AMC Entertainment Holdings, Inc. Announces Third Quarter 2019 Results

• Q3 Total Revenues of $1.317 billion, up 7.8% from last year (up 9.3% in constant currency)
• Q3 Net loss of $54.8 million, 45.4% improvement from last year (45.5% improvement in constant currency)
• Q3 Adjusted EBITDA of $156.5 million, up 9.9% from last year (up 11.4% in constant currency)
• Q3 Adjusted EBITDA, adjusting 2018 for ASC 842 impact, increased 31.3% (up 33.1% in constant currency)
• Q3 Total attendance of 87.1 million tickets sold set an all-time high quarterly record
• Q3 U.S. average ticket price grew 3.3% to $9.45, a 220 basis point industry outperformance (265 basis point industry outperformance, excluding AMC)
• Q3 U.S. food and beverage revenues per patron grew 4.7% to a third quarter record, $5.35

LEAWOOD, Kan.--(BUSINESS WIRE)-- AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or “the Company”), today reported results for the third quarter ended September 30, 2019.

“AMC delivered another quarter of strong results for the third quarter of 2019, achieving 7.8% year-over-year total revenue growth to $1.317 billion, driven by record third quarter attendance in each of our U.S. and international markets. Importantly, total Adjusted EBITDA grew 31.3% year-over-year after adjusting 2018 for the non-cash accounting impact of ASC 842 and 33.1% on a constant currency basis,” said Adam Aron, CEO and President of AMC.

Aron continued, "Our U.S. industry outperformance continued in the third quarter as we outperformed the industry by 220 basis points on attendance per screen and 450 basis points of admission revenue per screen. After excluding AMC’s contribution to the U.S. industry results, we outperformed the rest of the U.S. industry by 270 basis points on attendance per screen and by 560 basis points on admissions revenue per screen. Additionally, AMC generated record third quarter U.S. food and beverage revenues per patron of $5.35 and international food and beverage revenues per patron, in constant currency, of $3.77, representing year-over-year growth of 4.7% and 7.4%, respectively.”

Aron concluded, “The power of the AMC platform is clearly evident in these results, and we are highly encouraged by our performance in the third quarter as we position ourselves for a strong finish in 2019. These results further confirm that we are taking the appropriate actions to achieve the medium and long-term targets that we outlined in April. AMC is achieving real momentum, as we gain market share and outperform our industry in attendance and revenue growth. This is the result of the wholistic and synergistic impacts of AMC having invested in one theatre enhancement after another in the largest network of cinemas globally, combined with world-class marketing activity, and our being in the midst of nothing less than a digital transformation in which we are increasingly and continuously engaging with our guests before, during and after their visits to our theatres. In turn, this is enabling us to be vividly focused on generating additional free cash flow, deleveraging our balance sheet and driving shareholder value.”

Key Financial Results (presented in millions, except operating data)

Selected Third Quarter Financial Results

• Revenue: Third-quarter total revenues were $1.317 billion, increasing 7.8% on a GAAP basis (increasing 9.3% in constant currency) from the year-ago quarter. Results were driven by (i) record setting U.S. and International attendance, up 3.8% and 9.3%, respectively, (ii) strong food and beverage per patron growth, up 3.4% (up 4.7% in constant currency) primarily due to strategic pricing initiatives and (iii) other revenues per patron, which grew 10.7% (grew 12.6% in constant currency) largely from increases in online ticketing fees.
  
  Total revenues benefited from a 6.1% increase in admissions revenue (up 7.6% in constant currency). U.S. average ticket price increased by 3.3%, reflecting an increase in premium format attendance, strategic pricing increases, and a normalization of results related to the anniversary of our A-List program and other promotional pricing initiatives, while international average ticket price declined 5.6% (down 0.6% in constant currency) due to foreign exchange rates and strategic pricing initiatives.
  
  Given the natural fluctuations in the box office between quarters and within the year due to the timing of film releases, the Company’s management focuses on its full-year results and performance against its disclosed medium to long-term targets rather than on any particular quarter.

• Net Loss: Net loss was $54.8 million, improving $45.6 million, or 45.4% on a GAAP basis (improving 45.5% in constant currency) from the year-ago quarter. The decrease in net loss included the impact of the 7.8% increase in total revenues, which helped to drive our operating income higher by $42.7 million along with the reduction in general and administrative expenses and lower depreciation and amortization, partially offset by higher rent expense due primarily to ASC 842.

• Adjusted EBITDA: Total Adjusted EBITDA was $156.5 million, up 9.9% from the year-ago quarter (up 11.4% in constant currency). Total Adjusted EBITDA grew 31.3% year-over-year (up 33.1% in constant currency), after adjusting the year-ago quarter for $23.2 million in non-cash accounting impact of ASC 842 for comparability.
  
