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Section 1: 8-K (8-K)

Q2_18_AMC_Earnings_Release_8K_Taxonomy2017

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 1,  2018

 

AMC ENTERTAINMENT HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

 

 

 

 

Delaware

 

001-33892

 

26-0303916

(State or Other Jurisdiction of

 

(Commission File Number)

 

(I.R.S. Employer Identification

Incorporation)

 

 

 

Number)

 

One AMC Way

11500 Ash Street, Leawood, KS 66211

(Address of Principal Executive Offices, including Zip Code)

 

(913) 213-2000

(Registrant’s Telephone Number, including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

 

 

 


 

 

 

 

Item 2.02Results of Operations and Financial Condition. 

 

On August 1, 2018, we announced our financial results for the second quarter ended June 30, 2018. A copy of the press release is furnished as Exhibit 99.1 and a copy of the CFO Commentary is furnished as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1 Earnings press release dated August 1, 2018

99.2 CFO Commentary

 

The information furnished pursuant to Item 2.02 of this Current Report on Form 8-K, including the exhibits, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

2

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has du1y caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

AMC ENTERTAINMENT HOLDINGS, INC.

 

 

 

 

Date: August 1, 2018

By:

/s/ Craig R. Ramsey

 

            Craig R. Ramsey

 

            Executive Vice President and

            Chief Financial Officer

 

 

 

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Section 2: EX-99.1 (EX-99.1)

Exhibit 991 ER_Q2_18

Exhibit 99.1

 

 

 

 

Picture 3

INVESTOR RELATIONS: 

John Merriwether, 866-248-3872

[email protected]

 

MEDIA CONTACTS:

Ryan Noonan, (913) 213-2183

[email protected]

FOR IMMEDIATE RELEASE

AMC Entertainment Holdings, Inc. Announces

Record Second Quarter 2018 Results

 

LEAWOOD, KANSAS - (August 1, 2018) -- AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or “the Company”), today reported results for the second quarter ended June 30, 2018.

 

Highlights for the second quarter ended June 30, 2018, include the following:

 

·

AMC set second quarter records for the three months ended June 30 period for all revenue categories: admissions, food and beverage and other. 

 

·

Total revenues increased 20.0% to $1,442.5 million compared to total revenues of $1,202.3 million for the three months ended June 30, 2017. Total revenues in the quarter included approximately $313.2 million of revenues from our international theatres as compared to $294.9 million for the three months ended June 30, 2017.

 

·

Admissions revenues increased 17.7% to $896.3 million compared to $761.4 million for the same period a year ago.

 

·

Food and beverage revenues increased 19.2% to $445.8 million, compared to $374.1 million for the three months ended June 30, 2017.

 

·

Earnings before income taxes increased $305.7 million to $19.6 million, compared to a loss of $286.1 million for the same quarter a year ago. Included in the loss before income taxes for the second quarter ended June 30, 2017 was a $202.6 million other-than-temporary pre-tax impairment loss related to AMC’s investment in National CineMedia, LLC and National CineMedia, Inc. (“NCM”).

 

·

Net earnings increased $198.7 million to net earnings of $22.2 million compared to net loss of $176.5 million for the three months ended June 30, 2017

 

·

Diluted earnings per share (“diluted EPS”) increased by $1.52 to $0.17 per share compared to a net loss of $1.35 per share for the same period a year ago.  Weighted average diluted shares outstanding in the second quarter of 2018 decreased approximately 2.3% compared to the second quarter last year as a result of the effect of 3.7 million shares repurchased since August 2017.

 

·

Total Adjusted EBITDA(1) increased 80.3% to $244.8 million compared to $135.8 million for the three months ended June 30, 2017.  U.S. markets Adjusted EBITDA for the second quarter grew 93.2% to $222.2 compared to $115.0 million in the same period last year.  International Adjusted EBITDA for the second quarter grew 8.7% to $22.6 million compared to $20.8 million a year ago.

 


 

(1) Reconciliations and definitions of non-GAAP financial measures are provided in the financial schedules accompanying this press release.

 

Adam Aron, CEO and President of AMC said, “Obviously we are very pleased by AMC’s record results for the second quarter of 2018, especially given the magnitude of the impressive 20.0% increase in total revenues and an 80.3% year over year growth in Adjusted EBITDA for AMC. Our success was the result of our continued innovation in the design of our marketing programs and the theatrical experience we offer our guests, as well as an intense focus on the disciplined execution of our financial and operational strategies. And we had the opportunity to do so against a backdrop of a record setting industry movie slate that delivered the highest quarterly domestic box office admissions revenues in history.”

 

Aron added, “In the second quarter of 2018, once again AMC truly blazed new trails on a wide array of fronts. Our AMC Stubs program crossed 15 million-member households, and now stands at 15.8 million. We launched AMC Stubs A-List, which as of midnight last night had 181,790 paid members. Our online advance ticketing activity in the U.S. is soaring, up 131% year over year. AMC’s food and beverage revenue per patron in the U.S. was $5.29, the highest of any major U.S. operator. Looking globally, AMC is the largest operator of premium large format screens in the world, and admissions revenues at our IMAX, Dolby Cinema and all of our premium large format screens grew in the quarter by 70.3% in the U.S. and 17.5% in Europe. In addition, we continued to march ahead renovating theatres with our signature recliner seats to very attractive financial returns both in the U.S. and in Europe, as well as in opening new theatres, with expectations to renovate 44 theatres and open 16 new ones this year. Nowhere did a theatre opening ever capture so much press attention as was the case at the new AMC Cinema in Riyadh. That April cinema unveiling, done in partnership with the sovereign wealth fund of Saudi Arabia, ended a 37-year ban on cinemas and is the first of what we expect will be 50-100 AMC Cinemas to open in the years ahead in our 16th country. We managed our expenses tightly, triggering a 570-basis point improvement to theatre adjusted EBITDA margins globally, including a 700-basis point margin improvement in the United States. And finally, in the quarter, we continued to buy back stock, pay an attractive dividend and deleverage -- in part due to our earnings strength and in part through AMC having successfully monetized some $500 million of non-strategic assets over the past 11 months. Taking all this together, AMC made enormous progress in the second quarter of 2018.”

