Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10–Q contains “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 “may,” “will,” “forecast,” “estimate,” “project,” “intend,” “plan,” “expect,” “should,” “believe” 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 only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and speak only as of the date on which it is made. Examples of forward-looking statements include statements we make regarding future attendance levels, operating revenues and our liquidity. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
● the risks and uncertainties relating to the sufficiency of our existing cash and cash equivalents and available borrowing capacity, including following the termination of our senior secured revolving credit facility (“Senior Secured Revolving Credit Facility”), to fund operations, and satisfy obligations including cash outflows for deferred rent and planned capital expenditures currently and through the next twelve months. In order to achieve net positive operating cash flows and long-term profitability, operating revenues will need to increase from current levels to levels in line with pre-COVID-19 operating revenues. However, there remain significant risks that may negatively impact operating revenues and attendance levels, including changes to movie studios release schedules (including as a result of production delays and delays to the release of movies caused by labor stoppages, including but not limited to the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike that occurred during 2023, which has and is expected to negatively impact the box office during the first half of 2024) and direct to streaming or other changing movie studio practices. If we are unable to achieve increased levels of attendance and operating revenues, we will be required to obtain additional liquidity. If such additional liquidity is not obtained or insufficient, we likely would seek an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our Common Stock and other securities would likely suffer a total loss of their investment;
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● changing practices of distributors, which accelerated during the COVID-19 pandemic, including increased use of alternative film delivery methods including premium video on demand, streaming platforms, shrinking exclusive theatrical release windows or release of movies to theatrical exhibition and streaming platforms on the same date, the theatrical release of fewer movies, or transitioning to other forms of entertainment;
● the impact of changing movie-going behavior of consumers;
● the risk that the North American and international box office in the near term will not recover sufficiently, resulting in higher cash burn and the need to seek additional financing;
● risks and uncertainties relating to our significant indebtedness, including our borrowings and our ability to meet our financial maintenance and other covenants;
● the dilution caused by recent and potential future sales of our Common Stock and future potential share issuances to repay, refinance, redeem or repurchase indebtedness (including expenses, accrued interest and premium, if any);
● risks relating to motion picture production, promotion, marketing, and performance, including labor stoppages affecting the production, supply and release schedule of theatrical motion picture content, including but not limited to the Writers Guild of America and the Screen Actors Guild – American Federation of Television and Radio Artists strikes during 2023;
● the seasonality of our revenue and working capital, which are dependent upon the timing of motion picture releases by distributors, such releases being seasonal and resulting in higher attendance and revenues generally during the summer months and holiday seasons, and higher working capital requirements during the other periods such as the first quarter;
● intense competition in the geographic areas in which we operate among exhibitors, streaming platforms, or from other forms of entertainment;
● certain covenants in the agreements that govern our indebtedness may limit our ability to take advantage of certain business opportunities and limit or restrict our ability to pay dividends, pre-pay debt, and also to refinance debt and to do so at favorable terms;
● risks relating to impairment losses, including with respect to goodwill and other intangibles, and theatre and other closure charges;
● general and international economic, political, regulatory, social and financial market conditions, including potential economic recession, inflation, rising interest rates, the financial stability of the banking industry, and other risks that may negatively impact discretionary income and our operating revenues and attendance levels;
● our lack of control over distributors of films;
● limitations on the availability of capital or poor financial results may prevent us from deploying strategic initiatives;
● an issuance of preferred stock could dilute the voting power of the common stockholders and adversely affect the market value of our outstanding Common Stock;
● limitations on the authorized number of Common Stock shares could in the future prevent us from raising additional capital through Common Stock;
● our ability to achieve expected synergies, benefits and performance from our strategic initiatives;
● our ability to refinance our indebtedness on terms favorable to us or at all;
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● our ability to optimize our theatre circuit through new construction, the transformation of our existing theatres, and strategically closing underperforming theatres may be subject to delay and unanticipated costs;
● failures, unavailability or security breaches of our information systems;
● our ability to utilize interest expense deductions will be limited annually due to Section 163(j) of the Tax Cuts and Jobs Act of 2017;
● our ability to recognize interest deduction carryforwards, net operating loss carryforwards and other tax attributes to reduce our future tax liability;
● our ability to recognize certain international deferred tax assets which currently do not have a valuation allowance recorded;
● review by antitrust authorities in connection with acquisition opportunities;
● risks relating to the incurrence of legal liability, including costs associated with the ongoing securities class action lawsuits;
● dependence on key personnel for current and future performance and our ability to attract and retain senior executives and other key personnel, including in connection with any future acquisitions;
● increased costs in order to comply or resulting from a failure to comply with governmental regulation, including the General Data Protection Regulation (“GDPR”) and all other current and pending privacy and data regulations in the jurisdictions where we have operations;
● supply chain disruptions may negatively impact our operating results;
● the availability and/or cost of energy, particularly in Europe;
● the market price and trading volume of our shares of Common Stock has been and may continue to be volatile, and purchasers of our securities could incur substantial losses;
● future offerings of debt, which would be senior to our Common Stock for purposes of distributions or upon liquidation, could adversely affect the market price of our Common Stock;
● the potential for political, social, or economic unrest, terrorism, hostilities, cyber-attacks or war, including the conflict between Russia and Ukraine and other international conflicts;
● the potential impact of financial and economic sanctions on the regional and global economy, or widespread health emergencies, such as pandemics or epidemics, causing people to avoid our theatres or other public places where large crowds are in attendance;
● anti-takeover protections in our Third Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and our amended and restated bylaws may discourage or prevent a takeover of our Company, even if an acquisition would be beneficial to our stockholders;
● the expiration of our current equity incentive plan, which could cause difficulties in retaining and hiring executives and which could cause an adverse impact on cash flow or adverse accounting consequences from alternative forms of compensation; and
● other risks and uncertainties referenced from time to time in filings with the SEC.
