AMC CEO Warns Future Unsure for Company Despite Booming Business
By Movieguide® Contributor
During a Q2 earnings report that saw a massive profit jump, AMC Entertainment CEO Adam Aron warned that the company could be in serious financial peril if it can’t raise new cash before winter.
While AMC currently holds $643 million in liquidity, Aron believes that shareholders—who own the majority 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 the industry,” Aron said on a call with investors.
Aron’s warnings about fresh equity began last month after a court ruling made it harder for the company to raise money. The courts ruled that AMC was not allowed to issue more stock without the approval of its retail investors, who are balking at the idea, not wanting to dilute their holding.
“The dumbest thing we could ever do in this industry is run out of cash,” Aron said, especially because he believes the theater industry will see a full recovery by next year. “If we were to run out of cash before we before we get to 2024 or 2025, that would be a disaster.”
Assuming the company can deter bankruptcy, the future of AMC looks bright. The company has recently expanded into the dine-in-theater business, with the newly opened AMC DINE-IN Topanga 12 and AMC The Americana at Brand 18 becoming some of the company’s top performers.
AMC’s non-theater operations are also booming, with sales of AMC Perfectly Popcorn taking off and projected to eventually become a $100 million business. The company will also introduce AMC-branded chocolates and gummies to its theaters soon.
Movieguide® previously reported:
Last year, AMC released 70 movies and has plans to screen around 110 movies this year. Additionally, the box office has rebounded and AMC will generate further revenue by screening Apple and Amazon movies in their theaters.
“I believe we’re on a ramp. And I’m certain that ’23 will be bigger than ’22,” Aron said. “I’m expecting the ’24 is going to be bigger than ’23. And I’ve already said publicly, I think that in 2024-2025 the pandemic will be an ancient memory… [Covid was] a five-year detour for this industry. And we just completed our third year.”
The icing on the cake will come from the result of an ongoing lawsuit that would allow AMC to sell a larger share of AMC’s common stock, generating cash as the company requires. If the plan is approved, it will allow AMC to generate up to 408 million more shares, resulting in $10-$12 billion of capital they could raise at will.
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