AMC Entertainment (AMC) Prelim. Q3 Results Mixed to Expectations
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AMC Entertainment Holdings, Inc. (NYSE: AMC) previewed results for the third quarter ended September 30, 2016. AMC is providing these third quarter 2016 results in connection with the proposed financing previously announced on October 20, 2016. The financial results are subject to finalization of the Company’s quarterly financial and accounting procedures.
AMC expects third quarter 2016 total revenues to be between $777.0 million and $780.0 million compared to $688.8 million in the third quarter of 2015. Operating income for the third quarter is expected to be between $63.5 million and $66.5 million compared to $35.5 million in the same period a year ago. Net earnings are expected to be between $28.5 million and $31.5 million compared to $12.2 million for the third quarter of 2015, and diluted earnings per share for the third quarter of 2016 are expected to be between $0.29 and $0.32 compared to $0.12 for the third quarter of last year.
*** The Street sees revenue of $785.7 million and EPS of $0.23.
AMC expects third quarter 2016 Adjusted EBITDA to be between $142.0 million and $145.0 million compared to $109.0 million in the same quarter a year ago. Adjusted EBITDA is a non-GAAP financial measure, and a table reconciling expected net earnings to Adjusted EBITDA is included in this release.
Total attendance for the third quarter of 2016 increased approximately 10% to 51.9 million guests compared to the third quarter a year ago. Average ticket price for the 2016 third quarter increased 2.6% to $9.57 compared to the third quarter of 2015. Food and beverage revenue per patron for the third quarter 2016 increased 4.8% to $4.80 compared to the same period a year ago.
“AMC continues to deliver on our key priorities. Even at the low end of our projected range, Adjusted EBITDA grew 30% with a substantial improvement in margin, and we are very proud of that growth,” said Adam Aron, AMC Chief Executive Officer and President. “The recent relaunch of our AMC Stubs loyalty program in July was overwhelmingly received by guests who have signed up at rates 11 times faster than the same period a year ago - far faster than we had anticipated. Total active memberships now exceed four million households and are still growing rapidly. Through world class marketing efforts like our AMC Stubs program, and our soon-to-be-relaunched website and mobile app, guests are discovering and returning to our theatres to enjoy our proven innovations, including new recliner seating, MacGuffins Bars, and premium large format offerings like IMAX® at AMC and Dolby Cinema™ at AMC. We believe that when we integrate these organic growth initiatives with a disciplined acquisition strategy, as we move toward completion of the Odeon & UCI and Carmike Cinemas acquisitions, we are positioning AMC to leverage the record potential of the 2017 and 2018 box office to create even greater value for our customers and shareholders alike.”
AMC expects to report its complete financial results for the third quarter ended September 30, 2016, after the market closes on Monday, November 7, 2016. The Company will host a conference call for investors and interested parties at 4:00 p.m. CDT/5:00 p.m. EDT the same day. All interested parties are invited to access a live audio broadcast of the call via webcast. 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.
Information Regarding Preliminary Results
The preliminary estimated financial information contained in this press release reflects management’s estimates based solely upon information available to it as of the date of this press release and is not a comprehensive statement of our financial results for the three months ended September 30, 2016. In addition, the preliminary estimated financial information presented above has not been audited, reviewed or compiled by our independent registered public accounting firm, KPMG LLP. Accordingly, KPMG LLP does not express an opinion on or any other form of assurance with respect thereto and assumes no responsibility for this information. We have provided ranges for the preliminary estimated financial results described above primarily because our financial closing procedures for the three months ended September 30, 2016 are not yet complete. The information presented above should not be considered a substitute for full unaudited financial statements for the three months ended September 30, 2016 once they become available and should not be regarded as a representation by us or our management as to our actual financial results for the three months ended September 30, 2016. The ranges for the preliminary estimated financial results described above constitute forward-looking statements. The preliminary estimated financial information presented above is subject to change, and our actual financial results may differ from such preliminary estimates and such differences could be material. Accordingly, you should not place undue reliance upon these preliminary estimates.