  U.S. markets Adjusted EBITDA increased 10.8%, while International markets Adjusted EBITDA increased 7.5% (increase of 13.1% in constant currency). U.S. markets Adjusted EBITDA increased 26.8% year-over-year, and international Adjusted EBITDA increased 46.2% (53.8% in constant currency), after adjusting the year-ago quarter for $13.3 million and $9.9 million, respectively, in non-cash accounting impact of ASC 842 for comparability.

• Cash Flow: Net cash provided by operating activities was $56.6 million, growing $54.9 million compared to the year-ago quarter, and growing $69.2 million after adjusting for the $14.3 million cash flow classification impact of ASC 842 from financing activities to operating activities. Adjusted Free Cash Flow was $5.1 million, growing $36.6 million compared to the year-ago quarter and growing $50.9 million in the year-ago quarter after adjusting for the non-cash accounting impact of ASC 842. The increase in Adjusted Free Cash Flow is primarily related to increases in net cash provided by operating activities and the timing of maintenance capital expenditures. Our Adjusted Free Cash Flow in the third quarter and cash balance at the end of the third quarter was negatively impacted by the normal seasonal timing of certain working capital items and is expected to correct itself in the fourth quarter.

Other Key Highlights

• Industry Performance: In the third quarter of 2019, the U.S. industry box office generated $2.8 billion in admissions sales (up 3.6% year-over-year on a 2.4% increase in attendance). AMC outperformed the U.S. industry on both an attendance per screen and admissions revenue per screen basis by approximately 220 and 450 basis points, respectively, and after excluding AMC from the U.S. industry statistics, that outperformance grew to 270 and 560 basis points, respectively. The third quarter of 2019 marks the sixth consecutive quarter of attendance per screen industry outperformance and the third consecutive quarter of industry box office outperformance. Internationally, the industry box office in countries served by Odeon grew 13.7%, in constant currency. The industry box office across Europe benefited from a more family friendly film slate compared to a year ago.

• AMC Stubs A-List Program: Since its launch in June 2018, the A-List tier of our successful AMC Stubs loyalty program has attracted more than 900,000 subscribers, far in excess of initial internal expectations of 500,000 subscribers in the first year. During the first quarter of 2019, AMC implemented a 10% membership price increase in ten states and a 20% price increase in five states. Based on an average monthly frequency of 2.40x for our A-List members in the third quarter, their associated full-price bring-along guest attendance, their food and beverage spend and the price increases in the first quarter, we believe the A-List program was profitable in the third quarter and nine-months ended September 30, 2019 compared to our estimated results if the program had not existed. A-List membership levels continue to exceed our expectations despite our price increase and competitive offerings.

• AMC Theatres On Demand: On October 15, 2019, the Company became the first U.S. theatrical exhibitor to unveil a digital home streaming service with the launch of AMC Theatres On Demand, with approximately 2,000 movies, including movies from every major studio, available for purchase or rent to AMC Stubs members. In addition, later this fall, AMC Theatres On Demand will also include movies from AMC Networks (NASDAQ: AMCX) in a first-ever cross platform marketing partnership. Movies can be purchased or rented through AMCTheatres.com, the AMC Theatres mobile app, Roku and SmartTVs with more services and devices to be added in the near future. AMC Theatres On Demand is yet another benefit for AMC Stubs members, designed as a low-cost, ancillary service to add convenience and value for the guest, increase loyalty, augment our rich consumer database and generate additional earnings.

• Circuit Update: As of September 30, 2019, AMC owned, operated, or had interests in 634 theatres in the U.S. and 366 theatres internationally. In the third quarter, the Company added premium recliner seating to nine theatres, including eight in the U.S. and one internationally, bringing the U.S. penetration of theatres offering recliner seating to approximately 78% of addressable theatres, and approximately 9% of addressable European theatres. Premium large format offerings continue to attract guests by delivering the best sight and sound experience, and the Company added 3 new Dolby screens, 1 new IMAX screen and 1 new Prime at AMC screen during the quarter.

• New Lease Accounting Standard (ASC 842): The Company adopted ASC 842 on January 1, 2019. As previously disclosed, ASC 842 is an accounting change with no impact on AMC’s business or total cash flows. While this new rule introduces certain presentation changes to all three of AMC’s core financial statements, it does not affect day-to-day operations or cash generation. As a result of adopting ASC 842, the key changes are as follows: (i) the Company’s consolidated balance sheet now includes operating lease right-of-use assets and operating lease liabilities of $4.8 billion and $5.4 billion, respectively, at September 30, 2019; (ii) the Company’s income statement for the three months ended September 30, 2019 includes additional rent expense of $28.8 million, a decline in depreciation and amortization of $24.0 million and a decline in interest expense of $6.9 million; and (iii) the Company’s cash flows provided by operating activities for the nine months ended September 30, 2019 is lowered by $42.0 million, offset by an equivalent increase in the Company’s cash flows provided by financing activities.