This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty and we caution accordingly against relying on forward-looking statements.
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Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason. Actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For further information about these and other risks and uncertainties as well as strategic initiatives, see Item 1A. “Risk Factors” of this Form 10-Q, Item 1. “Business” in our Annual Report on Form 10–K for the year ended December 31, 2023, and our other public filings.
All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10–Q, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Overview
AMC is the world’s largest theatrical exhibition company and an industry leader in innovation and operational excellence. As of March 31, 2024, we operated theatres in 11 countries throughout the U.S. and Europe.
Our theatrical exhibition revenues are generated primarily from box office admissions and food and beverage sales. The balance of our revenues are generated from ancillary sources, including on-screen advertising, fees earned from our customer loyalty programs, rental of theatre auditoriums, income from gift card and exchange ticket sales, theatrical distribution, retail popcorn sales, and online ticketing fees. As of March 31, 2024, we owned, operated or had interests in 895 theatres and 10,005 screens.
Box Office Admissions and Film Content
Box office admissions are our largest source of revenue. We predominantly license theatrical films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis. Film exhibition costs are based on a share of admissions revenues and are accrued based on estimates of the final settlement pursuant to our film licenses. These licenses typically state that rental fees are based on the box office performance of each film, though in certain circumstances and less frequently, our rental fees are based on a mutually agreed settlement rate that is fixed. In some European territories, film rental fees are established on a weekly basis and some licenses use a per capita agreement instead of a revenue share, paying a flat amount per ticket.
Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor’s films in any given year. Our results of operations may vary significantly from quarter to quarter and from year to year based on the timing and popularity of film releases.
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Movie Screens
The following table provides detail with respect to large screen formats, such as IMAX ® and our proprietary Dolby Cinema™, other Premium Large Format (“PLF”) screens, enhanced food and beverage offerings and our premium seating as deployed throughout our circuit:
U.S. Markets
International Markets
Consolidated
As of March 31,
As of March 31,
As of March 31,
Format
2024
2023
2024
2023
2024
2023
Number of theatres:
IMAX®
183
185
33
32
216
217
Dolby Cinema™ theatres
162
158
7
7
169
165
In-house PLF
60
57
76
74
136
131
Dine-in
49
48
3
3
52
51
Premium seating
362
364
82
83
444
447
Offering alcohol
382
358
231
236
613
594
Number of screens:
IMAX®
184
186
33
32
217
218
Dolby Cinema™ theatres
162
158
7
7
169
165
In-house PLF
60
57
79
74
139
131
Dine-in
675
667
13
13
688
680
Premium seating
3,589
3,518
554
536
4,143
4,054
Loyalty Programs and Other Marketing
As of March 31, 2024, we had approximately 33 million member households enrolled in AMC Stubs® A-List (“A-List”), AMC Stubs Premiere™ (“Premiere”) and AMC Stubs Insider™ (“Insider”) programs, combined. During the three months ended March 31, 2024, our AMC Stubs® members represented approximately 48.6% of AMC U.S. markets attendance.
We currently have approximately 17 million members in our various International loyalty programs.
See “Item 1. Business” in our 2023 Annual Report on Form 10-K for additional discussion and information of our screens, seating concepts, amenities, loyalty programs and other marketing initiatives.
Holders of Shares
As of March 31, 2024, approximately 2.2 million shares of our Common Stock were directly registered with our transfer agent by 15,094 stockholders. The balance of our outstanding Common Stock was held in “street name” through bank or brokerage accounts.
Critical Accounting Estimates
For a discussion of our critical accounting policies and the means by which we develop estimates therefore, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K. Other than as discussed above, there have been no material changes from critical accounting estimates described in our Form 10-K.
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Significant Events—For the Three Months Ended March 31, 2024
Debt for Equity Exchange. During January 2024, we executed a debt for equity exchange transaction. This transaction was treated as an early extinguishment of the debt. In accordance with ASC 470-50-40-3, the reacquisition price of the extinguished debt was determined to be the fair value of the Common Stock exchanged. The below table summarizes the debt for equity exchange that occurred during January 2024:
Shares of
Aggregate Principal
Common Stock
Gain on
Accrued Interest
(In millions, except for share data)
Exchanged
Exchanged
Extinguishment
Exchanged
Second Lien Notes due 2026
$
17.5
2,541,250
$
5.8
$
0.1
Vendor Dispute. On January 26, 2024, we executed an agreement to collect $37.5 million as resolution of a dispute with a vendor. The proceeds, net of legal costs, were recorded to other income during the three months ended March 31, 2024. The relationship with the vendor has been restored and remains in good standing.
Significant Events—For the Three Months Ended March 31, 2023
Saudi Cinema Company. On December 30, 2022, we entered into an agreement to sell our 10.0% investment in Saudi Cinema Company, LLC for SAR 112.5 million ($30.0 million), subject to certain closing conditions. On January 24, 2023, the Saudi Ministry of Commerce recorded a sale of equity and we received the proceeds on January 25, 2023. We recorded a gain on the sale of $15.5 million in investment income during the three months ended March 31, 2023.
Debt Repurchases. The below table summarizes the cash debt repurchase transactions during the three months ended March 31, 2023, including related party transactions with Antara.
