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AMC Entertainment Holdings, Inc. Announces First Quarter 2019 Results

May 9, 2019 6:45 AM

LEAWOOD, Kan.--(BUSINESS WIRE)-- AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or “the Company”), today reported results for the first quarter ended March�31, 2019.

“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. While we have high expectations for 2019, due to an extraordinary slate of movies coming, the timing of releases within the film slate suggests that it will be a back-end loaded year. In addition, the first quarter of 2019 faced a tough year-over-year comparison, as Black Panther last year made the first quarter of 2018 the second highest grossing first quarter of all time. As we thought was likely for our U.S. theatres, in our largest market by far, the U.S. industry box office declined a healthy 16.2% this quarter. Even so, we are comforted that AMC continued to outperform the U.S. industry box office, notably with domestic attendance per screen declining only 10.1% in the first quarter of 2019. This beat the industry by approximately 570 basis points. Importantly, comparing AMC to the rest of the industry (meaning comparing AMC to the rest of the U.S. industry excluding AMC) attendance at AMC’s U.S. theatres actually beat the competition by more than 700 basis points. Additionally, our U.S. food and beverage capture of $5.23 per patron set a new first quarter record for our company. This all is largely attributable to the power of the AMC platform: stemming from experiential initiatives and enhancements at our theatres; a frictionless use of technology to communicate, engage and sell to our guests; combined with the soaring popularity of our AMC Stubs loyalty program and our AMC Stubs A-List subscription program,” said Adam Aron, CEO and President of AMC.

Aron added, “Looking ahead, we remain enthusiastic about our progress against our strategy and medium to long-term financial targets as outlined during our recent Investor Day. This progress has already kicked off in a big way with AVENGERS: ENDGAME, which shattered box office records both domestically and internationally. Grossing well over $2 billion globally in just its first two weeks in theatres, AVENGERS: ENDGAME continues to validate the appeal to consumers of seeing high quality movies, communally, in theatres, on the big screen. Accordingly, we continue to be excited about the remainder of 2019, which we believe might be the highest grossing 9-month period in cinema history. We are optimistic that the full year 2019 box office will be at least as strong as 2018, and potentially could be the first year ever that the domestic box office breaks $12 billion.”

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Key Financial Results (presented in millions, except operating data)

�
Quarter Ended March 31,
� � � � 2019 � � � � 2018 � � Change
GAAP Results
Revenue $ 1,200.4 $ 1,383.6 (13.2 )%
Net earnings (loss)* $ (130.2 ) $ 17.7 N/M
Net cash provided by operating activities $ 1.4 $ 165.4 (99.2 )%
Non-GAAP Results**
Total revenues (constant currency adjusted) $ 1,228.4 $ 1,383.6 (11.2 )%
Adjusted EBITDA $ 108.2 $ 277.9 (61.1 )%
Adjusted EBITDA (2018 Adjusted for ASC 842) $ 108.2 $ 254.2 (57.4 )%
Adjusted free cash flow $ (49.8 ) $ 113.4 N/M
Adjusted free cash flow (2018 Adjusted for ASC 842) $ (49.8 ) $ 98.8 N/M
Operating Metrics
Attendance (in thousands) 79,825 90,932 (12.2 )%
U.S. markets attendance (in thousands) 54,979 61,856 (11.1 )%
International markets attendance (in thousands) 24,846 29,076 (14.5 )%
Average screens 10,684 10,790 (1.0 )%
�
* � 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 First-Quarter Financial Results

Other Key Highlights

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, May 9, 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.

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AMC Entertainment Holdings, Inc.

Consolidated Statements of Operations

For the Quarters Ended March�31, 2019 and March�31, 2018

�

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

(unaudited)

