Theater company AMC Entertainment (NYSE:AMC) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 9.3% year on year to $862.5 million. Its non-GAAP loss of $0.58 per share was 4.4% above analysts’ consensus estimates.
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AMC Entertainment (AMC) Q1 CY2025 Highlights:
- Revenue: $862.5 million vs analyst estimates of $868.2 million (9.3% year-on-year decline, 0.7% miss)
- Adjusted EPS: -$0.58 vs analyst estimates of -$0.61 (4.4% beat)
- Adjusted EBITDA: -$58 million vs analyst estimates of -$68.69 million (-6.7% margin, 15.6% beat)
- Operating Margin: -16.9%, down from -11.4% in the same quarter last year
- Market Capitalization: $1.45 billion
StockStory’s Take
AMC Entertainment’s first quarter performance reflected the broader industry’s slow start to the year, with management noting that the January-to-March domestic box office was the lowest since 1996, excluding pandemic-impacted periods. CEO Adam Aron acknowledged, “the first quarter of 2025 was not at all indicative of the current strength and what we expect will be the coming strength of the movie theater business.” Despite the challenging backdrop, AMC highlighted resilience in per-patron metrics, including all-time first-quarter records for U.S. admissions revenue per patron. CFO Sean Goodman emphasized the company’s ability to grow food and beverage revenue per guest and maintain higher contribution margins compared to pre-pandemic levels, attributing these gains to portfolio optimization and guest engagement efforts.
Looking forward, AMC’s leadership projects a significant rebound for both the industry and the company, citing a strong film release calendar and ongoing enhancements to the theater experience. Aron stated, “the road ahead is packed with blockbuster titles,” and expects 2025’s box office to land at the high end of prior projections, with further growth in 2026. Management believes initiatives such as expanding premium large format screens, introducing upgraded seating, and evolving loyalty and subscription programs will enable AMC to benefit from increased moviegoing demand. However, they also highlighted the need for disciplined capital allocation, with Goodman noting that future investments will depend on achieving stronger EBITDA and sustained positive cash flow.
Key Insights from Management’s Remarks
Management highlighted the impact of a weak industry box office in the first quarter, but underscored resilience in operating metrics and detailed strategic initiatives aimed at capturing future growth as the film slate improves.
- Box office weakness acknowledged: Leadership described the quarter as an anomaly, noting that industry-wide domestic box office revenue for Q1 was at its lowest point since 1996, excluding pandemic-impacted years, which weighed on attendance and overall results.
- Per-patron revenue and margin gains: AMC achieved growth in revenue per patron and contribution margin per patron, both compared to 2019 levels. Goodman reported that contribution margin per patron has increased approximately 51% over pre-pandemic figures due to higher food and beverage spend and improved operational efficiency.
- Theater portfolio optimization: AMC continued its strategy of closing underperforming locations and opening higher-performing ones, resulting in a net reduction of 138 theaters since 2020. Management believes this has improved overall circuit profitability and quality.
- Premium experience investment: The company is expanding its premium large format (PLF) and extra-large format (XLF) screens, aiming to grow from over 600 to more than 1,000 such screens. Aron highlighted initiatives like upgraded IMAX and Dolby Cinema auditoriums and the rollout of new Club Rocker seating to enhance guest satisfaction.
- Food, beverage, and merchandise innovation: AMC has introduced new products and partnerships, including expanded bar offerings, movie-themed drinks, Dippin’ Dots, and home delivery via DoorDash and Uber Eats. Merchandise sales are expected to reach around $75 million in 2025, with half potentially contributing to EBITDA.
Drivers of Future Performance
Management’s outlook for the remainder of 2025 is driven by expectations of a revitalized box office and strategic investments in premium formats, guest amenities, and loyalty programs.
- Anticipated box office rebound: AMC expects a strong release slate to drive higher attendance and revenue for the rest of 2025 and into 2026. Management pointed to early Q2 box office figures running double those of the prior year, suggesting momentum is already underway.
- Expansion of premium offerings: The company plans to accelerate the rollout of PLF, XLF, and enhanced seating across its circuit. Aron indicated that these investments are being structured to limit upfront capital requirements, but future expansion will depend on improved EBITDA and available cash flow.
- Focus on disciplined capital allocation: Management outlined priorities of maintaining liquidity, reducing financial leverage, and investing in high-return growth initiatives. Goodman stressed that capital expenditures will remain controlled, with potential increases only if profitability improves, and that returning to pre-pandemic EBITDA does not require a full box office recovery.
Catalysts in Upcoming Quarters
In the upcoming quarters, the StockStory team will watch (1) whether the robust film slate translates into sustained box office and attendance growth, (2) the pace and impact of premium format and seating upgrades on guest experience and margins, and (3) the company’s ability to maintain higher per-patron profitability as attendance increases. Additional attention will be paid to AMC’s capital allocation discipline and progress in merchandise and food innovation.
AMC Entertainment currently trades at a forward EV-to-EBITDA ratio of 2.4×. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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