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, 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 cash flows provided by operating activities and long-term profitability, revenues will need to increase from current levels to levels at least in line with pre-COVID-19 revenues. However, there remain significant risks that may negatively impact 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) and direct to streaming or other changing movie studio practices. If we are unable to achieve increased levels of attendance and 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;
● the risks and uncertainties relating to the Refinancing Transactions, including, but not limited to, (i) the potential for additional future dilution of our Common Stock as a result of issuance of shares underlying our Exchangeable Notes, (ii) the possibility that the extension of certain debt maturities will not provide enough time for attendance and revenues to increase to sufficient levels and generate net positive cash flows from operating activities and long-term profitability to overcome liquidity concerns or may be
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insufficient if the Company does not achieve revenue levels at least in line with pre-COVID-19 revenues and (iii) the impact on the market price of our Common Stock and our capital structure of litigation resulting from the Refinancing Transactions or any additional litigation that may arise in connection with the Refinancing Transactions. See Note 11—Commitments and Contingencies for a description of the litigation;
● 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;
● 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, incur additional debt, pre-pay debt, and also to refinance debt and to do so at favorable terms, and such covenants impose additional administrative and operational burdens on our business;
● 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 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;
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● our ability to refinance our indebtedness on terms favorable to us or at all;
● 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, including due to cybersecurity incidents;
● 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; 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 September 30, 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 September 30, 2024, we owned, operated or had interests in 874 theatres and 9,800 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 September 30,
As of September 30,
As of September 30,
Format
2024
2023
2024
2023
2024
2023
Number of theatres:
IMAX®
184
183
35
33
219
216
Dolby Cinema™ theatres
164
158
7
7
171
165
In-house PLF
60
57
79
75
139
132
Dine-in
49
49
3
3
52
52
Premium seating
365
361
85
80
450
441
Offering alcohol
384
380
225
231
609
611
Number of screens:
IMAX®
185
184
35
33
220
217
Dolby Cinema™ theatres
164
158
7
7
171
165
In-house PLF
60
57
82
78
142
135
Dine-in
675
675
13
13
688
688
Premium seating
3,607
3,574
588
540
4,195
4,114
Loyalty Programs and Other Marketing
As of September 30, 2024, we had approximately 34 million member households enrolled in AMC Stubs® A-List (“A-List”), AMC Stubs Premiere™ (“Premiere”) and AMC Stubs Insider™ (“Insider”) programs, combined. During the nine months ended September 30, 2024, our AMC Stubs® members represented approximately 49.0% of AMC U.S. markets attendance.
We currently have approximately 18 million members in our various International loyalty programs.
See “Item 1. Business” in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional discussion and information of our screens, seating concepts, amenities, loyalty programs and other marketing initiatives.
Holders of Shares
As of September 30, 2024, approximately 1.7 million shares of our Common Stock were directly registered with our transfer agent by 14,934 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 Annual Report on Form 10-K for the year ended December 31, 2023. Material changes to our critical accounting estimates from what is described in our Form 10-K are described below:
Derivative Liability . We remeasure the derivative liability related to the conversion features in our Exchangeable Notes at fair value each reporting period with changes in fair value recorded in the consolidated statements of operations. We have obtained independent third-party valuation studies to assist us in determining fair value. Our valuation studies use the Binomial Lattice approach and are based on significant inputs not observable in the market and thus represent level 3 measurements within the fair value measurement hierarchy. The Binomial Lattice approach consists of simulated Common Stock prices from the valuation date to the maturity of the Exchangeable
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Notes. The significant inputs used to value the derivative include the initial share price of our Common Stock, the volatility of the share price, time to maturity, risk-free interest rate, credit spread, and the discount yield. The volatility of our Common Stock, the Common Stock price at the end of each reporting period, and the remaining amount of time until maturity of the Exchangeable Notes are key inputs for the estimation of fair value that are expected to change each reporting period.
During the three and nine months ended September 30, 2024, we recorded other income related to a decline in our derivative liability fair value of $(73.5) million. We expect there will be future changes in fair value for our derivative liability and that the related amounts recorded as income or expense may be material. See Note 6—Corporate Borrowings and Finance Lease Liabilities and Note 9—Fair Value Measurements in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.
Significant Events—For the Nine Months Ended September 30, 2024
Debt Repurchases and Exchanges. The below table summarizes the various cash debt repurchase transactions, debt for equity exchange transactions and cash and debt for equity exchange transactions that occurred during the nine months ended September 30, 2024. The debt for equity transactions were treated as early extinguishments of 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.
Shares of
Aggregate Principal
Common Stock
Reacquisition
Gain on
Accrued Interest
(In millions, except for share data)
Repurchased/Exchanged
Exchanged
Cost
Extinguishment
Paid/Exchanged
Cash debt repurchase transactions:
5.75% Senior Subordinated Notes due 2025
$
7.0
—
$
6.7
$
0.3
$
0.1
Second Lien Notes due 2026
50.0
—
50.5
4.4
1.4
Total cash debt repurchase transactions
57.0
—
57.2
4.7
1.5
Debt for equity exchange transactions:
Second Lien Notes due 2026
191.4
27,545,325
123.1
91.1
7.4
Total debt for equity exchange transactions
191.4
27,545,325
123.1
91.1
7.4
Cash and debt for equity exchange transactions:
5.75% Senior Subordinated Notes due 2025
8.6
447,829
8.4
0.2
0.1
5.875% Senior Subordinated Notes due 2026
9.6
432,777
8.1
1.3
0.2
Second Lien Notes due 2026
45.0
2,693,717
45.5
4.2
1.2
Total cash and debt for equity exchange transactions
63.2
3,574,323
62.0
5.7
1.5
Total debt repurchases and exchanges
$
311.6
31,119,648
$
242.3
$
101.5
$
10.4
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 nine months ended September 30, 2024. The relationship with the vendor has been restored and remains in good standing.
Share Issuance. During the nine months ending September 30, 2024, we raised gross proceeds of $250.0 million and paid fees to sales agents and incurred other third-party issuance costs of approximately $6.3 million and $0.6 million, respectively, through our at-the-market offering of approximately 72.5 million shares of Common Stock. We paid $0.7 million of other third-party issuance costs during the nine months ended September 30, 2024.
Debt Refinancing. During the three and nine months ended September 30, 2024, we completed a series of refinancing transactions with two creditor groups. See the Liquidity and Capital Resources section below for further information on these transactions.
Significant Events—For the Nine Months Ended September 30, 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 nine months ended September 30, 2023.
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Debt Repurchases. The below table summarizes the cash debt repurchase transactions during the nine months ended September 30, 2023, including repurchases with a related party:
Aggregate Principal
Reacquisition
Gain on
Accrued Interest
(In millions)
Repurchased
Cost
Extinguishment
Paid
Related party transactions:
Second Lien Notes due 2026
$
75.9
$
48.5
$
40.9
$
1.1
5.875% Senior Subordinated Notes due 2026
4.1
1.7
2.3
0.1
Total related party transactions
80.0
50.2
43.2
1.2
Non-related party transactions:
Second Lien Notes due 2026
89.7
51.3
54.3
2.2
Total non-related party transactions
89.7
51.3
54.3
2.2
Total debt repurchases
$
169.7
$
101.5
$
97.5
$
3.4
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 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. 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 nine months ended September 30, 2023, we entered into various equity distribution agreements with sales agents to sell shares of our Common Stock and AMC Preferred Equity Units, from time to time, through “at-the-market” offering programs.
During the nine months ended September 30, 2023, we raised gross proceeds of approximately $440.0 million and paid fees to sales agents and incurred other third-party issuance costs of approximately $11.1 million and $9.2 million, respectively, through our at-the-market offering of approximately 7.1 million shares of AMC Preferred Equity Units and 40.0 million shares of our Common Stock. We paid $11.6 million of other third-party issuance costs during the nine months ended September 30, 2023.
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 nine months ended September 30, 2023, we recognized $20.2 million of additional stock compensation expense.
Lease Termination. During the nine months ended September 30, 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.
NCM Bankruptcy. On April 11, 2023, National CineMedia, LLC (“NCM”) filed a petition under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of Texas. NCM is the in-theatre advertising provider for the majority of the Company’s theatres in the United States. Under the Chapter 11 plan of reorganization, which became effective on August 7, 2023 (the “Plan”), NCM has assumed its agreements with the Company. As part of the Plan, on August 7, 2023, NCM issued 16,581,829 common units (“NCM Common Units”) that were owed to the Company as part of the annual common unit adjustment. However, under the terms of the Plan and the restructuring of the equity of NCM thereunder, the NCM Common Units were immediately cancelled upon the effective date of the Plan. On August 13, 2023, in response to an appeal by the Company regarding certain terms of the Plan, including modification of the terms of the Exhibitor Services Agreement with other parties that were not similarly granted to the Company and appeal of the court’s order to approve cancellation of the NCM Common Unit issuance, the United States District Court for the
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Southern District of Texas affirmed the rulings of the bankruptcy court, including confirmation of the Plan. The Company filed an appeal to these rulings with the United States Court of Appeals for the Fifth Circuit and such appeal remains pending. The Company does not expect NCM’s bankruptcy or the appeal to have a material impact on the Company.
Shareholder Litigation. Two putative stockholder class actions were filed in the Delaware Chancery Court, and subsequently consolidated, which asserted claims for breach of fiduciary duty against certain of our directors and a claim for breach of 8 Del. C . § 242 against those directors and the Company, arising out of the creation of AMC Preferred Equity Units, the Antara Transactions and the Charter Amendments.
