AMC Entertainment Holdings, Inc. Announces Second Quarter 2019 Results

• Q2 Total Revenues of $1.506 billion, up 4.4% from last year (up 6.0% in constant currency)
• Q2 Net earnings of $49.4 million, up 122.5% from last year (up 125.2% in constant currency)
• Q2 Adjusted EBITDA of $237.6 million, down 2.9% from last year (down 1.8% in constant currency)
• Q2 Adjusted EBITDA, adjusting 2018 for ASC 842 impact, increased 7.3% (up 8.6% in constant currency) – these growth figures do not also adjust for a $10.8 million rent benefit in Q2 2018 that did not recur in 2019
• Q2 attendance of 97.0 million tickets sold set an all-time high quarterly record
• 2019 net capital expenditures guidance updated to approximately $415 million and 2020 net capital expenditures guidance set at approximately $300 million – consistent with medium to long-term financial target announced at the April 2019 Investor Day of $250 to 300 million net capex to be reached within three to five years
• Profit Improvement Plan announced, targeted to realize approximately $50 million in incremental operating income in 2020 from cost savings and revenue initiatives – consistent with the medium to long-term target announced at the April 2019 Investor Day to improve Adjusted EBITDA margins by up to 200 basis points

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

“AMC delivered strong results for the second quarter of 2019, achieving 4.4% year-over-year total revenue growth to $1.506 billion, driven by record attendance in both our U.S. and international markets. Importantly, total Adjusted EBITDA grew 7.3% year-over-year after adjusting 2018 for the non-cash accounting impact of ASC 842,” said Adam Aron, CEO and President of AMC.

Aron continued, "In a quarter that generated the second largest domestic industry box office for any quarter in the past 100 years, we are especially gratified that AMC outperformed the rest of the U.S. industry (meaning comparing AMC with the rest of the U.S. industry, excluding AMC) in attendance per screen by 800 basis points and in admissions revenue per screen by 400 basis points. Additionally, AMC generated record U.S. food and beverage per patron of $5.58 and total food and beverage per patron of $5.08, representing year-over-year growth of 5.5% and 3.9%, respectively.

Aron concluded, “We continue to drive this performance by leveraging the power of the AMC platform: from experiential initiatives and enhancements at our theatres to a frictionless use of technology to communicate, engage and sell to our guests. We are seeing meaningful recovery in Europe, and our efforts in the United States have been greatly aided by the soaring popularity of our AMC Stubs loyalty program, which recently crossed 21 million member households, our AMC Stubs A-List subscription program now with more than 900,000 subscribers, and our AMCTheatres.com web site and smartphone apps now being visited at a pace of more than 1 billion times annually.”

Selected Second Quarter Financial Results

• Revenue: Second-quarter total revenues were $1.506 billion, increasing 4.4% on a GAAP basis (increasing 6.0% in constant currency) from the year-ago quarter. Results were driven by (i) record setting U.S. and International attendance, up 3.1% and 16.6%, respectively, (ii) strong food and beverage per patron growth, up 3.9% (up 5.1% in constant currency) primarily due to strategic pricing initiatives and (iii) other theatre revenues per patron, which grew 10.9% (grew 12.7% in constant currency) largely from increases in online ticketing fees.
  
  Total revenues were not significantly affected by flat admissions revenues (up 1.5% in constant currency). U.S. average ticket price declined by 4.8%, reflecting the deliberate implementation of our A-List program and other promotional pricing initiatives as well as declines in IMAX attendance and an increase in the number of family-friendly films, while international average ticket price declined 8.8% (down 2.8% in constant currency) due to foreign exchange rates and strategic pricing initiatives. Average ticket price declines were offset by record global attendance at AMC.
  
  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 Earnings (Loss): Net earnings was $49.4 million, increasing 122.5% on a GAAP basis (increasing 125.2% in constant currency) from the year-ago quarter. The increase in net earnings included the impact of the 4.4% increase in total revenues and several other items. These items included $41.0 million of other income related to the quarterly fair-value remeasurement of a derivative liability and derivative asset, offset by $16.6 million of other expense related to the repayment of indebtedness. Furthermore, Q2 of 2018 benefited from a $10.8 million rent adjustment related to a lease modification that did not recur in 2019.

• Adjusted EBITDA: Total Adjusted EBITDA was $237.6 million, down 2.9% from the year-ago quarter (down 1.8% in constant currency). Total Adjusted EBITDA grew 7.3% year-over-year (up 8.6% in constant currency), after adjusting the year-ago quarter for $23.4 million in non-cash accounting impact of ASC 842 for comparability. The increase year-over-year is prior to adjusting for a $10.8 million rent benefit related to a lease modification recorded in Q2 of 2018 that did not recur in 2019.
  
  U.S. markets Adjusted EBITDA declined 9.0%, while International markets Adjusted EBITDA increased 57.1% (increase of 69.5% in constant currency). U.S. markets Adjusted EBITDA declined 3.4% year-over-year, after adjusting the year-ago quarter for $13.0 million in non-cash accounting impact of ASC 842 for comparability. The decrease year-over-year is prior to adjusting for a $10.8 million rent benefit related to a lease modification recorded in Q2 of 2018 that did not recur in 2019.

