When AMC Entertainment Group (AMC -4.59%) reported fourth quarter and full-year 2021 earnings on March 1, shareholders were pleasantly surprised.
The battered movie theater chain saw revenue climb nearly tenfold from the pandemic-plagued fourth quarter of 2020. AMC benefited from a blockbuster hit with consumers ready and willing to pay higher prices for tickets and concessions.
Image source: Getty Images.
Revenue soars at AMC
Indeed, AMC reported $1.17 billion in revenue in the fourth quarter, up from $163 million in the same quarter last year. The company is benefiting as consumers grow more comfortable returning to theaters. CEO Adam Aron discussed the drivers for this strong showing in the earnings release:
The quarter offered moviegoers a more robust and appealing film slate that culminated with the exclusive theatrical release of the now third-highest grossing movie of all-time, SPIDERMAN: NO WAY HOME, despite having been released at the height of Omicron fears. AMC took advantage of the robust fourth quarter film slate, pent-up consumer demand, and a bold advertising campaign, among other important marketing initiatives, to attract some 60 million visitors to our theatres around the world during the fourth quarter. That was a seven-fold increase over the fourth quarter of 2020, and a 50% increase compared to the third quarter of 2021.
Indeed, the Spider-Man flick has earned $1.87 billion at the box office thus far. Management is capitalizing on pent-up demand and raising ticket prices. In the U.S., the average ticket price reached $11.50 last quarter, up from $9.96 in the prior-year period. Internationally, that figure was $10.47, up from $9.87.
Additionally, AMC is finding moviegoers are opting to spend more on concessions. The food and beverage spend per visitor increased 11% year over year to $7.21 in the U.S. and another 13% to $4.64 in international markets. That's an excellent sign for shareholders as the food and beverage business is the most profitable segment. AMC generated $381 million in revenue from this category while recording only $59 million in costs. On the other hand, ticket sales of $667 million came with $310 million in film exhibition costs.
In more good news for AMC, studios continue releasing blockbuster films exclusively on the big screen after flirting with different strategies in 2020 and 2021. Studios have experimented with releasing films simultaneously on the big screen and through streaming services, or exclusively on streaming services, before returning to a more traditional exclusive theatrical window. The success of Spider-Man: No Way Home, and more recently The Batman, which opened to $134 million in domestic box-office sales in its first weekend, is giving studios more confidence in the exclusive window.
The threat of blockbuster films skipping theaters was a significant risk to AMC that has faded as a result of these recent trends.
Shares are down anyway
AMC stock is down over 15% since releasing earnings. As you may recall, the company was part of a meme stock frenzy in 2021 that sent shares soaring. It's going to take several more quarters of improving fundamentals to bring it back to those previous highs.
