Top movie theater owner AMC Entertainment unveiled what it called its “GO Plan” (short for “go on offense”), a set of major improvements to seating, projection and auditoriums over the next few years.
CEO Adam Aron laid out details of the initiative during a quarterly conference call with investors and analysts, adding that a press release on Thursday would aim to fill in a few blanks. He predicted the reinvestment would “generate attractive shareholder returns” and help differentiate AMC in the theater sector.
Financial specifics were largely absent from Aron’s remarks, though he hinted that depending on the pace of the renovations, costs would likely run into the hundreds of millions. The plan will start in the U.S. but is expected to reach international markets operated by Odeon.
The company’s third-quarter numbers beat Wall Street expectations, with AMC swinging to an adjusted loss per share of 4 cents from a profit of 8 cents in the year-earlier period. Total revenue of $1.35 billion slipped from $1.4 a year ago despite the presence during the July-to-September quarter of hits like Deadpool & Wolverine.
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Even though AMC beat analysts’ forecasts, its stock slumped 6% in after-hours trading.
New seats are already being put in at high-grossing locations, including Burbank, CA, and New York City (the Empire on 42nd Street and Lincoln Square uptown). Additional legroom (to a total of 4 feet between rows) will be another result. Laser projection will also replace traditional methods. A new auditorium format called AMC XL will feature expanded screen sizes, aiming to capture recent moviegoer enthusiasm for Imax and other ultra-big-screen experiences.
Citing “expected multi-year rising box office,” Aron said the company can choose to “go fast or go slow” with the upgrades, completing them in a span ranging from four to seven years. In addition to benefits from the post-Covid box office recovery, Aron noted that some key debt repayments have been pushed further out into the future, enabling the company to allocate resources in the near to medium term to its core theater assets.
Increased capital expenditures will only be booked at times when other key metrics like EBITDA (a measure of profitability) are increasing, Aron said.
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