AMC Entertainment Holdings, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Figures are unaudited and in U.S. dollars; amounts below are in millions unless otherwise noted. AMC operates movie theatres in the U.S. and internationally.
Business context and operating recovery
The results reflect reopening after widespread COVID-19 theatre closures and restrictions. By September 30, AMC reported operating essentially all of its domestic theatres and approximately 99% of its international theatres. Attendance and revenue rose sharply against Q3 2020, when many locations were closed or operating with restrictions; the comparison is therefore heavily affected by the pandemic-period base.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $763.2 | $119.5 | $1,356.2 | $1,079.9 |
| Operating loss | $(145.2) | $(675.4) | $(869.6) | $(3,133.1) |
| Net loss attributable to AMC | $(224.2) | $(905.8) | $(1,134.7) | $(3,643.3) |
| Adjusted EBITDA | $(5.4) | $(334.5) | $(450.9) | $(671.7) |
| Net cash used in operating activities | $(113.9) | Not clearly provided for Q3 | $(660.6) | $(771.6) |
- Q3 attendance was 40.0 million, versus 6.5 million a year earlier. Admissions revenue was $425.1 million; food and beverage revenue was $265.2 million.
- For the first nine months, U.S. revenue rose to $1,049.9 million from $724.3 million, while international revenue declined to $306.3 million from $355.6 million, reflecting extended international closures earlier in 2021.
- Q3 film exhibition costs were 41.5% of admissions revenue, versus 42.3% a year earlier; food and beverage costs were 16.2% of that revenue, versus 30.2%.
- Cash and cash equivalents were $1,612.5 million, with $27.7 million of restricted cash, at September 30. Working capital, excluding restricted cash, was positive $146.1 million.
- Corporate borrowings had a $5,432.8 million balance-sheet carrying value; stated principal was $5,182.8 million. Finance lease liabilities were $76.3 million. Operating lease liabilities totaled $5,392.8 million, including current and long-term amounts.
- Total liabilities were $12,700.2 million and stockholders’ deficit was $1,642.7 million. Q3 comprehensive loss was $243.0 million.
Material changes versus comparable periods
- Revenue increased $643.7 million in Q3 and $276.3 million for the first nine months versus 2020, mainly as theatres reopened, seating restrictions eased, and more films were released. Nine-month attendance was only 2.6% higher overall, with sharply different trends between U.S. and international markets.
- Net loss narrowed substantially, but comparisons are skewed by 2020 impairment charges: $195.9 million in Q3 and $2,047.8 million for the first nine months. AMC recorded no such impairment in the corresponding 2021 periods.
- Q3 Adjusted EBITDA improved to a near break-even loss, but remained negative; nine-month Adjusted EBITDA was still a $450.9 million loss.
- Nine-month operating cash outflow improved by $111.0 million year over year. Financing provided $2,018.6 million, largely reflecting equity issuance and new borrowing. Cash and restricted cash decreased $199.4 million during Q3, after rising in the first half.
- Nine-month interest expense rose to $361.0 million from $268.3 million, including a $70.0 million non-cash write-off of unamortized discount and financing costs when $600 million of convertible notes converted to equity.
Liquidity, debt, outlook, and risks
- Management said available cash and expected operating cash generation should fund operations, obligations, planned capital expenditures, and covenant requirements for at least 12 months. This is a forward-looking assessment, not a guarantee; management also said current cash-burn levels were not sustainable and significant attendance growth toward pre-COVID levels is needed for positive operating cash flow and long-term profitability.
- Deferred pandemic rent was approximately $375.9 million at September 30, and repayments will increase future operating cash outflows. Management expected 2021 capital expenditures, net of landlord contributions, of $80 million to $100 million, primarily for maintenance.
- The secured leverage-ratio covenant on the Senior Secured Revolving Credit Facility was suspended through March 31, 2022, subject to conditions including minimum liquidity. AMC reported approximately $144 million of aggregate minimum liquidity requirements. The leverage covenant is scheduled to resume beginning with the quarter ending June 30, 2022. Management expected compliance but noted that liquidity thereafter depends on movie releases and cash generation.
- Significant debt maturities include $580.3 million in 2023, $618.3 million in 2025, and $3,803.1 million in 2026. The Odeon term loan matures in 2023 and bears interest of 10.75% initially, rising to 11.25%; interest may be paid in kind under its terms.
- AMC repurchased $35 million principal of 15%/17% toggle notes for a total cost of $41.3 million, recording a $14.4 million extinguishment loss; the company said the transaction reduces annual cash interest by $5.25 million.
- Equity sales supported liquidity but increased dilution. ATM offerings raised $1,611.8 million gross in the first nine months, and a June sale to Mudrick raised $230.5 million gross. Class A shares outstanding were 513.3 million at quarter-end and 514.0 million as of November 2, 2021.
- Management cited COVID-19 resurgence and variants, moviegoer reluctance, studio release timing and direct-to-streaming practices, shorter exclusive theatrical windows, high leverage, refinancing access, and supply-chain disruptions as risks. It also warned that insufficient attendance or additional liquidity could lead to a restructuring, potentially resulting in a total loss for common stockholders.
- After quarter-end, AMC agreed in principle to an $18.0 million settlement of a securities class action; it remained subject to court approval. On November 3, the Board modified certain executive performance awards, accelerating some compensation expense into Q4 2021; the amount was not yet determined.
- AMC reported no dividends declared in the first nine months of 2021. It also disclosed extreme share-price and trading-volume volatility and the possibility of further dilution.
Most important facts for investors to verify
- Whether attendance and operating cash flow continue improving enough to reduce cash burn without relying on further equity issuance or borrowing.
- The timing and cash impact of the $375.9 million of deferred rent, alongside lease obligations and planned capital expenditures.
- Debt maturity and interest burden, especially the 2023 and 2026 maturities, and the company’s ability to satisfy liquidity and financial covenants when the leverage covenant resumes.
- Future share issuance, dilution, and the relationship between market valuation and operating performance.
- Developments in film release schedules, theatrical exclusivity, COVID-19 impacts, supply availability, and court approval of the $18.0 million settlement.