This litigation prevented us from immediately implementing the Charter Amendments. On August 11, 2023, the court approved a settlement of the Shareholder Litigation, which, among other things, permitted the implementation of the Charter Amendments. Pursuant to the terms of the settlement, record holders of Common Stock at the close of business on August 24, 2023, after giving effect to the Reverse Stock Split, but prior to the conversion of the AMC Preferred Equity Units into Common Stock, received a payment of one share of Common Stock for every 7.5 shares of Common Stock they owned. On August 28, 2023, the Company made the Settlement Payment and issued 6,897,018 shares of Common Stock. On October 13, 2023, a purported Company stockholder who objected to the settlement of the Shareholder Litigation filed a notice of appeal of the court’s decision approving the settlement. On May 22, 2024, the Delaware Supreme Court affirmed the court’s decision approving the settlement of the Shareholder Litigation.
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Operating Results
The following table sets forth our consolidated revenues, operating costs and expenses:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In millions)
2024
2023
% Change
2024
2023
% Change
Revenues
Admissions
$
744.2
$
797.7
(6.7)
%
$
1,839.1
$
2,075.9
(11.4)
%
Food and beverage
490.4
482.7
1.6
%
1,178.7
1,299.6
(9.3)
%
Other theatre
114.2
125.5
(9.0)
%
313.0
332.7
(5.9)
%
Total revenues
1,348.8
1,405.9
(4.1)
%
3,330.8
3,708.2
(10.2)
%
Operating Costs and Expenses
Film exhibition costs
381.4
398.5
(4.3)
%
893.0
1,027.8
(13.1)
%
Food and beverage costs
89.7
90.1
(0.4)
%
222.6
243.2
(8.5)
%
Operating expense, excluding depreciation and amortization below
454.6
449.8
1.1
%
1,237.9
1,245.0
(0.6)
%
Rent
216.4
224.3
(3.5)
%
659.3
650.8
1.3
%
General and administrative:
Merger, acquisition and other costs
0.1
0.7
(85.7)
%
0.1
1.5
(93.3)
%
Other, excluding depreciation and amortization below
54.0
54.4
(0.7)
%
160.7
184.8
(13.0)
%
Depreciation and amortization
80.8
88.7
(8.9)
%
241.2
279.1
(13.6)
%
Operating costs and expenses
1,277.0
1,306.5
(2.3)
%
3,414.8
3,632.2
(6.0)
%
Operating income (loss)
71.8
99.4
(27.8)
%
(84.0)
76.0
*
%
Other expense (income), net:
Other income
(22.8)
(15.9)
43.4
%
(173.8)
(10.0)
*
%
Interest expense:
Corporate borrowings
109.6
93.4
17.3
%
289.8
276.1
5.0
%
Finance lease obligations
1.0
0.9
11.1
%
2.5
2.8
(10.7)
%
Non-cash NCM exhibitor service agreement
9.0
9.4
(4.3)
%
27.5
28.5
(3.5)
%
Investment income
(3.2)
(3.0)
6.7
%
(14.4)
(11.4)
26.3
%
Total other expense, net
93.6
84.8
10.4
%
131.6
286.0
(54.0)
%
Earnings (loss) before income taxes
(21.8)
14.6
*
%
(215.6)
(210.0)
2.7
%
Income tax provision (benefit)
(1.1)
2.3
*
%
1.4
4.6
(69.6)
%
Net earnings (loss)
$
(20.7)
$
12.3
*
%
$
(217.0)
$
(214.6)
1.1
%
* Percentage change in excess of 100%
Three Months Ended
Nine Months Ended
September 30,
September 30,
Operating Data:
2024
2023
2024
2023
Screen additions
13
—
13
—
Screen acquisitions
—
8
1
15
Screen dispositions
105
33
235
381
Construction openings (closures), net
3
(17)
(38)
(30)
Average screens (1)
9,534
9,781
9,618
9,885
Number of screens operated
9,800
10,078
9,800
10,078
Number of theatres operated
874
904
874
904
Screens per theatre
11.2
11.1
11.2
11.1
Attendance (in thousands) (1)
65,087
73,576
161,731
187,565
(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
September 30,
September 30,
September 30,
(In millions)
2024
2023
2024
2023
2024
2023
Revenues
Admissions
$
572.2
$
587.5
$
172.0
$
210.2
$
744.2
$
797.7
Food and beverage
398.3
382.8
92.1
99.9
490.4
482.7
Other theatre
84.8
93.6
29.4
31.9
114.2
125.5
Total revenues
1,055.3
1,063.9
293.5
342.0
1,348.8
1,405.9
Operating Costs and Expenses
Film exhibition costs
311.1
309.2
70.3
89.3
381.4
398.5
Food and beverage costs
67.0
65.1
22.7
25.0
89.7
90.1
Operating expense
345.7
339.5
108.9
110.3
454.6
449.8
Rent
160.7
166.4
55.7
57.9
216.4
224.3
General and administrative expense:
Merger, acquisition and other costs
0.1
0.6
—
0.1
0.1
0.7
Other, excluding depreciation and amortization below
34.1
37.2
19.9
17.2
54.0
54.4
Depreciation and amortization
62.1
69.2
18.7
19.5
80.8
88.7
Operating costs and expenses
980.8
987.2
296.2
319.3
1,277.0
1,306.5
Operating income (loss)
74.5
76.7
(2.7)
22.7
71.8
99.4
Other expense (income):
Other expense (income)
(0.2)
(27.4)
(22.6)
11.5
(22.8)
(15.9)
Interest expense:
Corporate borrowings
94.5
78.7
15.1
14.7
109.6
93.4
Finance lease obligations
—
0.1
1.0
0.8
1.0
0.9
Non-cash NCM exhibitor service agreement
9.0
9.4
—
—
9.0
9.4
Investment income
(3.0)
(2.4)
(0.2)
(0.6)
(3.2)
(3.0)
Total other expense (income), net
100.3
58.4
(6.7)
26.4
93.6
84.8
Earnings (loss) before income taxes
(25.8)
18.3
4.0
(3.7)
(21.8)
14.6
Income tax provision (benefit)
(1.9)
0.6
0.8
1.7
(1.1)
2.3
Net earnings (loss)
$
(23.9)
$
17.7
$
3.2
$
(5.4)
$
(20.7)
$
12.3
U.S. Markets
International Markets
Consolidated
Three Months Ended
Three Months Ended
Three Months Ended
September 30,
September 30,
September 30,
Segment Operating Data:
2024
2023
2024
2023
2024
2023
Screen additions
—
—
13
—
13
—
Screen acquisitions
—
8
—
—
—
8
Screen dispositions
69
33
36
—
105
33
Construction openings (closures), net
2
(11)
1
(6)
3
(17)
Average screens (1)
7,179
7,356
2,355
2,425
9,534
9,781
Number of screens operated
7,195
7,396
2,605
2,682
9,800
10,078
Number of theatres operated
547
567
327
337
874
904
Screens per theatre
13.2
13.0
8.0
8.0
11.2
11.1
Attendance (in thousands) (1)
46,924
51,524
18,163
22,052
65,087
73,576
(1) Includes consolidated theatres only and excludes screens offline due to construction.
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U.S. Markets
International Markets
Consolidated
Nine Months Ended
Nine Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
(In millions)
2024
2023
2024
2023
2024
2023
Revenues
Admissions
$
1,382.2
$
1,560.6
$
456.9
$
515.3
$
1,839.1
$
2,075.9
Food and beverage
948.8
1,052.4
229.9
247.2
1,178.7
1,299.6
Other theatre
229.3
242.8
83.7
89.9
313.0
332.7
Total revenues
2,560.3
2,855.8
770.5
852.4
3,330.8
3,708.2
Operating Costs and Expenses
Film exhibition costs
712.8
817.7
180.2
210.1
893.0
1,027.8
Food and beverage costs
165.8
181.2
56.8
62.0
222.6
243.2
Operating expense
926.0
930.4
311.9
314.6
1,237.9
1,245.0
Rent
489.0
485.0
170.3
165.8
659.3
650.8
General and administrative expense:
Merger, acquisition and other costs
0.1
1.4
—
0.1
0.1
1.5
Other
105.1
130.9
55.6
53.9
160.7
184.8
Depreciation and amortization
187.0
218.7
54.2
60.4
241.2
279.1
Operating costs and expenses
2,585.8
2,765.3
829.0
866.9
3,414.8
3,632.2
Operating income (loss)
(25.5)
90.5
(58.5)
(14.5)
(84.0)
76.0
Other expense (income):
Other income
(117.9)
(5.6)
(55.9)
(4.4)
(173.8)
(10.0)
Interest expense:
Corporate borrowings
244.9
232.1
44.9
44.0
289.8
276.1
Finance lease obligations
0.1
0.2
2.4
2.6
2.5
2.8
Non-cash NCM exhibitor service agreement
27.5
28.5
—
—
27.5
28.5
Investment expense (income)
(13.0)
4.7
(1.4)
(16.1)
(14.4)
(11.4)
Total other expense (income), net
141.6
259.9
(10.0)
26.1
131.6
286.0
Loss before income taxes
(167.1)
(169.4)
(48.5)
(40.6)
(215.6)
(210.0)
Income tax provision (benefit)
(0.7)
1.6
2.1
3.0
1.4
4.6
Net loss
$
(166.4)
$
(171.0)
$
(50.6)
$
(43.6)
$
(217.0)
$
(214.6)
U.S. Markets
International Markets
Consolidated
Nine Months Ended
Nine Months Ended
Nine Months Ended
September 30,
September 30,
September 30,
Segment Operating Data:
2024
2023
2024
2023
2024
2023
Screen additions
—
—
13
—
13
—
Screen acquisitions
—
8
1
7
1
15
Screen dispositions
157
244
78
137
235
381
Construction openings (closures), net
(17)
(16)
(21)
(14)
(38)
(30)
Average screens (1)
7,231
7,429
2,387
2,456
9,618
9,885
Number of screens operated
7,195
7,396
2,605
2,682
9,800
10,078
Number of theatres operated
547
567
327
337
874
904
Screens per theatre
13.2
13.0
8.0
8.0
11.2
11.1
Attendance (in thousands) (1)
113,907
133,909
47,824
53,656
161,731
187,565
(1) Includes consolidated theatres only and excludes screens offline due to construction.