Aggregate Principal
Reacquisition
Gain on
Accrued Interest
(In millions)
Repurchased
Cost
Extinguishment
Paid
Related party transactions:
Second Lien Notes due 2026
$
41.9
$
24.4
$
25.3
$
0.7
5.875% Senior Subordinated Notes due 2026
4.1
1.7
2.3
0.1
Total related party transactions
46.0
26.1
27.6
0.8
Non-related party transactions:
Second Lien Notes due 2026
57.5
30.4
37.5
1.1
Total non-related party transactions
57.5
30.4
37.5
1.1
Total debt repurchases
$
103.5
$
56.5
$
65.1
$
1.9
Additional Share Issuances Antara. On December 22, 2022, we entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Antara pursuant to which we agreed to (i) sell to Antara 10,659,511 AMC Preferred Equity Units for an aggregate purchase price of $75.1 million and (ii) simultaneously purchase from Antara $100.0 million aggregate principal amount of the Company’s 10%/12% Cash/PIK Toggle Second Lien Notes due 2026 in exchange for 9,102,619 AMC Preferred Equity Units. On February 7, 2023, the Company issued 19,762,130 AMC Preferred Equity Units to Antara in exchange for $75.1 million in cash and $100.0 million aggregate principal amount of the Company’s 10%/12% Cash/PIK Toggle Second Lien Notes due 2026. The Company recorded $193.7 million to stockholders’ deficit as a result of the transaction. We paid $1.4 million of accrued interest in cash upon exchange of the notes.
Share Issuances. During the three months ended March 31, 2023, we raised gross proceeds of approximately $80.3 million and paid fees to a sales agent and incurred other third-party issuance costs of approximately $2.0 million and $7.8 million, respectively, through our at-the-market offering of approximately 4.9 million shares of our AMC Preferred Equity Units. The Company paid $6.8 million of other third-party issuance costs during the three months ended March 31, 2023.
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Special Awards. On February 23, 2023, the Compensation Committee approved special awards in lieu of vesting of the 2022 PSU awards. The special awards were accounted for as a modification to the 2022 Tranche Year PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches. This modification resulted in the immediate additional vesting of 238,959 Common Stock PSUs and 238,959 AMC Preferred Equity Unit PSUs. This was treated as a Type 3 modification (improbable-to-probable) which required the Company to recognize additional stock compensation expense based on the modification date fair values of the Common Stock PSUs and AMC Preferred Equity Units PSUs of $14.9 million and $5.3 million respectively. During the three months ended March 31, 2023, we recognized $20.2 million of additional stock compensation expense.
Lease Termination. During the three months ended March 31, 2023, we received a $13.0 million buyout incentive from a landlord which provided the landlord the right to terminate the lease of one theatre. The incentive and termination gain resulted in a $16.7 million reduction to rent expense.
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Operating Results
The following table sets forth our consolidated revenues, operating costs and expenses:
Three Months Ended
(In millions)
March 31, 2024
March 31, 2023
% Change
Revenues
Admissions
$
530.5
$
534.1
(0.7)
%
Food and beverage
321.2
328.7
(2.3)
%
Other theatre
99.7
91.6
8.8
%
Total revenues
951.4
954.4
(0.3)
%
Operating Costs and Expenses
Film exhibition costs
239.3
246.2
(2.8)
%
Food and beverage costs
63.0
61.4
2.6
%
Operating expense, excluding depreciation and amortization below
393.8
383.2
2.8
%
Rent
224.5
205.7
9.1
%
General and administrative:
Merger, acquisition and other costs
(0.1)
0.2
*
%
Other, excluding depreciation and amortization below
57.7
72.3
(20.2)
%
Depreciation and amortization
81.6
93.6
(12.8)
%
Operating costs and expenses
1,059.8
1,062.6
(0.3)
%
Operating loss
(108.4)
(108.2)
0.2
%
Other expense:
Other expense (income)
(42.8)
37.8
*
%
Interest expense:
Corporate borrowings
91.0
90.7
0.3
%
Finance lease obligations
0.9
0.9
—
%
Non-cash NCM exhibitor service agreement
9.3
9.5
(2.1)
%
Investment income
(5.1)
(13.5)
(62.2)
%
Total other expense, net
53.3
125.4
(57.5)
%
Net loss before income taxes
(161.7)
(233.6)
(30.8)
%
Income tax provision
1.8
1.9
(5.3)
%
Net loss
$
(163.5)
$
(235.5)
(30.6)
%
* Percentage change in excess of 100%
Three Months Ended
Operating Data:
March 31, 2024
March 31, 2023
Screen acquisitions
1
2
Screen dispositions
45
208
Construction closures, net
(10)
(4)
Average screens (1)
9,703
9,998
Number of screens operated
10,005
10,264
Number of theatres operated
895
920
Screens per theatre
11.2
11.2
Attendance (in thousands) (1)
46,631
47,621
(1) Includes consolidated theatres only and excludes screens offline due to construction.