• Cash Flow: Net cash provided by operating activities was $152.2 million, compared with $131.7 million in the year-ago quarter. Adjusted Free Cash Flow was $100.1 million, compared with $73.9 million in the year-ago quarter or $59.5 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.

Other Key Highlights

• Industry Performance: In the second quarter of 2019, the U.S. industry box office generated $3.2 billion in admissions sales (down 3.7% year-over-year on a 2.5% decline in attendance), which was the second largest U.S. industry box office quarter of all time. AMC outperformed the U.S. industry on both an attendance per screen and admissions revenue per screen basis by approximately 650 and 260 basis points, respectively, and after excluding AMC from the U.S. industry statistics, that outperformance grew to 800 and 400 basis points, respectively. Internationally, the industry box office in countries served by Odeon and Nordic’s theatres grew 16.6% and 11.1%, respectively, in constant currency. The industry box office across Europe benefited from the record-breaking AVENGERS: ENDGAME and an increase in well-received family product.

• AMC Stubs A-List Program: Since its launch in June 2018, the A-List tier of our successful AMC Stubs loyalty program has already 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 2.85x for our A-List members in the second 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 first half of 2019 compared to our estimated results if the program had not existed.

• Medium and Long-Term Financial Targets: During the second quarter, the Company outlined its medium to long-term financial targets which included the following: 1) anticipated total annual revenue growth of between 3% and 5%, based on a 1% to 2% annual outperformance of an assumed annual industry box office growth of between 2% and 3%; 2) Adjusted EBITDA margin (Adjusted EBITDA divided by Total Revenues) of between 16% and 18%; 3) a reduction in annual net capital expenditures to between $250 and $300 million over the next three to five years, and; 4) deleveraging to achieve a Net Leverage Ratio of between 3.5x and 4.5x by the end of three years and approximately 3.0x over the long-term. Net Leverage Ratio is defined as Net Debt divided by Adjusted EBITDA. Net Debt is defined as corporate borrowings plus capital and financing lease obligations, debt issuance costs for corporate borrowings, discounts (premiums) for corporate borrowings less the derivative liability related to the senior unsecured convertible notes due 2024, less cash.

• Capital Expenditures: In the context of the medium and long-term financial targets presented above, we are updating our capital expenditure guidance for 2019 and introducing capital expenditure guidance for 2020, which we believe will result in meaningful progress toward achieving those targets.
  
  Based on year-to-date and anticipated capital expenditures for the remainder of 2019 and for the full year 2020, we now believe that 2019 net capital expenditures will be approximately $415 million, a reduction of $35 million compared to previous guidance, and that 2020 net capital expenditures will be approximately $300 million.

• Profit Improvement Plan: In conjunction with the reduction in capital expenditures, AMC is also announcing a comprehensive profit improvement plan to enhance operational efficiency and as part of its efforts to achieve its medium and long-term margin targets. These initiatives will seek to achieve cost savings across the entire income statement, including general & administrative, operating, rent and other expense line items, while also generating additional revenues through strategic pricing and programming initiatives. The plan is targeted to realize approximately $50 million in incremental operating income by the end of 2020 with approximately $5 million of benefit expected in the remainder of 2019.

• Circuit Update: As of June 30, 2019, AMC owned, operated, or had interests in 639 theatres in the U.S. and 365 theatres internationally. In the second quarter, the Company added premium recliner seating to 15 theatres, including nine in the U.S. and six internationally, which includes two new build theatres. Premium large format offerings continue to attract guests by delivering the best sight and sound experience, and the Company added eight new Dolby screens, one new IMAX screen and one new Prime at AMC screen during the quarter. Furthermore, during the second quarter of 2019, 878 screens were converted to reserved seating. The Company has converted 97% of AMC branded screens and 98% of AMC-Dine-In branded screens to reserved seating.

• 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: 1) the Company’s consolidated balance sheet now includes operating right-of-use assets and operating lease liabilities of $4.8 billion and $5.4 billion, respectively, at June 30, 2019; 2) the Company’s income statement for the three months ended June 30, 2019 includes additional rent expense of $30.4 million, a decline in depreciation and amortization of $24.0 million and a decline in interest expense of $6.9 million; and 3) the Company’s cash flows provided by operating activities for the six months ended June 30, 2019 is lowered by $28.0 million, offset by an equivalent increase in the Company’s cash flows provided by financing activities.

• Cash Dividend / Share Repurchase: The Company paid approximately $20.8 million of dividends in the second quarter of 2019. Since its IPO, AMC has paid $622 million in total dividends and repurchased $480 million in common stock for a cumulative return of capital of $1.1 billion. Following the dividend declared on August 5, 2019, the Company will have issued a dividend in 21 consecutive quarters beginning in Q2 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, August 8, 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.