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Segment Information
Our historical results of operations for the three and nine months ended September 30, 2024 and September 30, 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 September 30, 2024, Compared to the Three Months ended September 30, 2023
Condensed Consolidated Results of Operations
Revenues. Total revenues decreased $57.1 million, or 4.1%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Admissions revenues decreased $53.5 million, or 6.7%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a decrease in attendance of 11.5% from 73.6 million patrons to 65.1 million patrons, partially offset by a 5.4% increase in average ticket price. In our U.S. markets our market share of box office revenues declined for the three months ended September 30, 2024, compared to the three months ended September 30, 2023 driven by the interplay between the film slate and our geographic mix. In our International markets attendance declined due to the popularity of film product compared to the prior year. The increase in average ticket price was primarily due to increased ticket prices for all formats, increases in 3D, other PLF and IMAX screen volumes as a percentage of attendance and increases in attendance for alternative content.
Food and beverage revenues increased $7.7 million, or 1.6%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the increase in food and beverage per patron, partially offset by the decrease in attendance. Food and beverage per patron increased 14.8% from $6.56 to $7.53 due primarily to an increase in average prices and the percentage of guests making transactions, partially offset by lower units purchase per transaction and more frequent attendance from our AMC Stubs members.
Total other theatre revenues decreased $11.3 million, or 9.0%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decline in attendance and a decline in the number of tickets purchased online subject to convenience fees, which resulted in lower ticket fee and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $29.5 million, or 2.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Film exhibition costs decreased $17.1 million, or 4.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decrease in admissions revenues, partially offset by higher film rental terms. As a percentage of admissions revenues, film exhibition costs were 51.2% for the three months ended September 30, 2024, compared to 50.0% for the three months ended September 30, 2023. The increase in film exhibition cost percentage is primarily due to higher film rental terms in U.S. markets on top grossing films and alternative content during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Food and beverage costs decreased $0.4 million, or 0.4%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in food and beverage costs was primarily due to lower costs, partially offset by the increase in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 18.3% for the three months ended September 30, 2024, compared to 18.7% for the three months ended September 30, 2023.
Operating expense increased by $4.8 million, or 1.1%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in operating expense was primarily due to increases in equipment expense, premium format expense, and insurance, partially offset by decreases in utilities and advertising. As a percentage of revenues, operating expense was 33.7% for the three months ended September 30, 2024, compared to 32.0% for the three months ended September 30, 2023. Rent expense decreased 3.5%, or $7.9 million, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $0.1 million during the three months ended September 30, 2024, compared to $0.7 million during the three months ended September 30, 2023.
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Other. Other general and administrative expense decreased $0.4 million, or 0.7%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due primarily to declines in bonus expense as a result of lower-than-expected annual performance compared to annual targets in the current year compared to the prior year and lower stock-based compensation 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 $7.9 million, or 8.9%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other income. Other income of $22.8 million during the three months ended September 30, 2024 was primarily due to $73.5 million of income related to the decrease in fair value of the Conversion Option derivative liability, $21.5 million in foreign currency transaction gains, $14.9 million of recoveries related to the Shareholder Litigation, $5.2 million in equity in earnings related to non-consolidated entities, gain on extinguishment of debt of $1.3 million related to the redemption of $9.57 million aggregate principal amount of the Senior Subordinated Notes due 2026, and gain on extinguishment of debt of $0.5 million related to the redemption of $15.6 million aggregate principal amount of Senior Subordinated Notes due 2025, partially offset by a loss on extinguishment of debt of $52.6 million related to the redemption of $613.65 million aggregate principal amount of the Second Lien Notes and $41.0 million of third party costs related to the modification of the Existing Term Loans. Other income of $15.9 million during the three months ended September 30, 2023 was primarily due to $15.3 million of income related to the settlement of the Shareholder Litigation comprised of $16.1 million of non-cash income for the decrease in estimated fair value as of the date of the final Delaware Supreme Court order of settlement shares issued to holders of Common Stock on August 28, 2023, partially offset by $0.8 million of contingent insurance recovery costs, gains on extinguishment of debt of $10.8 million related to the redemption of $24.2 million aggregate principal amount of the Second Lien Notes, and equity earnings from non-consolidated entities of $3.1 million, partially offset by $12.8 million in foreign currency transaction losses. 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 $15.9 million to $119.6 million for the three months ended September 30, 2024, compared to $103.7 million during the three months ended September 30, 2023, primarily due to increased interest expense of $18.0 million on the New Term Loans compared to the Existing Term Loans, and interest expense of $7.9 million on the Exchangeable Notes issued on July 22, 2024, partially offset by declines in interest expense of $9.0 million on the Second Lien Notes due to redemptions of principal balances and declines in interest expense related to the revolving credit facility of $1.0 million. 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 $3.2 million for the three months ended September 30, 2024, compared to income of $3.0 million for the three months ended September 30, 2023. Investment income in the current year includes interest income of $4.6 million and $0.3 million of increase in estimated fair value of our investment in common shares of Hycroft, partially offset by $1.7 million of decrease in estimated fair value of our investment in warrants to purchase common shares of Hycroft. Investment income in the prior year includes $3.7 million of interest income and $0.1 million of increase in our investment in common shares of Hycroft, partially offset by decline in estimated fair value of $0.8 million in our investment in warrants to purchase common shares of Hycroft.
Income tax provision (benefit). The income tax benefit was $(1.1) million, compared to a provision of $2.3 million, for the three months ended September 30, 2024, and September 30, 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 earnings (loss). Net earnings (loss) was $(20.7) million and $12.3 million during the three months ended September 30, 2024, and September 30, 2023, respectively. Net loss during the three months ended September 30, 2024 compared to net earnings for the three months ended September 30, 2023 was negatively impacted by the decrease in attendance as a result of the decline in market share in U.S. markets and the popularity of new film releases in International markets compared to the prior year and an increase in interest expense, partially offset by decreases in rent expense, general and administrative expense, depreciation and amortization, increases in investment income, increases in other income and decreases in income tax provision.
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Theatrical Exhibition — U.S. Markets
Revenues. Total revenues decreased $8.6 million, or 0.8%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Admissions revenues decreased $15.3 million, or 2.6%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a decrease in attendance of 8.9% from 51.5 million patrons to 46.9 million patrons, partially offset by a 6.9% increase in average ticket price. Our market share of box office revenues declined for the three months ended September 30, 2024, compared to the three months ended September 30, 2023 driven by the interplay between the film slate and our geographic mix. The increase in average ticket price was primarily due to increased ticket prices for all formats, increases in 3D, other PLF and IMAX screen volumes as a percentage of attendance and increases in attendance for alternative content.
Food and beverage revenues increased $15.5 million, or 4.0%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the increase in food and beverage per patron, partially offset by the decrease in attendance. Food and beverage per patron increased 14.3% from $7.43 to $8.49 due primarily to an increase in average prices and the percentage of guests making transactions, partially offset by lower units purchase per transaction and more frequent attendance from our AMC Stubs members.
Total other theatre revenues decreased $8.8 million, or 9.4%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to decline in attendance and a decline in the number of tickets purchased online subject to convenience fees, which resulted in lower ticket fee and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $6.4 million, or 0.6%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Film exhibition costs increased $1.9 million, or 0.6%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decrease in admissions revenues, partially offset by higher film rental terms. As a percentage of admissions revenues, film exhibition costs were 54.4% for the three months ended September 30, 2024, compared to 52.6% for the three months ended September 30, 2023. The increase in film exhibition cost percentage is primarily due to higher film rental terms on top grossing films and alternative content during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Food and beverage costs increased $1.9 million, or 2.9%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in food and beverage costs was primarily due to the increase in food and beverage revenues, partially offset by lower costs. As a percentage of food and beverage revenues, food and beverage costs were 16.8% for the three months ended September 30, 2024, compared to 17.0% for the three months ended September 30, 2023.
Operating expense increased by $6.2 million, or 1.8%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The increase in operating expense was primarily due to increases in equipment expense, premium format expense, and insurance, partially offset by decreases in utilities and advertising. As a percentage of revenues, operating expense was 32.8% for the three months ended September 30, 2024, compared to 31.9% for the three months ended September 30, 2023. Rent expense decreased 3.4%, or $5.7 million, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $0.1 million during the three months ended September 30, 2024, compared to $0.6 million during the three months ended September 30, 2023.
Other. Other general and administrative expense decreased $3.1 million, or 8.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due primarily to declines in bonus expense as a result of lower-than-expected annual performance compared to annual targets in the current year compared to the prior year and lower stock-based compensation 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 $7.1 million, or 10.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
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Other income. Other income of $0.2 million during the three months ended September 30, 2024 was primarily due to $73.5 million of income related to the decrease in fair value of the Conversion Option derivative liability, $14.9 million of recoveries related to the Shareholder Litigation, $4.5 million in equity in earnings related to non-consolidated entities, gain on extinguishment of debt of $1.3 million related to the redemption of $9.57 million aggregate principal amount of the Senior Subordinated Notes due 2026, and gain on extinguishment of debt of $0.5 million related to the redemption of $15.6 million aggregate principal amount of Senior Subordinated Notes due 2025, partially offset by a loss on extinguishment of debt of $52.6 million related to the redemption of $613.65 million aggregate principal amount of the Second Lien Notes and $41.0 million of third party costs related to the modification of the Existing Term Loans. Other income of $27.4 million during the three months ended September 30, 2023 was primarily due to $15.3 million of income related to the settlement of the Shareholder Litigation comprised of $16.1 million of non-cash income for the decrease in estimated fair value as of the date of the final Delaware Supreme Court order of settlement shares issued to holders of Common Stock on August 28, 2023, partially offset by $0.8 million of contingent insurance recovery costs, gains on extinguishment of debt of $10.8 million related to the redemption of $24.2 million aggregate principal amount of the Second Lien Notes and equity earnings from non-consolidated entities of $1.5 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 $15.3 million to $103.5 million for the three months ended September 30, 2024, compared to $88.2 million during the three months ended September 30, 2023, primarily due to increased interest expense of $18.0 million on the New Term Loans compared to the Existing Term Loans, and interest expense of $7.9 million on the Exchangeable Notes issued on July 22, 2024, partially offset by declines in interest expense of $9.0 million on the Second Lien Notes due to redemptions of principal balances and declines in interest expense related to the revolving credit facility of $1.0 million. 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 $3.0 million for the three months ended September 30, 2024, compared to income of $2.4 million for the three months ended September 30, 2023. Investment income in the current year includes interest income of $4.4 million and $0.3 million of increase in estimated fair value of our investment in common shares of Hycroft, partially offset by $1.7 million of decrease in estimated fair value of our investment in warrants to purchase common shares of Hycroft. Investment income in the prior year includes $(3.1) million in interest income and $(0.1) million of increase in estimated fair value of our investment in common shares of Hycroft, partially offset by $0.8 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft.