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Segment Operating Results
The following table sets forth our revenues, operating costs and expenses by reportable segment:
U.S. Markets
International Markets
Consolidated
Three Months Ended
Three Months Ended
Three Months Ended
March 31,
March 31,
March 31,
(In millions)
2024
2023
2024
2023
2024
2023
Revenues
Admissions
$
371.6
$
384.0
$
158.9
$
150.1
$
530.5
$
534.1
Food and beverage
246.3
258.5
74.9
70.2
321.2
328.7
Other theatre
71.2
62.0
28.5
29.6
99.7
91.6
Total revenues
689.1
704.5
262.3
249.9
951.4
954.4
Operating Costs and Expenses
Film exhibition costs
177.1
188.5
62.2
57.7
239.3
246.2
Food and beverage costs
45.0
44.0
18.0
17.4
63.0
61.4
Operating expense
286.8
278.3
107.0
104.9
393.8
383.2
Rent
165.7
150.7
58.8
55.0
224.5
205.7
General and administrative expense:
Merger, acquisition and other costs
(0.1)
0.2
—
—
(0.1)
0.2
Other, excluding depreciation and amortization below
38.6
53.4
19.1
18.9
57.7
72.3
Depreciation and amortization
63.5
74.9
18.1
18.7
81.6
93.6
Operating costs and expenses
776.6
790.0
283.2
272.6
1,059.8
1,062.6
Operating loss
(87.5)
(85.5)
(20.9)
(22.7)
(108.4)
(108.2)
Other expense (income):
Other expense (income)
(8.9)
46.8
(33.9)
(9.0)
(42.8)
37.8
Interest expense:
Corporate borrowings
76.2
76.1
14.8
14.6
91.0
90.7
Finance lease obligations
—
0.1
0.9
0.8
0.9
0.9
Non-cash NCM exhibitor service agreement
9.3
9.5
—
—
9.3
9.5
Investment expense (income)
(4.5)
2.0
(0.6)
(15.5)
(5.1)
(13.5)
Total other expense (income), net
72.1
134.5
(18.8)
(9.1)
53.3
125.4
Net loss before income taxes
(159.6)
(220.0)
(2.1)
(13.6)
(161.7)
(233.6)
Income tax provision
0.6
0.4
1.2
1.5
1.8
1.9
Net loss
$
(160.2)
$
(220.4)
$
(3.3)
$
(15.1)
$
(163.5)
$
(235.5)
U.S. Markets
International Markets
Consolidated
Three Months Ended
Three Months Ended
Three Months Ended
March 31,
March 31,
March 31,
2024
2023
2024
2023
2024
2023
Segment Operating Data:
Screen acquisitions
—
—
1
2
1
2
Screen dispositions
43
116
2
92
45
208
Construction closures, net
(1)
(2)
(9)
(2)
(10)
(4)
Average screens (1)
7,287
7,513
2,416
2,485
9,703
9,998
Number of screens operated
7,325
7,530
2,680
2,734
10,005
10,264
Number of theatres operated
558
578
337
342
895
920
Screens per theatre
13.1
13.0
8.0
8.0
11.2
11.2
Attendance (in thousands) (1)
30,490
32,362
16,141
15,259
46,631
47,621
(1) Includes consolidated theatres only and excludes screens offline due to construction.
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Adjusted EBITDA
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 below. 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. The preceding definition of and adjustments made to GAAP measures to determine Adjusted EBITDA are broadly consistent with Adjusted EBITDA as defined in the Company’s debt indentures.
Adjusted EBITDA is a non-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; and
● does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future.
During the three months ended March 31, 2024, Adjusted EBITDA in the U.S. markets was $(27.6) million compared to $10.9 million during the three months ended March 31, 2023. The year-over-year decline was primarily driven by a decrease in attendance as a result of the popularity of new film releases, increases in rent expense due to a prior year rent credit for a theatre termination, decreases in legal settlement income, increases in general and administrative expenses and increases in operating expenses related to an increase in expected general liability and workers compensation costs compared to the prior year. These declines were partially offset by increases in average ticket price, increases in food and beverage sales per patron, increases in other revenues and increases in cash distributions from non-consolidated entities.
During the three months ended March 31, 2024, Adjusted EBITDA in the International markets was $(4.0) million compared to $(3.8) million during the three months ended March 31, 2023. The year-over-year decline was primarily driven by a decline in other revenues, increases in rent, increases in operating expenses related to the increase in attendance, general and administrative expenses and increases in foreign currency translation rates. These declines were partially offset by an increase in attendance as a result of the popularity of new film releases, increases in food and beverage sales per patron, increases in legal settlement income and increases in Attributable EBITDA.
During the three months ended March 31, 2024, Adjusted EBITDA in the U.S. markets and International markets was $(31.6) million compared to $7.1 million during the three months ended March 31, 2023, driven by the aforementioned factors impacting Adjusted EBITDA.
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The following tables set forth our Adjusted EBITDA by reportable operating segment and our reconciliation of Adjusted EBITDA:
Three Months Ended
Adjusted EBITDA (In millions)
March 31, 2024
March 31, 2023
U.S. markets
$
(27.6)
$
10.9
International markets
(4.0)
(3.8)
Total Adjusted EBITDA
$
(31.6)
$
7.1
Three Months Ended
(In millions)
March 31, 2024
March 31, 2023
Net loss
$
(163.5)
$
(235.5)
Plus:
Income tax provision (1)
1.8
1.9
Interest expense
101.2
101.1
Depreciation and amortization
81.6
93.6
Certain operating expense (2)
0.5
1.1
Equity in earnings of non-consolidated entities
(3.7)
(1.4)
Cash distributions from non-consolidated entities (3)
1.3
—
Attributable EBITDA (4)
0.6
0.5
Investment income (5)
(5.1)
(13.5)
Other expense (income) (6)
(38.8)
42.8
Other non-cash rent benefit (7)
(11.7)
(9.6)
General and administrative — unallocated:
Merger, acquisition and other costs (8)
(0.1)
0.2
Stock-based compensation expense (9)
4.3
25.9
Adjusted EBITDA
$
(31.6)
$
7.1
(1) For information regarding the income tax provision, see Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q.
(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, 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 or are non-operating in nature.
(3) 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.
(4) Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain International markets. See below for a reconciliation of our equity in 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.
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Three Months Ended
(In millions)
March 31, 2024
March 31, 2023
Equity in (earnings) of non-consolidated entities
$
(3.7)
$
(1.4)
Less:
Equity in (earnings) of non-consolidated entities excluding International theatre joint ventures
(3.5)
(1.1)
Equity in earnings of International theatre joint ventures
0.2
0.3
Income tax benefit
—
(0.1)
Investment expense
0.1
0.1
Depreciation and amortization
0.3
0.2
Attributable EBITDA
$
0.6
$
0.5
(5) Investment expense (income) during the three months ended March 31, 2024 primarily includes deterioration in estimated fair value of our investment in common shares of Hycroft of $0.5 million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $0.5 million and interest income of $(6.1) million.
