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Box Office: 4Q22 Will be the Test for AMC to Narrow its Gap with Cinemark

Thomas Paulson
Nov 18, 2022
Box Office: 4Q22 Will be the Test for AMC to Narrow its Gap with Cinemark

  • As anticipated, Black Panther: Wakanda Forever came in with a roaring $180M opening weekend, only just behind Doctor Strange in the Multiverse of Madness’ $187M and producing the 13th biggest opening of all time. Adding to the Thanksgiving movie feast will be The Menu, Strange World, and Pinocchio. December brings Avatar: The Way of Water and Puss in Boots: The Last Wish, among others.
  • As shown in the figures below, AMC has been behind Cinemark in filling its theater seats and its pace isn’t outmatching Cinemark’s; pre-pandemic AMC’s admissions per screen were 82% of Cinemark’s. For 2021 and 2022, another contributing to both the gap is that AMC has more screens in urban markets which haven’t been as vibrant as say suburban markets in Texas and Florida. However, when looked at by state level, Cinemark outperformed for 3Q22 AMC in visits per theater. That gap is one of the primary reasons that AMC’s profitability and cash generation is behind. Given that its operating cost per screen is very similar to Cinemark’s, the lower admissions per screen results in lower profitability. Given the ongoing urban-market recovery from the pandemic and a packed 4Q22 box office release schedule, we will be watching carefully for AMC to narrow the gap.

  • Sustainable cash generation is every business' primary objective. For AMC, it’s more pressing as the company has $5B in debt compared to $684M in cash. Lease payments total $950K per year and debt maturities become significant in 2026. AMC’s filling seats is critical to turning free cash flow (FCF) positive and driving FCF is necessary to deleverage.

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Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more.

He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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