Major cinema operator AMC Entertainment is filing for an IPO, and although it has made several failed attempts at an offering in the past, its prospects look bright now.
AMC is one of the largest theater chains, with more than 343 locations containing 4,900-plus screens, primarily located in the North American market.
Last year was a record-breaker for AMC, which recorded $2.7 billion in revenues and $438.3 million in adjusted profits — not a bad feat considering AMC has been heavily investing in upgrading its theaters.
One effort that’s getting a lot of traction is the installation of recliner seats. True, this has reduced available seating, but the shortfall has been more than made up by an increase in attendance.
Another important move has been to allow for open-source Internet ticketing; that is, AMC now allows many websites to sell tickets, and that in turn has boosted its business.
Finally, the company has been rethinking its concession strategy. For example, AMC has introduced Concession Freshens, which offers made-to-order hot foods, espresso drinks and smoothies. Then there is the MacGuffins Bar & Lounge concept, which has a wide assortment of premium beers, wines and liquors.
In short, AMC has been trying to transform the theater business from a commodity to a differentiated entertainment experience. While the strategy is still in early stages, the company’s moves are looking savvy.
It should be pointed out that AMC’s initial public offering record has been spotty. AMC filed for an IPO in 2007 but had to nix it because of the financial crisis, then after filing again in 2010, it ditched the deal and sold out instead to Wanda Group, China’s biggest theater operator.
But AMC probably won’t leave investors waiting at the altar this time around. The company has taken innovative steps, and cash flows are strong. More importantly, the IPO market is hot right now and has been receptive to other entertainment companies, such as SeaWorld (SEAS). Plus, publicly traded theater companies including Regal Entertainment (RGC) and Carmike Cinemas (CKEC) have been decent performers this year.
AMC plans to list on the New York Stock Exchange under the ticker symbol of “AMC.” The S-1 filing does not mention any underwriters.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.