AMC Entertainment narrows losses, thanks to Tom Cruise and food margins

What do strange doctors, dinosaurs, Elvis Presley and hyper-masculine jet fighter pilots all have in common?

Answer: They all contributed to a 162% quarter-on-quarter (QoQ) surge in revenue for US cinema chain AMC Entertainment, according to its latest results posted on Thursday August 4.

However, the real MVP was the high-margin food and beverage segment that accounted for approximately 64% of total revenues of US$907.9mln, bolstering underlying earnings (EBITDA) of US$106.7mln compared to US$61.7mln of losses tallied in the fist quarter.

But ballooning operating costs in both the film and food and bev segments still contributed to an overall operating loss of US$0.24 per share; in fairness a vast year-on-year improvement of US$0.47 and a quarterly improvement of US$0.41.

Losses were also felt in AMC’s Hycroft Mining investment.

“We wrote down much of the large gains that were booked in the first quarter. While our reported losses will continue to be impacted by market price volatility, we continue to believe strongly in the potential value of our $28 million Hycroft Mining investment,” chairman Adam Aron said.

Looking forward, Aron was upbeat, stating: “AMC just completed a spectacularly encouraging second quarter that boosts our mood and brightens our prospects as we look ahead.”

Planet of the APE

As a once-popular meme stock, AMC has not forgotten its substantial base of individual investors, who “aped” (meme stock parlance for going long on a random security for purposes of amusement) into AMC shares in mid 2021, sending them skywards of 600% in a matter of weeks.

The cinema chain announced the declaration of a special dividend of one AMC Preferred Equity Unit to be listed on the New York exchange under the APE ticker.

Shareholders will receive one APE for each share of AMC common stock owned with equal voting rights, sparking concerns of shareholder dilution.