss of $13.5 million in the fourth quarter of 2019, AMC Theatres president and CEO Adam Aron called the company’s fourth quarter and 2019 year end results impressive. In its earnings release last week, AMC reported total revenue of $1.45 billion, a 2.4% increase year-over-year. AMC attributes the revenue growth to the increase in food and beverage averages per customer, U.S. average ticket price growth and subscription growth. AMC Theatres also reported adjusted net income for basic earnings per share of $38.9 million, a 105.8% increase year-over-year.
“We are very pleased to have delivered another quarter of strong results to finish 2019. Despite the U.S. industry box office declining 1.6% in the fourth quarter, AMC grew revenue 2.4%, and Adjusted EBITDA 11.6%, year-over-year, after adjusting 2018 for the non-cash accounting impact of ASC 842. These results, when combined with our disciplined approach to capital expenditures, generated approximately $303.1 million of adjusted free cash flow for the fourth quarter of 2019,” said Aron.
“These impressive results illustrate the power of customer engagement through the AMC platform, especially from our A-List subscription program and AMC Stubs loyalty program in the U.S., returns from our industry-leading recliner seating investments both in the U.S. and overseas, as well as the strength of our diversified geographic footprint,” Aron added.
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“These results are directly tied to the continued commitment to innovation in the AMC platform through which we deliver a personalized and targeted end-to-end experience for our guests leveraging technology and data driven insights that all drive consumer loyalty,” said Aron on the earnings call.
“We believe that AMC is blazing a unique trail in creating nothing less than the quintessential 21st Century movie going experience.”
Other highlights from fourth quarter 2019 earnings include the following:
- The 18-month-old Stubs A-List movie subscription program had more than 900,000 subscribers at year end.
- The consolidated average ticket price was $9.47, an increase of 3.3% year-over-year.
- Consolidated food and beverage revenue per customer was $4.74, an increase of 2.4% from last year. AMC attributes this to the wider variety of menu choices the theatre chain offers beyond typical theatre fare.
- Total global attendance in the fourth quarter was 92.6 million, down from 94.1 million in Q4 2018.
- Total U.S. attendance was 30.2 million, a 4.8% increase over the same period last year.
Highlights from the full year 2019 include:
- Total revenue for the year was $5.47 billion, an increase of 0.02%.
- Net loss was $149.1 million, compared to net earnings of $110.1 million in 2018.
- Adjusted net loss for basic loss per share was $112.1 million, compared to adjusted net income of $12.5 million in 2018.
- Adjusted EBITDA was $771.4 million, a decrease of 7.7% over the prior year.
- 2019 was the biggest year ever for global box revenue at $42.5 billion.
Launched in June 2018, the Stubs A-List subscription program continued to do well. Stubs A-List is the premium paid tier of AMC Theatres’ loyalty program. To date, it has enrolled more than 900,000 subscribers, despite subscription free increases in the first quarter of 2018.
“Based on an average monthly frequency of 2.4x for our A-List members in the fourth quarter, their associated full-price bring-along guest attendance, their food and beverage spend and the price increases in the first quarter, we believe the A-List program was profitable in the fourth quarter and year ended December 31, 2019 compared to our estimated results if the program had not existed. A-List membership levels and contributions continue to exceed our expectations,” said AMC in the February 27 news release.
Aron concluded the earnings call with an eight-point explanation for why AMC Theatres is on the upswing and committed to returning value to shareholders. Among his key points: the 2020 domestic box office will be strong, despite naysayers who believe streaming will take over; at the end of Q2 2019, the company announced a $50 million profit improvement plan to cut costs and improve efficiencies and margins; certain officers of the company have accepted reductions to their salaries and bonuses; and the company will continue to invest in its Stubs A-List program which brought in more than $20 million in incremental operating income in 2019.
AMC Theatres is taking some financial heat right now, but the long-term, big picture looks solid for AMC Theatres. The company has a detailed plan for cutting costs and identifying efficiencies, while growing its subscription program and diversifying revenue through its relatively new on-demand movie purchase and rental business. The company has faith that movie lovers will continue to head to the theatre, and streaming will continue to grow. Aron does not seem threatened by the growing number of entertainment options available. He is confident that AMC will continue to outperform its competitors and offer entertainment that movie lovers are willing to pay for.