AMC Entertainment Holdings, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with Q1 2023 unless noted. AMC operates theatres in the U.S. and Europe, reporting U.S. and International segments. At quarter-end it operated 895 theatres and 10,005 screens.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $951.4 million | $954.4 million |
| Operating loss | $(108.4) million | $(108.2) million |
| Net loss | $(163.5) million | $(235.5) million |
| Net loss per share | $(0.62) | $(1.71) |
| Adjusted EBITDA | $(31.6) million | $7.1 million |
| Cash used in operating activities | $(188.3) million | $(189.9) million |
| Capital expenditures | $50.5 million | $47.4 million |
Total revenue was nearly flat, while operating loss was also little changed. Operating margin was approximately negative 11.4%, versus negative 11.3%. Net loss narrowed substantially, but this comparison reflects unusual items, including a $36.2 million net vendor-dispute settlement benefit in 2024 and a $126.6 million shareholder-litigation charge in 2023. Adjusted EBITDA declined from positive $7.1 million to a loss of $31.6 million.
Admissions revenue fell 0.7% as attendance declined 2.1% to 46.6 million, partly offset by a 1.4% increase in average ticket price. Food and beverage revenue declined 2.3%; other-theatre revenue increased 8.8%. U.S. revenue fell 2.2% and U.S. Adjusted EBITDA declined to $(27.6) million from $10.9 million. International revenue rose 5.0%, but International Adjusted EBITDA remained negative at $(4.0) million.
At March 31, cash and cash equivalents were $624.2 million, down from $884.3 million at year-end; cash plus restricted cash declined $250.7 million during the quarter to $660.7 million. Working capital, excluding restricted cash, was negative $626.5 million. Corporate borrowings had $4.482 billion principal outstanding; quarterly interest expense was $101.2 million. The balance sheet reported $3.885 billion of noncurrent operating lease liabilities, in addition to $508.9 million current. Stockholders’ deficit was $2.031 billion.
Material changes and significant events
- Lower U.S. attendance, reflecting the comparative film slate and industry effects of 2023 labor stoppages, weighed on results; International attendance increased 5.8%.
- Rent expense rose 9.1%, partly because Q1 2023 benefited from a theatre lease termination. Operating expenses increased 2.8%, including higher expected general liability and workers’ compensation costs.
- In January, AMC exchanged $17.5 million principal amount of 2026 Second Lien Notes for 2,541,250 common shares, recording a $5.8 million extinguishment gain.
- After quarter-end, AMC terminated and repaid its revolving credit facility on April 19, 2024; it does not expect to replace it. The term loan remains outstanding. The company also reported approximately $103.5 million gross proceeds from its at-the-market share offering through the filing date, from approximately 32.0 million shares.
- Cash used in investing activities was $50.0 million, compared with $16.6 million used in Q1 2023; the prior-year period included $30.0 million of proceeds from the Saudi Cinema Company sale.
Outlook, risks and contingencies
Management says existing cash and expected operating cash flows should fund operations and obligations through the next 12 months, but also states that current cash-burn rates are not sustainable long term. AMC believes sustainable positive operating cash flow and long-term profitability require revenue to return to pre-COVID levels. North American box-office grosses in Q1 2024 were approximately 32% below Q1 2019. The filing provides no earnings or revenue guidance.
AMC estimates 2024 capital expenditures, net of landlord contributions, of approximately $175 million to $225 million. Management cautions that future cash needs are difficult to estimate and additional liquidity beyond 12 months may not be available on acceptable terms or at all. If revenues and attendance do not improve and additional liquidity is unavailable, the company says it may seek an in-court or out-of-court restructuring; common stockholders could lose their investment.
- Risks include the film-release pipeline and lingering labor-stoppage impacts, changes in theatrical windows and streaming competition, attendance and consumer behavior, seasonality, inflation and interest rates, and substantial debt and lease obligations.
- The company’s $4.482 billion corporate debt principal includes approximately $2.868 billion due in 2026. A 100-basis-point rate change would alter quarterly interest expense on variable-rate debt by an estimated $4.8 million.
- Common shares outstanding were 263.6 million at March 31 and 295.6 million as of May 8. Further equity issuance may dilute existing holders; the ATM program is intended in part to bolster liquidity and address debt.
- AMC is pursuing insurance recovery of up to $80 million related to the shareholder-litigation settlement; insurers contest coverage. A separate APE-holder suit remains pending, with a motion to dismiss scheduled for argument in October 2024. AMC also appealed aspects of the NCM bankruptcy plan; the company says it does not expect a material impact from NCM’s bankruptcy.
Investor verification priorities
- Assess cash runway and liquidity after the revolving-credit-facility termination, including the impact of continued operating cash outflows and the absence of a replacement revolver.
- Verify ATM issuance proceeds, shares issued, remaining capacity, and the resulting dilution; distinguish quarter-end share counts from the May 8 count.
- Review the 2026 debt maturity concentration, interest costs, refinancing prospects, and the effect of any further debt-for-equity exchanges.
- Track attendance, film releases, box-office recovery, and segment-level Adjusted EBITDA; assess whether adjusted performance improves without one-time settlement benefits.
- Monitor actual 2024 capital spending against the $175 million–$225 million estimate and developments in litigation, insurance recovery, and the NCM appeal.