- 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
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.”
Key Financial Results (presented in
millions, except operating data)
Quarter Ended June 30,
Six Months Ended June
30,
2019
2018
Change
2019
2018
Change
GAAP Results
Total Revenues
$
1,506.1
$
1,442.5
4.4
%
$
2,706.5
$
2,826.1
(4.2)
%
Net earnings (loss)*
$
49.4
$
22.2
122.5
%
$
(80.8)
$
39.9
N/M
Net cash provided by operating
activities
$
152.2
$
131.7
15.6
%
$
153.6
$
297.1
(48.3)
%
Non-GAAP Results**
Total revenues (2019 constant currency
adjusted)
$
1,528.8
$
1,442.5
6.0
%
$
2,757.2
$
2,826.1
(2.4)
%
Adjusted EBITDA
$
237.6
$
244.8
(2.9)
%
$
345.8
$
522.7
(33.8)
%
Adjusted EBITDA (2018 Adjusted for ASC
842)
$
237.6
$
221.4
7.3
%
$
345.8
$
475.6
(27.3)
%
Adjusted free cash flow
$
100.1
$
73.9
35.5
%
$
50.3
$
187.3
(73.1)
%
Adjusted free cash flow (2018 Adjusted for
ASC 842)
$
100.1
$
59.5
68.2
%
$
50.3
$
158.3
(68.2)
%
Operating Metrics
Attendance (in thousands)
96,955
91,245
6.3
%
176,780
182,177
(3.0)
%
U.S. markets attendance (in thousands)
71,900
69,751
3.1
%
126,879
131,607
(3.6)
%
International markets attendance (in
thousands)
25,055
21,494
16.6
%
49,901
50,570
(1.3)
%
Average screens
10,675
10,684
(0.1)
%
10,679
10,737
(0.5)
%
* Please refer to our form 10-Q filed
today for a discussion of items included in GAAP net earnings
(loss). N/M = Percent change is not meaningful due to the current
year net loss.
** Please refer to the tables included
later in this press release for definitions and full
reconciliations of non-U.S. GAAP financial measures.
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.
AMC Entertainment Holdings,
Inc.
Consolidated Statements of
Operations
For the Three and Six Months Ended June
30, 2019 and June 30, 2018
(dollars in millions, except share and per
share data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues
Admissions
$
895.5
$
896.3
$
1,627.0
$
1,771.3
Food and beverage
492.5
445.8
861.3
851.6
Other theatre
118.1
100.4
218.2
203.2
Total revenues
1,506.1
1,442.5
2,706.5
2,826.1
Operating costs and expenses
Film exhibition costs
482.5
471.4
847.8
897.9
Food and beverage costs
76.4
72.2
137.9
138.4
Operating expense, excluding depreciation
and amortization below
437.4
424.5
840.2
836.4
Rent
245.9
199.7
487.9
389.4
General and administrative:
Merger, acquisition and transaction
costs
3.2
4.3
6.5
9.0
Other, excluding depreciation and
amortization below
43.2
43.0
89.4
87.2
Depreciation and amortization
112.0
137.7
225.0
268.2
Operating costs and expenses
1,400.6
1,352.8
2,634.7
2,626.5
Operating income
105.5
89.7
71.8
199.6
Other expense (income):
Other expense (income)
(23.4)
2.2
6.4
3.4
Interest expense:
Corporate borrowings
74.2
62.2
145.5
123.9
Capital and financing lease
obligations
2.1
9.8
4.2
20.1
Non-cash NCM exhibitor services
agreement
10.1
10.4
20.3
20.9
Equity in earnings of non-consolidated
entities
(10.2)
(13.0)
(16.7)
(4.0)
Investment income
(2.1)
(1.5)
(18.2)
(6.7)
Total other expense
50.7
70.1
141.5
157.6
Earnings (loss) before income taxes
54.8
19.6
(69.7)
42.0
Income tax provision (benefit)
5.4
(2.6)
11.1
2.1
Net earnings (loss)
$
49.4
$
22.2
$
(80.8)
$
39.9
Diluted earnings (loss) per share
$
0.17
$
0.17
$
(0.78)
$
0.31
Average shares outstanding diluted (in
thousands)
135,528
128,105
103,814
128,042
Consolidated Balance Sheet Data (at
period end):
(dollars in millions)
(unaudited)
As of
As of
June 30,
December 31,
2019
2018
Cash and cash equivalents
$
190.5
$
313.3
Corporate borrowings
4,734.5
4,723.0
Other long-term liabilities
192.0
963.1
Finance lease liabilities
120.3
560.2
Stockholders' equity
1,325.1
1,397.6
Total assets
13,514.9
9,495.8
Consolidated Other Data:
(in millions, except operating data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