Investment expense (income) during the three months ended March 31, 2023 primarily included deterioration in estimated fair value of our investment in common shares of Hycroft of $2.3 million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $2.3 million, a $(15.5) million gain on the sale of our investment in Saudi Cinema Company, LLC, and interest income of $(2.3) million.
(6) Other expense (income) during the three months ended March 31, 2024 includes a vendor dispute settlement of $(36.2) million, foreign currency transaction losses of $3.2 million and gains on debt extinguishment of $(5.8) million.
Other expense (income) during the three months ended March 31, 2023 included a non-cash litigation contingency reserve charge of $116.6 million, partially offset by income related to foreign currency transaction gains of $(8.7) million and gains on debt extinguishment of $(65.1) million.
(7) Reflects amortization expense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842, Leases and deferred rent benefit related to the impairment of right-of-use operating lease assets.
(8) Merger, acquisition and other costs are excluded as they are non-operating in nature.
(9) Non-cash expense included in general and administrative: other.
Segment Information
Our historical results of operations for the three months ended March 31, 2024 and March 31, 2023, reflect the results of operations for our two theatrical exhibition reportable segments, U.S. markets and International markets.
Results of Operations—For the Three Months ended March 31, 2024, Compared to the Three Months ended March 31, 2023
Condensed Consolidated Results of Operations
Revenues. Total revenues decreased $3.0 million, or 0.3%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Admissions revenues decreased $3.6 million, or 0.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to a decrease in attendance of 2.1% from 47.6 million patrons to 46.6 million patrons, partially offset by a 1.4% increase in average ticket price. The decrease in attendance was primarily due to the popularity of film product in U.S. Markets compared to the prior year. The availability and popularity of film product released during the three months ended March 31, 2024, was negatively impacted by the Writers Guild of America and the Screen Actors Guild – American Federation of Television and Radio Artists strikes during 2023. The increase in average ticket price was primarily due to increased ticket prices for all formats, increased attendance at IMAX and other PLF screens and an increase in foreign currency translation rates, partially offset by lower attendance for 3D content.
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Food and beverage revenues decreased $7.5 million, or 2.3%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the decrease in attendance and a decrease in food and beverage per patron. Food and beverage per patron decreased 0.1% from $6.90 to $6.89 due primarily to an increase in revenues in International markets as a percentage of consolidated revenues from 21.4% during the three months ended March 31, 2023 to 23.3% during the three months ended March 31, 2024. Food and beverage per patron in International markets is much lower than in our U.S. markets and this change in the mix of revenues resulted in a decline in consolidated food and beverage per patron, partially offset by an increase in foreign currency translation rates.
Total other theatre revenues increased $8.1 million, or 8.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to higher income from gift cards and package tickets, higher income from AMC Theatres Perfectly Popcorn and an increase in foreign currency translation rates.
Operating costs and expenses. Operating costs and expenses decreased $2.8 million, or 0.3%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Film exhibition costs decreased $6.9 million, or 2.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 45.1% for the three months ended March 31, 2024, compared to 46.1% for the three months ended March 31, 2023.
Food and beverage costs increased $1.6 million, or 2.6%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in food and beverage costs was primarily due to higher product costs. As a percentage of food and beverage revenues, food and beverage costs were 19.6% for the three months ended March 31, 2024, compared to 18.7% for the three months ended March 31, 2023.
Operating expense increased by $10.6 million, or 2.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in operating expense was primarily due to an increase in expected general liability and workers compensation costs compared to the prior year and an increase in foreign currency translation rates. As a percentage of revenues, operating expense was 41.4% for the three months ended March 31, 2024, compared to 40.2% for the three months ended March 31, 2023. Rent expense increased 9.1%, or $18.8 million, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the early termination of one theatre lease for a benefit of $16.7 million in the prior year, which included an early termination payment from the landlord for $13.0 million and an increase in foreign currency translation rates.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $(0.1) million during the three months ended March 31, 2024, compared to $0.2 million during the three months ended March 31, 2023.
Other. Other general and administrative expense decreased $14.6 million, or 20.2%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to declines in stock-based compensation expense. We recorded $2.1 million of stock-based compensation expense during the three months ended March 31, 2024 compared to $20.2 million during the three months ended March 31, 2023 related to special awards in each year accounted for as a modification to the respective 2023 and 2022 PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches in 2023 and 2022, partially offset by increased rent expense, salaries expense and an increase in foreign currency translation rates. See Note 7—Stockholders’ Deficit in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about stock-based compensation expense.
Depreciation and amortization. Depreciation and amortization decreased $12.0 million, or 12.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023, partially offset by an increase in foreign currency translation rates.
Other expense (income). Other income of $(42.8) million during the three months ended March 31, 2024 was primarily due to the favorable settlement of a vendor dispute of $36.2 million, a gain on extinguishment of debt of $5.8 million related to the redemption of $17.5 million aggregate principal amount of the Second Lien Notes due 2026 and equity in earnings of non-consolidated entities of $3.7 million, partially offset by foreign currency transaction losses of $3.2 million. Other expense of $37.8 million during the three months ended March 31, 2023 was primarily due to $126.6 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10 million of
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estimated legal fees and $116.6 million of non-cash expense for the estimated fair value as of March 31, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $62.8 million related to the redemption of $99.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026, a receipt of $14.0 million in settlement of the Lao Action, $8.7 million in foreign currency transaction gains and equity in earnings of non-consolidated entities of $1.4 million. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense (income).
Interest expense. Interest expense increased $0.1 million to $101.2 million for the three months ended March 31, 2024, compared to $101.1 million during the three months ended March 31, 2023, primarily due to an increase in interest rates on the Senior Secured Credit Facility Term Loan Due 2026, partially offset by lower interest expense on the Second Lien Notes due 2026 due to redemptions of principal balances. See Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.