Income tax provision (benefit). The income tax benefit was $(1.9) million, compared to a provision of $0.6 million, for the three months ended September 30, 2024, and September 30, 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 earnings (loss). Net earnings (loss) was $(23.9) million and $17.7 million during the three months ended September 30, 2024, and September 30, 2023, respectively. Net loss during the three months ended September 30, 2024 compared to net earnings for the three months ended September 30, 2023 was negatively impacted by the decrease in attendance as a result of the decline in market share compared to the prior year and decreases in other income and an increase in interest expense, partially offset by decreases in rent expense, general and administrative expense, depreciation and amortization, increases in investment income and decreases in income tax provision.
Theatrical Exhibition—International Markets
Revenues. Total revenues decreased $48.5 million, or 14.2%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Admissions revenues decreased $38.2 million, or 18.2%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a decrease in attendance of 17.6% from 22.1 million patrons to 18.2 million patrons and a decrease in average ticket price of 0.6%. The decrease in attendance was primarily due to the popularity of film product compared to the prior year.
Food and beverage revenues decreased $7.8 million, or 7.8%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decrease in attendance, partially
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offset by an increase in food and beverage per patron. Food and beverage per patron increased 11.9% from $4.53 to $5.07 primarily due to an increase in average prices and the percentage of guests making transactions.
Total other theatre revenues decreased $2.5 million, or 7.8%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decline in attendance and a decline in the number of tickets purchased online subject to convenience fees, which resulted in lower ticket fee and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $23.1 million, or 7.2%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Film exhibition costs decreased $19.0 million, or 21.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 40.9% for the three months ended September 30, 2024, compared to 42.5% for the three months ended September 30, 2023. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the prior year, which typically results in higher film exhibition costs.
Food and beverage costs decreased $2.3 million, or 9.2%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 24.6% for the three months ended September 30, 2024, compared to 25.0% for the three months ended September 30, 2023.
Operating expense decreased by $1.4 million, or 1.3%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. The decrease in operating expense was primarily due to lower utilities expense and the decrease in attendance. As a percentage of revenues, operating expense was 37.1% for the three months ended September 30, 2024, compared to 32.3% for the three months ended September 30, 2023. Rent expense decreased 3.8%, or $2.2 million, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Other. Other general and administrative expense increased $2.7 million, or 15.7%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to payroll and related costs.
Depreciation and amortization. Depreciation and amortization decreased $0.8 million, or 4.1%, during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other expense (income). Other expense (income) of $(22.6) million during the three months ended September 30, 2024 was primarily due to foreign currency transaction gains of $(21.9) million and equity in earnings of non-consolidated entities of $(0.7) million. Other expense of $11.5 million during the three months ended September 30, 2023 was primarily due to $12.8 million in foreign currency transaction losses, partially offset by equity in earnings of non-consolidated entities of $(1.6) 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 $0.6 million to $16.1 million for the three months ended September 30, 2024, compared to $15.5 million for the three months ended September 30, 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 $0.2 million for the three months ended September 30, 2024, compared to income of $0.6 million for the three months ended September 30, 2023. Investment income in the current and prior year is comprised of interest income.
Income tax provision. The income tax provision was $0.8 million and $1.7 million for the three months ended September 30, 2024, and September 30, 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.
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Net earnings (loss). Net earnings (loss) was $3.2 million and $(5.4) million during the three months ended September 30, 2024, and September 30, 2023, respectively. Net earnings during the three months ended September 30, 2024 compared to net loss for the three months ended September 30, 2023 was positively impacted by decreases in depreciation and amortization expense, and decreases in rent expense and decreases in other expense, partially offset by the decrease in attendance as a result of the popularity of new film releases compared to the prior year, increases in general and administrative expense, increases in interest expense and decreases in income tax benefit.
Results of Operations—For the Nine Months ended September 30, 2024 Compared to the Nine Months ended September 30, 2023
Condensed Consolidated Results of Operations
Revenues. Total revenues decreased $377.4 million, or 10.2%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Admissions revenues decreased $236.8 million, or 11.4%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to a decrease in attendance of 13.8% from 187.6 million patrons to 161.7 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 in U.S. markets compared to the prior year. The availability and popularity of film product released during the nine months ended September 30, 2024, was negatively impacted by labor stoppages during 2023. The increase in average ticket price was primarily due to increased ticket prices for all formats, increases in IMAX and other PLF screen volumes as a percentage of attendance and increases in attendance for alternative content.
Food and beverage revenues decreased $120.9 million, or 9.3%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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 5.2% from $6.93 to $7.29 due primarily to an increase in average prices, partially offset by lower units purchase per transaction, a decline in the percentage of guests making transactions and more frequent attendance from our AMC Stubs members.
Total other theatre revenues decreased $19.7 million, or 5.9%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decline in attendance which resulted in lower ticket fees and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $217.4 million, or 6.0%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Film exhibition costs decreased $134.8 million, or 13.1%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 48.6% for the nine months ended September 30, 2024, compared to 49.5% for the nine months ended September 30, 2023. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the prior year, which typically results in higher film exhibition costs.
Food and beverage costs decreased $20.6 million, or 8.5%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in food and beverage costs was primarily due to lower food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 18.9% for the nine months ended September 30, 2024, compared to 18.7% for the nine months ended September 30, 2023.
Operating expense decreased by $7.1 million, or 0.6%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in operating expense was primarily due to the decrease in attendance. As a percentage of revenues, operating expense was 37.2% for the nine months ended September 30, 2024, compared to 33.6% for the nine months ended September 30, 2023. Rent expense increased 1.3%, or $8.5 million, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $0.1 million during the nine months ended September 30, 2024, compared to $1.5 million during the nine months ended September 30, 2023.
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Other. Other general and administrative expense decreased $24.1 million, or 13.0%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due primarily to lower stock-based compensation expense and declines in bonus expense, as a result of lower expected annual performance compared to annual targets in the current year compared to the prior year. We recorded $2.1 million of stock-based compensation expense during the nine months ended September 30, 2024 compared to $20.2 million during the nine months ended September 30, 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. 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 $37.9 million, or 13.6%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other income. Other income of $173.8 million during the nine months ended September 30, 2024 was primarily due to $73.5 million of income related to the decrease in fair value of the Conversion Option derivative liability, a gain on extinguishment of debt of $38.5 million related to the redemption of $805.0 million aggregate principal amount of the Second Lien Notes, the favorable settlement of a vendor dispute of $36.2 million, $34.0 million of recoveries related to the Shareholder Litigation, $18.9 million of foreign currency transaction gains, $9.9 million of equity in earnings of non-consolidated entities and $3.6 million of other settlement proceeds, partially offset by $41.0 million of third party costs related to the modification of the Existing Term Loans. Other income of $10.0 million during the nine months ended September 30, 2023 was primarily due to a gain on extinguishment of debt of $95.2 million related to the redemption of $165.6 million aggregate principal amount of the Second Lien Notes, 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, equity in earnings of non-consolidated entities of $5.3 million and $3.2 million in foreign currency transaction gains, partially offset by, $110.1 million of expense related to the settlement of the Shareholder Litigation comprised of $10.8 million of estimated legal fees and contingent insurance recovery costs and $99.3 million of non-cash expense for the estimated fair value as of the date of the final Delaware Supreme Court order of settlement shares issued to holders of Common Stock on August 28, 2023 . 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 $12.4 million to $319.8 million for the nine months ended September 30, 2024, compared to $307.4 million during the nine months ended September 30, 2023, primarily due to increased interest expense of $24.2 million on the New Term Loans compared to the Existing Term Loans, and interest expense of $7.9 million on the Exchangeable Notes issued on July 22, 2024, partially offset by declines in interest expense of $17.4 million on the Second Lien Notes due to redemptions of principal balances and declines in interest expense related to the revolving credit facility of $1.8 million. 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 $14.4 million for the nine months ended September 30, 2024, compared to $11.4 million for the nine months ended September 30, 2023. Investment income in the current year includes interest income of $16.1 million and $0.2 million of increase in estimated fair value of our investment in common shares of Hycroft, partially offset by $1.9 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 $8.5 million, partially offset by $5.4 million of decline in estimated fair value of our investment in common shares of Hycroft and $5.4 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft and $1.8 million of expense for NCM Common Units.
Income tax provision. The income tax provision was $1.4 million and $4.6 million for the nine months ended September 30, 2024, and September 30, 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.
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Net loss. Net loss was $217.0 million and $214.6 million during the nine months ended September 30, 2024, and September 30, 2023, respectively. Net loss during the nine months ended September 30, 2024 compared to net loss for the nine months ended September 30, 2023 was negatively impacted by the decrease in attendance as a result of the popularity of new film releases compared to the prior year and increases in interest expense, partially offset by decreases in rent expense, decreases in general and administrative expense, decreases in depreciation and amortization, increases in other income, increases in investment income and decreases in income tax provision.