Consolidated
2019
2018
2019
2018
Net cash provided by operating
activities
$
152.2
$
131.7
$
153.6
$
297.1
Net cash used in investing activities
$
(122.8)
$
(66.7)
$
(221.3)
$
(181.5)
Net cash used in financing activities
$
(20.6)
$
(55.5)
$
(54.5)
$
(117.9)
Adjusted free cash flow
$
100.1
$
73.9
$
50.3
$
187.3
Capital expenditures
$
115.1
$
(133.8)
$
(229.9)
$
(241.1)
Screen additions
16
17
37
40
Screen acquisitions
64
9
64
31
Screen dispositions
36
44
104
134
Construction openings, net
(3)
(65)
(52)
(118)
Average screens
10,675
10,684
10,679
10,737
Number of screens operated
11,036
10,988
11,036
10,988
Number of theatres operated
1,004
1,005
1,004
1,005
Screens per theatre
11.0
10.9
11.0
10.9
Attendance (in thousands)
96,955
91,245
176,780
182,177
Segment Other Data:
(in millions, except per patron amounts
and operating data)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Other operating data:
Attendance (patrons, in
thousands):
U.S. markets
71,900
69,751
126,879
131,607
International markets
25,055
21,494
49,901
50,570
Consolidated
96,955
91,245
176,780
182,177
Average ticket price (in
dollars):
U.S. markets
$
9.47
$
9.95
$
9.43
$
9.87
International markets
$
8.57
$
9.40
$
8.64
$
9.34
Consolidated
$
9.24
$
9.82
$
9.20
$
9.72
Food and beverage revenues per patron
(in dollars):
U.S. markets
$
5.58
$
5.29
$
5.43
$
5.17
International markets
$
3.65
$
3.56
$
3.46
$
3.38
Consolidated
$
5.08
$
4.89
$
4.87
$
4.67
Average Screen Count (month end
average):
U.S. markets
8,006
8,010
8,003
8,053
International markets
2,669
2,674
2,676
2,684
Consolidated
10,675
10,684
10,679
10,737
Segment Information:
(unaudited, in millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Revenues
U.S. markets
$
1,161.2
$
1,129.3
$
2,028.4
$
2,111.4
International markets
344.9
313.2
678.1
714.7
Consolidated
$
1,506.1
$
1,442.5
$
2,706.5
$
2,826.1
Adjusted EBITDA
U.S. markets
$
202.1
$
222.2
$
279.5
$
430.5
International markets
35.5
22.6
66.3
92.2
Consolidated
$
237.6
$
244.8
$
345.8
$
522.7
Capital Expenditures
U.S. markets
$
84.1
$
101.0
$
159.6
$
172.0
International markets
31.0
32.8
70.3
69.1
Consolidated
$
115.1
$
133.8
$
229.9
$
241.1
Reconciliation of Adjusted
EBITDA:
(dollars in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Net earnings (loss)
$
49.4
$
22.2
$
(80.8)
$
39.9
Plus:
Income tax provision (benefit)
5.4
(2.6)
11.1
2.1
Interest expense
86.4
82.4
170.0
164.9
Depreciation and amortization
112.0
137.7
225.0
268.2
Certain operating expenses (2)
2.3
5.7
4.8
9.4
Equity in (earnings) loss of
non-consolidated entities (3)
(10.2)
(13.0)
(16.7)
(4.0)
Cash distributions from non-consolidated
entities (4)
1.8
3.5
12.3
27.8
Attributable EBITDA (5)
2.0
(0.4)
2.9
1.6
Investment income
(2.1)
(1.5)
(18.2)
(6.7)
Other expense (income) (6)
(23.8)
2.5
6.1
3.7
Non-cash rent - purchase accounting
(7)
5.8
—
13.4
—
General and administrative
expense—unallocated:
Merger, acquisition and transaction costs
(8)
3.2
4.3
6.5
9.0
Stock-based compensation expense (income)
(9)
5.4
4.0
9.4
6.8
Adjusted EBITDA(1)
$
237.6
$
244.8
$
345.8
$
522.7
Rent
$
245.9
$
199.7
$
487.9
$
389.4
__________________________
1)
We present Adjusted EBITDA as a supplemental measure of our
performance. We define Adjusted EBITDA as net earnings (loss)
plus (i) income tax provision (benefit), (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
attributable EBITDA from equity investments in theatre operations
in international markets and any cash distributions of earnings
from other 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-U.S. GAAP financial measure
commonly used in our industry and should not be construed as an
alternative to net earnings (loss) as an indicator of operating
performance (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 estimate our value.