Investment income. Investment income was $5.1 million for the three months ended March 31, 2024, compared to income of $(13.5) million for the three months ended March 31, 2023. Investment income in the current year includes interest income of $6.1 million, partially offset by $0.5 million of decline in estimated fair value of our investment in common shares of Hycroft and $0.5 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft. Investment income in the prior year includes a gain on sale of our 10.0% interest in Saudi Cinema Company, LLC of $15.5 million and interest income of $2.3 million, partially offset by $2.3 million of decline in estimated fair value of our investment in common shares of Hycroft and $2.3 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft.
Income tax provision. The income tax provision was $1.8 million and $1.9 million for the three months ended March 31, 2024, and March 31, 2023, respectively. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.
Net loss. Net loss was $163.5 million and $235.5 million during the three months ended March 31, 2024, and March 31, 2023, respectively. Net loss during the three months ended March 31, 2024 compared to net loss for the three months ended March 31, 2023 was positively impacted by decreases in general and administrative expense, depreciation and amortization expense, increases in other income and decrease in income tax provision, partially offset by the decrease in attendance as a result of the popularity of new film releases compared to the prior year, increases in rent expense, increases in interest expense, decreases in investment income and the increase in foreign currency translation rates.
Theatrical Exhibition — U.S. Markets
Revenues. Total revenues decreased $15.4 million, or 2.2%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Admissions revenues decreased $12.4 million or 3.2%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to a decrease in attendance of 5.8% from 32.4 million patrons to 30.5 million patrons, partially offset by a 2.7% increase in average ticket price. The decrease in attendance was primarily due to the popularity of film product compared to the prior year. The availability and popularity of film product released during the three months ended March 31, 2024, was negatively impacted by the Writers Guild of America and the Screen Actors Guild – American Federation of Television and Radio Artists strikes during 2023. The increase in average ticket price was primarily due to increased ticket prices for all formats and increased attendance at IMAX and other PLF screens, partially offset by lower attendance for 3D content.
Food and beverage revenues decreased $12.2 million, or 4.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the decrease in attendance, partially offset by an increase in food and beverage per patron. Food and beverage per patron increased 1.1% from $7.99 to $8.08 due primarily to an increase in average prices, partially offset by lower units purchase per transaction.
Total other theatre revenues increased $9.2 million, or 14.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to higher income from gift cards and package tickets and higher income from AMC Theatres Perfectly Popcorn.
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Operating costs and expenses. Operating costs and expenses decreased $13.4 million, or 1.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Film exhibition costs decreased $11.4 million, or 6.0%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 47.7% for the three months ended March 31, 2024, compared to 49.1% for the three months ended March 31, 2023.
Food and beverage costs increased $1.0 million or 2.3%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in food and beverage costs was primarily due to higher product costs. As a percentage of food and beverage revenues, food and beverage costs were 18.3% for the three months ended March 31, 2024, and 17.0% for the three months ended March 31, 2023.
Operating expense increased by $8.5 million, or 3.1%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in operating expense was primarily due to an increase in expected general liability and workers compensation costs compared to the prior year. As a percentage of revenues, operating expense was 41.6% for the three months ended March 31, 2024, compared to 39.5% for the three months ended March 31, 2023. Rent expense increased 10.0%, or $15.0 million, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to the early termination of one theatre lease for a benefit of $16.7 million in the prior year, which included an early termination payment from the landlord for $13.0 million.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $(0.1) million during the three months ended March 31, 2024, compared to $0.2 million during the three months ended March 31, 2023.
Other. Other general and administrative expense decreased $14.8 million, or 27.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to declines in stock-based compensation expense. We recorded $1.9 million of stock-based compensation expense during the three months ended March 31, 2024 compared to $18.1 million during the three months ended March 31, 2023 related to special awards in each year accounted for as a modification to the respective 2023 and 2022 PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches in 2023 and 2022, partially offset by increased rent expense and salaries expense. See Note 7—Stockholders’ Deficit in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about stock-based compensation expense.
Depreciation and amortization. Depreciation and amortization decreased $11.4 million, or 15.2%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other expense (income). Other income of $(8.9) million during the three months ended March 31, 2024 was primarily due to a gain on extinguishment of debt of $5.8 million related to the redemption of $17.5 million aggregate principal amount of the Second Lien Notes due 2026 and equity in earnings of non-consolidated entities of $3.5 million. Other expense of $46.8 million during the three months ended March 31, 2023 was primarily due to $126.6 million of expense related to a proposed settlement of the Shareholder Litigation comprised of $10.0 million of estimated legal fees and $116.6 million of non-cash expense for the estimated fair value as of March 31, 2023 of settlement shares proposed to be issued to holders of AMC Class A Common Stock, partially offset by a gain on extinguishment of debt of $62.8 million related to the redemption of $99.4 million aggregate principal amount of the Second Lien Notes due 2026, a gain on extinguishment of debt of $2.3 million related to the redemption of $4.1 million aggregate principal amount of our Senior Subordinated Notes due 2026, a receipt of $14.0 million in settlement of the Lao Action and equity in earnings of non-consolidated entities of $0.9 million. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense (income).
Interest expense. Interest expense decreased $0.2 million to $85.5 million for the three months ended March 31, 2024, compared to $85.7 million during the three months ended March 31, 2023, primarily due to lower interest expense on the Second Lien Notes due 2026 due to redemptions of principal balances, partially offset by an increase in interest rates on the Senior Secured Credit Facility Term Loan Due 2026. See Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.
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Investment expense (income). Investment income was $(4.5) million for the three months ended March 31, 2024, compared to investment expense of $2.0 million for the three months ended March 31, 2023. Investment income in the current year includes interest income of $5.5 million, partially offset by $0.5 million of decline in estimated fair value of our investment in common shares of Hycroft and $0.5 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft. Investment expense in the prior year includes $2.3 million of decline in estimated fair value of our investment in common shares of Hycroft and $2.3 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft, partially offset by interest income of $2.3 million.