 

Aron concluded, "While we are proud that AMC set financial records and outperformed the competition in Q2, it really shouldn’t be a surprise that AMC did well financially at a time when industry revenues were robust. What may be the biggest news of all, though, is just how healthy are both AMC and the movie business overall. This is a solid and steady industry over the long haul. Theatre revenues have been growing over the past two decades. Honing in on our U.S. business in April through June, AMC’s attendance per screen increased 21.1%, AMC’s domestic admissions revenues were up 22.8%, outpacing overall domestic industry box office revenues which were up a still noteworthy 21.4%. Consider that movie after movie has shattered attendance and revenue records this year, and that all-time overall monthly domestic industry box office revenue records were set in five different months out of the past ten. It is finally time for the sky-is-falling-in cynics to admit that they misinterpreted a brief slump in moviegoing last summer. Our industry is flourishing and strong, and the prospects for AMC are enormously bright.”

 

 

Highlights for the six months ended June 30, 2018, include the following:

 

·

Total revenues increased 13.8% to $2,826.1 million compared to total revenues of $2,483.7 million for the six months ended June 30, 2017.  Total revenues for 2018 included approximately $714.7 million of revenues from our international theatres as compared to $584.1 million in the six-month period a year ago.

 

·

Admissions revenues grew 12.2% to $1,771.3 million compared to $1,578.9 million for the six months ended June 30, 2017.

 

·

Food and beverage revenues increased 10.4% to $851.6 million, compared to $771.7 million for the six months ended June 30, 2017.

 


 

·

Earnings before income taxes increased $328.9 million to $42.0 million, compared to a loss of $286.9 million for the same quarter a year ago. Included in the loss before income taxes for the six months ended June 30, 2017 was a $204.5 million other-than-temporary pre-tax impairment loss related to AMC’s investment in NCM.

 

·

Net earnings increased $208.0 million to $39.9 million compared to a net loss of $168.1 million for the six months ended June 30, 2017.

 

·

Diluted EPS increased by $1.64 to $0.31 per share compared to loss of $1.33 per share for the same period a year ago.  Weighted average diluted shares outstanding for the six months ended June 30, 2018 increased approximately 1.4% compared to the second quarter last year as a result of the additional public offering of 20.3 million shares in February 2017 offset by the repurchase of 3.7 million shares since August 2017.

 

·

Total Adjusted EBITDA(1) grew 35.1% to $522.7 million compared to $386.9 million for the six months ended June 30, 2017.  U.S. markets Adjusted EBITDA for the six months grew 37.6% to $430.5 compared to $312.9 million in the same period last year.  International Adjusted EBITDA grew 24.6% to $92.2 million compared to $74.0 million in the same period a year ago.  Much of the growth in international Adjusted EBITDA is due to the March 28, 2017 acquisition of Nordic Cinema Group Holding AB (“Nordic”).

 

(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.  

 

Additional information detailing select unaudited pro forma financial data for the quarter ended June 30, 2017 is included in the second quarter 2018 CFO Commentary. The select unaudited pro forma data for the six-month period ended June 30, 2017 combines the historical financial data of AMC and Nordic, giving effect to the acquisition, financings and theatre divestitures related to our acquisition of Carmike Cinemas, Inc. (“Carmike”) as if they had been completed on January 1, 2017. The unaudited proforma data for the three-month period ended June 30, 2017 gives effect to the Carmike theatre divestitures. The historical consolidated financial information for Nordic has been adjusted to comply with U.S. GAAP. The classification of certain items presented by Nordic under IFRS has been modified in order to align with the presentation used by AMC under U.S. GAAP. In addition to the U.S. GAAP adjustments and the reclassifications, amounts have also been translated to U.S. Dollars. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what our results of operations would actually have been had the acquisitions occurred on the date indicated. Please refer to the August 1, 2017 Form 8-K and 8-K/A on December 4, 2017 for additional information on pro forma financial statement adjustments.  The historical results included in the CFO Commentary for the periods ended June 30, 2018 have been adjusted for constant currency. Constant currency amounts, which are non-GAAP measurements, were calculated using the average exchange rate for the corresponding pro forma period ended June 30, 2017.

 

Update on Share Repurchase Program

 

On August 3, 2017, AMC announced that its Board of Directors authorized the repurchase of up to $100 million of the Company’s Class A common stock over a two-year period.

 

As of August 1, 2018, the Company has repurchased approximately 56% of the authorized $100 million, having purchased approximately 3.7 million shares of AMC’s Class A common stock for approximately $55.7 million, representing an average share price of $15.07.

 


 

Dividends

 

On May 3, 2018, the Company declared a regular quarterly dividend of $0.20 per share for the quarter ended March 31, 2018, payable on June 25, 2018 to stockholders of record on June 11, 2018. The total dividends paid in the second quarter of 2018 were approximately $25.7 million.

 

On July 24, 2018, the Company declared a regular quarterly dividend of $0.20 per share for the quarter ended June 30, 2018, payable on September 24, 2018 to stockholders of record on September 10, 2018.