Odeon & UCI Cinemas Holdings Limited: As previously announced on July 12, 2016, AMC entered into a Share Purchase Agreement to acquire the film exhibition business of Odeon and UCI Cinemas Holdings Limited, referred to as "Odeon/UCI," for total consideration of (i) cash in the amount of GBP £375.0 million ($460.8 million), (ii) shares of AMC Class A common stock valued at GBP £125.0 million ($153.6 million) and (iii) the repayment of indebtedness of approximately GBP £478.6 million ($588.1 million) as of October 19, 2016. The US Dollar amounts set forth in the preceding sentence assume a Euro/USD exchange rate of 1.0973 and a GBP/USD exchange rate of 1.2289 as of October 19, 2016. Odeon/UCI is a leading European cinema operator with 242 cinemas and 2,236 screens. Odeon/UCI operates in four major markets: the United Kingdom, Spain, Italy and Germany; and three smaller markets: Austria, Portugal, and Ireland. For the year ended December 31, 2015 and six months ended June 30, 2016, Odeon/UCI had revenues of $1,142.0 million and $526.0 million respectively. The closing of the Share Purchase Agreement is subject to clearance by the European Commission and the UK Competition and Markets Authority.
Carmike Cinemas, Inc. (NASDAQ: CKEC): As previously announced on July 24, 2016, AMC entered into an amended and restated agreement and plan of merger to acquire all of the outstanding shares of Carmike Cinemas, Inc. (NASDAQ: CKEC) (“Carmike”) for $33.06 per share, representing an approximate 32% premium to Carmike’s March 3, 2016, closing stock price. Carmike stockholders can elect to receive $33.06 in cash or 1.0819 AMC shares per Carmike share, subject to a customary proration mechanism to achieve an aggregate consideration mix of 70% cash and 30% in shares of AMC stock. A shareholder meeting to allow Carmike shareholders the opportunity to vote on the transaction has been scheduled for November 15, 2016. The transaction is valued at approximately $1.2 billion, including the assumption of Carmike’s net indebtedness, based on the closing trading price of AMC’s common stock on the New York Stock Exchange on July 22, 2016.
|AMC Entertainment Holdings, Inc.|
|Reconciliation of Adjusted EBITDA|
|(Unaudited, dollars in thousands)|
|Three Months Ended|
September, 30 2016(Preliminary Estimates)
|Three Months Ended|
|Low||High||September, 30 2015|
|Reconciliation of Adjusted EBITDA:|
|Income tax provision||19,600||20,300||9,080|
|Depreciation and amortization||62,500||63,300||58,008|
|Certain operating expenses (2)||5,000||5,800||3,899|
|Equity in earnings of non-consolidated entities||(9,500||)||(13,500||)||(10,850||)|
|Cash distributions from non-consolidated entities||3,300||3,500||8,557|
|General and administrative expense-unallocated:|
|Merger, acquisition and transaction costs (3)||4,500||5,000||751|
|Stock-based compensation expense (4)||1,650||1,750||2,199|
|Adjusted EBITDA (1)||$||142,000||$||145,000||$||108,953|
|(1)||We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net earnings plus (i) income tax provision, (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance and to include any cash distributions of earnings from our equity method investees. These further adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Adjusted EBITDA is a non-GAAP financial measure and should not be construed as an alternative to net earnings as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with U.S. GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and 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,|
• does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
• does not reflect changes in, or cash requirements for, our working capital needs;
• does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt;
• excludes income tax payments that represent a reduction in cash available to us; and
• does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future.
|(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. 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)||Merger, acquisition and transition costs is excluded as it is non-operating in nature.|
|(4)||Non-cash expense included in General and Administrative: Other|
AMC Entertainment Holdings, Inc.
John Merriwether, 866-248-3872
Ryan Noonan, 913-213-2183
Source: AMC Entertainment Holdings, Inc.
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