�
Quarter Ended
March 31,
� 2019 � � 2018 �
Revenues
Admissions $ 731.5 $ 875.0
Food and beverage 368.8 405.8
Other theatre � 100.1 � � 102.8 �
Total revenues � 1,200.4 � � 1,383.6 �
�
Operating costs and expenses
Film exhibition costs 365.3 426.5
Food and beverage costs 61.5 66.2
Operating expense, excluding depreciation and amortization below 402.8 411.9
Rent 242.0 189.7
General and administrative:
Merger, acquisition and transaction costs 3.3 4.7
Other, excluding depreciation and amortization below 46.2 44.2
Depreciation and amortization � 113.0 � � 130.5 �
Operating costs and expenses � 1,234.1 � � 1,273.7 �
�
Operating income (loss) (33.7 ) 109.9
Other expense (income):
Other expense 29.8 1.2
Interest expense:
Corporate borrowings 71.3 61.7
Capital and financing lease obligations 2.1 10.3
Non-cash NCM exhibitor services agreement 10.2 10.5
Equity in (earnings) loss of non-consolidated entities (6.5 ) 9.0
Investment income � (16.1 ) � (5.2 )
Total other expense � 90.8 � � 87.5 �
�
Earnings (loss) before income taxes (124.5 ) 22.4
Income tax provision � 5.7 � � 4.7 �
Net earnings (loss) $ (130.2 ) $ 17.7 �
� �
Diluted earnings (loss) per share $ (1.25 ) $ 0.14 �
�
Average shares outstanding diluted (in thousands) � 103,783 � � 128,046 �
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Consolidated Balance Sheet Data (at period end):

(dollars in millions)

(unaudited)

�
As of As of
March 31, December 31,
2019 2018
Cash and cash equivalents $ 184.6 $ 313.3
Corporate borrowings 4,752.9 4,722.9
Other long-term liabilities 188.2 963.1
Finance lease liabilities 128.6 560.3
Stockholders' equity 1,303.5 1,397.6
Total assets 13,473.2 9,495.8
�
� � � �

Consolidated Other Data:

(in millions, except operating data)

(unaudited)

�
Quarter Ended
March 31,
Consolidated � 2019 � � 2018 �
Net cash provided by operating activities $ 1.4 $ 165.4
Net cash used in investing activities $ (98.5 ) $ (114.8 )
Net cash used in financing activities $ (33.9 ) $ (62.4 )
Adjusted free cash flow $ (49.8 ) $ 113.4
Capital expenditures $ (114.8 ) $ (107.3 )
Screen additions

21

23
Screen acquisitions — 22
Screen dispositions 68 90
Construction openings, net

(49

) (53 )
Average screens 10,684 10,790
Number of screens operated 10,995 11,071
Number of theatres operated 1,001 1,008
Screens per theatre 11.0 11.0
Attendance (in thousands) 79,825 90,932
�
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Segment Other Data:

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

(unaudited)

�
Quarter Ended
March 31,
� 2019 2018
Other operating data:
Attendance (patrons, in thousands):
U.S. markets 54,979 61,856
International markets � 24,846 � 29,076
Consolidated � 79,825 � 90,932
�
Average ticket price (in dollars):
U.S. markets $ 9.37 $ 9.78
International markets $ 8.70 $ 9.30
Consolidated $ 9.16 $ 9.62
�
Food and beverage revenues per patron (in dollars):
U.S. markets $ 5.23 $ 5.04
International markets $ 3.27 $ 3.24
Consolidated $ 4.62 $ 4.46
�
Average Screen Count (month end average):
U.S. markets 8,000 8,096
International markets � 2,684 � 2,694
Consolidated � 10,684 � 10,790
�
� � � �

Segment Information:

(unaudited, in millions)

�
Quarter Ended
March 31,
� 2019 2018
Revenues
U.S. markets $ 867.2 $ 982.1
International markets � 333.2 � 401.5
Consolidated $ 1,200.4 $ 1,383.6
�
Adjusted EBITDA
U.S. markets $ 77.5 $ 208.4
International markets � 30.7 � 69.5
Consolidated $ 108.2 $ 277.9
�
Capital Expenditures
U.S. markets $ 75.5 $ 71.0
International markets � 39.3 � 36.3
Consolidated $ 114.8 $ 107.3
�
� � � �

Reconciliation of Adjusted EBITDA:

(dollars in millions)

(unaudited)

�
Quarter Ended
March 31,
� � 2019 � � 2018 �
Net earnings (loss) $ (130.2 ) $ 17.7
Plus:
Income tax provision 5.7 4.7
Interest expense 83.6 82.5
Depreciation and amortization 113.0 130.5
Certain operating expenses (2) 2.5 3.7
Equity in (earnings) loss of non-consolidated entities (3) (6.5 ) 9.0
Cash distributions from non-consolidated entities (4) 10.5 24.3
Attributable EBITDA (5) 0.9 2.0
Investment income (16.1 ) (5.2 )
Other expense (income) (6) 29.9 1.2
Non-cash rent - purchase accounting (7) 7.6
General and administrative expense—unallocated:
Merger, acquisition and transaction costs (8) 3.3 4.7
Stock-based compensation expense (income) (9) � 4.0 � � 2.8 �
Adjusted EBITDA(1) $ 108.2 � $ 277.9 �

__________________________

�

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 March 31, 2019, the Company recorded $5.5 million in earnings from DCIP. During the three months ended March 31, 2018, equity in 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. 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 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 (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.