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;
- does not reflect any cash requirements for the assets being
depreciated and amortized that may have to be replaced in the
future; and
- does not reflect the impact of divestitures that were required
in connection with recently completed acquisitions.
2)
Amounts represent preopening expense related to temporarily
closed screens under renovation, theatre and other closure expense
for the permanent closure of screens including the related
accretion of interest, non-cash deferred digital equipment rent
expense, and disposition of assets and other non-operating gains or
losses included in operating expenses. The Company has excluded
these items as they are non-cash in nature, include components of
interest cost for the time value of money or are non-operating in
nature.
3)
During the three months ended
June 30, 2019, the Company recorded $9.0 million in
earnings from DCIP.
During the six months ended June 30,
2019, the Company recorded $14.6 million in earnings from
DCIP. During the six months ended June 30, 2018, equity in
earnings of non-consolidated entities includes a lower of carrying
value or fair value impairment loss of the held-for sale portion of
our investment in NCM of $16.0 million. The impairment charge
reflects recording our held-for-sale units and shares at the
publicly quoted per share price on March 31, 2018 of $5.19.
Equity in earnings of non-consolidated entities also includes loss
on the surrender (disposition) of a portion of the Company’s
investment in NCM of $1.1 million during the six months ended
June 30, 2018.
4)
Includes U.S. non-theatre distributions from equity method
investments and International non-theatre distributions from equity
method investments to the extent received. The Company believes
including cash distributions is an appropriate reflection of the
contribution of these investments to its operations.
5)
Attributable EBITDA includes the EBITDA from minority equity
investments in theatre operators in certain international markets.
See below for a reconciliation of the Company’s equity (earnings)
loss of non-consolidated entities to attributable EBITDA. Because
these equity investments are in theatre operators in regions where
the Company holds a significant market share, the Company believes
attributable EBITDA is more indicative of the performance of these
equity investments and management uses this measure to monitor and
evaluate these equity investments. The Company also provides
services to these theatre operators including information
technology systems, certain on-screen advertising services and our
gift card and package ticket program. As these investments relate
only to our Nordic acquisition, the second quarter of 2017
represents the first time the Company has made this adjustment and
does not impact prior historical presentations of Adjusted
EBITDA.
Reconciliation of Attributable EBITDA
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Equity in earnings of non-consolidated
entities
$
(10.2)
$
(13.0)
$
(16.7)
$
(4.0)
Less:
Equity in earnings of non-consolidated
entities excluding international theatre JV's
(9.8)
(13.9)
(15.8)
(3.6)
Equity in earnings (loss) of International
theatre JV's
0.4
(0.9)
0.9
0.4
Income tax provision
0.1
—
0.1
—
Investment income
(0.3)
—
(0.5)
—
Interest expense
0.1
—
0.1
—
Depreciation and amortization
1.7
0.5
2.3
1.2
Attributable EBITDA
$
2.0
$
(0.4)
$
2.9
$
1.6
6)
Other income for the three months ended June 30, 2019 includes
income of $33.9 million due to the decrease in fair value of our
derivative liability for the Convertible Notes due 2024, income of
$7.1 million as a result of an increase in fair value of its
derivative asset, and an expense of $16.6 million of fees related
to modification of term loans. Other expense for the six months
ended June 30, 2019 includes income of $20.6 million due to the
decrease in fair value of our derivative liability for the
Convertible Notes due 2024, an expense of $8.0 million as a result
of a decrease in fair value of its derivative asset, an expense of
$16.6 million of fees related to modifications of term loans, and
$1.0 million loss on GBP forward contract. Other income for the
three and six months ended June 30, 2018 includes financing related
foreign currency transaction losses.
