AMC Entertainment Q4 revenue decline, losses widen; The CEO sees a recovery in 2023, but says shareholders will have to agree to bigger cash-raising moves

Movie giant AMC Entertainment saw revenue fall 15% to $991 million last quarter, and losses were extended on a one-time impairment in the fourth quarter. Avatar: The Way of Water hit late in the year and some misfires. A fuller release, at the head of a steady stream of tentpoles, is expected to push the box office into a true post-Covid recovery this year.

AMC “continued on its multi-year glide path of recovery,” says CEO Adam Aron, who did some digging after bankrupt Regal parent Cineworld. “In stark contrast to others in our industry that have run aground, AMC Entertainment has improved our cash profile and strengthened our balance sheet through equity raising, debt refinancing, debt swaps and buybacks.”

However, the company is not out of the woods yet, and much is revolving around an important shareholder meeting next month.

“We cannot stress enough how important it is that in order to keep AMC profitable, we must remain agile and nimble not only in managing our day-to-day operations, but also in continuously raising cash and reducing AMC’s debt Entertainment. Aaron said.

“As we have long said, industry-wide settlement will not return to pre-pandemic standards until 2024 or 2025. As such, this active management of our capital structure is critical for AMC to ultimately survive the pandemic and thrive over the long term. As a result, we continue to encourage our shareholders to vote “yes” by voting on the recommended proposals at the March 14 Extraordinary Shareholders’ Meeting, giving AMC the best opportunity to deliver value for all of our shareholders in the months and years ahead. what’s coming . “

In short, the company’s debt is a huge burden, and Aron needs shareholder approval to issue new shares for sale to repay it. He thought he had solved this last year by creating new preferred shares, called APEs for short. He sold some, but not enough or fast enough to make a difference before the APE price fell. His plan is to spin off the APEs in a reverse stock split conversion.

AMC shareholders will vote on two proposals at a special meeting of shareholders on March 14: one that calls for an increase in the number of authorized common shares from 524 million to 550 million, and the second that calls for a 10:1 reverse stock split. If both exist, holders can convert their APEs into ordinary shares.

If AMC shares are in place, the reverse split could open the door to as much as $22 billion worth of stock, B Riley analyst Eric Wold said in a note earlier this month.

He and others believe the votes will be there. However, several shareholders are suing AMC in the Delaware Chancery Court to block the process. A judge yesterday scheduled a preliminary hearing for April 27. So even if shareholders approve the measures in March, action can only be taken after that.

AMC has been in a slightly odd position as a meme stock since early 2021, with millions of retail investors pumping the stock. CEO Adam Aron was smart about hiring them as he branched out into related ventures like selling retail popcorn, a branded credit card and buying movie theaters here and there, and unrelated investments like a gold mine.

The company’s net loss was $288 million, including a $133 million non-cash impairment charge related to long-lived assets. That compares with a net loss of $134 million in the same quarter last year, including a charge of $77 million.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) fell to $14.5 million from $159 million.

Total debt was about $4.95. billion at the end of the year – $220 million less than last year.

Operating cash burn for the quarter was $57.5 million per month.

At year-end, available liquidity was $842.7 million, including $211.2 million in unused capacity and $631.5 million in cash.

Withdrawal revenue fell to $561.3 million from $666.6 million. Food and beverage sales fell to $331.2 million from $380.5 million.

Executives will host a conference call at 5:00 PM ET.