Strategic Initiatives Success Contributes to
26.6% Increase in Adjusted EBITDA
Diluted Earnings Per Share Grows 383% to
First Quarter Record $0.29
AMC Entertainment Holdings, Inc. (“AMC” or “the Company”), one
of the world’s leading theatrical exhibition companies and an
industry leader in innovation and operational excellence, today
reported results for the first quarter ended March 31, 2016.
Highlights for the first quarter 2016 include the
following:
- Total revenues were a first quarter
record $766.0 million compared to total revenues of $653.1 million
for the three months ended March 31, 2015.
- Admissions revenues were a first
quarter record $482.6 million compared to $418.7 million for the
same period a year ago. Average ticket price was also a first
quarter record $9.42 compared to $9.35 for the same period a year
ago.
- Food and beverage revenues were a first
quarter record $244.2 million, compared to $200.5 million for the
quarter ended March 31, 2015. Food and beverage revenues per patron
increased 6.3% to $4.76, representing the highest in the history of
the Company.
- Adjusted EBITDA(1) increased 26.6% to a
first quarter record $146.5 million compared to $115.7 million for
the three months ended March 31, 2015. Adjusted EBITDA Margin (1)
for the first quarter was 19.1% compared to 17.7%, for the same
period a year ago.
- Included in Adjusted EBITDA last year,
for the three months ended March 31, 2015, was an $18.1 million
one-time gain related to the termination of a post-retirement
health benefit plan. The gain was recorded as a reduction of
general and administrative: other expense, and did not recur in
2016. Excluding the benefit of the $18.1 million gain, first
quarter 2015 Adjusted EBITDA and Adjusted EBITDA Margin would have
been approximately $97.6 million and 14.9% respectively. Excluding
this one-time gain, Adjusted EBITDA growth, year-over-year for the
first quarter of 2016, showed an improvement of 50.1%, and Adjusted
EBITDA Margin improved 420 basis points to 19.1% from 14.9%.
- Net earnings grew 360.9% to $28.3
million and diluted earnings per share (“diluted EPS”) grew 383.3%
to a first quarter record $0.29 compared to the three months ended
March 31, 2015.
- During the first quarter 2016, AMC
recorded a $3.0 million gain, or approximately $0.02 per diluted
share, on the sale of Real D to Rizvi Traverse Management LLC.
Excluding the benefit of this gain and excluding the benefit from
the one-time $18.1 million gain related to the termination of a
post-retirement health benefit plan in the prior year’s first
quarter, adjusted diluted EPS(1) for the three months ended March
31, 2016, was earnings of $0.27 per diluted share compared to a
loss of ($0.05) per diluted share for the first quarter ended March
31, 2015.
- Free Cash Flow(1) for the quarter ended
March 31, 2016, increased approximately $52.9 million, or 276.1% to
$72.1 million.
- As previously announced on March 3,
2016, AMC entered into a definitive agreement to acquire all of the
outstanding shares of Carmike Cinemas, Inc. (NASDAQ: CKEC)
(“Carmike”) for $30.00 per share in cash. The transaction is valued
at approximately $1.1 billion, including the assumption of Carmike
net indebtedness. The transaction is expected to result in free
cash flow per share accretion for AMC, exclusive of one-time
transaction-related charges, in 2017 and beyond, and is expected to
produce annual cost synergies of approximately $35 million. The
transaction is expected to be completed by the end of 2016, subject
to customary closing conditions, including regulatory approval and
approval by Carmike’s shareholders.
“AMC is off to a great start in 2016. Our relentless pursuit of
innovation and delivering the best possible movie-going experience
for our guests, together with the December 2015 acquisition of
Starplex Cinemas, generated record first-quarter results at AMC. We
are pleased to report record attendance, record revenue, record
adjusted EBITDA, record diluted EPS and record free cash flow,”
said Adam Aron, AMC Chief Executive Officer and President. “We
fundamentally believe that we will continue to succeed by serving
our guests with the very best amenities that theatrical exhibition
can offer. We also plan on continuing to leverage our marketing and
technology prowess to further enhance loyalty to AMC, from both our
current and potential guests. The recently completed Starplex
acquisition and the anticipated consummation of the announced
purchase of Carmike Cinemas should further serve to significantly
accelerate the pace of our growth. AMC is well down a path to drive
higher attendance and revenues, all the while managing our costs
intelligently. As a result, we see tremendous opportunity ahead for
AMC to continue in delivering value to our shareholders, both today
and well into the future."