7)
Reflects amortization of certain intangible assets reclassified
from depreciation and amortization to rent expense, due to the
adoption of ASC 842.
8)
Merger, acquisition and transition costs are excluded as they
are non-operating in nature.
9)
Stock-based compensation expense is non-cash or non-recurring
expense included in General and Administrative: Other.
Reconciliation of Adjusted Free Cash
Flow (1)
(dollars in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
Net cash provided by operating
activities
$
152.2
$
131.7
$
153.6
$
297.1
Plus:
Merger, acquisition and transaction
costs(2)
3.2
4.3
6.5
9.0
Less:
Maintenance capital expenditures(3)
25.7
31.9
45.0
46.5
Landlord contributions(5)
29.6
30.2
64.8
72.3
Adjusted free cash flow (1)
$
100.1
$
73.9
$
50.3
$
187.3
Reconciliation of Capital Expenditures
Capital expenditures
Growth capital expenditures(4)
$
88.2
$
109.2
$
158.7
$
183.2
Maintenance capital expenditures(3)
25.7
31.9
45.0
46.5
Change in construction payables(6)
1.2
(7.3)
26.2
11.4
Total capital expenditures
$
115.1
$
133.8
$
229.9
$
241.1
Starting in the fourth quarter of 2018, AMC began disclosing a new
non-U.S. GAAP financial measure “Adjusted Free Cash Flow” as a
measure of our liquidity. We believe this measure is indicative of
our ability to generate cash in excess of maintenance capital
expenditures and certain other non-operating costs and for other
uses including repayment of our corporate borrowings and generating
cash for growth opportunities.
1)
We present “Adjusted Free Cash Flow” as a supplemental measure
of our liquidity. Management uses this measure and we believe it is
helpful to investors as an indication of our ability to generate
cash in-excess-of maintenance capital expenditures and certain
other non-operating and costs and for other uses including
repayment of our corporate borrowings and generating cash for
growth opportunities. Adjusted Free Cash Flow is a non-U.S. GAAP
financial measure and is defined as net cash provided by operating
activities, plus merger, acquisition and transaction costs, less
maintenance capital expenditures and landlord contributions.
Adjusted free cash flow does not represent the residual cash flow
available for discretionary expenditures. It should be considered
in addition to, not a substitute for or superior to net cash
provided by operating activities. The term adjusted free cash flow
may differ from similar measures reported by other companies. Also
provided is a reconciliation of Capital Expenditures disclosed in
the Consolidated Statement of Cash Flows made up of growth capital
expenditures, maintenance capital expenditures and change in
construction payables as further explanation of the components of
adjusted free cash flow.
2)
Merger, acquisition and transition costs are excluded as they
are non-operating.
3)
Maintenance capital expenditures are amounts required to keep
our existing theatres in compliance with regulatory requirements
and in a sustainable good operating condition, including
expenditures for repair of HVAC, sight and sound systems,
compliance with ADA requirements and technology upgrades of
existing systems.
4)
Growth capital expenditures are investments that enhance the
guest experience and grow revenues and profits and include
initiatives such as theatre remodels, acquisitions, newly built
theatres, premium large formats, enhanced food and beverage
offerings and service models and technology that enable
efficiencies and additional revenue opportunities. We did not
deduct these from adjusted free cash flow because they are
discretionary, and the related benefits may not be fully reflected
in our net cash provided by operating activities.
5)
Landlord contributions represent reimbursements in our strategic
growth initiatives by our landlords.
6)
Change in construction payables are changes in amounts accrued
for capital expenditures and are not deducted or added back to
Adjusted Free Cash Flow as they fluctuate significantly from period
to period based on the timing of actual payments.
Reconciliation of Consolidated Adjusted
EBITDA and Adjusted Free Cash Flow Under ASC 842
(dollars in millions)
(Unaudited)
Quarter Ended June 30,
2019
2018
Change
Total Adjusted EBITDA
Total Adjusted EBITDA (as reported)
$
237.6
$
244.8
(2.9)
%
Certain adjustments to rent expense
(a)
—
(23.4)
Total Adjusted EBITDA (post-ASC 842)
237.6
221.4
7.3
%
Impact of ASC 842 on Adjusted EBITDA
$
(22.7)
$
(23.4)
(a) The adjustments for certain rent
expense items include cash rent for legacy build-to-suit financing
lease obligations of $22.1 million and deferred rent related to
deferred gain amortization of $1.3 million.
