AMC Entertainment Holdings, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the provided text does not give standalone fourth-quarter financial results. Filed February 28, 2024.
Business context
AMC operates movie theatres in the United States and Europe through U.S. and International segments. At year-end it owned, leased, operated, or held interests in 898 theatres with 10,059 screens across 11 countries. Revenue is primarily from admissions and food and beverage, supplemented by advertising, ticketing, loyalty programs, theatre rentals, and other sources.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Total revenue | $4.813 billion | $3.911 billion |
| Operating loss | $74.3 million | $522.3 million |
| Net loss | $396.6 million | $973.6 million |
| Adjusted EBITDA (non-GAAP) | $425.8 million | $46.6 million |
| Cash used in operating activities | $215.2 million | $628.5 million |
| Capital expenditures | $225.6 million | $202.0 million |
| Cash and cash equivalents at year-end | $884.3 million | $631.5 million |
| Corporate borrowings, carrying value | $4.577 billion | $5.141 billion |
| Corporate borrowings, principal amount | $4.504 billion | $4.949 billion |
| Working capital deficit | $456.4 million | $811.1 million |
Operating margin was approximately negative 1.5%, compared with negative 13.4% in 2022. Total interest expense was $411.2 million, including $369.6 million on corporate borrowings. Stockholders’ deficit was $1.848 billion. The company reported no cash dividend.
Changes versus the prior year
- Revenue rose 23.0%, reflecting attendance growth of 19.2% to 239.5 million patrons and a 2.6% increase in average ticket price. Food and beverage revenue per patron increased 6.6% to $6.97.
- Both segments improved: U.S. Adjusted EBITDA was $370.2 million versus $59.6 million; International Adjusted EBITDA was $55.6 million versus a $13.0 million loss.
- Net loss narrowed by $577.0 million, but AMC remained loss-making and used cash in operations. The improvement included lower impairment and other expenses as well as stronger attendance.
- AMC raised approximately $790 million gross through 2023 at-the-market equity offerings and reported $832.7 million net proceeds from equity issuances in financing cash flows. It also repurchased $219.7 million principal of debt for $141.6 million and exchanged $105.3 million principal of second-lien notes for common shares.
- Common shares outstanding increased materially following equity issuance, conversion of preferred equity units, debt exchanges, and a shareholder-settlement share issuance. The company completed a 1-for-10 reverse stock split and converted outstanding AMC Preferred Equity Units into common stock in August 2023.
Liquidity, outlook, risks, and unusual items
- Management said cash plus expected operating cash flow should fund operations and obligations for the next 12 months, and expected to meet a $100 million minimum-liquidity condition through the revolving facility’s April 22, 2024 maturity. AMC said it did not currently expect to extend or replace that facility at maturity. It also cautioned that cash burn is not sustainable long term and that additional liquidity may be needed beyond the near term.
- AMC expects net cash capital expenditures of approximately $175 million to $225 million in 2024. No revenue, earnings, or attendance guidance is provided in the filing.
- Material obligations include approximately $920.3 million of minimum operating lease payments and $396.6 million of corporate-borrowing interest payments due in 2024. Deferred rent was approximately $56.3 million at year-end; total disclosed future operating lease payments were $6.850 billion before imputed interest.
- Key business risks include film-release uncertainty and reduced 2024 content following the 2023 writers’ and actors’ strikes; competition from streaming and other entertainment; high leverage and refinancing needs; interest-rate exposure; operating lease commitments; and potential further share dilution. North American box office grosses in 2023 remained approximately 21% below 2019.
- Unusual items included $142.8 million of debt-extinguishment gains, a $110.2 million shareholder-litigation charge, and $106.9 million of non-cash long-lived-asset impairments. AMC recorded impairments at 125 theatres across U.S. and international markets. The company also earned a $15.5 million gain on selling its Saudi Cinema Company investment.
- Contingencies include an appeal relating to the shareholder-litigation settlement, a separate claim by former preferred-equity holders, and an insurance coverage dispute over settlement-related losses. Management said it did not expect the NCM bankruptcy to have a material impact.
- In February 2024, the compensation committee modified 2023 performance goals for certain executives; AMC estimated approximately 260,000 additional shares, $2.1 million incremental stock compensation expense, and $1.0 million of cash tax-withholding payments. The 2013 equity incentive plan expired in December 2023; a replacement plan had not yet been approved.
- Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls and internal controls were effective.
Most important facts for investors to verify
- Whether AMC maintained adequate liquidity after the revolving credit facility’s April 2024 maturity, and whether it needed new financing or other liquidity measures.
- Subsequent operating cash flow, attendance, film slate, and the effect of strike-related release delays on revenue and cash burn.
- Debt principal, interest costs, refinancing options, covenant status, and the ability to meet substantial lease and rent obligations.
- Future equity issuance and dilution, including post-year-end debt-for-equity exchanges and executive compensation awards.
- Developments and potential financial exposure in the shareholder litigation, insurance coverage action, and other disclosed legal matters.