With sincere apologies to T. S. Eliot, this is the way summer ends -- not with a bang, but a whimper. Business is slowing at AMC Entertainment Holdings (AMC +0.75%) and its fellow exhibitors. Domestic box office receipts clocked in at $91.9 million over the weekend, the industry's weakest showing since May.
Bullet Train was the big premiere this time. The Brad Pitt-helmed thriller didn't exactly flop out of the gate. It topped $30 million in ticket sales, accounting for nearly a third of all stateside theater admissions over the weekend. However, it wasn't enough to save what the industry considers to be the last real weekend of the telltale summer season.
Summer technically doesn't end until late September, but with many area schools returning to class in the coming days you should have more elbow room at your local multiplex now. Studios tend to put out their more promising releases between the Memorial Day and Independence Day holidays. The release slate for the rest of the current quarter is predictably bland. It doesn't mean that AMC shareholders should be concerned.
Image source: Getty Images.
No. 1 with a bullet
Multiplex operators got off to a strong start in the current quarter. By mid-July domestic ticket sales were at their highest level since 2016. The script has been flipped after a few uninspiring weekends. You have to go back to 2005 to find a worse pre-pandemic showing in box office receipts for the quarter to date.
The bad news is that help isn't on the way in the near term. Outside of a possible sleeper hit here or there, the theatrical release slate is understandably dry for the balance of the third quarter. Studios know that this is not when you put out a potential blockbuster. The next major superhero film doesn't hit the big screen until November. There could be a few winners in the horror genre when October rolls around. None of this means that it's curtains for AMC and its smaller peers.
NYSE: AMC
Key Data Points
The industry has successfully completed a turnaround in terms of consumer sentiment. Some genres -- like comedies, indie films, and romcoms -- are now destined to stay on premium streaming services. Superhero, action, high-profile animation, and even horror movies are still drawing big crowds at the multiplex. Studios will get even better about getting the balance right next summer.
AMC just posted positive adjusted earnings before interest, taxes depreciation, and amortization (EBITDA) and operating cash flow in its latest quarter. It has gotten better in a few ways on this end of the pandemic, improving its per-capita revenue by rolling out mobile ordering and advance seating reservations across most of its locations. Folks are also willing to pay an average of nearly 6% more now for a ticket to a movie than they were a year ago.
The most widely owned of movie theater stocks will still need to execute to keep winning. Its cash interest expense has risen 60% over the past year, and outright profitability is going to require even larger crowds than it drew this summer. However, the stock has now more than doubled since bottoming out in May. It has established a cult following of shareholders that can prove potent if they also become AMC regulars. The peak summer season for exhibitors may essentially be over, but the foundation has been set for the good times to continue.
