AMC Entertainment Does Dramatic Reversal of Multimillion Dollar Losses

Company attributes success to growth initiatives, box office momentum and the company's movie subscription service.

Subscription News: AMC Entertainment Does Dramatic Reversal of Multimillion Dollar Losses

Source: AMC Theatres

Last year marked a dramatic reversal of fortune for AMC Entertainment Holdings, Inc. (NYSE: AMC) with the company going from a net loss of $487.2 million in 2017 to net earnings of $110.1 million in 2018. That’s a swing of $597.3 million! For the fourth quarter of 2018, revenue was $1.413 billion, a 0.2 percent loss of the fourth quarter of 2017, but with such a strong year, a slight reduction in quarterly revenue has no impact. For the full year 2018, AMC had revenue of $5.5 billion, a 7.5 percent increase over 2017.

“AMC continued to deliver strong results in the fourth quarter of 2018, capping a record-setting full year performance, the best-ever in our 98-year history,” said Adam Aron, AMC president and CEO in a February 28 news release. “The tremendous momentum of the industry box office, which was the fifth record-setting year in the last seven years, combined with AMC’s transformative growth initiatives and the popularity of the new AMC Stubs A-List subscription program, drove full year global attendance to an all-time high of 359 million guests, up 6.1 percent in the U.S. markets, resulting in strong financial performance across the board.”

Other highlights from the earnings report include:

  • For the quarter, net earnings were $170.6 million, compared to $276.4 million in Q4 2017.
  • Total adjusted EBITDA for the fourth quarter was $264.1 million, a decrease of 8.4 percent.
  • Net cash from operating activities in Q4 2018 was $224.4 million, compared to $307.8 million in Q4 2017.
  • AMC’s Stubs A-List movie subscription service has grown to over 700,000 members in the first six months of the program.
  • U.S. movie attendance was 65.2 million, compared to just under 61.9 million in Q4 2017, a 5.3 percent increase. This was a record in fourth-quarter attendance for AMC.
  • International movie attendance was just under 29 million in Q4, compared to 30.4 million in Q4 2017, a 5.0 percent decrease.
  • The average number of screens in Q4 2018 was 10.7 for U.S. and international, compared to 10.8 in Q4 2017, a decrease of 0.8 percent.
  • The average ticket price in the U.S. was $9.26 and $8.96 internationally, compared to $9.92 and $9.30, respectively, in Q4 2017. Ticket prices were down slightly due to declines in IMAX and 3D volumes and A-List promotional pricing.

Subscription News: AMC Entertainment Does Dramatic Reversal of Multimillion Dollar Losses

Source: AMC Theatres

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The movie industry had its share of highlights as well. For the full year 2018, the U.S. industry box office revenue was $11.9 billion, a 6.9 percent increase – making it the highest grossing year ever recorded. In addition, February, April, June and October set all-time box office monthly records.

In June 2018, AMC launched its Stubs A-List movie subscription program, in combination with its AMC Stubs loyalty program. In six months, the program has grown to over 700,000 subscribers, exceeding the company’s expectations.

“At this membership level, the subscriber base is expected to generate more than $150 million of annual recurring revenue and, based on historical performance, in excess of $300 million when factoring in food and beverage purchase and full fare tickets purchased by bring-along guests,” said AMC in the news release.

“The A-List subscription program represents a meaningful opportunity to shift a portion of AMC’s business to a recurring subscription model, thereby increasing revenue visibility, reducing box office volatility, and driving long-term customer loyalty. We expect the program to become accretive to Adjusted EBITDA in 2019, a year earlier than originally anticipated,” AMC added.

Investors were certainly impressed. On February 27, the day before financials were reported, AMC stock stood at $13.87 per share. It has since spiked to $16.00 per share as of 7:26 p.m. EST on March 1. A year ago, on March 5, 2018, AMC stock was valued at $15.75 per share, but that was at a point when the company was reporting huge multimillion-dollar losses.

Subscription News: AMC Entertainment Does Dramatic Reversal of Multimillion Dollar Losses

Source: Google

At year end, AMC owned, operated or had interests in 637 theatres in the U.S. and 369 theatres internationally. In 2018, the company added 8 new build theatres, made three acquisitions of single theatre locations, added premium recliner seating to 58 U.S. theatres and 19 international theatres. 

Insider Take:

Wow – what a turnaround! You can’t attribute this turnaround entirely to Stubs A-List, but AMC is definitely onto something. They saw an opportunity in the relatively new market of movie subscription services and created an attractive, reasonably priced, reliable service that customers wanted. Leveraging its existing membership of loyalty rewards moviegoers, AMC had a captive audience. The poor performance of MoviePass certainly didn’t hurt AMC either. We love hearing stories like this, especially when subscriptions or memberships are a contributing factor. Well done, AMC – or should we say bravo?!!