(1) (Reconciliations and definitions of
non-GAAP financial measures are provided in the financial schedules
accompanying this press release.)
CFO Commentary
Commentary on the quarter by Craig Ramsey, AMC's executive vice
president and chief financial officer, is available at
http://investor.amctheatres.com
Dividend
On February 25, 2016, the Company declared a regular quarterly
dividend of $0.20 per share for the quarter ended December 31,
2015, which was paid on March 21, 2016, to shareholders of record
as of March 7, 2016. The total dividends paid in the first quarter
of 2016 were approximately $19.8 million.
On April 27, 2016, the Company declared a regular quarterly
dividend of $0.20 per share for the quarter ended March 31, 2016,
which is payable on June 20, 2016, to shareholders of record on
June 6, 2016.
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.
CT/8:30 a.m. ET on Friday, April 29, 2016. 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.
A podcast and 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 (NYSE:AMC) is the guest experience leader with 385 locations
and 5,380 screens located primarily in the United States. AMC has
propelled innovation in the theatrical exhibition industry and
continues today by delivering more comfort and convenience,
enhanced food & beverage, greater engagement and loyalty,
premium sight & sound, and targeted programming. AMC operates
the most productive theatres in the country’s top markets,
including No. 1 market share in the top three markets (NY, LA,
Chicago). 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 E-mail 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,” “project,” “intend,”
“expect,” “should,” “believe,” “continue,” 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 those 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 other facts include, but are not
limited to, with respect to our pending Carmike acquisition, our
ability to satisfy closing conditions in the anticipated time frame
or at all, obtaining regulatory approval, including the risk that
any approval may be on terms or subject to conditions that are not
anticipated; obtaining Carmike stockholders approval; the
possibility that the Carmike acquisition does not close, including
in circumstances in which we would be obligated to pay Carmike a
termination fee or other damage or expenses; our ability to finance
the proposed Carmike acquisition on acceptable terms; responses of
activist stockholders to the proposed Carmike transaction; our
ability to realize expected benefits and synergies from the
proposed Carmike acquisition; execution risks related to the
proposed Carmike acquisition; litigation and/or regulatory actions
related to the proposed Carmike transaction; our significant
indebtedness, including the indebtedness incurred to acquire
Carmike; execution risks related to the integration of Starplex
Cinemas into our business; our ability to achieve expected
synergies and performance from our acquisition of Starplex Cinemas;
decreased supply, quality and performance of, and delays in our
access to, motion pictures; risks relating to our significant
indebtedness; our ability to utilize net operating loss carry
forwards to reduce future tax liability; increased competition in
the geographic areas in which we operate and from alternative film
delivery methods and other forms of entertainment; continued
effectiveness of our strategic initiatives; the impact of shorter
theatrical exclusive release windows; our ability to attract and
retain senior executives and other key personnel; the impact of
governmental regulation, including anti-trust review of our
acquisition opportunities and investigations concerning potentially
anticompetitive conduct, including film clearances and
participation in certain joint ventures; unexpected delays and
costs related to our optimization of our theatre circuit; failures,
unavailability or security breaches of our information systems; and
other business effects, including the effects of industry, market,
economic, political or regulatory conditions, future exchange or
interest rates, changes in tax laws, regulations, rates and
policies.
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 these risks
and uncertainties, see the section entitled “Risk Factors” in our
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on March 8, 2016, and our other public filings. The
Company does not intend, and undertakes no duty, to update this
information to reflect future events or circumstances, except as
required by applicable law.
AMC Entertainment Holdings, Inc.