Six Months Ended June
30,
2019
2018
Change
Total Adjusted EBITDA
Total Adjusted EBITDA (as reported)
$
345.8
$
522.7
(33.8)
%
Certain adjustments to rent expense
(a)
—
(47.1)
Total Adjusted EBITDA (post-ASC 842)
345.8
475.6
(27.3)
%
Impact of ASC 842 on Adjusted EBITDA
$
(45.4)
$
(47.1)
(a) The adjustments for certain rent
expense items include cash rent for legacy build-to-suit financing
lease obligations of $44.5 million and deferred rent related to
deferred gain amortization of $2.6 million.
Reconciliation of net earnings to
Adjusted EBITDA for 2018 (adjusted for ASC 842) (see footnotes
above):
(In millions)
Three Months
Six Months
Ended
Ended
June 30, 2018
June 30, 2018
Net earnings
$
23.9
43.9
Plus:
Income tax provision
(2.6)
2.1
Interest expense
74.7
149.4
Depreciation and amortization
110.6
213.0
Certain operating expenses (2)
5.7
9.4
Equity in loss of non-consolidated
entities (3)
(13.0)
(4.0)
Cash distributions from non-consolidated
entities (4)
3.5
27.8
Attributable EBITDA (5)
(0.4)
1.6
Investment income
(1.5)
(6.7)
Other expense (6)
2.5
3.7
Non-cash rent - purchase accounting
(7)
9.7
19.6
General and administrative
expense—unallocated:
—
Merger, acquisition and transaction costs
(8)
4.3
9.0
Stock-based compensation expense (9)
4.0
6.8
Adjusted EBITDA (1)
$
221.4
$
475.6
Quarter Ended June 30,
2019
2018
Change
Adjusted free cash flow
Adjusted free cash flow (as reported)
$
100.1
$
73.9
35.5
%
Adjustment to cash flow used in operating
activities (a)
—
(14.4)
Adjusted free cash flow (post-ASC 842)
100.1
59.5
68.2
%
Impact of ASC 842 on Adjusted free cash
flow
$
(14.0)
$
(14.4)
__________________________
(a)
Adjustments for principal payments for
build-to-suit financing lease obligations that previously were
reported in net cash used in financing activities
Six Months Ended June
30,
2019
2018
Change
Adjusted free cash flow
Adjusted free cash flow (as reported)
$
50.3
$
187.3
(73.1)
%
Adjustment to cash flow used in operating
activities (a)
—
(29.0)
Adjusted free cash flow (post-ASC 842)
50.3
158.3
(68.2)
%
Impact of ASC 842 on Adjusted free cash
flow
$
(28.0)
$
(29.0)
__________________________
(a)
Adjustments for principal payments for
build-to-suit financing lease obligations that previously were
reported in net cash used in financing activities
Select Consolidated Constant Currency
financial data (see Note 10):
Three and Six Months Ended June 30,
2019
(dollars in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2019
June 30, 2019
Constant Currency (10)
Constant Currency (10)
US
International
Total
US
International
Total
Revenues
Admissions
$
680.7
$
228.9
$
909.6
$
1,196.1
$
463.2
$
1,659.3
Food and beverage
401.1
97.4
498.5
688.7
185.2
873.9
Other theatre
79.4
41.3
120.7
143.6
80.4
224.0
Total revenues
1,161.2
367.6
1,528.8
2,028.4
728.8
2,757.2
Operating costs and expenses
Film exhibition costs
390.2
98.4
488.6
667.5
193.9
861.4
Food and beverage costs
56.1
21.6
77.7
99.0
41.7
140.7
Operating expense
320.9
124.0
444.9
606.5
250.9
857.4
Rent
179.6
70.6
250.2
356.2
141.3
497.5
General and administrative:
Merger, acquisition and transaction
costs
2.4
0.9
3.3
3.5
3.3
6.8
Other
24.9
19.4
44.3
52.5
39.7
92.2
Depreciation and amortization
84.2
29.5
113.7
167.9
61.3
229.2
Operating costs and expenses
1,058.3
364.4
1,422.7
1,953.1
732.1
2,685.2
Operating income (loss)
102.9
3.2
106.1
75.3
(3.3)
72.0
Other expense (income)
(23.2)
(0.2)
(23.4)
6.1
0.2
6.3
Interest expense
84.2
2.3
86.5
165.8
4.6
170.4
Equity in earnings of non-consolidated
entities
(9.9)
(0.3)
(10.2)
(16.0)
(0.8)
(16.8)
Investment income
(0.2)
(2.0)
(2.2)
(5.3)
(14.8)
(20.1)
Total other expense
50.9
(0.2)
