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» Film-Tech Forum   » Community   » Film-Yak   » AMC shares plunge 25% after pre-announcing ‘shocking’ quarterly loss (Page 1)

 
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Author Topic: AMC shares plunge 25% after pre-announcing ‘shocking’ quarterly loss
David Stambaugh
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 - posted 08-02-2017 02:32 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
https://www.cnbc.com/2017/08/02/amc-shares-plunge-after-pre-announcing-shocking-quarterly-loss.html

Shares of AMC Entertainment are diving by 25 percent Wednesday after the company revealed it expects a dramatic second-quarter loss, and believes the third quarter will be equally unrelenting.

AMC said the expected loss reflects "industry box office trends." American box offices declined 4.4 percent in the second-quarter compared with the same period last year, according to AMC.

Against this tide of declining moviegoing, the second-largest movie theater chain in the U.S. is attempting to curtail costs by cutting back on both its staff and operating hours, as well as through a new pricing strategy. But the cost reduction initiatives have yet to bear fruit this year.

"We were caught by surprise when AMC pre-announced second-quarter results over 30 days after the close of the quarter, and were further surprised by the magnitude of the top and bottom line miss," Wedbush Securities' Michael Pachter wrote in a note, along with a team of analysts.

AMC's adjusted projection for earnings before interest, taxes, depreciation and amortization "shocked" Pachter, who anticipated adjusted EBITDA of more than $200 million. Instead, AMC expects adjusted EBITDA to come in between $134 million and $136 million – or about $65 million short of Wedbush expectations.

With AMC's second-quarter report still to come, Pachter said "something doesn't sound right" before speculating that the company's expenses may be to blame.

"We can only surmise that the company had some unusual expenses during the quarter that it plans to eliminate in the next six months," Pachter said.

Wedbush is maintaining an outperform rating on AMC's stock, while the firm "anxiously awaits a more detailed explanation from management."

Eric Handler, media analyst at MKM Partners, told CNBC's "Power Lunch" on Wednesday that he does not see "a massive issue long term" for the movie theater chain and declared "the industry as a whole is healthy."

"People love to say the industry is dying if they have one or two bad quarters in a row. The year is still tracking flat, and when you look at the last two years, you've had record years," Handler said. "I think you're going to see another record year in 2018."

AMC's stock is down more than 53 percent this year, when it began near its 52-week high of $35.65. The company is expected to formally report second-quarter earnings Monday after the market close.

Correction: This story has been updated to reflect that it is solely about AMC Entertainment.

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Mark Ogden
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It’s not just AMC, it’s also Dalian Wanda, the Chinese company that owns them. There was a recent report in the financial media to the effect that everything they have touched has turned to crap, including their hotels and amusement parks. The company, it seems, is mired in debt and bad management.

I personally dread going into AMC theaters, but here in northern New Jersey they are pretty much the only player in first-run movies. Their concession prices this summer took a big jump, the smallest soda is now $6.15, the smallest popcorn is over $8.00. I used to sometimes get the snack-size combo, but that’s gone. They are typically down to one assistant manager/ticket seller during matinee hours, they want you to purchase your ticket from these disgusting, fingerprint smeared ticketing machines which are frequently out of paper or otherwise non-functional.

The single most infuriating thing to me, though, is their “Stubs” frequent customer program, which allows members to jump the ticketing and concession lines. I typically don’t join such programs, and never do when they are not for free. At the local AMC, you can be in a line of thirty people waiting for snacks, but as long as a Stubs member is in their separate line, they wait on them first, turning you into a second-class customer. The last time I went on a busy night, the concession line for the non-member riff-raff like me didn’t move at all because the Stubs line stayed occupied. I wonder how much in concession sales was lost from the mere mortals who walked away. It’s pretty damned infuriating, I can tell you.

How I long for an Arclight or an Alamo to show up within a reasonable driving distance.

