Adam Aron couldn’t stop talking about popcorn on AMC’s Q4 Earnings call
The theater chain lost $287 million last quarter, but you can make AMC Perfectly Popcorn at home in three flavors.
AMC Theaters has announced a new line of AMC-branded popcorn sold exclusively at Walmart, and CEO Adam Aron wants you to know how excited he is. He was so excited that he devoted a large chunk of time during the theater chain’s earnings call Tuesday to tell us all about the buttery goodness coming soon to a store near you.
It wasn’t just a line during prepared assessments. In a lengthy call limited to just one live question from analysts, Aron instead took undisclosed shareholder questions and went all out. press release this morning explains the excitement for AMC popcorn that you can eat at home.
“Yes, the enthusiasm and excitement for AMC Perfectly Popcorn at home is real. I see it on Twitter,” Aron said. “If I look at the readership of my recent tweets about popcorn, it’s skyrocketing. The likes skyrocket, the retweets skyrocket, the comments come back to me, all of which I read by the way, I recently got like 45,000 inbound messages on popcorn tweets and I read them all. Boy, they get you excited because you’re excited about it.
The only analyst who received a question was interrupted briefly by Aron to explain the flavor profile of the popcorn. (Classic butter, extra butter and lightly salted.)
“I don’t want to interrupt, but you know what’s going to please you more than us reporting the popcorn results?” Eating popcorn. Very good. In fact, we spent a full year working on the flavor profile of these products. This is really great,” he said.
In fact, this is a good way for AMC to generate additional revenue when it is most needed. But Aron was excited about entering the home popcorn business, calling it a potentially “multi-billion dollar” market and teasing that it could one day be sold in theaters or even internationally under the Odeon Cinemas brand.
“Everything is new, we haven’t started yet, and the interest is very high. It’s a very good position to be in when launching a new product,” he said. “Let’s say we set up our manufacturing plants to produce millions of bags and microwave-packaged popcorn. We think this is a big opportunity for us.”
Never mind that AMC Entertainment lost another $287.7 million last quarter, bringing its net loss for the year to $973 million. Or that it still has nearly $5 billion in debt. Or that analyst forecasts for AMC remain bleak. Wedbush gave AMC Entertainment a price target of just $2 ahead of the results in a report on Monday. The stock closed at $7.14 on Tuesday. That comes after the stock price rallied 23 percent on Monday, though not because of popcorn sales.
Getty Images for CinemaCon
Aron wasn’t just talking about popcorn (both pre-popped and microwaved, adding that the Extra Butter flavor comes with “six packets of extra buttery toppings for home eaters to spread all over the popcorn”). He also urged shareholders to vote to convert AMC’s Preferred Equity shares, or APE shares, into common stock through a reverse stock exchange.
Named after the people who helped make AMC Entertainment a meme, AMC’s APE shares are essentially the same as common stock and allow the company to raise cash and reduce debt. So far, the shares have raised $314 million and reduced AMC’s debt by $390 million since early 2022. However, for various reasons, APE stock was trading much cheaper than AMC stock, which Aron said was ridiculous.
“I don’t think there’s a compelling case for our shareholders to be averse to a reverse stock split,” he said. “If we are deprived of that… our future can turn pretty bleak in the blink of an eye… our success literally evaporates in an instant.”
The meeting to vote on the share exchange is planned for March 14. Even if it passes, still Monday is stuck when a judge approved a request for a temporary injunction and set a trial for April 27 after some shareholders sued the company over their voting rights. That hearing caused AMC’s matching stock to jump on Monday, but Aron remained encouraged that the court allowed the vote to proceed. He called the lawsuit “wrong” and said the company would “vigorously defend against it.”
Áron also gave an outlook on the 2023 box office. Although he admitted that a full return to pre-pandemic norms won’t happen until 2024 or 2025 at the earliest, 75 percent more movies will hit screens in 2023. He believes as many as 30 films could top $100 this year. million at the domestic treasury.
There was also the new Sightline policy, which raises the price of the best seats in the house while giving you a discount if you’re in the front row. Aron emphasized that Sightline will remain a trial operation in the hope that it can be rolled out nationwide this year. He even speculated that if AMC felt the need to raise the price of movie tickets, they could only raise the price of the premium seats and leave the rest of the house at the old price.
“However, we understand that this is a significant change in the situation for moviegoers, so we will be monitoring it very closely,” he said.
AMC beat average market expectations in the fourth quarter, posting revenue of $990.9 million for the quarter, compared to Wall Street’s estimate of $977.6 million, and earnings of -$14 per share, compared to a loss of $0.21 with relevant estimates. Another boon is expected next quarter, where “Avatar: The Way of Water” made a significant chunk of its money. AMC has a particularly large market share in movie theaters because most viewing is skewed toward AMC’s many IMAX and other premium large-format screens.
Additional reporting by Wilson Chapman.
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