 

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 Wednesday, August 1, 2018. 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 U.S., in Europe and throughout the world with more than 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 program, web site and smartphone 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 22 of the 25 largest metropolitan areas of the United States, including the top three markets (NY, LA, Chicago). Through its Odeon subsidiary AMC operates in 14 European countries and is the #1 theatre chain in Estonia, Finland, Italy, Latvia, Lithuania, Norway, Spain, Sweden and UK & Ireland. In a joint partnership with The Development and Investment Entertainment Company, a subsidiary of The Public Investment Fund of Saudi Arabia, AMC also operates AMC Cinemas in the Kingdom of Saudi Arabia. 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; increased use of alternative film delivery methods or other forms of entertainment; shrinking exclusive theatrical release windows; international economic, political, regulatory and other risks; 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; 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 Annual Report on Form 10-K, filed with the SEC on March 1, 2018, 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.

 

(Tables follow)


 

 

AMC Entertainment Holdings, Inc.

Consolidated Statements of Operations

For the Fiscal Periods Ended 6/30/18 and 6/30/17

(dollars in millions, except share and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 Admissions

 

$

896.3

 

$

761.4

 

$

1,771.3

 

$

1,578.9

 Food and beverage

 

 

445.8

 

 

374.1

 

 

851.6

 

 

771.7

 Other theatre

 

 

100.4

 

 

66.8

 

 

203.2

 

 

133.1

   Total revenues

 

 

1,442.5

 

 

1,202.3

 

 

2,826.1

 

 

2,483.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 Film exhibition costs

 

 

471.4

 

 

379.8

 

 

897.9

 

 

799.4

 Food and beverage costs

 

 

72.2

 

 

62.1

 

 

138.4

 

 

121.9

 Operating expense, excluding depreciation and amortization below

 

 

424.5

 

 

389.2

 

 

836.4

 

 

745.6

 Rent

 

 

199.7

 

 

199.8

 

 

389.4

 

 

390.2

 General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

   Merger, acquisition and transaction costs

 

 

4.3

 

 

11.5

 

 

9.0

 

 

51.7

   Other, excluding depreciation and amortization below

 

 

43.0

 

 

46.1

 

 

87.2

 

 

80.4

 Depreciation and amortization

 

 

137.7

 

 

133.3

 

 

268.2

 

 

258.6

   Operating costs and expenses

 

 

1,352.8

 

 

1,221.8

 

 

2,626.5

 

 

2,447.8

 

 

 

 

 

 

 

 

 

 

 

 

 

   Operating income (loss)

 

 

89.7

 

 

(19.5)

 

 

199.6

 

 

35.9

   Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

     Other expense (income)

 

 

2.2

 

 

1.1

 

 

3.4

 

 

(1.5)

     Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

       Corporate borrowings

 

 

62.2

 

 

59.6

 

 

123.9

 

 

110.9

       Capital and financing lease obligations

 

 

9.8

 

 

10.3

 

 

20.1

 

 

21.1

 Non-cash NCM exhibitor service agreement

 

 

10.4

 

 

 —

 

 

20.9

 

 

 —

     Equity in (earnings) loss of non-consolidated entities

 

 

(13.0)

 

 

195.0

 

 

(4.0)

 

 

197.3

     Investment (income) expense

 

 

(1.5)

 

 

0.6

 

 

(6.7)

 

 

(5.0)

       Total other expense

 

 

70.1

 

 

266.6

 

 

157.6

 

 

322.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) before income taxes

 

 

19.6

 

 

(286.1)

 

 

42.0

 

 

(286.9)

Income tax provision (benefit)

 

 

(2.6)

 

 

(109.6)

 

 

2.1

 

 

(118.8)

Net Earnings (loss)

 

$

22.2

 

$

(176.5)

 

$

39.9

 

$

(168.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Diluted earnings (loss) per share

 

$

0.17

 

$

(1.35)

 

$

0.31

 

$

(1.33)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding diluted (in thousands)

 

 

128,105

 

 

131,166

 

 

128,042

 

 

126,290

 

 

 

 

 


 

 

Consolidated Balance Sheet Data (at period end):

(dollars in millions)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

 

June 30,

 

December 31,

 

 

2018

 

2017

Cash and cash equivalents

 

$

316.4

 

$

310.0

Corporate borrowings

 

 

4,217.8

 

 

4,235.3

Other long-term liabilities

 

 

963.0

 

 

903.8

Capital and financing lease obligations

 

 

605.8

 

 

651.4

Stockholders' equity

 

 

1,969.9

 

 

2,112.4

Total assets

 

 

9,531.8

 

 

9,805.9

 

 

 

 

 

Consolidated Other Data:

(in millions, except operating data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

Consolidated

 

2018

 

2017

 

2018

 

2017

Net cash provided by operating activities

 

$

131.7

 

$

(54.1)

 

$

297.1

 

$

118.4

Capital expenditures

 

$

(133.8)

 

$

(156.7)

 

$

(241.1)

 

$

(318.0)

Screen additions

 

 

17

 

 

23

 

 

40

 

 

42

Screen acquisitions

 

 

 9

 

 

22

 

 

31

 

 

705

Screen dispositions

 

 

44

 

 

219

 

 

134

 

 

236

Construction openings (closures), net

 

 

(65)

 

 

10

 

 

(118)

 

 

14

Average screens

 

 

10,684

 

 

10,776

 

 

10,737

 

 

10,606

Number of screens operated

 

 

10,988

 

 

11,083

 

 

10,988

 

 

11,083

Number of theatres operated

 

