| OPERATING SEGMENTS |
NOTE 10—OPERATING SEGMENTS The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance. The Company has identified two reportable segments and reporting units for its theatrical exhibition operations, U.S. markets and International markets. The International markets reportable segment has operations in or partial interest in theatres in the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Norway, and Denmark. On December 30, 2022, the Company entered into an agreement to sell its 10.0% investment Saudi Cinema Company, LLC for SAR 112.5 million ($30.0 million), subject to certain closing conditions. On January 24, 2023, the Saudi Ministry of Commerce recorded the sale of equity and the Company received the proceeds on January 25, 2023. See Note 5—Investments for further information. Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary revenues, primarily screen advertising, AMC Stubs® membership fees and other loyalty programs, ticket sales, gift card income and exchange ticket income. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance of or allocate resources between segments. Below is a breakdown of select financial information by reportable operating segment: | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | Revenues (In millions) | | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | U.S. markets | | $ | 1,063.9 | | $ | 753.3 | | $ | 2,855.8 | | $ | 2,224.3 | International markets | | | 342.0 | | | 215.1 | | | 852.4 | | | 696.2 | Total revenues | | $ | 1,405.9 | | $ | 968.4 | | $ | 3,708.2 | | $ | 2,920.5 |
| | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | Adjusted EBITDA (In millions) | | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | U.S. markets | | $ | 150.6 | | $ | 1.2 | | $ | 336.3 | | $ | 52.2 | International markets | | | 43.1 | | | (14.1) | | | 47.0 | | | (20.1) | Total Adjusted EBITDA (1) | | $ | 193.7 | | $ | (12.9) | | $ | 383.3 | | $ | 32.1 |
| (1) | The Company presents Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of the Company’s ongoing operating performance and to include attributable EBITDA from equity investments in theatre operations in International markets and any cash distributions of earnings from its other equity method investees. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, which is broadly consistent with how Adjusted EBITDA is defined in the Company’s debt indentures. |
| | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | Capital Expenditures (In millions) | | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | U.S. markets | | $ | 40.8 | | $ | 40.1 | | $ | 112.2 | | $ | 91.5 | International markets | | | 16.7 | | | 14.4 | | | 41.3 | | | 38.2 | Total capital expenditures | | $ | 57.5 | | $ | 54.5 | | $ | 153.5 | | $ | 129.7 |
| | | | | | | | | As of | | As of | Long-term assets, net (In millions) | | September 30, 2023 | | December 31, 2022 | U.S. markets | | $ | 5,854.1 | | $ | 6,135.9 | International markets | | | 1,958.9 | | | 2,097.6 | Total long-term assets (1) | | $ | 7,813.0 | | $ | 8,233.5 |
| (1) | Long-term assets are comprised of property, net, operating lease right-of-use assets, intangible assets, goodwill, deferred tax assets, net and other long-term assets. |
The following table sets forth a reconciliation of net loss to Adjusted EBITDA: | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | (In millions) | | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | Net earnings (loss) | | $ | 12.3 | | $ | (226.9) | | $ | (214.6) | | $ | (685.9) | Plus: | | | | | | | | | | | | | Income tax provision | | | 2.3 | | | 1.8 | | | 4.6 | | | 2.5 | Interest expense | | | 103.7 | | | 95.7 | | | 307.4 | | | 278.4 | Depreciation and amortization | | | 88.7 | | | 96.9 | | | 279.1 | | | 293.0 | Certain operating expense (1) | | | 3.8 | | | 4.3 | | | 4.0 | | | 10.5 | Equity in (earnings) loss of non-consolidated entities | | | (3.1) | | | (2.8) | | | (5.3) | | | 3.3 | Cash distributions from non-consolidated entities (2) | | | 2.2 | | | 3.4 | | | 3.9 | | | 5.0 | Attributable EBITDA (3) | | | 1.4 | | | 0.1 | | | 1.6 | | | 0.1 | Investment expense (income) (4) | | | (3.0) | | | 18.3 | | | (11.4) | | | 12.2 | Other expense (income) (5) | | | (14.1) | | | 6.2 | | | (1.4) | | | 110.9 | Other non-cash rent benefit (6) | | | (8.4) | | | (6.6) | | | (27.0) | | | (20.6) | General and administrative — unallocated: | | | | | | | | | | | | | Merger, acquisition and other costs (7) | | | 0.7 | | | 0.3 | | | 1.5 | | | 0.4 | Stock-based compensation expense (8) | | | 7.2 | | | (3.6) | | | 40.9 | | | 22.3 | Adjusted EBITDA | | $ | 193.7 | | $ | (12.9) | | $ | 383.3 | | $ | 32.1 |
| (1) | Amounts represent preopening expense related to temporarily closed screens under renovation, theatre and other closure expense for the permanent closure of screens, including the related accretion of interest, disposition of assets and other non-operating gains or losses included in operating expenses. The Company has excluded these items as they are non-cash in nature or are non-operating in nature. |
