AMC Entertainment’s CEO Adam Aron warned that the chain risks financial peril if it can’t raise fresh cash as needed while exhibition continues its post-Covid recovery amid Hollywood strikes.
The world’s biggest move chain saw second-quarter earnings surge, sales jump and things looked great in movieland with the three months ended in June and the current month of July setting records on key metrics. But the numbers mask an AMC skirmish with shareholders that turned into a messy, ongoing Delaware Chancery Court case requiring a judge’s approval for the company to sell equity to raise cash.
Yes, Aron said he’s heartened at AMC’s liquidity of $643 at the end of June, but retail shareholders, who own most of the company’s stock, “are underestimating the potential for cash burn in seasonally weaker winter months, especially given the uncertainties of the actors’ and writers’ strikes, since no one knows when they will end.”
“We continue to seek the flexibility to raise fresh capital on the best possible terms…to avoid the pitfalls that sank others in our industry,” he said on a call with investors after market close.
“The dumbest thing we could ever do in this industry is to run out of cash,” he added. After all, he expects a full theatrical recovery for the industry next year or the following. But “If we were to run out of cash before we get to 2024 or 2025, that would be a disaster.”
If AMC did have the cash, he ticked off a wish list including repairs to theaters, adding bars and more of the highly lucrative large-format screens, buying other exhibitors and even “transformative M&A” that could move the company beyond cinemas.
The chain will continue to bring theaters into the circuit if can do so cheaply, he said, noting huge successes at new locations in the LA area in Topanga (AMC DINE-IN Topanga 12) and Glendale (AMC The Americana at Brand 18), which are now among AMC’s top performers.
Meanwhile, he said sales of AMC Perfectly Popcorn – microwavable and in bags — at Walmart stores and online has taken off and could eventually grow to a $100 million business. He confirmed the chain will be introducing a line of AMC-branded chocolates and gummies in theaters.
Content Source: deadline.com