Theatrical Exhibition—U.S. Markets
Revenues. Total revenues decreased $295.5 million, or 10.3%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Admissions revenues decreased $178.4 million or 11.4%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to a decrease in attendance of 14.9% from 133.9 million patrons to 113.9 million patrons, partially offset by a 4.1% 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 nine months ended September 30, 2024, was negatively impacted by labor stoppages during 2023. The increase in average ticket price was primarily due to increased ticket prices for all formats, increases in IMAX and other PLF screen volumes as a percentage of attendance and increases in attendance for alternative content.
Food and beverage revenues decreased $103.6 million, or 9.8%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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 6.0% from $7.86 to $8.33 due primarily to an increase in average prices, partially offset by lower units purchase per transaction, a decline in the percentage of guests making transactions and more frequent attendance from our AMC Stubs members.
Total other theatre revenues decreased $13.5 million, or 5.6%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decline in attendance which resulted in lower ticket fees and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $179.5 million, or 6.5%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Film exhibition costs decreased $104.9 million, or 12.8%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 51.6% for the nine months ended September 30, 2024, compared to 52.4% for the nine months ended September 30, 2023. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the prior year, which typically results in higher film exhibition costs.
Food and beverage costs decreased $15.4 million, or 8.5%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 17.5% for the nine months ended September 30, 2024, and 17.2% for the nine months ended September 30, 2023.
Operating expense decreased by $4.4 million, or 0.5%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in operating expense was primarily due to the decrease in attendance. As a percentage of revenues, operating expense was 36.2% for the nine months ended September 30, 2024, compared to 32.6% for the nine months ended September 30, 2023. Rent expense increased 0.8%, or $4.0 million, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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.
Merger, acquisition, and other costs. Merger, acquisition, and other costs were $0.1 million during the nine months ended September 30, 2024, compared to $1.4 million during the nine months ended September 30, 2023.
Other. Other general and administrative expense decreased $25.8 million, or 19.7%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due primarily to declines in stock-based compensation expense and lower bonus expense, as a result of lower annual performance compared to annual targets in the current year compared to the prior year. We recorded $1.9 million of stock-based compensation expense during the nine months ended September 30, 2024 compared to $18.1 million during the nine months ended September
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30, 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. 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 $31.7 million, or 14.5%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other income. Other income of $117.9 million during the nine months ended September 30, 2024 was primarily due to $73.5 million of income related to the decrease in fair value of the Conversion Option derivative liability, a gain on extinguishment of debt of $38.5 million related to the redemption of $805.0 million aggregate principal amount of the Second Lien Notes, $34.0 million of recoveries related to the Shareholder Litigation, $10.1 million of equity in earnings of non-consolidated entities and $3.6 million of other settlement proceeds, partially offset by $41.0 million of third party costs related to the modification of the Existing Term Loans. Other income of $5.6 million during the nine months ended September 30, 2023 was primarily due to a gain on extinguishment of debt of $95.2 million related to the redemption of $165.6 million aggregate principal amount of the Second Lien Notes, 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 $3.8 million, partially offset by $110.1 million of expense related to the settlement of the Shareholder Litigation comprised of $10.8 million of estimated legal fees and contingent insurance recovery costs and $99.3 million of non-cash expense for the estimated fair value as of the date of the final Delaware Supreme Court order of settlement shares issued to holders of Common Stock on August 28, 2023. 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 $11.7 million to $272.5 million for the nine months ended September 30, 2024, compared to $260.8 million during the nine months ended September 30, 2023, primarily due to increased interest expense of $24.2 million on the New Term Loans compared to the Existing Term Loans, and interest expense of $7.9 million on the Exchangeable Notes issued on July 22, 2024, partially offset by declines in interest expense of $17.4 million on the Second Lien Notes due to redemptions of principal balances and declines in interest expense related to the revolving credit facility of $1.8 million. 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 expense (income). Investment income was $(13.0) million for the nine months ended September 30, 2024, compared to expense of $4.7 million for the nine months ended September 30, 2023. Investment income in the current year includes interest income of $(14.7) million and $(0.2) million of increase in the estimated fair value of our investment in common shares of Hycroft, partially offset by $1.9 million of decrease in estimated fair value of our investment in warrants to purchase common shares of Hycroft. Investment expense in the prior year includes $5.4 million of decline in estimated fair value of our investment in common shares of Hycroft, $5.4 million of decline in estimated fair value of our investment in warrants to purchase common shares of Hycroft and $1.8 million of expense for NCM Common Units, partially offset by interest income of $7.9 million.
Income tax provision (benefit). The income tax benefit was $(0.7) million and provision $1.6 million for the nine months ended September 30, 2024, and September 30, 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 $166.4 million and $171.0 million during the nine months ended September 30, 2024, and September 30, 2023, respectively. Net loss during the nine months ended September 30, 2024, compared to net loss for the nine months ended September 30, 2023, were positively impacted by decreases in general and administrative expense, depreciation and amortization, increases in other income, decreases in investment expense and the 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 and increases in interest expense.
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Theatrical Exhibition—International Markets
Revenues. Total revenues decreased $81.9 million, or 9.6%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Admissions revenues decreased $58.4 million, or 11.3%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to a decrease in attendance of 10.9% from 53.7 million patrons to 47.8 million patrons and a decrease in average ticket price of 0.5%. The decrease in attendance was primarily due to the popularity of film product compared to the prior year.
Food and beverage revenues decreased $17.3 million, or 7.0%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 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 4.3% from $4.61 to $4.81 primarily due to an increase in average prices and the percentage of guests making transactions.
Total other theatre revenues decreased $6.2 million, or 6.9%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decline in attendance which resulted in lower ticket fees and advertising revenues.
Operating costs and expenses. Operating costs and expenses decreased $37.9 million, or 4.4%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Film exhibition costs decreased $29.9 million, or 14.2%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the decrease in attendance and lower film rental terms. As a percentage of admissions revenues, film exhibition costs were 39.4% for the nine months ended September 30, 2024, compared to 40.8% for the nine months ended September 30, 2023. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the prior year, which typically results in higher film exhibition costs.
Food and beverage costs decreased $5.2 million, or 8.4%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 24.7% for the nine months ended September 30, 2024, compared to 25.1% for the nine months ended September 30, 2023.
Operating expense decreased by $2.7 million, or 0.9%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. The decrease in operating expense was primarily due to lower utilities expense and the decrease in attendance. As a percentage of revenues, operating expense was 40.5% for the nine months ended September 30, 2024, compared to 36.9% for the nine months ended September 30, 2023. Rent expense increased 2.7%, or $4.5 million, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Other. Other general and administrative expense increased $1.7 million, or 3.2%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Depreciation and amortization. Depreciation and amortization decreased $6.2 million, or 10.3%, during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to theatre closures and lower depreciation expense on theatres impaired during the year ended December 31, 2023.
Other income. Other income of $55.9 million during the nine months ended September 30, 2024, was primarily due to the favorable settlement of a vendor dispute of $36.2 million, and foreign currency transaction gains of $19.0 million. Other income of $4.4 million during the nine months ended September 30, 2023, was primarily due to $3.2 million in foreign currency transaction gains. 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 by $0.7 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 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.
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Investment income. Investment income was $1.4 million for the nine months ended September 30, 2024, and $16.1 million for the nine months ended September 30, 2023. Investment income in the current year includes $1.4 million of interest income. 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 $(0.6) million.
Income tax provision. The income tax provision was $2.1 million and $3.0 million for the nine months ended September 30, 2024, and September 30, 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 $50.6 million and $43.6 million during the nine months ended September 30, 2024, and September 30, 2023, respectively. Net loss during the nine months ended September 30, 2024 compared to net loss for the nine months ended September 30, 2023 was negatively impacted 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 general and administrative expenses, increases in interest expense and decreases in investment income, partially offset by decreases in depreciation and amortization expense, increases in other income and decreases in income tax provision.
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. 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. During the three months ended September 30, 2024, the Company changed the definition of Adjusted EBITDA to no longer further adjust for “cash distributions from non-consolidated entities” and “other non-cash rent benefit.” All comparative period information for Adjusted EBITDA has been re-cast to conform with the current definition.
The following tables set forth our Adjusted EBITDA by reportable operating segment and our reconciliation of Adjusted EBITDA:
Three Months Ended
Nine Months Ended
Adjusted EBITDA (In millions)
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
U.S. markets
$
143.3
$
155.5
$
178.5
$
353.4
International markets
18.5
44.4
0.6
53.0
Total Adjusted EBITDA
$
161.8
$
199.9
$
179.1
$
406.4
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Three Months Ended
Nine Months Ended
(In millions)
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Net earnings (loss)
$
(20.7)
$
12.3
$
(217.0)
$
(214.6)
Plus:
Income tax provision (benefit) (1)
(1.1)
2.3
1.4
4.6
Interest expense
119.6
103.7
319.8
307.4
Depreciation and amortization
80.8
88.7
241.2
279.1
Certain operating expense (2)
2.0
3.8
3.5
4.0
Equity in earnings of non-consolidated entities (3)
(5.2)
(3.1)
(9.9)
(5.3)
Attributable EBITDA (4)
1.3
1.4
1.2
1.6
Investment income (5)
(3.2)
(3.0)
(14.4)
(11.4)
Other income (6)
(18.1)
(14.1)
(161.9)
(1.4)
General and administrative — unallocated:
Merger, acquisition and other costs (7)
0.1
0.7
0.1
1.5
Stock-based compensation expense (8)
6.3
7.2
15.1
40.9
Adjusted EBITDA
$
161.8
$
199.9
$
179.1
$
406.4
(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) Equity in earnings of non-consolidated entities during the three months ended September 30, 2024 primarily consisted of equity in earnings from AC JV of $(4.3) million. Equity in earnings of non-consolidated entities during the three months ended September 30, 2023 primarily consisted of equity in earnings from AC JV of $(1.5) million.
