AMC Entertainment Holdings Inc. shares tumbled 10% Thursday, after the cinema chain operator posted a wider-than-expected loss for the first quarter.
The company AMC, -6.96% had a net loss of $130.2 million, or $1.25 a share, after earnings of $17.7 million, or 14 cents a share, in the year-earlier period. Revenue fell to $1.200 billion from $1.384 billion. The FactSet consensus was for a loss per share of 55 cents and revenue of $1.194 billion.
“Even with the anticipated slow start to the year, we have been and continue to be quite bullish about the full year prospects for AMC, currently expecting 2019 Adjusted Ebitda to exceed 2018 results, adjusted for ASC 842,” Chief Executive Adam Aron said in a statement, referring to an accounting change that impacts the company’s theater leases.
The company is expecting the year to be back-end loaded given the slate of films due and noted that the first quarter faced a tough comparison given the success of “Black Panther” in early 2018. The U.S. box office declined by 16.2% in the first quarter, but attendance at AMC fell by 10.1%.
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“This is exactly what happened last year,” Aron told analysts on the company’s earnings call, according to a FactSet transcript. “Despite being the second biggest first quarter of all time, the domestic industry box office back in 2018 was actually down 2% year-over-year through mid-April.
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“But then Avengers: Infinity War opened and when the dust settled at year-end, the 2018 domestic industry box office finished up 8% and set a new all-time record. Looking at the 2019 film slate, we …think that pattern will repeat again this year. For sure 2019 this year started slowly, but that all changed with a record shattering opening of Avengers Endgame.”
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Aron cited a long list of coming releases that are expected to appeal to cinemagoers in 2019, including in May, the Elton John biopic“Rocketman,” the Keanu Reeves vehicle “John Wick 3,” “Pokémon Detective Pikachu” and Disney’s “Aladdin,” and later in the year, “Frozen 2,” “Star Wars: The Risk of Skywalker,” and many others.
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Aron highlighted the success of the company’s loyalty program AMC Stubs, which is close to counting more than 20 million household members.
“We are also pleased to report that the A-List program was profitable and was accretive to adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) in the first quarter of 2019,” he said. “We continue to believe that by the end of the year. A-List will be $3 accretive to adjusted Ebitda on a per member per month basis.”
MKM Partners analyst Eric Handler said the company’s adjusted Ebitda number of $108 million was disappointing, even excluding the impact of the accounting change.
“We look for AMC shares to underperform today barring anything unexpected from management’s earnings call, following a disappointing 1Q adjusted Ebitda result,” he said in an early note to clients.
AMC shares have fallen 18% in the last 12 months, while the S&P 500 SPX, -0.30% has gained 5%.
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