50.7
150.6
(10.8)
139.8
Loss before income taxes
52.0
3.4
55.4
(75.3)
7.5
(67.8)
Income tax provision (benefit)
5.8
(0.4)
5.4
9.3
2.1
11.4
Net loss
$
46.2
$
3.8
$
50.0
$
(84.6)
$
5.4
$
(79.2)
Attendance
71,900
25,055
96,955
126,879
49,901
176,780
Average Screens
8,006
2,669
10,675
8,003
2,676
10,679
Average Ticket Price
$
9.47
$
9.14
$
9.38
$
9.43
$
9.28
$
9.39
Reconciliation of Consolidated Constant
Currency Adjusted EBITDA (see Note 10):
Three and Six Months Ended June 30,
2019
(dollars in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2019
June 30, 2019
Constant Currency (10)
Constant Currency (10)
Net earnings (loss)
$
50.0
$
(79.5)
Plus:
Income tax benefit
5.4
11.4
Interest expense
86.5
170.3
Depreciation and amortization
113.7
229.1
Certain operating expenses (2)
2.2
4.9
Equity in earnings of non-consolidated
entities (3)
(10.2)
(16.8)
Cash distributions from non-consolidated
entities (4)
1.8
12.4
Attributable EBITDA (5)
2.2
3.2
Investment income
(2.2)
(19.8)
Other expense (income) (6)
(23.8)
6.1
Non-cash rent expense - purchase
accounting (7)
5.9
13.7
General and administrative
expense—unallocated:
Merger, acquisition and transaction costs
(8)
3.3
6.9
Stock-based compensation expense (9)
5.6
9.6
Adjusted EBITDA (1)
$
240.4
$
351.5
Adjusted EBITDA (in millions) (1)
U.S. markets
$
202.1
$
279.6
International markets
38.3
71.9
Total Adjusted EBITDA
$
240.4
$
351.5
1)
We present Adjusted EBITDA as a supplemental measure of our
performance. We define Adjusted EBITDA as net earnings (loss) plus
(i) income tax provision (benefit), (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 attributable EBITDA
from equity investments in theatre operations in international
markets and any cash distributions of earnings from other 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-U.S. GAAP financial measures and should
not be construed as an alternative to net earnings (loss) or net
earnings (loss) margin 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 estimate our
value.
Adjusted EBITDA has important limitations as analytical tools, 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;
- does not reflect any cash requirements for the assets being
depreciated and amortized that may have to be replaced in the
future; and
- does not reflect the impact of divestitures that were required
in connection with recently completed acquisitions.
2)
Amounts represent preopening expense related to temporarily
closed screens under renovation, theatre and other closure expense
for the permanent closure of screens including the related
accretion of interest, non-cash deferred digital equipment rent,
and disposition of assets and other non-operating gains or losses
included in operating expenses. We have excluded these items as
they are non-cash in nature, include components of interest cost
for the time value of money or are non-operating in nature.
3)
During the three months ended June 30, 2019, we recorded $9.0
million in earnings from DCIP. During the six months ended June 30,
2019, we recorded $14.6 million in earnings from DCIP. During the
six months ended June 30, 2018, equity in earnings of
non-consolidated entities includes a lower of carrying value
impairment loss on the held-for-sale portion of NCM of $16.0
million. The impairment charges reflect recording our held-for-sale
units and other-than-temporary impaired shares at the publicly
quoted per share price on March 31, 2018 of $5.19. Equity in
earnings of non-consolidated entities also includes the surrender
(disposition) of a portion of our investment in NCM of $1.1 million
during the six months ended June 30, 2018.