Consolidated Statements of Operations For the Fiscal
Periods Ended 3/31/16 and 3/31/15 (dollars in thousands, except
per share data) (unaudited)
3 Months Ended March 31,
2016 2015 Revenues
Admissions $ 482,574 $ 418,694 Food and beverage 244,152 200,524
Other theatre 39,291 33,906 Total revenues
766,017 653,124 Operating costs and
expenses Film exhibition costs 262,354 223,088 Food and beverage
costs 33,965 28,508 Operating expense 202,313 187,258 Rent 124,584
117,921 General and administrative: Merger, acquisition and
transaction costs 4,604 1,578 Other 18,516 4,941 Depreciation and
amortization 60,430 57,777 Operating costs and
expenses 706,766 621,071
Operating income 59,251 32,053 Other expense (income): Other
expense 26 - Interest expense: Corporate borrowings 24,867 26,079
Capital and financing lease obligations 2,195 2,373 Equity in
earnings of non-consolidated entities (4,264 ) (1,324 ) Investment
income (9,954 ) (5,143 ) Total other expense
12,870 21,985 Earnings before income
taxes 46,381 10,068 Income tax provision 18,090 3,930
Net Earnings $ 28,291 $ 6,138 Diluted
earnings per share $ 0.29 $ 0.06
Adjusted diluted earnings (loss) per share (1) $ 0.27 $
(0.05 ) Average shares outstanding diluted
98,207 97,919
Balance Sheet Data (at
period end): (dollars in thousands) (unaudited)
As of As of March 31, December 31,
2016 2015 Cash and
equivalents $ 107,927 $ 211,250 Corporate borrowings 1,861,355
1,912,793 Other long-term liabilities 484,668 462,626 Capital and
financing lease obligations 99,788 101,864 Stockholders' equity
1,546,254 1,538,703 Total assets 4,931,071 5,088,317
Other Data: (in thousands, except operating data)
(unaudited)
3 Months Ended March 31,
2016 2015 Net cash provided by
operating activities 22,871 21,563 Capital expenditures (57,657 )
(69,590 ) Screen additions 12 - Screen acquisitions - 8 Screen
dispositions 38 - Construction openings (closures), net (20 ) 4
Average screens-continuing operations 5,313 4,884 Number of screens
operated 5,380 4,959 Number of theatres operated 385 345 Screens
per theatre 14.0 14.4 Attendance (in thousands) 51,245 44,758
Reconciliation of Diluted Earnings Per Share to Adjusted
Diluted Earnings (Loss) Per Share: (dollars in thousands,
except per share data) (unaudited)
3 Months
Ended March 31, 2016
2015 Net Earnings: $ 28,291 $ 6,138 Net
periodic benefit credit related to the termination of
post-retirement plan, net of related tax effects - (11,052 ) Gain
on sale Real D, net of related tax effects (1,835 ) -
Net Earnings (Loss), excluding benefit related to
termination of post-retirement plan and gain on sale of RealD, net
of related tax effects $ 26,456 $ (4,914 ) Average
shares outstanding, diluted 98,207 97,919
Adjusted diluted earnings (loss) per share (1) $ 0.27
$ (0.05 ) Diluted Earnings per share $ 0.29 $ 0.06
Reconciliation of Adjusted EBITDA:
(dollars in thousands) (unaudited)
3 Months Ended
March 31, 2016
2015 Net Earnings $ 28,291 $ 6,138 Plus: Income tax
provision 18,090 3,930 Interest expense 27,062 28,452 Depreciation
and amortization 60,430 57,777 Certain operating expenses (3) 3,402
4,064 Equity in earnings of non-consolidated entities (4,264 )
(1,324 ) Cash distributions from non-consolidated entities 17,681
14,486 Investment income (9,954 ) (5,143 ) Other expense 26 -
General and administrative expense-unallocated: Merger, acquisition
and transaction costs 4,604 1,578 Stock-based compensation expense
(4) 1,087 5,739 Adjusted EBITDA (2) $
146,455 $ 115,697 Adjusted EBITDA Margin (5)
19.1 % 17.7 %
Reconciliation of Net Cash Provided
by Operating Activities to Free Cash Flow: (dollars in
thousands) (unaudited)
3 Months Ended March
31, 2016 2015
Net cash provided by operating activities $ 22,871 $ 21,563 Plus:
Equity in earnings from equity method investees (10,463 ) (9,134 )
Deferred rent (excluding digital equipment rent) 7,011 5,442 Net
periodic benefit (cost) credit (199 ) 17,917 Change in working
capital, accruals and other 108,593 50,150 General and
administrative expense: merger, acquisition and transaction costs
4,604 1,578 Investment Income (9,954 ) (5,143 ) Capital
expenditures (excluding change in construction payables) (46,111 )
(59,384 ) Principal payments under Term Loan (2,202 ) (1,938 )
Principal payments under capital and financing lease obligations
(2,076 ) (1,886 ) Free Cash Flow (6) $ 72,074
$ 19,165
Reconciliation of Adjusted EBITDA to Free
Cash Flow: (dollars in thousands) (unaudited)
3 Months Ended March 31, 2016
2015 Adjusted EBITDA (2) $ 146,455 $ 115,697
Minus: Cash distributions from non-consolidated entities 17,681
14,486 Income taxes, net 806 505 Cash interest expense 25,814
29,324 Capital expenditures (excluding change in construction
payables) 46,111 59,384 Landlord contributions (20,309 ) (10,991 )
Principal payments under Term Loan 2,202 1,938 Principal payments
under capital and financing lease obligations 2,076
1,886 Free Cash Flow (6) $ 72,074 $ 19,165
(1)
We have included adjusted diluted earnings
(loss) per share, which is diluted earnings per share excluding the
gain on sale of our investments in Real D net of related tax
effects in the current quarter, and a non-recurring postretirement
net periodic benefit credit, net of related tax effects in the
prior quarter because we believe it provides investors with a
useful industry comparative and they are financial measures used by
management to assess our performance.