Income tax provision. The income tax provision was $0.6 million and $0.4 million for the three months ended March 31, 2024, and March 31, 2023, respectively. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.
Net loss. Net loss was $160.2 million and $220.4 million during the three months ended March 31, 2024 and March 31, 2023, respectively. Net loss during the three months ended March 31, 2024 compared to net loss for the three months ended March 31, 2023 was positively impacted by decreases in general and administrative expense, depreciation and amortization expense, increases in other income, decreases in interest expense and increases in investment income and partially offset by the decrease in attendance as a result of the popularity of new film releases compared to the prior year, increases in rent expense and increases in income tax provision.
Theatrical Exhibition—International Markets
Revenues. Total revenues increased $12.4 million, or 5.0%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Admissions revenues increased $8.8 million, or 5.9%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to an increase in attendance of 5.8% from 15.3 million patrons to 16.1 million patrons and an increase in foreign currency translation rates. The increase in attendance was primarily due to the popularity of film product compared to the prior year.
Food and beverage revenues increased $4.7 million, or 6.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the increase in attendance and an increase in food and beverage per patron. Food and beverage per patron increased 0.9% from $4.60 to $4.64 due primarily to an increase in foreign currency translation rates.
Total other theatre revenues decreased $1.1 million, or 3.7%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to lower advertising and retail merchandise revenues, partially offset by an increase in foreign currency translation rates.
Operating costs and expenses. Operating costs and expenses increased $10.6 million, or 3.9%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Film exhibition costs increased $4.5 million, or 7.8%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the increase in attendance and higher film rental terms. As a percentage of admissions revenues, film exhibition costs were 39.1% for the three months ended March 31, 2024, compared to 38.4% for the three months ended March 31, 2023.
Food and beverage costs increased $0.6 million, or 3.4%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in food and beverage costs was primarily due to the increase in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 24.0% for the three months ended March 31, 2024, compared to 24.8% for the three months ended March 31, 2023.
Operating expense increased by $2.1 million, or 2.0%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in operating expense was primarily due to the increase in attendance and foreign currency translation rates, partially offset by lower utilities expense. As a percentage of revenues, operating expense was 40.8% for the three months ended March 31, 2024, compared to 42.0% for the three months ended March 31, 2023. Rent expense increased 6.9%, or $3.8 million, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to higher common area maintenance costs and an increase in foreign currency translation rates.
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Other. Other general and administrative expense increased $0.2 million, or 1.1%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, due primarily to higher payroll costs and an increase in foreign currency translation rates, partially offset by declines in stock-based compensation expense. We recorded $0.2 million of stock-based compensation expense during the three months ended March 31, 2024 compared to $2.1 million during the three months ended March 31, 2023 related to special awards in each year accounted for as a modification to the respective 2023 and 2022 PSU awards which lowered the Adjusted EBITDA and free cash flow performance targets such that 200% vesting was achieved for both tranches in 2023 and 2022, partially offset by increased rent expense, salaries expense and an increase in foreign currency translation rates. See Note 7—Stockholders’ Deficit in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about stock-based compensation expense.
Depreciation and amortization. Depreciation and amortization decreased $0.6 million, or 3.2%, during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to theatre closures and locations impaired in 2023 and lower depreciation expense on theatres impaired during the year ended December 31, 2023, partially offset by an increase in foreign currency translation rates.
Other income. Other income of $33.9 million during the three months ended March 31, 2024 was primarily due to the favorable settlement of a vendor dispute of $36.2 million, equity in earnings of non-consolidated entities of $0.2 million, partially offset by foreign currency transaction losses of $3.2 million. Other income of $9.0 million during the three months ended March 31, 2023 was primarily due to $8.7 million in foreign currency transaction gains and equity in earnings of non-consolidated entities of $0.4 million. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other income.
Interest expense. Interest expense increased $0.3 million to $15.7 million for the three months ended March 31, 2024, compared to $15.4 million during the three months ended March 31, 2023. See Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about our indebtedness.
Investment income. Investment income was $0.6 million for the three months ended March 31, 2024, compared to income of $15.5 million for the three months ended March 31, 2023. Investment income in the current year includes interest income of $0.6 million. Investment income in the prior year includes a gain on sale of our 10.0% interest in Saudi Cinema Company, LLC of $15.5 million
Income tax provision. The income tax provision was $1.2 million and $1.5 million for the three months ended March 31, 2024, and March 31, 2023, respectively. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.
Net loss. Net loss was $3.3 million and $15.1 million during the three months ended March 31, 2024, and March 31, 2023, respectively. Net loss during the three months ended March 31, 2024 compared to net loss for the three months ended March 31, 2023 was positively impacted by the increase in attendance as a result of the popularity of new film releases compared to the prior year, decreases in depreciation and amortization expense, increases in other income and decreases in income tax provision, partially offset by, increases in general and administrative expense, increases in rent expense, increases in interest expense, decreases in investment income and the increase in foreign currency translation rates.
LIQUIDITY AND CAPITAL RESOURCES
Our consolidated revenues are primarily collected in cash, principally through admissions and food and beverage sales. We have an operating “float” which partially finances our operations and which generally permits us to maintain a smaller amount of working capital capacity. This float exists because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors 20 to 45 days following receipt of admissions revenues. Film distributors generally release the films which they anticipate will be the most successful during the summer and year-end holiday seasons. Consequently, we typically generate higher revenues during such periods and experience higher working capital requirements following such periods.
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We had working capital deficit (excluding restricted cash) as of March 31, 2024, and December 31, 2023 of $(626.5) million and $(456.4) million, respectively. As of March 31, 2024 and December 31, 2023, working capital included operating lease liabilities of $508.9 million and $508.8 million, respectively, and deferred revenues of $394.2 million and $421.8 million, respectively.