4)
Includes U.S. non-theatre distributions from equity method
investments and International non-theatre distributions from equity
method investments to the extent received. We believe including
cash distributions is an appropriate reflection of the contribution
of these investments to our operations.
5)
Attributable EBITDA includes the EBITDA from equity investments
in theatre operators in certain international markets. See below
for a reconciliation of our equity (earnings) loss of
non-consolidated entities to attributable EBITDA. Because these
equity investments are in theatre operators in regions where we
hold a significant market share, we believe attributable EBITDA is
more indicative of the performance of these equity investments and
management uses this measure to monitor and evaluate these equity
investments. We also provide services to these theatre operators
including information technology systems, certain on-screen
advertising services and our gift card and package ticket program.
As these investments relate only to our Nordic acquisition, the
second quarter of 2017 represents the first time we have made this
adjustment and does not impact prior historical presentations of
Adjusted EBITDA.
Reconciliation of Constant Currency Attributable EBITDA
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2019
(In millions)
Constant Currency
Constant Currency
Equity in earnings of non-consolidated
entities
$
(10.2)
$
(16.8)
Less:
Equity in earnings of non-consolidated
entities excluding international theatre JV's
(9.8)
(15.8)
Equity in earnings of International
theatre JV's
0.4
1.0
Investment income
(0.3)
(0.5)
Interest expense
0.2
0.2
Depreciation and amortization
1.9
2.5
Attributable EBITDA
$
2.2
$
3.2
6)
Other income for the three months ended June 30, 2019 includes
income of $33.9 million due to the decrease in fair value of our
derivative liability for the Convertible Notes due 2024, income of
$7.1 million as a result of an increase in fair value of its
derivative asset, and expense of $16.6 million of fees related to
modifications of term loans. Other expense for the six months ended
June 30, 2019 includes income of $20.6 million due to the decrease
in fair value of our derivative liability for the Convertible Notes
due 2024, an expense of $8.0 million as a result of a decrease in
fair value of its derivative asset, an expense of $16.6 million of
fees related to modifications of term loans, and $1.0 million loss
on GBP forward contract.
7)
Reflects amortization of certain intangible assets reclassified
from depreciation and amortization to rent expense, due to the
adoption of ASC 842.
8)
Merger, acquisition and transition costs are excluded as it is
non-operating in nature.
9)
Stock-based compensation expense is Non-cash or non-recurring
expense included in General and Administrative: Other.
The International segment information for
the three and six months ended June 30, 2019 has been adjusted for
constant currency. Constant currency amounts, which are non-GAAP
measurements were calculated using the average exchange rate for
the corresponding period for 2018. We translate the results of our
international operating segment from local currencies into U.S.
dollars using currency rates in effect at different points in time
in accordance with U.S. GAAP. Significant changes in foreign
exchange rates from one period to the next can result in meaningful
variations in reported results. We are providing constant currency
amounts for our international operating segment to present a
period-to-period comparison of business performance that excludes
the impact of foreign currency fluctuations.
Forward-Looking Non-GAAP Financial Information
The Company provides certain elements of its forward-looking
2019 outlook solely on a non-GAAP basis because the Company cannot
predict certain elements that would be required in certain reported
GAAP results. The Company has not presented a quantitative
reconciliation of the forward-looking non-GAAP ranges of measures,
Adjusted EBITDA Margin and Net Leverage to their most comparable
GAAP financial measures because it is impractical to forecast
certain items without unreasonable efforts due to the uncertainty
and inherent difficulty of predicting the occurrence and financial
impact of and the periods in which such items may be recognized.
For Adjusted EBITDA and Net Leverage, these items are generally
expected to be similar to the kinds of charges and costs excluded
from Adjusted EBITDA and Net Leverage in prior periods and include,
but are not limited to, acquisition- related expenses, stock-based
compensation, income tax, interest and depreciation expense, and
certain other expenses and other assumptions about capital
requirements, cash and derivative liabilities for future periods.
The variability of these items may have a significant impact on our
future GAAP financial results
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version on businesswire.com: https://www.businesswire.com/news/home/20190808005249/en/
INVESTOR RELATIONS: John Merriwether, 866-248-3872
InvestorRelations@amctheatres.com
MEDIA CONTACTS: Ryan Noonan, (913) 213-2183
rnoonan@amctheatres.com
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