(2)
We present Adjusted EBITDA as a
supplemental measure of our performance that is commonly used in
our industry. We define Adjusted EBITDA as net earnings plus (i)
income tax provision, (ii) interest expense and (iii) depreciation
and amortization, as further adjusted to eliminate the impact of
certain items that we do not consider indicative of our ongoing
operating performance and to include any cash distributions of
earnings from our equity method investees. These further
adjustments are itemized above. You are encouraged to evaluate
these adjustments and the reasons we consider them appropriate for
supplemental analysis. In evaluating Adjusted EBITDA, you should be
aware that in the future we may incur expenses that are the same as
or similar to some of the adjustments in this presentation. Our
presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by unusual or
non-recurring items. Adjusted EBITDA is a non-GAAP financial
measure commonly used in our industry and should not be construed
as an alternative to net earnings as an indicator of operating
performance or as an alternative to cash flow provided by operating
activities as a measure of liquidity (as determined in accordance
with U.S. GAAP). Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies. We have included
Adjusted EBITDA because we believe it provides management and
investors with additional information to measure our performance
and liquidity, estimate our value and evaluate our ability to
service debt.
Adjusted EBITDA has important limitations
as an analytical tool, and you should not consider it in isolation,
or as a substitute for analysis of our results as reported under
U.S. GAAP. For example,
Adjusted EBITDA:
- does not reflect our capital
expenditures, future requirements for capital expenditures or
contractual commitments;
- does not reflect changes in, or cash
requirements for, our working capital needs;
- does not reflect the significant
interest expenses, or the cash requirements necessary to service
interest or principal payments, on our debt;
- excludes income tax payments that
represent a reduction in cash available to us; and
- does not reflect any cash requirements
for the assets being depreciated and amortized that may have to be
replaced in the future.
(3) Amounts represent preopening expense, theatre and other
closure expense, deferred digital equipment rent expense, and
disposition of assets and other gains included in operating
expenses. (4) Non-cash expense included in General and
Administrative: Other (5) We define Adjusted EBITDA Margin
as Adjusted EBITDA divided by Total Revenues. (6) Free Cash
Flow is a non-GAAP financial measure commonly used in our industry
and should not be construed as an alternative to cash flows from
operating activities as a measure of liquidity (as determined in
accordance with U.S. GAAP). We define free cash flow as adjusted
EBITDA minus the sum of cash distributions from non-consolidated
entities, cash taxes, cash interest, capital expenditures
(excluding change in construction payables) net of landlord
contributions, mandatory payments of principal under any credit
facility and payments under capital lease obligations and financing
lease obligations. This non-GAAP financial measure may not be
comparable to similarly titled measures reported by other
companies. We have included Free Cash Flow as we believe it
provides a useful measure of cash flows generated by our
operations, and because it is used by management to assess the
liquidity of our Company.
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AMC Entertainment Holdings, Inc.INVESTOR
RELATIONS:John Merriwether,
866-248-3872InvestorRelations@amctheatres.comorMEDIA
CONTACTS:Ryan Noonan, 913-213-2183rnoonan@amctheatres.com
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