How AMC Entertainment’s Q3 Margins and EPS Look



Operating margin

AMC Entertainment (AMC) reported an operating loss of $21.9 million in the third quarter compared to its operating loss of $4.1 million in the third quarter of 2017. The increases in operating losses were mainly due to rising operating expenses and subdued revenue growth. AMC’s operating costs and expenses were up 5.1% to $1.24 billion in the quarter as overall operating expenses, food and beverage costs, and film exhibition costs continued to rise.

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AMC reported adjusted EBITDA of $142.4 million against its EBITDA of $147.4 million in the corresponding quarter last year. Adjusted EBITDA were impacted by the launch of the Stubs A-List, which will likely continue to dent adjusted EBITDA in the fourth quarter. However, due to the increasing number of subscribers, management expects the Stubs A-List to become accretive to EBITDA in 2019 versus the earlier expectation of  2019 being a break-even year.

The US segment’s adjusted EBITDA declined 2.4% to $105.0 million. The rollout of the Stubs A-List impacted the EBITDA for the US segment. The International segment’s adjusted EBITDA fell 6% to $37.4 million. Europe was a dampener and proved a drag on the segment’s EBITDA along with the closure of screens for renovations.

Bottom-line numbers

The company’s EPS came in at -$0.82, worse than analysts’ estimate of -$0.47 and the adjusted EPS of -$0.33 reported in the same quarter of 2017. The company paid dividends worth $186.0 million in the third quarter. In September, AMC paid its shareholders a special dividend of $1.55. AMC Entertainment has been selling non-core assets to maximize shareholder wealth and accelerate investment activities. It has generated $550 million via the sale of non-core assets in the past 12 months.

For the third quarter, Cinemark Holdings (CNK) reported adjusted EPS of $0.43, up 30.3% YoY. It beat the consensus estimate by 19.4%.


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