| (2) | Includes U.S. non-theatre distributions from equity method investments and International non-theatre distributions from equity method investments to the extent received. The Company believes including cash distributions is an appropriate reflection of the contribution of these investments to the Company’s operations. |
| (3) | Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain International markets. See below for a reconciliation of the Company’s equity in loss of non-consolidated entities to attributable EBITDA. Because these equity investments in theatre operators are in regions where the Company holds a significant market share, the Company believes attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure to monitor and evaluate these equity investments. The Company also provides services to these theatre operators including information technology systems, certain on-screen advertising services and the Company’s gift card and package ticket program. |
| | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | (In millions) | | September 30, 2023 | | September 30, 2022 | | September 30, 2023 | | September 30, 2022 | Equity in (earnings) loss of non-consolidated entities | | $ | (3.1) | | $ | (2.8) | | $ | (5.3) | | $ | 3.3 | Less: | | | | | | | | | | | | | Equity in (earnings) of non-consolidated entities excluding International theatre joint ventures | | | (2.1) | | | (3.5) | | | (4.7) | | | (3.1) | Equity in earnings (loss) of International theatre joint ventures | | | 1.0 | | | (0.7) | | | 0.6 | | | (6.4) | Income tax provision (benefit) | | | 0.1 | | | 0.1 | | | (0.1) | | | 0.1 | Investment expense (income) | | | (0.2) | | | — | | | (0.1) | | | 0.2 | Interest expense | | | 0.1 | | | — | | | 0.2 | | | — | Impairment of long-lived assets | | | — | | | — | | | — | | | 4.2 | Depreciation and amortization | | | 0.4 | | | 0.7 | | | 1.0 | | | 2.0 | Attributable EBITDA | | $ | 1.4 | | $ | 0.1 | | $ | 1.6 | | $ | 0.1 |
| (4) | Investment expense (income) during the three months ended September 30, 2023 primarily includes appreciation in estimated fair value of the Company’s investment in common shares of Hycroft of $(0.1) million, deterioration in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft of $0.8 million and interest income of $(3.7) million. During the three months ended September 30, 2022, investment expense (income) included deterioration in estimated fair value of the Company’s investment in common shares of Hycroft of $11.8 million, deterioration in estimated fair value of the Company's investment in warrants to purchase common shares of Hycroft of $7.7 million, and $1.6 million decline in estimated fair value of the Company’s investment in NCM Common Units, partially offset by interest income of $(2.8) million. |
Investment expense (income) during the nine months ended September 30, 2023 includes deterioration in estimated fair value of the Company’s investment in common shares of Hycroft of $5.4 million, deterioration in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft of $5.4 million, $1.8 million of expense for NCM Common Units, $(15.5) million gain on the sale of the Company’s investment in Saudi Cinema Company, LLC and interest income of $(8.5) million. During the nine months ended September 30, 2022, investment expense (income) included deterioration in estimated fair value of the Company’s investment in common shares of Hycroft of $10.8 million, $11.1 million decline in estimated fair value of the Company’s investment in NCM Common Units, partially offset by appreciation in estimated fair value of the Company’s investment to purchase common shares of Hycroft of $(7.4) million and interest income of $(3.3) million. | (5) | Other expense (income) during the three months ended September 30, 2023 includes a non-cash litigation adjustment of $(16.1) million, income related to foreign currency transaction losses of $12.8 million and gains on debt extinguishment of $(10.8) million. During the three months ended September 30, 2022, other expense (income) included foreign currency transaction losses of $6.3 million. |
Other expense (income) during the nine months ended September 30, 2023 includes a non-cash litigation charge of $99.3 million, partially offset by gains on debt extinguishment of $(97.5) million and foreign currency transaction gains of $(3.2) million. During the nine months ended September 30, 2022, other expense (income) included loss on debt extinguishment of $96.4 million and foreign currency transaction losses of $14.7 million. | (6) | Reflects amortization expense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842, Leases and deferred rent benefit related to the impairment of right-of-use operating lease assets. |
| (7) | Merger, acquisition and other costs are excluded as they are non-operating in nature. |
| (8) | Non-cash or non-recurring expense included in general and administrative: other. |
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