Item 2.02
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Results of Operations and Financial Condition.
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Certain Preliminary Financial Results for the Three Months Ended
March 31, 2021
The Company has released certain limited preliminary results for the
three months ended March 31, 2021. The preliminary results are unaudited, subject to completion of the Company’s quarterly financial
reporting process, based on information known by management as of the date of this document and do not represent a comprehensive statement
of our financial results for the three months ended March 31, 2021.
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·
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The
Company expects total revenues for the three months ended March 31, 2021 to be approximately
$148.3 million compared to $941.5 million for the three months ended March 31, 2020.
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·
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The
Company expects net loss for the three months ended March 31, 2021 to be between $572.2 million and $567.2
million compared to $2,176.3 million for the three months ended March 31, 2020.
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·
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The
Company expects Adjusted EBITDA to be between $(301.7) million and $(294.7) million for the
three months ended March 31, 2021 compared to $3.1 million for the three months ended March
31, 2020, and a table reconciling expected net loss to Adjusted EBITDA is included below.
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·
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The
Company estimates that its cash and cash equivalents at March 31, 2021 was $813.1 million.
In addition, as of March 31, 2021, $211.9 million was available for drawing under our revolving
credit facility.
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AMC Entertainment Holdings, Inc.
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Reconciliation of Adjusted EBITDA
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(Unaudited, in millions)
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Three Months Ended
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March
31, 2021
(Preliminary Estimates)
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Three Months Ended
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Low
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High
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March 31, 2020
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Reconciliation of Adjusted EBITDA:
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Net Loss
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$
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(572.2
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)
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$
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(567.2
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)
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$
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(2,176.3
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)
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Plus:
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Income tax provision (benefit)
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(8.8
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)
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(6.8
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)
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68.2
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Interest expense
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162.8
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162.8
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82.8
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Depreciation and amortization
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114.1
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114.1
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122.5
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Impairment of long-lived assets, definite and indefinite-lived Intangible
assets and goodwill (2)
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-
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-
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1,851.9
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Certain operating expenses (3)
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2.3
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2.3
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2.1
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Equity in loss of non-consolidated entities
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2.8
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2.8
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2.9
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Cash distributions from non-consolidated entities (4)
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0.3
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0.3
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7.6
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Attributable EBITDA (5)
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(0.8
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)
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(0.8
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(0.1
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)
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Investment expense (income)
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(2.0
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)
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(2.0
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9.4
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Other expense (income) (6)
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(4.8
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(4.8
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26.9
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Other non-cash rent (7)
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(7.5
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)
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(7.5
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)
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2.3
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General and administrative expense-unallocated:
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Merger, acquisition and transaction costs (8)
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6.7
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6.7
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0.2
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Stock-based compensation
expense (9)
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5.4
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5.4
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2.7
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Adjusted EBITDA (1)
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$
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(301.7
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)
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$
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(294.7
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$
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3.1
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(1) We present Adjusted EBITDA as a supplemental measure of our performance.
We define 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 we do not consider indicative of our ongoing operating
performance and to include attributable EBITDA from equity investments in theatre operations in International markets and any cash distributions
of earnings from other equity method investees. These further adjustments are itemized below. You are encouraged to evaluate these adjustments
and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the
future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted
EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Adjusted
EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net earnings (loss)
as an indicator of operating performance (as determined in accordance with U.S. GAAP). Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors
with additional information to measure our performance and estimate our value.
Adjusted EBITDA has important limitations as an analytical tool, and
you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. For example,
Adjusted EBITDA:
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does not reflect our
capital expenditures, future requirements for capital expenditures or contractual commitments;
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does not reflect changes
in, or cash requirements for, our working capital needs;
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does not reflect the
significant interest expenses, or the cash requirements necessary to service interest or
principal payments on our debt;
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excludes income tax
payments that represent a reduction in cash available to us; and
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does not reflect any
cash requirements for the assets being depreciated and amortized that may have to be replaced
in the future.