Equity in earnings of non-consolidated entities during the nine months ended September 30, 2024 primarily consisted of equity in earnings from AC JV of $(9.5) million. Equity in earnings of non-consolidated entities during the nine months ended September 30, 2023 primarily consisted of equity in earnings from AC JV of $(3.4) million.
(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
Nine Months Ended
(In millions)
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Equity in (earnings) of non-consolidated entities
$
(5.2)
$
(3.1)
$
(9.9)
$
(5.3)
Less:
Equity in (earnings) of non-consolidated entities excluding International theatre joint ventures
(4.7)
(2.1)
(10.3)
(4.7)
Equity in earnings (loss) of International theatre joint ventures
0.5
1.0
(0.4)
0.6
Income tax provision (benefit)
—
0.1
(0.1)
(0.1)
Investment income
(0.1)
(0.2)
—
(0.1)
Interest expense
—
0.1
0.1
0.2
Depreciation and amortization
0.7
0.4
1.4
1.0
Other expense
0.2
—
0.2
—
Attributable EBITDA
$
1.3
$
1.4
$
1.2
$
1.6
(5) Investment expense (income) during the three months ended September 30, 2024 includes appreciation in estimated fair value of our investment in common shares of Hycroft of $(0.3) million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $1.7 million and interest income of $(4.6) million. Investment expense (income) during the three months ended September 30, 2023 included appreciation in estimated fair value of our investment in common shares of Hycroft of $(0.1) million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $0.8 million, and interest income of $(3.7) million.
Investment expense (income) during the nine months ended September 30, 2024 includes appreciation in estimated fair value of our investment in common shares of Hycroft of $(0.2) million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $1.9 million, and interest income of $(16.1) million. Investment expense (income) during the nine months ended September 30, 2023 included deterioration in estimated fair value of our investment in common shares of Hycroft of $5.4 million, deterioration in estimated fair value of our investment in warrants to purchase common shares of Hycroft of $5.4 million, $1.8 million of expense for NCM Common Units, $(15.5) million gain on the sale of our investment in Saudi Cinema Company, LLC and interest income of $(8.5) million.
(6) Other expense (income) during the three months ended September 30, 2024 includes shareholder litigation recoveries of $(14.9) million, foreign currency transaction gains of $(21.5) million, losses on debt extinguishment of $50.8 million, term loan modification third party fees of $41.0 million, and a decrease in fair value of the derivative liability for the embedded conversion feature in the Exchangeable Notes of $(73.5) million. Other expense (income) during the three months ended September 30, 2023 included a non-cash litigation contingency adjustment of $(16.1) million, foreign currency transaction losses of $12.8 million, and gains on debt extinguishment of $(10.8) million.
Other expense (income) during the nine months ended September 30, 2024 includes shareholder litigation recoveries of $(34.0) million, gains on debt extinguishment of $(40.3) million, term loan modification third party fees of $41.0 million, a vendor dispute settlement of $(36.2) million, foreign currency transaction gains of $(18.9) million and a decrease in fair value of the derivative liability for the embedded conversion feature in the Exchangeable Notes of $(73.5) million. Other expense (income) during the nine months ended September 30, 2023 included a non-cash litigation contingency charge of $99.3 million, partially offset by gains on debt extinguishment of $(97.5) million and foreign currency transaction gains of $(3.2) million.
(7) Merger, acquisition and other costs are excluded as they are non-operating in nature.
(8) Non-cash expense included in general and administrative: other.
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.
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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 September 30, 2024, Adjusted EBITDA in the U.S. markets was $143.3 million compared to $155.5 million during the three months ended September 30, 2023. The year-over-year decline was primarily driven by a decrease in attendance partially due to a decline in market share of box office revenues compared to the prior year driven by the interplay between the film slate and our geographic mix, increases in film exhibition cost as a percentage of admissions revenue, and increases in operating expenses. These declines were partially offset by increases in average ticket price, increases in food and beverage sales per patron, decreases in rent expense and decreases in general and administrative expenses. During the three months ended September 30, 2024, Adjusted EBITDA in the International markets was $18.5 million compared to $44.4 million during the three months ended September 30, 2023. The year-over-year decline was primarily driven by a decrease in attendance as a result of the popularity of new film releases compared to the prior year and declines in average ticket price. These declines were partially offset by increases in food and beverage sales per patron and decreases in rent expense. During the three months ended September 30, 2024, Adjusted EBITDA in the U.S. markets and International markets was $161.8 million compared to $199.9 million during the three months ended September 30, 2023, driven by the aforementioned factors impacting Adjusted EBITDA.
During the nine months ended September 30, 2024, Adjusted EBITDA in the U.S. markets was $178.5 million compared to $353.4 million during the nine months ended September 30, 2023. The year-over-year decline was primarily driven by a decrease in attendance as a result of the availability and popularity of new film releases compared to the prior year and increases in rent expense due to a prior year rent credit for a theatre termination. These declines were partially offset by increases in average ticket price, increases in food and beverage sales per patron and decreases in general and administrative expenses. During the nine months ended September 30, 2024, Adjusted EBITDA in the International markets was $0.6 million compared to $53.0 million during the nine months ended September 30, 2023. The year-over-year decline was primarily driven by a decrease in attendance as a result of the popularity of new film releases compared to the prior year, declines in average ticket price and increases in rent expense. During the nine months ended September 30, 2024, Adjusted EBITDA in the U.S. markets and International markets was $179.1 million compared to $406.4 million during the nine months ended September 30, 2023, driven by the aforementioned factors impacting Adjusted EBITDA.
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.
We had working capital deficit (excluding restricted cash) as of September 30, 2024, and December 31, 2023 of ($839.5) million and $(456.4) million, respectively. As of September 30, 2024 and December 31, 2023, working capital included operating lease liabilities of $527.6 million and $508.8 million, respectively, and deferred revenues of $385.1 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.
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As of September 30, 2024, we had cash and cash equivalents of $527.4 million.
We have continued to lower the future interest expense of our fixed-rate debt through debt buybacks and 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.
Refinancing Transactions
On July 22, 2024, we completed a series of refinancing transactions (the “Refinancing Transactions”) with two creditor groups to refinance and extend to 2029 and 2030 the maturities of approximately $1.6 billion of our debt previously maturing in 2026.
On August 1, 2024, we completed follow-on open market repurchases of our Existing Term Loans, and in exchange, issued to such selling holders our New Term Loans pursuant to the New Term Loan Credit Agreement of approximately $762.0 million.
On August 14, 2024, we completed an additional follow-on open market repurchase of our Existing Term Loans, and in exchange, issued to such selling holders our New Term Loans pursuant to the New Term Loan Credit Agreement of approximately $4.0 million.
On September 17, 2024, we issued $27.0 million of New Term Loans at par for cash and used the proceeds to redeem the remaining Existing Term Loans. As of September 30, 2024, the Company completed open market purchases of $1,895.0 million aggregate principal amount of its Existing Term Loans and issued $2,024.3 million aggregate principal amount of the New Term Loans. Accordingly, as of such date, the Company had no remaining aggregate principal amount of Existing Term Loans outstanding.
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 further information.
Liquidity Requirements
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. Our current cash burn rates are not sustainable long-term. In order to achieve sustainable net positive cash flows provided by operating activities and long-term profitability, we believe that revenues will need to increase to levels at least in line with pre-COVID-19 revenues. North American box office grosses were down approximately 25% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2019. Until such time as we are able to achieve sustainable net positive cash flows provided by operating activities, 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 revenue, the estimates of amounts of required liquidity vary significantly.
There can be no assurance that the 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 that occurred during 2023 had a negative impact in 2024 on the film slate for exhibition, the Company’s 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 $250.0 million, through an at-the-market offering program. During the nine months ended September 30, 2024, we raised gross proceeds of $250.0
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million and paid fees to sales agents and incurred other third-party issuance costs of approximately $6.3 million and $0.6 million, respectively, through the at-the-market offering of approximately 72.5 million shares of Common Stock. We paid $0.7 million of other third-party issuance costs during the nine months ended September 30, 2024. We intend to use any net proceeds from the sale of Common Stock pursuant to the program to bolster liquidity, to repay, refinance, redeem or repurchase our existing indebtedness (including expenses, accrued interest and premium, if any) and for general corporate purposes.
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. We currently do not expect to replace 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.
Cash Flows from Operating Activities
Net cash flows used in operating activities, as reflected in the condensed consolidated statements of cash flows, were $254.4 million and $137.4 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The increase in net cash flows used in operating activities was primarily due to the decline in attendance due to the impact of labor stoppages that occurred during 2023 and third-party fees paid in connection with the modification of the term loans. All things being equal, a decline in attendance results in less cash inflows provided by operating activities that could be used to pay for the costs associated with our operations, thus creating an increase in net cash used in operations. The additional cash used in operating activities due to the decline in attendance was partially offset by reductions in rent repayments that were deferred during the COVID-19 pandemic and vendor dispute and other settlement proceeds received during the nine months ended September 30, 2024.
Cash Flows from Investing Activities
Net cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were $154.0 million and $116.4 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. Cash outflows from investing activities include capital expenditures of $155.8 million and $153.5 million during the nine months ended September 30, 2024, and September 30, 2023, respectively.
During the nine months ended September 30, 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 $8.6 million.
We fund the costs of constructing, maintaining, and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or capital raised, 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 provided by financing activities, as reflected in the condensed consolidated statements of cash flows, were $72.1 million and $355.3 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. Cash flows provided by financing activities during the nine months ended September 30, 2024, were primarily due to net proceeds from equity issuances of $243.0 million and proceeds from the issuance of New Term Loans of $27.0 million, partially offset by the repurchase of Second Lien Notes of $83.2 million, deferred debt issuance costs of $45.7 million, principal payments under Existing Term Loans of $27.0 million, the repurchase of Senior Subordinated Notes due 2025 of $12.9 million, the repurchase of Senior Subordinated Notes due 2026 of $6.0 million, principal payments under term loan borrowings of $15.1 million, and taxes paid for restricted unit withholdings of $2.2 million. See Note 6—Corporate Borrowings and Finance Lease Liabilities and Note 7—Stockholders’ Equity in the Notes to the 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 September 30, 2024.
