Adam Aron, as always, remains unruffled by widespread talk of AMC Theatres‘ financial woes.
At CinemaCon, the annual gathering of exhibitors and Hollywood studios that’s underway in Las Vegas this week, there’s loads of chatter as to the financial health and future of the world’s largest theater circuit, and whether a restructuring is in the offing. According to Aron, who sat down with The Hollywood Reporter on Tuesday, the answer is an emphatic “No.”
“Personally, I think it’s inconceivable that AMC would have to restructure like Regal Cinemas did and file for Chapter 11. One of the things I’m very proud of is that going into the pandemic, AMC was in very strong position. We are the biggest and best movie theater chain in the world. Somehow all of us on this planet got handed COVID as something to deal with. And the movie theater industry has been hit quite hard by COVID, and it’s been slow to recover. And the labor strikes were a double whammy. We are already at the four-year mark since COVID shut theaters in March of 2020. And the box office is still not yet back to where it was before,” said Aron.
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“Having said that, and it’s not just me who thinks it, AMC has been more creative and more successful in trying to cope with COVID than just about any exhibitor in the planet,” he said.
While laden with $4.5 billion in debt, AMC has enough cash on hand to get through 2024, according to Aron. From there, the executive thinks it will be smooth sailing since Aron is predicting a robust 2025 and 2026 at the box office. Once earnings improve, everything else does too. “So, I actually think the problem has already been solved, which makes me quite optimistic and enthusiastic, but we just have to get there,” Aron added.
AMC’s cash balance was $885 million as of Dec. 31, 2023. “That’s money in the bank. It suggests to me that not only have we weathered the storm so far, but to the extent that there’s any storm left, we will weather that as well. There’s almost no scenario that I can foresee where we don’t have enough cash to make it through 2024. But everything that I see tells me 2025 and 2026 are going to be gangbusters,” he continued. “And that means our EBITDA is going to go way up. And so, I’m already looking ahead and am quite relaxed about where our company will be and where our industry will be looking forward, which is a much different circumstance than it was in January and February of ’24, which, of course, was a debacle with revenue down 20 percent year over year.”
Like other circuits, AMC is grappling with a dramatic downturn at the box office so far this year because of delays due to the strikes. (Although some forecasts have gotten slightly better: analytics firm Gower Street projected global theatrical revenues in 2024 will hit $32.3 billion, up from the $31.5 billion originally forecast.) The box office downturn was the second big crisis following the pandemic.
After its latest quarterly earnings results were disclosed on Feb. 28, Wall Street analyst Eric Handler at Roth MKM doled out a glass half-full and half-empty view for AMC. “Improvements have been seen on the top line with average revenue per patron up 31% since 2019,” Handler wrote. “However, profit is significantly lagging; average EBITDA per patron down 18% and cash burn remains considerable. Liquidity isn’t an issue with $884mn in cash on hand, but net leverage remains very high at ~9x.”
Aron has taken several unorthodox steps to help fill the gaps. Late last summer, he took the unprecedented step of distributing Taylor Swift: The Eras Tour after Hollywood studios passed on the terms presented by Swift and her team. The movie, which AMC licensed to other circuits, became the most successful concert film of all time with more than $261 million globally. AMC next distributed Renaissance: A Film by Beyoncé, which did far more modest business but was a smart branding opportunity.
Aron told THR he would certainly consider distributing more films, but that they would have to make sense. A big-budget studio tentpole would probably not be the right business for AMC to be in. Special events are another matter, including live concerts and beaming the Paris Olympics this summer into AMC cinemas.
“No one sells more tickets for studios than AMC,” Aron said. “We are totally committed to leaning in and supporting the product that studios are offering the public to see. Having said that, we only sell 15 percent to 20 percent of our available seats in the course of a year. So, we have a massive amount of excess capacity. Nothing would make us happier than to get that additional studio content. But in addition to that, if we’re able to be successful in finding other content that we can put on screen, we’ll do that too.”
AMC also started a spin-off retail popcorn business, which has expanded into grocery stories carried by giants Kroger and Publix after first teaming exclusively with Walmart. All told, the popcorn is carried in about 6,000 stores. Since it’s a side business, AMC doesn’t have to report sales. Aron said the program has been very successful but didn’t provide numbers. Separately, he did reveal, however, that customized popcorn holders costing upwards of $20 have generated $540 million in revenue over the past five years.
Meanwhile, the executive faced something of backlash recently when it was revealed in securities filings on April 5 that he received compensation of $25.4 million in 2023, up from $23.7 million in 2022 and $18.9 million in 2021. That included a base salary of $1.5 million, stock awards of $17.9 million and non-equity incentive plan compensation of $6 million.
Aron took to X, formerly Twitter, to explain the pay issue to assuage any disgruntled shareholders, noting: “The draft proxy draft proxy shows I was awarded AMC stock in 2023 (that I cannot sell any time soon) valued using SEC required methodology at $17.9 million. At yesterday’s closing share price, it is actually worth $1,345,000. So, my compensation — valued presently — was $16.5 million less.”