• Cash Dividend: The Company paid approximately $20.8 million of dividends in the third quarter of 2019. Since its IPO, AMC has paid $642.8 million in total dividends. Following the dividend declared on October 24, 2019, the Company will have issued a dividend in 23 consecutive quarters beginning in the second quarter of 2014.

Conference Call / Webcast Information

The Company will host a conference call via webcast for investors and other interested parties beginning at 7:30 a.m. CDT/8:30 a.m. EDT on Thursday, November 7, 2019. To listen to the conference call via the internet, please visit the investor relations section of the AMC website at www.investor.amctheatres.com for a link to the webcast. Investors and interested parties should go to the website at least 15 minutes prior to the call to register, and/or download and install any necessary audio software.

Participants may also listen to the call by dialing (877) 407-3982, or (201) 493-6780 for international participants. An archive of the webcast will be available on the Company’s website after the call for a limited time.

About AMC Entertainment Holdings, Inc.

AMC is the largest movie exhibition company in the United States, the largest in Europe and the largest throughout the world with approximately 1,000 theatres and 11,000 screens across the globe. AMC has propelled innovation in the exhibition industry by: deploying its Signature power-recliner seats; delivering enhanced food and beverage choices; generating greater guest engagement through its loyalty and subscription programs, web site and mobile apps; offering premium large format experiences and playing a wide variety of content including the latest Hollywood releases and independent programming. AMC operates among the most productive theatres in the United States' top markets, having the #1 or #2 market share positions in 21 of the 25 largest metropolitan areas of the United States. AMC is also #1 or #2 in market share in 12 of the 15 countries it serves in North America, Europe and the Middle East. For more information, visit www.amctheatres.com.

Website Information

This press release, along with other news about AMC, is available at www.amctheatres.com. We routinely post information that may be important to investors in the Investor Relations section of our website, www.investor.amctheatres.com. We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD, and we encourage investors to consult that section of our website regularly for important information about AMC. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document. Investors interested in automatically receiving news and information when posted to our website can also visit www.investor.amctheatres.com to sign up for email alerts.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “forecast,” “plan,” “estimate,” “will,” “would,” “project,” “maintain,” “intend,” “expect,” “anticipate,” “prospect,” “strategy,” “future,” “likely,” “may,” “should,” “believe,” “continue,” “opportunity,” “potential,” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements are based on information available at the time the statements are made and/or management’s good faith belief as of that time with respect to future events, and are subject to risks, trends, uncertainties and other facts that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks, trends, uncertainties and facts include, but are not limited to, risks related to: motion picture production and performance; AMC’s lack of control over distributors of films; intense competition in the geographic areas in which AMC operates; AMC Stubs A-List may not meet anticipated revenue projections which could negatively impact projected operating results; increased use of alternative film delivery methods or other forms of entertainment; shrinking exclusive theatrical release windows; general and international economic, political, regulatory and other risks, including risks related to the United Kingdom’s exit from the European Union; risks and uncertainties relating to AMC’s significant indebtedness; AMC’s ability to execute cost cutting and revenue enhancement initiatives; box office performance; limitations on the availability of capital; certain covenants in the agreements that govern AMC’s indebtedness may limit its ability to take advantage of certain business opportunities; risks relating to AMC’s inability to achieve the expected benefits and performance from its recent acquisitions; AMC’s ability to refinance its indebtedness on favorable terms; optimizing AMC’s theatre circuit through construction and the transformation of its existing theatres may be subject to delay and unanticipated costs; failures, unavailability or security breaches of AMC’s information systems; risks relating to impairment losses, including with respect to goodwill and other intangibles, and theatre and other closure charges; AMC’s ability to utilize net operating loss carryforwards to reduce its future tax liability or valuation allowances taken with respect to deferred tax assets; review by antitrust authorities in connection with acquisition opportunities; risks relating to unexpected costs or unknown liabilities relating to recently completed acquisitions; risks relating to the incurrence of legal liability including costs associated with recently filed class action lawsuits; general political, social and economic conditions and risks, trends, uncertainties and other factors discussed in the reports AMC has filed with the SEC. Should one or more of these risks, trends, uncertainties or facts materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by the forward-looking statements contained herein. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. For a detailed discussion of risks, trends and uncertainties facing AMC, see the section entitled “Risk Factors” in AMC’s reports on Forms 10-K and Form 10-Q filed with the SEC, and the risks, trends and uncertainties identified in its other public filings. AMC does not intend, and undertakes no duty, to update any information contained herein to reflect future events or circumstances, except as required by applicable law.