AMC Entertainment ($AMC), one of the leading movie theater chains, recently announced its financial performance for the second quarter, revealing a widening loss compared to the same period last year. The company reported an adjusted loss of $0.43 per share for the June quarter, a significant drop from a loss of $0.04 during the previous year.
Analysts from Capital IQ had projected a lower loss of $0.36 per share, highlighting a discrepancy in expectations versus reality. The company's revenue also took a hit, decreasing by approximately 24% to $1.03 billion, which was reflective of a struggling market both domestically and globally; however, this figure fell within the company's guidance released in July. Chief Executive Adam Aron expressed optimism regarding the future of the movie industry, citing a robust pipeline of blockbuster films scheduled for release in the coming years.
"We have carefully and intensely studied the movie slate coming for the remainder of 2024 as well as the slates that are coming out for 2025 and 2026. Our current expectations are that the box office turned an important corner in June of 2024 and would be ahead," Aron stated during an earnings conference call, as reported by a Capital IQ transcript. Despite these losses, there are indicators of resilience within the company.
Each share of AMC Entertainment saw a decline of 3.5% at the close of trading on Friday, and the company further experienced an 8.9% drop in premarket activity on Monday. This decline in share value has raised concerns among investors as they evaluate the company's future potential. A breakdown of AMC's revenue sources reveals notable declines: admissions revenue fell to $564.4 million from $744.1 million year-over-year, while food and beverage sales dropped to $367.1 million from $488.2 million last year.
Attendance figures echoed these trends, decreasing to approximately 50 million patrons from 66.4 million during the same period last year, although the average ticket price saw a slight increase to $11.29 from $11.21. The quarter's overall performance began sluggishly, heavily influenced by the earlier strikes from Hollywood writers and actors, which adversely impacted box office dynamics.
Nonetheless, the release of Walt Disney's (DIS) "Inside Out 2" reportedly provided a significant boost toward the end of the quarter, enabling the company to achieve unexpected strength. Aron mentioned that the disparity between AMC's early quarter struggles and late quarter performance felt like a tale of two completely different companies facing distinct industry challenges. Furthermore, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) showed a stark contrast, coming in at $29.4 million compared to $182.5 million in the prior year.
Operating costs saw a marked reduction, falling to $1.08 billion from $1.26 billion year-over-year. As of June, AMC's average screen count stood at 9,618, reflecting a 2.6% decrease on an annual basis. Looking ahead, Aron voiced confidence about the lineup of blockbuster titles scheduled for release through the end of the year and into 2025 and 2026, suggesting that the movie industry is now in a prime position for sustained growth.
He stated, "With a long list of blockbuster movie titles opening in theatres during the remainder of the year and into 2025 and 2026, the industry-wide box office now appears to us to be poised for sustained growth. Looking ahead, we believe that bodes ever so well for the increasing cash generation potential from AMC's movie theatres both at home and abroad.".