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(2) During the three months ended March 31, 2020, we recorded non-cash
impairment charges of $1,124.9 million and $619.4 million related to the enterprise fair values of our Domestic Theatres and International
Theatres reporting units, respectively. We recorded non-cash impairment charges related to our long-lived assets of $81.4 million on
57 theatres in the U.S. markets with 658 screens which were related to property, net, operating lease right-of-use assets, net and other
long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens which were related to property, net and
operating lease right-of-use assets, net, during the three months ended March 31, 2020. We recorded non-cash impairment charges related
to our indefinite-lived intangible assets of $5.9 million and $2.4 million related to the Odeon and Nordic trade names, respectively,
during the three months ended March 31, 2020. We also recorded non-cash impairment charges of $8.0 million related to our definite-lived
intangible assets.
(3) Amounts represent preopening expense related to temporarily closed
screens under renovation, theatre and other closure expense for the permanent closure of screens including the related accretion of interest,
non-cash deferred digital equipment rent expense, and disposition of assets and other non-operating gains or losses included in operating
expenses. We have excluded these items as they are non-cash in nature or are non-operating in nature.
(4) Includes U.S. non-theatre distributions from equity method investments
and International non-theatre distributions from equity method investments to the extent received. We believe including cash distributions
is an appropriate reflection of the contribution of these investments to our operations.
(5) Attributable EBITDA includes the EBITDA from equity investments
in theatre operators in certain International markets. See below for a reconciliation of our equity in (earnings) loss of non-consolidated
entities to attributable EBITDA. Because these equity investments are in theatre operators in regions where we hold a significant market
share, we believe attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure
to monitor and evaluate these equity investments. We also provide services to these theatre operators including information technology
systems, certain on-screen advertising services and our gift card and package ticket program.
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Three Months Ended
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(In millions)
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March 31, 2021
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March 31, 2020
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Equity in (earnings) loss of non-consolidated entities
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$
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2.8
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$
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2.9
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Less:
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Equity in (earnings) loss of non-consolidated
entities excluding International theatre joint ventures
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1.2
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2.1
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Equity in earnings (loss) of International theatre joint ventures
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(1.6
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)
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(0.8
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Income tax provision
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(0.2
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(0.1
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Investment income
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—
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(0.2
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Interest expense
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—
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—
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Depreciation and amortization
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0.9
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0.8
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Other expense
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0.1
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0.2
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Attributable EBITDA
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$
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(0.8
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$
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(0.1
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(6) Other expense (income) for the three months ended March 31, 2021
included foreign currency transaction gains of $3.8 million and gains related to contingent lease guarantees of $2.0 million, partially
offset by financing fees of $1.0 million primarily related to deferred financing cost write-off for the Odeon revolving credit facility.
During the three months ended March 31, 2020, we recorded a loss of
$20.1 million for the fair value adjustment of the derivative asset related to the Convertible Notes due 2026, credit losses related
to contingent lease guarantees of $5.3 million, and foreign currency transaction losses of $2.0 million, partially offset by a gain of
$0.5 million for the fair value adjustment of the derivative liability related to the Convertible Notes due 2026.
(7) 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.
(8) Merger, acquisition and other costs are excluded as they are non-operating
in nature.
(9) Non-cash expense included in general and administrative: other
Information Regarding Preliminary Results
The preliminary estimated financial information contained herein reflects
management’s estimates based solely upon information available to it as of the date of this document and is not a comprehensive
statement of our financial results for the three months ended March 31, 2021. The preliminary estimated financial results described above
constitute forward-looking statements. The preliminary estimated financial information presented above is subject to change, and our
actual financial results may differ from such preliminary estimates and such differences could be material. Accordingly, you should not
place undue reliance upon these preliminary estimates.
Reference to Additional Disclosures
In providing this update, reference is made to the Company’s
prior disclosures contained in its Annual Report on Form 10-K, filed with the SEC on March 12, 2021. This update should be
read together with the prior disclosures, including the risk factors contained therein. Reference is also made to the risk factor disclosures
and the cautionary note regarding forward-looking statements and other disclosures contained in the Prospectus Supplement, dated April
27, 2021.