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Reconciliation of Attributable EBITDA (Unaudited)

�
Quarter Ended
March 31,
� � 2019 � � 2018
Equity in (earnings) loss of non-consolidated entities $ (6.5 ) $ 9.0
Less:
Equity in (earnings) loss of non-consolidated entities excluding international theatre JV's � (6.0 ) � 10.3
Equity in earnings (loss) of International theatre JV's 0.5 1.3
Income tax provision — —
Investment income (0.2 ) —
Depreciation and amortization � 0.6 � � 0.7
Attributable EBITDA $ 0.9 � $ 2.0
�
� 6) � Other expense (income) for the three ended March 31, 2019 includes a loss of $28.4 million as a result of a decrease in fair value of our derivative asset and an increase in fair value of our derivative liability for the Convertible Notes due 2024, also included are financing losses and financing related foreign currency transaction losses. Other income for the three months ended March 31, 2018 includes $1.6 million financing related foreign currency transaction losses, partially offset by $0.4 million forward foreign currency contract gains.
�
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)

�
Quarter Ended
March 31,
� 2019 � � 2018
�
Net cash provided by operating activities $ 1.4 $ 165.4
Plus:
Merger, acquisition and transaction costs(2) 3.3 4.7
Less:
Maintenance capital expenditures(3) 19.3 14.6
Landlord contributions(5) � 35.2 � � 42.1
Adjusted free cash flow(1) $ (49.8 ) $ 113.4
�
Reconciliation of Capital Expenditures
Capital expenditures
Growth capital expenditures(4) $ 70.5 $ 74.0
Maintenance capital expenditures(3) 19.3 14.6
Change in construction payables(6) � 25.0 � � 18.7
Total capital expenditures $ 114.8 � $ 107.3
�
Starting in the fourth quarter of 2018, AMC began disclosing a new non-U.S. GAAP 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.

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Reconciliation of Consolidated Adjusted EBITDA and Adjusted Free Cash Flow Under ASC 842

(dollars in millions)

(Unaudited)

�
Quarter Ended March 31,
� � 2019 � � 2018 � Change
Total Adjusted EBITDA
Total Adjusted EBITDA (as reported) $ 108.2 $ 277.9 (61.1 )%
Certain adjustments to rent expense (a) � — � � (23.7 )
Total Adjusted EBITDA (post-ASC 842) � 108.2 � � 254.2 � (57.4 )%
Impact of ASC 842 on Adjusted EBITDA $ (22.7 ) $ 23.7
� (a) � The adjustments for certain rent expense items include cash rent for legacy build-to-suit financing lease obligations of $22.4 million and deferred rent related to deferred gain amortization of $1.3 million.
�
� �

Reconciliation of net earnings to Adjusted EBITDA for 2018 (adjusted for ASC 842)(see footnotes above)

(In millions)

�
Quarter Ended
� March 31, 2018
Net earnings $ 20.0
Plus:
Income tax provision 4.7
Interest expense 74.7
Depreciation and amortization 102.4
Certain operating expenses (2) 3.7
Equity in loss of non-consolidated entities (3) 9.0
Cash distributions from non-consolidated entities (4) 24.3
Attributable EBITDA (5) 2.0
Investment income (5.2 )
Other expense (6) 1.2
Non-cash rent - purchase accounting (7) 9.9
General and administrative expense—unallocated:
Merger, acquisition and transaction costs (8) 4.7
Stock-based compensation expense (9) � 2.8 �
Adjusted EBITDA (1) $ 254.2 �
� � � � � �
Quarter Ended March 31,
� � 2019 � � 2018 � Change
Adjusted free cash flow
Adjusted free cash flow (as reported) $ (49.8 ) $ 113.4 N/M
Adjustment to cash flow used in operating activities (a) � — � � (14.6 )
Adjusted free cash flow (post-ASC 842) � (49.8 ) � 98.8 � N/M
Impact of ASC 842 on Adjusted free cash flow (a) $ (14.0 ) $ 14.6
�
� (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):

Quarter Ended March 31, 2019

(dollars in millions) (unaudited)

