“AMC is on a bright and exciting road,” Adam Aron told analysts after the exhibition giant swung to a second-quarter loss.
AMC Entertainment Holdings CEO Adam Aron on Friday told analysts to look beyond a bad second quarter and a stock plunge this week to what’s driving the exhibition giant.
“AMC is on a bright and exciting road. We are genuinely focused on increasing returns for our investors,” Aron told market watchers during a morning call. In an earlier statement accompanying his company’s latest financial results, Aron said he was “extremely disappointed” with the second quarter performance.
The poor earnings follow a string of box office flops from Hollywood, an exhibition climate not likely to recover before the end of the year, he predicted. “Just ahead of us is a strong fourth quarter film slate that creates the opportunity to lessen the angst surrounding box office weakness industry wide in the second quarter and third quarters of 2017,” Aron said.
During the analyst call, the AMC Entertainment boss took a bullish stance on his company’s prospects going forward, despite swinging to a second-quarter loss on weak Hollywood box office and weak revenues at its recently-acquired Carmike Cinemas chain.
After an earnings preview two days earlier that sent stock in AMC down 27 percent, AMC Entertainment on Friday reported a loss of $176.5 million, down from a year-ago profit of $24 million. That was on revenue rising 57 percent to $1.2 billion, against a year-earlier $764 million, after the acquisitions of Carmike Cinemas and the Odeon Cinemas Group and Nordic Cinema Group in Europe.
Besides U.S. box office falling 4.4 percent year-on-year, the quarterly loss was also due to a $202 million pre-tax impairment charge related to its investment in National CineMedia, the U.S. in-theater advertising company.
Shares in AMC Entertainment sank from $20.80 to below $15.50 on Wednesday after the market close and its earnings preview. Stock in the exhibition giant on Friday recovered $1.15, or just over 7 percent, to stand at $16.25 during afternoon trading on the New York Stock Exchange.
AMC’s Aron in his comments to analysts did not address concerns over Chinese owner Dalian Wanda Group after restrictions were placed on its ability to finance additional overseas entertainment acquisitions. He did talk about efforts to upgrade recently acquired Carmike Cinemas theaters to boost revenues.
“We think we have a solid understanding of what the issues have been, theater by theater, and we’re putting in solutions, theater by theater,” Aron said. He was also downbeat when asked about ongoing negotiations between the major studios and domestic exhibitors to create a premium VOD window for consumers.
“We would be interested in working with the studios to find a mutually beneficial solution” that increased the bottom line of both parties, Aron said. But he also warned the world’s largest exhibitor will push back if any eventual PVOD window threatens his company.
“If we cannot forge agreement on a new window that advances our interests, we will take any and all necessary actions to vigorously protect the long-term interests of AMC and that of our shareholders,” Aron added. Studios and theater owners are having ongoing discussions about shortening theatrical windows, the amount of time films play exclusively in theaters before they are made available for home viewing.