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Cash flows provided by financing activities during the nine months ended September 30, 2023, were primarily due to net proceeds from equity issuances of $492.4 million, net of issuance costs, partially offset by the repurchase of Second Lien Notes for $99.8 million, and taxes paid for restricted unit withholdings of $14.2 million.
Formation of Unrestricted Subsidiaries
On July 22, 2024, American-Multi Cinema Inc. (“Multi-Cinema”), a Missouri corporation and a direct subsidiary of AMC Entertainment Holdings, Inc. (“Holdings”), assigned or transferred the net assets (“Theatre Net Assets”) of 175 theatres and transferred a 100% interest in certain intellectual property assets to its direct subsidiary Centertainment Development, LLC (“Centertainment”), and the Theatre Net Assets were in turn transferred to Centertainment’s direct wholly-owned subsidiary Muvico, LLC (“Muvico”), a newly formed Texas limited liability company. Theatre Net Assets include lease contracts and theatre property, including furniture, fixtures, plant and equipment, and other working capital items associated directly with the theatre locations. At the same time, Muvico licensed the intellectual property back to Multi-Cinema for its continued use in the operation of its retained theatres and entered into a management agreement for Multi-Cinema to operate the theatres transferred to Muvico. Muvico and Centertainment (collectively, the “Muvico Group”) are unrestricted subsidiaries under the indenture governing Holdings’ Existing First Lien Notes.
Unrestricted Subsidiaries’ Financial Information and Operating Metrics
Pursuant to the indenture governing Holdings’ Existing First Lien Notes, the indenture governing Muvico’s Exchangeable Notes, and the New Term Loan Credit Agreement governing Holdings’ and Muvico’s New Term Loans, we are presenting the following financial information and operating metrics for the Muvico Group separately from Holdings and its restricted subsidiaries (the “Restricted Subsidiaries” and collectively with Holdings, the “AMC Group”). AMC Theatres of UK Limited, which is an unrestricted subsidiary under the indenture governing Holdings’ Existing First Lien Notes has been included with the Restricted Subsidiaries for the purposes of the following presentation of financial information and operating metrics (this subsidiary is individually immaterial). The financial information presented for AMC Group and Muvico Group is presented on a standalone basis with discrete identification of the assets, liabilities, revenues and expenses associated with the Theatre Net Assets that were transferred to Muvico. Intercompany transactions between entities within the AMC Group or within the Muvico Group have been eliminated. Certain entities within the AMC Group and within the Muvico Group are parties to intercompany management, licensing, and debt agreements with each other. These transactions are reflected discretely within the columnar presentation below and are properly eliminated upon consolidation. The financial information is also prepared using the historical cost carrying values of Holdings, the top parent entity.
Holdings and Muvico are co-borrowers and joint and severally liable for the New Term Loan borrowings. Pursuant to ASC 405-40 we have allocated fifty percent (50%) of the liabilities, interest expense and cash flows each to Muvico and Holdings, respectively. The basis of this allocation is the amount we expect each party to pay.
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Three Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Eliminations
Consolidated
(In millions)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Admissions
$
577.3
$
166.9
$
—
$
744.2
Food and beverage
400.3
90.1
—
490.4
Other theatre (4)
101.9
20.4
(8.1)
114.2
Total revenues
1,079.5
277.4
(8.1)
1,348.8
Operating costs and expenses
Film exhibition costs
291.8
89.6
—
381.4
Food and beverage costs
74.6
15.1
—
89.7
Operating expense, excluding depreciation and amortization below
362.4
92.2
—
454.6
Rent
173.7
42.7
—
216.4
General and administrative:
Merger, acquisition and other costs
0.1
—
—
0.1
Other, excluding depreciation and amortization below (4)
57.9
4.2
(8.1)
54.0
Depreciation and amortization
65.7
15.1
—
80.8
Operating costs and expenses
1,026.2
258.9
(8.1)
1,277.0
Operating income
53.3
18.5
—
71.8
Other expense, net:
Other expense (income), net
50.7
(73.5)
—
(22.8)
Interest expense:
Corporate borrowings
77.6
32.0
—
109.6
Finance lease obligations
1.0
—
—
1.0
Intercompany interest expense
—
3.2
(3.2)
—
Non-cash NCM exhibitor services agreement
9.0
—
—
9.0
Intercompany interest income
(3.2)
—
3.2
—
Investment expense (income)
(0.5)
(2.7)
—
(3.2)
Total other expense (income), net
134.6
(41.0)
—
93.6
Earnings (loss) before income taxes
(81.3)
59.5
—
(21.8)
Income tax provision (benefit) (3)
(1.1)
—
—
(1.1)
Net earnings (loss)
$
(80.2)
$
59.5
$
—
$
(20.7)
Three Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Consolidated
(unaudited)
(unaudited)
(unaudited)
Net earnings (loss)
$
(80.2)
$
59.5
$
(20.7)
Other comprehensive income (loss):
Unrealized foreign currency translation adjustments
8.7
—
8.7
Pension adjustments:
Net gain arising during the period
(0.1)
—
(0.1)
Other comprehensive income
8.6
—
8.6
Total comprehensive income (loss)
$
(71.6)
$
59.5
$
(12.1)
(1) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement. Transactions between Holdings and its restricted subsidiaries have been eliminated.
(2) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
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(3) Muvico is a disregarded entity for federal and state income tax purposes with all tax expense and deferred taxes recorded at the Holdings level.
(4) Includes intercompany management fee revenues of $4.2 million recorded by AMCEH & Restricted Subsidiaries/AMC Group and intercompany license fee revenues of $3.9 million recorded by Muvico Group Unrestricted Subsidiaries. Corresponding amounts of expense are included in General and Administrative: Other for Muvico Group Unrestricted Subsidiaries and AMCEH & Restricted Subsidiaries/AMC Group, respectively. The amounts presented are from Muvico inception on July 22, 2024 through the end of the reporting period.
Three Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (3)
Subsidiaries (4)
Consolidated
Key operating metrics:
(unaudited)
(unaudited)
(unaudited)
Average ticket price
$
11.02
$
13.16
$
11.43
Attendance (in thousands) (1)
52,407
12,680
65,087
Number of screens operated (2)
7,564
2,236
9,800
Number of theatres operated (2)
701
173
874
Adjusted EBITDA (5)
$
128.0
$
33.8
$
161.8
(1) Includes consolidated theatres only and excludes screens offline due to construction.
(2) The screens and theatres of the Muvico Group are operated by Multi-Cinema pursuant to the management agreement.
(3) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(4) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
(5) Below is a reconciliation of net loss to Adjusted EBITDA for AMCEH & Restricted Subsidiaries/AMC Group and Muvico Group. The reconciling items below have the same definitions and are of the same nature as of the reconciling items presented previously in Management’s Discussion and Analysis section of this Form 10-Q.
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Below is a reconciliation of net loss to Adjusted EBITDA for AMCEH & Restricted Subsidiaries/AMC Group and Muvico Group. The reconciling items below have the same definitions and are of the same nature as of the reconciling items presented previously in Management’s Discussion and Analysis section of this Form 10-Q.
Three Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Eliminations
Consolidated
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net earnings (loss)
$
(80.2)
$
59.5
$
—
$
(20.7)
Plus:
Income tax benefit
(1.1)
—
—
(1.1)
Interest expense
87.6
35.2
(3.2)
119.6
Depreciation and amortization
65.7
15.1
—
80.8
Certain operating expense
1.8
0.2
—
2.0
Equity in earnings of non-consolidated entities
(5.2)
—
—
(5.2)
Attributable EBITDA
1.3
—
—
1.3
Investment income
(3.7)
(2.7)
3.2
(3.2)
Other expense (income)
55.4
(73.5)
—
(18.1)
General and administrative — unallocated:
Merger, acquisition and other costs
0.1
—
—
0.1
Stock-based compensation expense
6.3
—
—
6.3
Adjusted EBITDA
$
128.0
$
33.8
$
—
$
161.8
(1) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(2) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
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Nine Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Eliminations
Consolidated
(In millions)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Admissions
$
1,672.2
166.9
—
1,839.1
Food and beverage
1,088.6
90.1
—
1,178.7
Other theatre (4)
300.7
20.4
(8.1)
313.0
Total revenues
3,061.5
277.4
(8.1)
3,330.8
Operating costs and expenses
Film exhibition costs
803.4
89.6
—
893.0
Food and beverage costs
207.5
15.1
—
222.6
Operating expense, excluding depreciation and amortization below
1,145.7
92.2
—
1,237.9
Rent
616.6
42.7
—
659.3
General and administrative:
Merger, acquisition and other costs
0.1
—
—
0.1
Other, excluding depreciation and amortization below (4)
164.6
4.2
(8.1)
160.7
Depreciation and amortization
226.1
15.1
—
241.2
Operating costs and expenses
3,164.0
258.9
(8.1)
3,414.8
Operating income (loss)
(102.5)
18.5
—
(84.0)
Other expense, net:
Other income, net
(100.3)
(73.5)
—
(173.8)
Interest expense:
Corporate borrowings
257.8
32.0
—
289.8
Finance lease obligations
2.5
—
—
2.5
Intercompany interest expense
1.8
3.2
(5.0)
—
Non-cash NCM exhibitor services agreement
27.5
—
—
27.5
Intercompany interest income
(3.2)
(1.8)
5.0
—
Investment expense (income)
(11.7)
(2.7)
—
(14.4)
Total other expense (income), net
174.4
(42.8)
—
131.6
Earnings (loss) before income taxes
(276.9)
61.3
—
(215.6)
Income tax provision (benefit) (3)
1.4
—
—
1.4
Net earnings (loss)
$
(278.3)
$
61.3
$
—
$
(217.0)
Nine Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Consolidated
(unaudited)
(unaudited)
(unaudited)
Net earnings (loss)
$
(278.3)
$
61.3
$
(217.0)
Other comprehensive income (loss):
Unrealized foreign currency translation adjustments
(24.4)
—
(24.4)
Pension adjustments:
Net loss arising during the period
0.4
—
0.4
Other comprehensive loss
(24.0)
—
(24.0)
Total comprehensive income (loss)
$
(302.3)
$
61.3
$
(241.0)
(1) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(2) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
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(3) Muvico is a disregarded entity for federal and state income tax purposes with all tax expense and deferred taxes recorded at the Holdings level.