 

1,005

 

 

1,009

 

 

1,005

 

 

1,009

Screens per theatre

 

 

10.9

 

 

11.0

 

 

10.9

 

 

11.0

Attendance (in thousands)

 

 

91,245

 

 

81,636

 

 

182,177

 

 

174,990

 

 

 

 


 

 

Segment Other Data:

(in millions, except per patron amounts and operating data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Other operating data:

 

 

 

 

 

 

 

 

 

 

 

 

Attendance (patrons, in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

 

69,751

 

 

57,949

 

 

131,607

 

 

124,772

International markets

 

 

21,494

 

 

23,687

 

 

50,570

 

 

50,218

Consolidated

 

 

91,245

 

 

81,636

 

 

182,177

 

 

174,990

 

 

 

 

 

 

 

 

 

 

 

 

 

Average ticket price (in dollars):

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

$

9.95

 

$

9.76

 

$

9.87

 

$

9.49

International markets

 

$

9.40

 

$

8.28

 

$

9.34

 

$

7.85

Consolidated

 

$

9.82

 

$

9.33

 

$

9.72

 

$

9.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage revenues per patron (in dollars):

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

$

5.29

 

$

5.19

 

$

5.17

 

$

5.02

International markets

 

$

3.56

 

$

3.10

 

$

3.38

 

$

2.89

Consolidated

 

$

4.89

 

$

4.58

 

$

4.67

 

$

4.41

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Screen Count (month end average):

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

 

8,010

 

 

8,059

 

 

8,053

 

 

8,111

International markets

 

 

2,674

 

 

2,717

 

 

2,684

 

 

2,495

Consolidated

 

 

10,684

 

 

10,776

 

 

10,737

 

 

10,606

 

 

Segment Information

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

$

1,129.3

 

$

907.4

 

$

2,111.4

 

$

1,899.6

International markets

 

 

313.2

 

 

294.9

 

 

714.7

 

 

584.1

Consolidated

 

$

1,442.5

 

$

1,202.3

 

$

2,826.1

 

$

2,483.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

$

222.2

 

$

115.0

 

$

430.5

 

$

312.9

International markets

 

 

22.6

 

 

20.8

 

 

92.2

 

 

74.0

Consolidated

 

$

244.8

 

$

135.8

 

$

522.7

 

$

386.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

 

 

 

 

 

 

 

 

 

 

U.S. markets

 

$

101.0

 

$

139.4

 

$

172.0

 

$

289.7

International markets

 

 

32.8

 

 

17.3

 

 

69.1

 

 

28.3

Consolidated

 

$

133.8

 

$

156.7

 

$

241.1

 

$

318.0

 


 

 

Reconciliation of Adjusted EBITDA:

(dollars in millions)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Net earnings (loss)

 

$

22.2

 

$

(176.5)

 

$

39.9

 

$

(168.1)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(2.6)

 

 

(109.6)

 

 

2.1

 

 

(118.8)

Interest expense

 

 

82.4

 

 

69.9

 

 

164.9

 

 

132.0

Depreciation and amortization

 

 

137.7

 

 

133.3

 

 

268.2

 

 

258.6

Certain operating expenses (2)

 

 

5.7

 

 

3.5

 

 

9.4

 

 

8.8

Equity in (earnings) loss of non-consolidated entities (3)

 

 

(13.0)

 

 

195.0

 

 

(4.0)

 

 

197.3

Cash distributions from non-consolidated entities (4)

 

 

3.5

 

 

2.2

 

 

27.8

 

 

26.6

Attributable EBITDA (5)

 

 

(0.4)

 

 

1.0

 

 

1.6

 

 

1.0

Investment income (expense)

 

 

(1.5)

 

 

0.6

 

 

(6.7)

 

 

(5.0)

Other expense (income) (6)

 

 

2.5

 

 

1.0

 

 

3.7

 

 

(1.2)

General and administrative expense—unallocated:

 

 

 

 

 

 

 

 

 

 

 

 

Merger, acquisition and transaction costs (7)

 

 

4.3

 

 

11.5

 

 

9.0

 

 

51.7

Stock-based compensation expense (8)

 

 

4.0

 

 

3.9

 

 

6.8

 

 

4.0

Adjusted EBITDA(1)

 

$

244.8

 

$

135.8

 

$

522.7

 

$

386.9


1)

We present Adjusted EBITDA as a supplemental measure of our performance.  We define Adjusted EBITDA as net earnings 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 may be 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)

Equity in (earnings) loss 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 for the six months ended June 30, 2018. The three and six months ended June 30, 2017 included an other-than-temporary impairment loss of $202.6 million and $204.5 million, respectively on our investment in NCM. 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 and June 30, 2017 of $7.42. Equity in loss 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 three months ended March 31, 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 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,

 

 

2018

 

2017

 

2018

 

2017

Equity in (earnings) loss of non-consolidated entities

 

$

(13.0)

 

$

195.0

 

$

(4.0)

 

$

197.3

Less:

 

 

 

 

 

 

 

 

 

 

 

 

Equity in (earnings) loss of non-consolidated entities excluding international theatre JV's

 

 

(13.9)

 

 

195.3

 

 

3.6

 

 

197.6

Equity in earnings (loss) of International theatre JV's

 

 

(0.9)

 

 

0.3

 

 

0.4

 

 

0.3

Depreciation and amortization

 

 

0.5

 

 

0.7

 

 

1.2

 

 

0.7

Attributable EBITDA

 

$

(0.4)

 

$

1.0

 

$

1.6

 

$

1.0

 

 

6)

Other income for the three and six months ended June 30, 2018 includes financing related foreign currency transaction losses.   