�
Quarter Ended
March 31, 2019
Constant Currency (10)
US � International � Total
Revenues
Admissions $ 515.4 $ 234.3 $ 749.7
Food and beverage 287.6 87.8 375.4
Other theatre � 64.2 � � 39.1 � � 103.3 �
Total revenues 867.2 361.2 1,228.4
�
Operating costs and expenses
Film exhibition costs 277.3 95.5 372.8
Food and beverage costs 43.0 20.1 63.1
Operating expense 285.6 126.9 412.5
Rent 176.6 70.7 247.3
General and administrative:
Merger, acquisition and transaction costs 1.2 2.4 3.6
Other 27.5 20.3 47.8
Depreciation and amortization � 83.6 � � 31.8 � � 115.4 �
Operating costs and expenses 894.8 367.7 1,262.5
Operating income (loss) (27.6 ) (6.5 ) (34.1 )
Other expense (income) 29.4 0.4 29.8
Interest expense 81.5 2.3 83.8
Equity in earnings of non-consolidated entities (6.1 ) (0.5 ) (6.6 )
Investment income � (4.8 ) � (12.8 ) � (17.6 )
Total other expense 100.0 (10.6 ) 89.4
Loss before income taxes (127.6 ) 4.1 (123.5 )
Income tax provision (benefit) � 3.5 � � 2.5 � � 6.0 �
Net loss $ (131.1 ) $ 1.6 � $ (129.5 )
�
Attendance 54,979 24,846 79,825
Average Screens 8,000 2,684 10,684
Average Ticket Price $ 9.37 $ 9.43 $ 9.39
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Reconciliation of Consolidated Constant Currency Adjusted EBITDA (see Note 10):

Quarter Ended March 31, 2019

(dollars in millions) (unaudited)

�
Quarter Ended
March 31, 2019
Constant Currency (10)
Net loss $ (129.5 )
Plus:
Income tax benefit 6.0
Interest expense 83.8
Depreciation and amortization 115.4
Certain operating expenses (2) 2.7
Equity in earnings of non-consolidated entities (3) (6.6 )
Cash distributions from non-consolidated entities (4) 10.6
Attributable EBITDA (5) 1.0
Investment income (17.6 )
Other income (6) 29.9
Non-cash rent expense - purchase accounting (7) 7.8
General and administrative expense—unallocated:
Merger, acquisition and transaction costs (8) 3.6
Stock-based compensation expense (9) � 4.0 �
Adjusted EBITDA (1) $ 111.1 �
�
Adjusted EBITDA (in millions) (1)
U.S. markets $ 77.5
International markets � 33.6 �
Total Adjusted EBITDA $ 111.1 �
�
�

1)

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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.

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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,
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Adjusted EBITDA:
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• does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;

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• does not reflect changes in, or cash requirements for, our working capital needs;

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• does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt;

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• excludes income tax payments that represent a reduction in cash available to us;

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• does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; and

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• does not reflect the impact of divestitures that were required in connection with recently completed acquisitions.

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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.

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3)

During the three months ended March 31, 2019, the Company recorded $5.5 million in earnings from DCIP. During the three months ended March 31, 2018, equity in 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. 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 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.

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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.

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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.

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Reconciliation of Constant Currency Attributable EBITDA (Unaudited)

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Quarter Ended
March 31,
� 2019 �
(In millions) Constant Currency
Equity in (earnings) loss of non-consolidated entities $ (6.6 )
Less:
Equity in (earnings) loss of non-consolidated entities excluding international theatre JV's � (6.0 )
Equity in earnings of International theatre JV's 0.6
Investment income (0.2 )
Depreciation and amortization � 0.6 �
Attributable EBITDA $ 1.0 �
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6)

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Other expense (income) for the three ended March 31, 2019 includes a loss of $28.4 million as a result of a decrease in fair value of our derivative asset and an increase in fair value of our derivative liability for the Convertible Notes due 2024, also included are financing losses and financing related foreign currency transaction losses. Other income for the three months ended March 31, 2018 includes $1.6 million financing related foreign currency transaction losses, partially offset by $0.4 million forward foreign currency contract gains.

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7)

Reflects amortization of certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842.

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8)

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

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9)

Stock-based compensation expense is Non-cash or non-recurring expense included in General and Administrative: Other.

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10)

The International segment information for the three months ended March 31, 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.

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INVESTOR RELATIONS:

John Merriwether, 866-248-3872

[email protected]

MEDIA CONTACTS:

Ryan Noonan, (913) 213-2183

[email protected]

Source: AMC Entertainment Holdings, Inc.

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