AMC Entertainment (AMC) Lags Q2 Earnings And Revenues

AMC Entertainment Holdings Inc. (NYSE:AMC) reported weak financial results in the second quarter of 2016. Both the top and the bottom line lagged the respective Zacks Consensus Estimate.

GAAP net income was $24 million or 24 cents per share compared with $43.9 million or 45 cents per share in the prior-year quarter. Second-quarter earnings per share of 24 cents were well below the Zacks Consensus Estimate of 29 cents.

Quarterly total revenue was $764 million, down 7% year over year and short of the Zacks Consensus Estimate of $775 million. Segment-wise, Admission revenues were $481.2 million, down 9.8% year over year. Food and beverage revenues were $243.5 million, down 2.8% year over year. Other theater revenues were $39.2 million, up 5.4% year over year.

Quarterly operating expenses were $708.4 million, down 2.6% year over year. Operating income was $55.6 million, down a whopping 41% year over year. Operating margin declined to 7.3% from 11.5% in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $129.6 million, down 17.9% year over year. Adjusted EBITDA margin was 17% compared with 19.2% in the year-ago quarter.

Operational Metrics

In the second quarter of 2016, average ticket price was $9.63 compared with $9.91 for the same period a year ago. Food and beverage revenues per patron increased 4.7% year over year to an all-time high of $4.87. Average screens for continuing operations were 5,282, up 6.9% year over year. Total number of screens operated was 5,334, up 6%. Total number of theaters operated was 386, up 10.3%. Screens per theater were 13.8 compared with 14.4 in the prior-year quarter.

Cash Flow

During the second quarter of 2016, AMC Entertainment generated $111.1 million of cash from operations compared with $171.4 million in the year-ago quarter. Adjusted free cash flow was $40.8 million compared with $68.7 million in the prior-year quarter.

Liquidity

At the end of the second quarter of 2016, AMC Entertainment had $93.3 million of cash and cash equivalents and $1,835 million of outstanding debt compared with $211.3 million of cash and cash equivalents and $1,912.8 million of outstanding debt at the end of 2015. The debt-to-capitalization ratio, at second-quarter 2016 end, was 0.54 versus 0.55 at the end of 2015.

Zacks Rank & Stocks to Consider

AMC Entertainment currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the same industry are Diamond Resorts International Inc. (NYSE:DRII) , CBS Corp. (NYSE:CBS) and Vail Resorts Inc. (NYSE:MTN) . All three stocks currently carry a Zacks Rank #2 (Buy).