 

7)

Merger, acquisition and transition costs are excluded as they are non-operating in nature.

 

8)

Non-cash or non-recurring expense included in General and Administrative: Other.

 

 

 

###

 

 

 

 

 

Picture 2


(Back To Top)

Section 3: EX-99.2 (EX-99.2)

Exhibit 992 CFO Commentary_Q2_18

Exhibit 99.2

 

 

Picture 4

11500 Ash Street

Leawood, Kansas 66211

 

August 1, 2018

 

CFO Commentary on

Second Quarter 2018 Financial Results

 

 

 

Financial Information

Reconciliations and definitions of non-GAAP financial measures (Adjusted EBITDA, Adjusted EBITDA Margin and constant currency amounts) are provided in the financial schedules included below and in our financial tables that accompany our second quarter 2018 earnings press release issued August 1, 2018 and available at http://investor.amctheatres.com. 

 

Additional information detailing select unaudited pro forma financial data for the three and six months ended June 30, 2017 and June 30, 2018 is included below in this CFO commentary which has been published in the investor relations section of AMC’s website located at http://investor.amctheatres.com and furnished with the SEC on Form 8-K dated August 1, 2018. The Company believes the pro forma information provides a more comparable view of its results relative to prior periods. The select unaudited pro forma data for the six-month period ended June 30, 2017 combines the historical financial data of AMC and Nordic, giving effect to the acquisition, financings and theatre divestitures related to our acquisition of Carmike Cinemas, Inc. (“Carmike”) as if they had been completed on January 1, 2017. The unaudited proforma data for the three-month period ended June 30, 2017 gives effect to the Carmike theatre divestitures. The historical consolidated financial information for Nordic has been adjusted to comply with U.S. GAAP. The classification of certain items presented by Nordic under IFRS has been modified in order to align with the presentation used by AMC under U.S. GAAP. In addition to the U.S. GAAP adjustments and the reclassifications, amounts have also been translated to U.S. Dollars. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what our results of operations would actually have been had the acquisitions occurred on the date indicated. Please refer to the August 1, 2017 Form 8-K and 8-K/A on December 4, 2017 for additional information on pro forma financial statement adjustments. 

 

Additional constant currency information adjusting unaudited historical financial data for the three and six months ended June 30, 2018 using average monthly currency rates from the three and six months ended June 30, 2017 is also presented for comparative purposes.

1

 


 

 

Conference Call

 

The Company will host a conference call on Wednesday, August 1, 2018, at 7:30 a.m. CST/8:30 a.m. EST to review results for the second quarter ended June 30, 2018.

 

To listen to the call, please dial (877) 407-3982 in the U.S. or (201) 493-6780 outside the U.S. You may also listen to the conference call via the internet by visiting 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.

 

Second quarter ended June 30, 2018

 

U.S. Industry Box Office: The second quarter of 2018 set a new all-time quarterly box office record, generating $3.33 billion and growing 22.7% compared to the same quarter a year ago.  The quarter started out strong with a record April over $1 billion, driven by the success of AVENGERS: INFINITY WAR and A QUIET PLACE.  April was followed by another $1 billion month in May as AVENGERS continued its strong run and DEADPOOL 2 and SOLO: A STAR WARS STORY, also contributed.  Finally, June was witness to a record $1.3 billion box office on the strength of INCREDIBLES 2,  JURASSIC WORLD: FALLEN KINGDON and OCEAN’S 8

 

AVENGERS led the charge for the second quarter by a wide margin, with the highest opening weekend ever, becoming the fourth highest grossing domestic film of all time. Rounding out the industry’s top five box office films for the quarter were INCREDIBLES 2, DEADPOOL 2, JURASSIC WORLD; FALLEN KINGDOM, and SOLO: A STAR WARS STORY.  Despite INCREDIBLES 2, family-friendly films saw the fifth consecutive quarterly decline compared to the prior year, down nearly 12%.

 

 

Consolidated Results

 

Compared to the second quarter of 2017, consolidated admissions revenues for the quarter increased 17.7% to $896.3 million while food and beverage revenues grew 19.2% to $445.8 million and other theatre revenues grew 50.3% to $100.4 million. Consolidated total revenues grew 20.0% in the second quarter to $1,442.5 million.

 

Consolidated net earnings for the second quarter increased $198.7 million to $22.2 million compared to a net loss of $176.5 million in the same quarter a year ago. Included in the net loss for the second quarter of 2017 is a $202.6 million pre-tax impairment charge related to AMC’s National CineMedia, LLC (NASDAQ: NCMI) (“NCM”) investment. Included in net earnings for the 2018 second quarter was approximately $10.8 million of benefit to rent expense due to a lease modification and $12.6 million of other revenue related to the adoption of Accounting Standards Codification (“ASC”) 606, offset by approximately $10.4 million of non-cash interest expense and $6.8 million of operating expense related to the adoption of ASC 606.  Consolidated net earnings margin for the second quarter was 1.5% compared to (14.7%) in the second quarter of 2017. 

 

Consolidated diluted earnings (loss) per share (“diluted EPS”) increased $1.52 to $0.17 per share compared to a loss of $(1.35) per share for the same period a year ago.

 

2

 


 

Consolidated Adjusted EBITDA for the second quarter grew 80.3% to $244.8 million and Adjusted EBITDA margin increased to 17.0% from 11.3% in the year ago period.