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Bobby Henderson
"Ask me about Trajan."

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 - posted 08-02-2017 03:25 PM      Profile for Bobby Henderson   Email Bobby Henderson   Send New Private Message       Edit/Delete Post 
I'm not at all surprised to see AMC in this situation.

Clearly the take-over of Carmike Cinemas has to be affecting AMC's balance sheets. The 3rd quarter earnings reports of most movie theater chains may be lousy, thanks in part to a lackluster summer movie season.

It's interesting AMC is talking about cutting staff. I don't know how they're going to cut staff any further at many Carmike locations; those theaters had been running on bare minimum staff for many years already. I have seen AMC playing around with pricing and booking strategy here in Lawton at both former Carmike locations. The AMC Classic 8, which used to be the Carmike 8 location I visited many years, was showing only bargain/2nd run content. Now half the screens are running 1st run content, but at prices $3 to $4 cheaper than the newer Patriot 13 theater nearby. Both theaters are running some of the same movies, which completely blows my mind considering the previous clearance situation between the Carmike 8 and UA Cache 8 theater years ago. We watched War for the Planet of the Apes this past weekend on one of the former Carmike 8 theater's former THX screens for what seemed like a bargain.

I think we're going to see more worrisome earnings reports from movie theaters in the months ahead. All sorts of factors are contributing to this. The short release window and growing popularity of streaming services are both factors. I think the broader down-turn in brick and mortar retail is having a big effect. The restaurant industry overall is in a down-turn as well. This can't just be coincidental. The growing migration to online shopping is affecting "main street" badly.

Amazon CEO Jeff Bezos is now (technically) the world's richest man. The media is in love with that news and still posts articles about the online situation as only a positive thing, rather than something that may eliminate tens of millions of jobs. Just this morning I saw an article on Bloomberg, saying Amazon might be a "greater good" since it turns out women are spending less time shopping in stores and more time at home with the kids. Uh, yeah, having one's face buried in the computer browsing for bargains and surfing social media isn't what I would call spending time with the kids. The true "greater good" is having as many citizens gainfully employed as possible. Decimating the physical retail landscape is not going to be good for anyone, even the executives at online businesses like Amazon -after all even their customers can't buy shit if they don't have a job.

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Mitchell Dvoskin
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 - posted 08-02-2017 03:25 PM      Profile for Mitchell Dvoskin   Email Mitchell Dvoskin   Send New Private Message       Edit/Delete Post 
> The single most infuriating thing to me, though, is their “Stubs” frequent customer program, which allows members to jump the ticketing and concession lines.

I went to see Dunkirk at the AMC Garden State Plaza last week. This happened to me on the concession line. I just walked away without buying anything. There is nothing I want bad enough to be treated rudely.

This was my first, and probably last trip to AMC for a while. Even though I understand the forces that drive the pricing, as a consumer I don't feel I am getting value for my money at either the boxoffice or the concession stand.

Unrelated, in the same Garden State Plaza mall, is a physical Amazon store...

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Leo Enticknap
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 - posted 08-02-2017 04:25 PM      Profile for Leo Enticknap   Author's Homepage   Email Leo Enticknap   Send New Private Message       Edit/Delete Post 
Loyalty programs only really make business sense in situations where the customer doesn't have a lot of choice, especially if they are perceived to penalize customers who choose not to join them.

For example, for about at 10-year period in my life, I was making 2-3 transatlantic journeys a year, starting from a small airport that was only served by one airline (KLM). It therefore made sense for me to join their frequent flyer program, because it wasn't as if I had a choice of airlines. I was buying all my plane tickets from them anyways, so I might as well have the points.

But in contrast, why would I bother shopping at Vons now (which basically requires you to join their card program or pay noncompetitive prices for groceries), when Stater Bros. and Trader Joe's are nearby, both of which have a business model that rejects loyalty cards in favor of reasonable turn-up-and-buy prices? However, if Vons was the only supermarket a sane distance from my home, I'd probably join their program.