See Note 6—Corporate Borrowings and Finance Lease Liabilities in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for a further discussion of our Financial Covenants.
As of March 31, 2024, we had cash and cash equivalents of $624.2 million.
We have continued to lower our future interest expense through debt exchanges for equity and enhanced liquidity through equity issuances. See Note 6 — Corporate Borrowings and Finance Lease Liabilities, Note 7—Stockholders’ Deficit, and Note 13—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information. We expect, from time to time, to continue to seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material and, to the extent equity is used, dilutive.
We believe our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund our operations and satisfy our obligations currently and through the next twelve months. As of March 31, 2024, we were subject to a minimum liquidity requirement of $100.0 million as a condition to the financial covenant suspension period under the Credit Agreement. As of April 19, 2024, and in anticipation of the maturity of the Senior Secured Revolving Credit Facility, we voluntarily terminated the commitments under the Senior Secured Revolving Credit Facility in full and paid off any remaining obligations with respect to the Senior Secured Revolving Credit Facility. The financial covenants and related covenant suspension conditions are no longer in effect pursuant to the terms of the Credit Agreement. The termination of the Senior Secured Revolving Credit Facility does not otherwise affect the senior secured term loan facility under the Credit Agreement. We currently do not expect to replace the Senior Secured Revolving Credit Facility. As of March 31, 2024, we had $9.2 million of letters of credit outstanding under the Senior Secured Revolving Credit Facility. We have entered into a new letter of credit facility in order to continue to provide letters of credit in the ordinary course of business following the termination of the Senior Secured Revolving Credit Facility.
Our current cash burn rates are not sustainable long-term. In order to achieve sustainable net positive operating cash flows and long-term profitability, we believe that operating revenues will need to increase to levels in line with pre-COVID-19 operating revenues. North American box office grosses were down approximately 32% for the three months ended March 31, 2024, compared to the three months ended March 31, 2019. Until such time as we are able to achieve sustainable net positive operating cash flow, it is difficult to estimate our future cash burn rates and liquidity requirements. Depending on our assumptions regarding the timing and ability to achieve levels of operating revenue, the estimates of amounts of required liquidity vary significantly.
There can be no assurance that the operating revenues, attendance levels and other assumptions used to estimate our liquidity requirements and future cash burn rates will be correct, and our ability to be predictive is uncertain due to limited ability to predict studio film release dates, the overall production and theatrical release levels and success of individual titles. Additionally, the effects of labor stoppages, including but not limited to the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike that occurred during 2023, cannot be reasonably estimated and have had and are expected to continue to have a negative impact in 2024 on the film slate for exhibition, the Company’s future liquidity and cash burn rates. Further, there can be no assurances that we will be successful in generating the additional liquidity necessary to meet our obligations beyond twelve months from the issuance of this Quarterly Report on terms acceptable to us or at all.
On March 28, 2024, we entered into a Common Stock equity distribution agreement with certain sales agents to sell shares of Common Stock, from time to time, having an aggregate offering price of $250,000,000, through an at-the-market offering program. The Company intends to use any net proceeds from the sale of Common Stock pursuant to the program to bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness (including expenses, accrued interest and premium, if any) and for general corporate purposes. Through the date of this filing, the Company has received gross proceeds of approximately $103.5 million through its at-the-market offering of approximately 32.0
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million shares of its Common Stock and paid fees to the sales agents of approximately $2.6 million.
Cash Flows from Operating Activities
Net cash flows used in operating activities, as reflected in the condensed consolidated statements of cash flows, were $188.3 million and $189.9 million during the three months ended March 31, 2024 and March 31, 2023, respectively. The decrease in cash flows used in operating activities was primarily due to reductions in rent repayments that were deferred during the COVID-19 pandemic and a lease termination payment received during the three months ended March 31, 2023, partially offset by the decrease in attendance and increase in working capital used. The increase in working capital used was primarily due to timing of incentive bonus payments which were made during the three months ended March 31, 2024 in the current year and during the three months ended June 30, 2023 in the prior year.
Cash Flows from Investing Activities
Net cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $50.0 million and $16.6 million during the three months ended March 31, 2024 and March 31, 2023, respectively. Cash outflows from investing activities include capital expenditures of $50.5 million and $47.4 million during the three months ended March 31, 2024, and March 31, 2023, respectively.
During the three months ended March 31, 2023, cash flows used in investing activities included proceeds from the sale of our investment in Saudi Cinema Company, LLC of $30.0 million and proceeds from the disposition of long-term assets of $0.8 million.
We fund the costs of constructing, maintaining, and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases, which may require the developer, who owns the property, to reimburse us for the construction costs. We estimate that our capital expenditures, net of landlord contributions, will be approximately $175 million to $225 million for year ended December 31, 2024, to maintain and enhance operations.
Cash Flows from Financing Activities
Net cash flows (used in) provided by financing activities, as reflected in the condensed consolidated statements of cash flows, were $(9.0) million and $68.9 million during the three months ended March 31, 2024 and March 31, 2023, respectively. Cash flows used in financing activities during the three months ended March 31, 2024, were primarily due to scheduled principal payments under the Term Loan due 2026 and taxes paid for restricted unit withholdings of $2.2 million. See Note 6—Corporate Borrowings and Finance Lease Liabilities condensed consolidated financial statements in Item 1 of Part I of this Form 10-Q for further information, including a summary of principal payments required and maturities of corporate borrowings as of March 31, 2024.
Cash flows provided by financing activities during the three months ended March 31, 2023, were primarily due to equity issuances of $146.6 million, net of issuance costs, partially offset by the repurchase of Second Lien Notes due 2026 for $54.8 million, and taxes paid for restricted unit withholdings of $13.1 million.
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