2018 Consolidated Historical Results vs. 2017 Consolidated Pro Forma Results

 

To provide greater transparency and more relevant year-over-year comparisons, we have included pro forma financial data in the tables section of this CFO commentary. The select unaudited pro forma data for the three months ended June 30, 2017 gives effect to the theatre divestitures related to our Carmike acquisition as if they had been completed on January 1, 2017. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what our results of operations would actually have been had the acquisitions occurred on the date indicated. Please refer to the August 1, 2017 Form 8-K and 8-K/A on December 4, 2017 for additional information on pro forma financial statement adjustments. 

 

Compared to the pro forma second quarter of 2017, second quarter 2018 consolidated total revenues increased 20.1% (increased 18.0% on a constant currency basis) and were comprised of a 17.8% increase (increased 15.7% on a constant currency basis) in admissions revenues, a 19.3% increase (increased 17.7% on a constant currency basis) in food and beverage revenues, and a 50.5% increase (increased 46.3% on a constant currency basis) in other theatre revenues.

 

Consolidated net earnings for the second quarter increased $193.6 million to $22.2 million (increased $195.7 million to $24.3 million on a constant currency basis) compared to the pro forma results in the same quarter last year.

 

Consolidated Adjusted EBITDA for the second quarter increased 80.3% to $244.8 million (78.9% increase to $242.9 million on a constant currency basis) and Consolidated Adjusted EBITDA margin increased 570 basis points to 17.0% compared to the same pro forma period a year ago.

 

2018 U.S. Segment Historical Results vs. 2017 U.S. Segment Pro Forma Results 

 

Compared to the pro forma U.S. segment second quarter of 2017, second quarter 2018 total U.S. revenues increased 24.6% to $1,129.3 million and were comprised of a 22.9% increase in admissions revenue to $694.2 million (approximately 20 basis point industry outperformance), a 23.0% increase in food and beverage revenues to $369.3 million, and a 59.3% increase in other theatre revenues to $65.8 million.  In the second quarter, AMC outperformed the industry by approximately 285 basis points on an admissions revenue per screen basis and outperformed the industry by approximately 600 basis points on an attendance per screen basis.

 

Total U.S. attendance increased 20.6% to 69.8 million while average ticket price for the quarter increased 1.9% to $9.95 compared to the pro forma results in the same quarter a year ago. This growth in average ticket price is a result of strategic price increases over the last year and increases in attendance for PLF and IMAX® premium formats, which more than offset the average ticket price pressure from a decline in 3D and alternative content attendance in the second quarter.

 

Food and beverage revenue per patron increased 1.9% to $5.29 compared to the second quarter last year.  Strong attendance growth during the quarter yielded a 23.2% increase in gross profit dollars from our food and beverage operations.  Our guests continue to enjoy our diverse array of enhanced food and beverage offerings as we roll out menu innovations, including our new Feature Fare menu that is now available at more than 335 theatres.  Our U.S. food and beverage gross margin for the

3

 


 

quarter increased 30 basis points to 85.3%, while U.S. food and beverage gross profit per patron increased approximately 2.5%.

 

At quarter-end we operated 28 dine-in-theatres and served alcohol at more than 300 locations.

 

U.S. other revenues saw a 59.3% increase to $65.8 million compared to the prior year’s pro forma quarter. Included in other revenues is approximately $12.6 million of revenue related to a change in revenue recognition as a result of adopting ASC 606.   

 

AMC’s U.S. film exhibition costs increased 31.2% to $391.4 million compared to last year’s pro forma results, representing 56.4% of admissions revenue as compared to 52.8% in the same quarter a year ago. These results are consistent with the film concentration and studio mix of the top U.S. titles this year versus last year, as the top ten films represented approximately 72.5% of the quarterly box office as compared to 64.7% last year.

 

U.S. operating expenses for the quarter increased 6.9% to $300.6 million compared to last year’s pro forma results and represented 26.6% of revenues as compared to 31.0% in the same pro forma period a year ago. Included in U.S. operating expenses for the quarter is approximately $6.8 million of expense related to the adoption of ASC 606.  U.S. operating expenses for the 2018 second quarter and 2017 pro forma period include $3.7 million and $4.0 million, respectively, of certain operating expenses that are excluded from our calculation of Adjusted EBITDA. Excluding these costs from both periods, adjusted operating expenses for the second quarter increased 7.1% to $296.9 million, and represented 26.3% of revenues, a 430-basis point decrease from the prior year pro forma period. We are disclosing adjusted operating expenses because we believe they are more indicative of our ongoing performance.

 

U.S. rent expense for the second quarter decreased 2.2% to $145.5 million, on roughly 0.3% fewer average screens. As previously disclosed during the first quarter, the company modified a lease which resulted in a $10.8 million benefit to rent expense during the second quarter. 

 

U.S. depreciation and amortization decreased 1.0% to $97.2 million in the second quarter compared to the same pro forma period last year.  The decrease is primarily due to the prior year impairment charges and adjustments to the estimated fair value of property related to the Carmike acquisition.  We will continue to evaluate the useful lives of our theatres and expect depreciation and amortization expense to be between $550 and $560 million for 2018 on a consolidated basis.

 

U.S. net earnings for the second quarter was $47.9 million compared to a net loss of $148.8 million in the same pro forma period a year ago. Included in the net loss for the second quarter of 2017 is a $202.6 million pre-tax impairment charge related to AMC’s NCM investment. Net earnings for the 2018 second quarter was negatively impacted by $5.0 million related to the adoption of ASC 606. 

 

U.S. Adjusted EBITDA for the quarter increased 93.2% to $222.2 million compared to the pro forma first quarter last year, as U.S. adjusted EBITDA margins increased 700 basis points to 19.7%.  Included in adjusted EBITDA for the 2018 quarter was $10.8 million reduction in rent expense related to a lease modification.