Likewise, AMC making non-members stand in line for ages for concessions is probably hurting them at every site where alternative theaters playing the same movies are within a reasonable drive. At locations where they're the only theater in town, they're probably getting a lot of members, though out of necessity rather than actual loyalty.

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Harold Hallikainen
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 - posted 08-02-2017 04:49 PM      Profile for Harold Hallikainen   Author's Homepage   Email Harold Hallikainen   Send New Private Message       Edit/Delete Post 
Why is a profit of $134-136 million a loss? Apparently the profit was below someone's expectation, but it appears to not have been a loss. The article cites overall industry revenue compared to the same quarter in the previous year, but does not mention AMC's revenue or profit compared to the same quarter last year.

What loss?

Harold

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David Stambaugh
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 - posted 08-02-2017 04:59 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
EBITDA is messy. Sometimes it's used as an accounting trick (not saying AMC is doing anything like that). It's only part of a larger snapshot of a company's financial health.

http://www.investopedia.com/terms/e/ebitda.asp

EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization

"A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it is key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA."

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Travis Cape
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 - posted 08-02-2017 05:07 PM      Profile for Travis Cape   Email Travis Cape   Send New Private Message       Edit/Delete Post 
Sorry, I absolutely love the reserved seating and being able to jump ahead of nearly everyone in the concession line.

It's a mere $15 a year to do that. I would pay many times over that to bypass customers that often have no idea what they want. I only jump into the "magic" line when there's a mass of clueless people and I am close to showtime.

They could remove that perk and I would still pay the $15 to get the rewards, the free up size and the rebate of the on-line ticket surcharge.

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Harold Hallikainen
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 - posted 08-02-2017 05:08 PM      Profile for Harold Hallikainen   Author's Homepage   Email Harold Hallikainen   Send New Private Message       Edit/Delete Post 
True. It's net income with interest, taxes, depreciation and amortization added back. Adding back interest is interesting since the "interest" would be considered profit if the funds were from stockholders instead of lenders. But, the funds DID come from lenders, so the interest has to be paid! I assume the Taxes part is tax on profit, so I can see excluding that from a profit calculation. Depreciation and amortization, however, are real costs. Depreciation is supposed to cover the replacement of assets as they age. This should not be neglected. I notice this sort of thing all the time where only a capital expense is considered when purchasing something with nothing budgeted for maintenance and depreciation.

Still, the article headline appears to indicate there was a loss, but nothing in the article shows one...

Thanks!

Harold

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David Stambaugh
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 - posted 08-02-2017 05:11 PM      Profile for David Stambaugh   Author's Homepage   Email David Stambaugh   Send New Private Message       Edit/Delete Post 
Here's another analysis by CNBC.

https://www.cnbc.com/2017/08/01/amc-entertainment-shares-fall-27-percent-after-hours-on-earnings-warning.html

Shares of AMC Entertainment plummeted after the company previewed a dramatic quarterly loss, unveiled a cost reduction plan and forecast a "very challenging third quarter."

Here's what the company projects for its second quarter, compared to Wall Street projections, according to Thomson Reuters consensus estimates:

* Loss per share: $1.34 to $1.36, vs. 1 cent expected
* Revenue: $1.200 billion to $1.204 billion, vs. $1.249 billion expected.

In the year-ago quarter, the company reported earnings of 24 cents a share on $764 million in revenue.

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Harold Hallikainen
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 - posted 08-02-2017 05:37 PM      Profile for Harold Hallikainen   Author's Homepage   Email Harold Hallikainen   Send New Private Message       Edit/Delete Post 
Much more detailed article. Thanks! And, it DOES show a loss. It looks like revenue is 97% to 99% of expected. I have no idea what the margins are, but either they are very tight or expenses are way up for a 1% to 3% change in revenue to result in turning a profit to a loss.