(4) Includes intercompany management fee revenues of $4.2 million recorded by AMCEH & Restricted Subsidiaries/AMC Group and intercompany license fee revenues of $3.9 million recorded by Muvico Group Unrestricted Subsidiaries. Corresponding amounts of expense are included in General and Administrative: Other for Muvico Group Unrestricted Subsidiaries and AMCEH & Restricted Subsidiaries/AMC Group, respectively. The amounts presented are from Muvico inception on July 22, 2024 through the end of the reporting period.
Nine Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (3)
Subsidiaries (4)
Consolidated
Key operating metrics:
(unaudited)
(unaudited)
(unaudited)
Average ticket price
$
11.22
$
13.16
$
11.37
Attendance (in thousands) (1)
149,051
12,680
161,731
Number of screens operated (2)
7,564
2,236
9,800
Number of theatres operated (2)
701
173
874
Adjusted EBITDA (5)
$
145.3
$
33.8
$
179.1
(1) Includes consolidated theatres only and excludes screens offline due to construction.
(2) The screens and theatres of the Muvico Group are operated by Multi-Cinema pursuant to the management agreement.
(3) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(4) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
(5) Below is a reconciliation of net loss to Adjusted EBITDA for AMCEH & Restricted Subsidiaries/AMC Group and Muvico Group. The reconciling items below have the same definitions and are of the same nature as of the reconciling items presented previously in Management’s Discussion and Analysis section of this Form 10-Q.
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Nine Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Eliminations
Consolidated
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net earnings (loss)
$
(278.3)
$
61.3
$
—
$
(217.0)
Plus:
Income tax provision
1.4
—
—
1.4
Interest expense
289.6
35.2
(5.0)
319.8
Depreciation and amortization
226.1
15.1
—
241.2
Certain operating expense
3.3
0.2
—
3.5
Equity in earnings of non-consolidated entities
(9.9)
—
—
(9.9)
Attributable EBITDA
1.2
—
—
1.2
Investment income
(14.9)
(4.5)
5.0
(14.4)
Other income, net
(88.4)
(73.5)
—
(161.9)
General and administrative — unallocated:
Merger, acquisition and other costs
0.1
—
—
0.1
Stock-based compensation expense
15.1
—
—
15.1
Adjusted EBITDA
$
145.3
$
33.8
$
—
$
179.1
(1) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(2) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
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As of September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (3)
Subsidiaries
Eliminations
Consolidated
(In millions, except share data)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)
$
197.7
$
329.7
$
—
$
527.4
Restricted cash
49.7
—
—
49.7
Receivables, net
104.4
3.7
—
108.1
Other current assets
66.0
37.9
—
103.9
Total current assets
417.8
371.3
—
789.1
Property, net
1,105.8
378.6
—
1,484.4
Operating lease right-of-use assets, net
2,539.2
812.7
—
3,351.9
Intangible assets, net
42.8
104.4
—
147.2
Goodwill
2,351.6
—
—
2,351.6
Deferred tax asset, net (4)
0.5
—
—
0.5
Other long-term assets
198.7
0.7
—
199.4
Intercompany receivables (2)
—
1,373.6
(1,373.6)
—
Investment in subsidiary
635.5
—
(635.5)
—
Total assets
$
7,291.9
$
3,041.3
$
(2,009.1)
$
8,324.1
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable
$
221.7
$
26.0
$
—
$
247.7
Accrued expenses and other liabilities
284.6
33.7
—
318.3
Deferred revenues and income
382.3
2.8
—
385.1
Current maturities of corporate borrowings
85.5
10.1
—
95.6
Current maturities of finance lease liabilities
4.6
—
—
4.6
Current maturities of operating lease liabilities
384.8
142.8
—
527.6
Total current liabilities
1,363.5
215.4
—
1,578.9
Corporate borrowings
2,640.3
1,408.1
—
4,048.4
Finance lease liabilities
48.6
—
—
48.6
Operating lease liabilities
2,959.4
778.9
—
3,738.3
Exhibitor services agreement
469.8
—
—
469.8
Deferred tax liability, net (4)
34.0
—
—
34.0
Intercompany payables (2)
1,373.6
—
(1,373.6)
—
Other long-term liabilities
88.0
3.4
—
91.4
Total liabilities
8,977.2
2,405.8
(1,373.6)
10,009.4
Commitments and contingencies
Stockholders’ deficit:
AMC Entertainment Holdings, Inc.'s stockholders' deficit:
Preferred stock
—
—
—
—
Class A common stock
3.6
—
—
3.6
Additional paid-in capital
6,624.5
558.3
(558.3)
6,624.5
Accumulated other comprehensive loss
(102.2)
—
—
(102.2)
Accumulated deficit
(8,211.2)
77.2
(77.2)
(8,211.2)
Total stockholders' deficit
(1,685.3)
635.5
(635.5)
(1,685.3)
Total liabilities and stockholders’ deficit
$
7,291.9
$
3,041.3
$
(2,009.1)
$
8,324.1
(1) The cash held in bank accounts differs from the book balance due to deposits in transit, payments in transit, and certain cash equivalents.
(2) Intercompany receivables (payables) includes intercompany loans, fees receivable/payable pursuant to the management agreement and intellectual property license agreement, the intercompany receivable/payable created by allocating the New Term Loans borrowings between Holdings and Muvico, and other intercompany balances created due to the Refinancing Transactions.
(3) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
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(4) Muvico is a disregarded entity for federal and state income tax purposes with all tax expense and deferred taxes recorded at the Holdings level.
Nine Months Ended September 30, 2024
AMCEH &
Restricted
Muvico Group
Subsidiaries/AMC
Unrestricted
Group (1)
Subsidiaries (2)
Consolidated
(unaudited)
(unaudited)
(unaudited)
Net (loss) earnings
$
(278.3)
$
61.3
$
(217.0)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
226.1
15.1
241.2
(Gain) loss on extinguishment of debt
(40.3)
—
(40.3)
Gain on derivative liability
—
(73.5)
(73.5)
Deferred income taxes
1.1
—
1.1
Unrealized loss on investments in Hycroft
1.7
—
1.7
Amortization of (premium) discount on corporate borrowings to interest expense
(23.8)
3.7
(20.1)
Amortization of deferred financing costs to interest expense
6.1
0.6
6.7
Non-cash portion of stock-based compensation
15.1
—
15.1
Equity in loss (earnings) from non-consolidated entities, net of distributions
(3.3)
—
(3.3)
Landlord contributions
26.0
—
26.0
Deferred rent
(78.9)
(3.2)
(82.1)
Net periodic benefit cost
1.5
—
1.5
Change in assets and liabilities:
Receivables
91.7
6.9
98.6
Other assets
2.1
(14.9)
(12.8)
Accounts payable
(50.7)
(31.9)
(82.6)
Accrued expenses and other liabilities
(91.1)
0.1
(91.0)
Intercompany receivables and payables
(130.2)
130.2
—
Other, net
(23.6)
—
(23.6)
Net cash (used in) provided by operating activities
(348.8)
94.4
(254.4)
Cash flows from investing activities:
Capital expenditures
(146.9)
(8.9)
(155.8)
Proceeds from disposition of long-term assets
0.3
—
0.3
Cash contributed to Muvico Group
(3.9)
3.9
—
Other, net
1.5
—
1.5
Net cash used in investing activities
(149.0)
(5.0)
(154.0)
Cash flows from financing activities:
Repurchase of Senior Subordinated Notes due 2025
(12.9)
—
(12.9)
Repurchase of Senior Subordinated Notes due 2026
(6.0)
—
(6.0)
Repurchase of Second Lien Notes due 2026
(83.2)
—
(83.2)
Scheduled principal payments under Term Loan borrowings
(12.6)
(2.5)
(15.1)
Principal payments under Term Loan due 2026
(27.0)
—
(27.0)
Proceeds from issuance of Term Loan due 2029
27.0
—
27.0
Net proceeds from equity issuances
243.0
—
243.0
Principal payments under finance lease obligations
(3.5)
—
(3.5)
Cash used to pay for deferred financing costs
(11.0)
(34.7)
(45.7)
Debt extinguishment costs
(2.3)
—
(2.3)
Taxes paid for restricted unit withholdings
(2.2)
—
(2.2)
Proceeds (payments) of intercompany loans
(266.2)
266.2
—
Net cash provided by (used in) financing activities
(156.9)
229.0
72.1
Effect of exchange rate changes on cash and cash equivalents and restricted cash
2.0
—
2.0
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Net increase (decrease) in cash and cash equivalents and restricted cash
(652.7)
318.4
(334.3)
Cash and cash equivalents and restricted cash at beginning of period
900.1
11.3
911.4
Cash and cash equivalents and restricted cash at end of period
$
247.4
$
329.7
$
577.1
(1) This column provides the information required to be presented for (i) Holdings and its Restricted Subsidiaries under the indentures governing the Exchangeable Notes and Existing First Lien Notes and (ii) AMC Group under the New Term Loan Credit Agreement.
(2) The amounts presented for Muvico are from its inception on July 22, 2024 through the end of the reporting period.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.