 

International Industry Box Office: Overall, the second quarter international industry box office did not fare as well as the domestic box office, with the countries served by Odeon’s theatres seeing a 4.3%

4

 


 

decline while the countries served by Nordic witnessed a 9.4% decrease compared to the same period in 2017.  With a popular FIFA World Cup in June, and unusually warm weather across Europe for most of the late spring, expected blockbusters like SOLO: A STAR WARS STORY and JURASSIC WORLD: FALLEN KINGDOM simply did not resonate with European movie-goers to overcome the success of GUARDIANS OF THE GALAXY 2, FAST & FURIOUS 8, THE BOSS BABY and PIRATES OF THE CARIBBEAN:DEAD MEN TELL NO TALES last year. Continued lack of strong family product during the spring and softer local content also contributed to the decline.  Strong local product last year also contributed to the second quarter decline in Nordic served countries.

 

 

2018 International Historical Segment Results vs. 2017 International Historical Segment Results

 

Compared to the second quarter of 2017, second quarter total international revenues increased 6.2% to $313.2 million (decreased 2.3% to $288.2 million on a constant currency basis) , and were comprised of a 3.1% increase in admissions revenue to $202.1 million (decreased 5.2% to $185.9 million on a constant currency basis), a 4.2% increase in food and beverage revenues to $76.5 million (decreased 4.0% to $70.5 million on a constant currency basis), and a 36.2% increase in other theatre revenues to $34.6 million (increased 25.2% to $31.8 million on a constant currency basis).

 

Total International attendance decreased 9.3% to 21.5 million and average ticket price for the quarter increased 13.6% to $9.40 (increased 4.5% to $8.65 on a constant currency basis). Odeon’s strategic pricing increases and reduced promotional activity compared to last year’s quarter helped drive the increase in average ticket price.  Attendance was affected by a weaker movie slate this year including the impacts of the FIFA World Cup and weather, as well as the impact from screen closures from recliner renovations and increased competition.

 

International food and beverage revenue per patron increased 14.9% to $3.56 (increased 5.8% to $3.28 on a constant currency basis) while International food and beverage gross margin for the quarter declined 20 basis points to 76.6%.

 

AMC’s International film exhibition costs for the quarter declined 1.5% to $80.0 million (decreased 9.4% to $73.6 million on a constant currency basis), representing 39.6% of admissions revenue and a 180-basis point decrease compared to last year. These results are consistent with the film concentration of the top International titles and local content this year versus last year.

 

International operating expense for the quarter was up 12.2% to $123.9 million (increased 3.3% to $114.0 million on a constant currency basis) compared to last year and represented 39.6% of revenues as compared to 37.4% in the same period a year ago. International operating expenses for the 2018 second quarter and 2017 period include $1.8 million ($1.7 million on a constant currency basis) and $2.3 million, respectively, of certain operating expenses that are excluded from our calculation of Adjusted EBITDA. Excluding these costs from both periods, adjusted operating expenses for the second quarter increased 13.0% to $122.1 million (increased 3.9% to $112.3 million on a constant currency basis) and represented 39.0% of revenues, as compared to 36.7% from the prior year period. We are disclosing adjusted operating expenses because we believe they are more indicative of our ongoing performance.

 

International rent expense for the second quarter increased 6.5% to $54.2 million (decreased 1.8% to $50.0 million on a constant currency basis).

5

 


 

 

International depreciation and amortization increased 16.7% to $40.5 million (increased 7.2% to $37.2 million on a constant currency basis) in the second quarter compared to the same period last year.

 

International net loss for the second quarter increased $3.1 million to $25.7 million (increased $1.0 million to $23.6 million on a constant currency basis), compared to the same period a year ago.

 

International Adjusted EBITDA for the second quarter increased 8.7% to $22.6 million (essentially no change at $20.7 million on a constant currency basis) compared to the second quarter last year. International Adjusted EBITDA margins increased 10 basis points to 7.2%. As we continue to integrate the Odeon circuit, deploy initiatives and manage expenses, we are confident that Adjusted EBITDA and Adjusted EBITDA margins have the potential for improvement.

 

 

AMC Screens

During the second quarter of 2018, we opened two new theatres with a total of 17 screens and acquired one theatre with 9 screens. We permanently closed 44 screens, temporarily closed 161 screens and reopened 95 screens to implement our strategy and install consumer experience upgrades. As of June 30, 2018, we owned or operated 1,005 theatres with 10,987 screens across 16 countries.

 

Capital Expenditures

Total gross capital expenditures for the quarter ended June 30, 2018 were $133.8 million and after $30.2 million of landlord contributions yielded net capital expenditures of $101.7 million. Recliner renovations accounted for the majority of the capital expenditures in the second quarter.

 

We expect gross capital expenditures for 2018 to total approximately $600 million to $640 million, with landlords contributing approximately $140 million to $150 million, resulting in a net cash outlay of approximately $450 to $500 million.

 

Balance Sheet

With respect to the balance sheet, we finished the second quarter with $316.4 million in cash and cash equivalents and a total debt balance of approximately $4.8 billion, including capital and financing lease obligations.

 

As of June 30, 2018, we were in compliance with all debt covenants.

 

Dividend

Consistent with our plans to augment shareholder returns through the return of capital, AMC’s Board of Directors, at its regular board meeting on July 24, 2018, authorized the eighteenth consecutive quarterly dividend of $0.20 per share, payable on September 24, 2018, to holders of record on September 10, 2018.