Thanks for posting the link!

Harold

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Bobby Henderson
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 - posted 08-02-2017 07:28 PM      Profile for Bobby Henderson   Email Bobby Henderson   Send New Private Message       Edit/Delete Post 
quote: Leo Enticknap
Loyalty programs only really make business sense in situations where the customer doesn't have a lot of choice, especially if they are perceived to penalize customers who choose not to join them.
I'm not sure how many movie-goers participate in AMC's Stubs Premiere thing. I signed up for it a few weeks ago, somewhat reluctantly. It's $15 per year. If you're a Stubs Premiere member you can order tickets online without being charged any convenience fees. When I was ordering tickets to see Spiderman: Homecoming at a Dolby Cinema @ AMC theater in Oklahoma City they were going to charge me over $4 in convenience fees for 2 tickets. That's what prompted to me spend the $15 on a membership.

Both the decent theaters here in town on Lawton's West side are now AMC-branded. So I'll probably make enough use of the Stub Premiere program to make it more than pay for itself pretty quick. Stubs Premiere members get free size upgrades on drinks and popcorn. Ticket and concessions purchases add up points on your account that you can redeem for discounts or even free movie tickets.

I didn't know about the concession line-skipping feature with Stubs Premiere until a staffer pointed it out to me at OKC's Quail Springs Mall theater. That theater at least had a cash register set up at the far left to cater to Stubs Premiere members without screwing up the traffic at all the other registers. It wasn't very busy, but then we were at a matinee show. I forgot about the perk when we visited the Patriot 13 theater here in Lawton; all the ticket & concession sales are going through the same line.

Whether you have a premium membership or not, if you order tickets online you can get a QR Code emailed or texted to your phone. The code lets you skip the ticket counter and go directly to the staff member tearing tickets at the theater entrance. That can at least let you get some good seats in the theater before going back to the snack counter. More theaters are going to reserved seating, which makes it more necessary to order tickets online to reserve good seats in advance. Stubs Premiere isn't free, but if you visit the theater on any sort of frequent basis (and are watching movies together with your significant other) it really cuts down on the convenience fee bloat.

quote: Harold Hallikainen
Why is a profit of $134-136 million a loss? Apparently the profit was below someone's expectation, but it appears to not have been a loss.
Once a company's stock becomes a publicly traded commodity it is never enough for the company to merely be profitable. It must be even more profitable from one quarter to the next. Any scheme to inflate those stock prices, no matter how stupid for the long term health of the company, is worth it to investors. Movie studios and their parent media companies are victims of the same greedy hysteria.

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Monte L Fullmer
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If you check out money dot cnn dot com and plug in the names of AMC, REG and Cinemark, you can see that REG and Cinemark are taking a 4.5% hit in the stocks, where AMC does show the 25% drop in the stock count.

Yet, the actual drop for AMC was 4.4%

Still though: having these almost 5 percent drops can hurt a business.

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Buck Wilson
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quote: Bobby Henderson
If you're a Stubs Premiere member you can order tickets online without being charged any convenience fees. When I was ordering tickets to see Spiderman: Homecoming at a Dolby Cinema @ AMC theater in Oklahoma City they were going to charge me over $4 in convenience fees for 2 tickets.
Are we not going to talk about what a GD racket it is to even have the "convenience fee"?? It's one thing using a 3rd party website like Fandango, but when you're using AMC's own website, and you're enabling them to cut box office staff by using it, why in the actual fuck am I being charged an extra $2!??! If anything, it should be LESS!

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Jason McMillan
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quote: Mitchell Dvoskin was the last to post
The single most infuriating thing to me, though, is their “Stubs” frequent customer program, which allows members to jump the ticketing and concession lines.
I agree with this, but thankfully, at the AMC I occasionally visit they let you order your food online when you purchase your tickets and will bring the order to your seat so you can skip the concession line all together. That's pretty handy.

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