 

Since our IPO on December 18, 2013, AMC has returned more than $370 million to shareholders in the form of dividends or dividend equivalents.

 

Share Repurchase Plan

On August 3, 2017, we announced that our Board of Directors had approved a $100.0 million share repurchase program to repurchase our Class A common stock until mid-August 2019.

 

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Repurchases may be made at management's discretion from time to time through open market transactions including block purchases, through privately negotiated transactions, or otherwise until mid-August 2019 in accordance with all applicable securities laws and regulations. The extent to which AMC repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including liquidity, capital needs of the business, market conditions, regulatory requirements and other corporate considerations, as determined by AMC’s management team. Repurchases may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when our management might otherwise be precluded from doing so under insider trading laws. The repurchase program does not obligate us to repurchase any minimum dollar amount or number of shares and may be suspended for periods or discontinued at any time.

 

During the quarter and six months ended June 30, 2018, we repurchased 500,000 shares of Class A common stock at a cost of $8.2 million. From the inception of this share repurchase program, through the quarter ended June 30, 2018, we repurchased 3,695,856 shares of Class A common stock at a cost of $55.7 million.

 

Website Information

This CFO Commentary, 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 CFO Commentary 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,” “guidance,” “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’s ability to execute cost-cutting and revenue enhancement initiatives; box office performance; increased use of alternative film delivery methods or other forms of entertainment; shrinking exclusive theatrical release windows; the performance of AMC’s non-consolidated entities; international economic, political, regulatory and other risks; risks and uncertainties relating to AMC’s significant indebtedness; limitations on the availability of capital; 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

7

 


 

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 Annual Report on Form 10-K, filed with the SEC on March 1, 2018 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.

 

(tables follow)

 

 

8

 


 

 

Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin:

(dollars in millions) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Net earnings (loss)

 

$

22.2

 

$

(176.5)

 

$

39.9

 

$

(168.1)

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision (benefit)

 

 

(2.6)

 

 

(109.6)

 

 

2.1

 

 

(118.8)

Interest expense

 

 

82.4

 

 

69.9

 

 

164.9

 

 

132.0

Depreciation and amortization

 

 

137.7

 

 

133.3

 

 

268.2

 

 

258.6

Certain operating expenses (2)

 

 

5.7

 

 

3.5

 

 

9.4

 

 

8.8

Equity in (earnings) loss of non-consolidated entities (3)

 

 

(13.0)

 

 

195.0

 

 

(4.0)

 

 

197.3

Cash distributions from non-consolidated entities(4)

 

 

3.5

 

 

2.2

 

 

27.8

 

 

26.6

Attributable EBITDA (5)

 

 

(0.4)

 

 

1.0

 

 

1.6

 

 

1.0

Investment income (expense)

 

 

(1.5)

 

 

0.6

 

 

(6.7)

 

 

(5.0)

Other expense (income) (6)

 

 

2.5

 

 

1.0

 

 

3.7

 

 

(1.2)

General and administrative expense—unallocated:

 

 

 

 

 

 

 

 

 

 

 

 

Merger, acquisition and transaction costs (7)

 

 

4.3

 

 

11.5

 

 

9.0

 

 

51.7

Stock-based compensation expense (8)

 

 

4.0

 

 

3.9

 

 

6.8

 

 

4.0

Adjusted EBITDA(1)

 

$

244.8

 

$

135.8

 

$

522.7

 

$

386.9

Adjusted EBITDA Margin(1)

 

 

17.0%

 

 

11.3%

 

 

18.5%

 

 

15.6%

Total revenues

 

$

1,442.5

 

$

1,202.3

 

$

2,826.1

 

$

2,483.7

Net earnings margin (9)

 

 

1.5%

 

 

-14.7%

 

 

1.4%

 

 

-6.8%

 

9

 


 

Select historical and pro forma financial data:

 Three Months Ended June 30, 2018 and Three Months Ended June 30, 2017:

(dollars in millions),  (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

June 30, 2018

 

June 30, 2017

 

 

Actual

 

Pro Forma (10)

 

 

US

 

International

 

Total

 

US

 

International

 

Total

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Admissions

 

$

694.2

 

$

202.1

 

$

896.3

 

$

564.7

 

$

196.1

 

$

760.8

 Food and beverage

 

 

369.3

 

 

76.5

 

 

445.8

 

 

300.3

 

 

73.4

 

 

373.7

 Other theatre

 

 

65.8

 

 

34.6

 

 

100.4

 

 

41.3

 

 

25.4

 

 

66.7

   Total revenues

 

 

1,129.3

 

 

313.2

 

 

1,442.5

 

 

906.3

 

 

294.9

 

 

1,201.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Film exhibition costs

 

 

391.4

 

 

80.0

 

 

471.4

 

 

298.3

 

 

81.2

 

 

379.5

 Food and beverage costs

 

 

54.3

 

 

17.9

 

 

72.2

 

 

44.9

 

 

17.0

 

 

61.9

 Operating expense

 

 

300.6

 

 

123.9

 

 

424.5

 

 

281.3

 

 

110.4

 

 

391.7

 Rent

 

 

145.5

 

 

54.2

 

 

199.7

 

 

148.7

 

 

50.9

 

 

199.6

 General and administrative:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Merger, acquisition and transaction costs

 

 

2.2

 

 

2.1

 

 

4.3

 

 

1.3

 

 

 —

 

 

1.3

   Other

 

 

26.5

 

 

16.5

 

 

43.0

 

 

28.2

 

 

18.0

 

 

46.2

 Depreciation and amortization

 

 

97.2

 

 

40.5

 

 

137.7