Amc Entertainment Holdings, Inc. · NYSE:AMC
Amc Entertainment — Corporate Update (April 2019)
16 slides from Amc Entertainment's corporate update, Apr 24, 2019
Slide 1: Lease Accounting
Lease Accounting April 24, 2019
Slide 2: Disclaimer
Disclaimer AMC’s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles ("GAAP"). Certain items contained in this presentation, including Adjusted EBITDA, Adjusted EBITDAR, Net Debt, and Adjusted Free Cash Flow, are non-GAAP financial
Slide 3: Executive Summary
ASC 842 new lease accounting rules came into effect on January 1st, 2019 Accounting change with no impact on the business or total cash flows New rule will result in certain presentation changes to the income and cash flow statements… … and an increase in both assets and non-debt liabilities on the
Slide 4: Executive Summary (Cont'd)
Importantly, this accounting change will have a non-operational impact on several of our key investor metrics. For example, assuming implementation of ASC 842 in 2018: Net Debt: $427.3M decrease → legacy financing lease obligations (FLOs) reclassified as operating lease liabilities Adjusted EBITDA:
Slide 5: Changes Under New Lease Accounting Standard
Changes Under New Lease Accounting Standard 5 Prior GAAP (ASC 840) Operating Leases • B/S: None • P&L: Rent expense Financing Lease Obligations / FLOs • B/S: PP&E & Debt • P&L: Interest & Depreciation Capital Leases / CLOs • B/S: PP&E & Debt • P&L: Interest & Depreciation New GAAP (ASC 842) Operatin
Slide 6: ASC Adjustments: Income Statement
ASC 842 Adjustments: Income Statement 6 Line Item 2018A PF Impact ($M) Revenue –. Rent Expense $93.3. Adjusted EBITDA ($93.3) D&A ($105.7) Interest Expense ($29.5) Non-Cash Rent Expense – Purchase Accounting $38.5. Net Income $3.4. Commentary ▪ No revenue impact ▪ Reclassification of legacy financin
Slide 7: ASC Adjustments: Cash Flow Statement
ASC 842 Adjustments: Cash Flow Statement 7 Line Item 2018A PF Impact ($M) Net Income $3.4. Deferred Rent (1) $6.2. D&A ($105.7). Non-Cash Rent Expense – Purchase Accounting (1) $38.5. Cash Flow Used In Operating Activities ($57.6) Principal Payment Under FLO $57.6. Cash Flow Provided By Financing Ac
Slide 8: ASC Adjustments: Balance Sheet
ASC 842 Adjustments: Balance Sheet 8 Line Item 2018A PF Impact ($M) ROU Operating Lease Assets $4,832.0 Operating Lease Liabilities $5,358.0 Lease Obligations (Legacy FLO) ($427.3) Net Debt ($427.3) Commentary ▪ Operating leases are capitalized on the balance sheet, resulting in the creation of righ
Slide 9: Valuation Multiples
Valuation Multiples 9 TEV / LTM Adjusted EBITDA TEV / LTM Adjusted EBITDAR To adjust for non-cash lease accounting changes, Adjusted EBITDA valuation multiples should re-rate upwards by 0.3x; Adjusted EBITDAR multiples remain consistent pre- and post-change 7.9x 7.3x 8.2x 7.6x Current3-Year Average
Slide 10: Medium to Long-Term Target Rationale
10 Medium to Long-Term Target Rationale 3% – 5% (2% – 3% box office growth + 1% – 2% industry outperformance) Outperformance driven by the AMC Platform (e.g., Stubs, A-List, premium food & beverage, high ROI growth capex) 17% – 19% (Up to ~200 bps of margin expansion) Margin expansion from operating
Slide 11: Medium to Long-Term Target Revisions
11 Medium to Long-Term Target Revisions 3% – 5% (2% – 3% box office growth + 1% – 2% industry outperformance) None 16% – 18% (Up to ~200 bps+ of margin expansion) Non-operational reduction in Adjusted EBITDA as a result of rent expense increase from lease reclassification $250-300M of net capex with
Slide 12: Appendix
Appendix 12
Slide 13: Summary of Key ASC Adjustments
Summary of Key ASC 842 Adjustments 13 Key Inputs Impact • Rent Expense • Depreciation & Amortization • Interest Expense • Adjusted EBITDA • Net Income • Net Income • Depreciation & Amortization • FLO Principal Payments • CF Used In Operations • Adjusted Free Cash Flow • CF Provided By Financing • Ch
Slide 14: Summary Valuation Multiple Reconciliation (Pre-ASC 842)
Summary Valuation Multiple Reconciliation (Pre-ASC 842) 14 Pre- ASC 842 Year Ended: PF 2016 PF 2017 2018A 2018A Share Price as of: 12/30/2016 12/29/2017 12/31/2018 4/19/2019 Share Price $33.65 $15.10 $12.28 $16.05 Shares Outstanding Class A (Total) 34.3 51.9 51.7 52.1 Class B 75.8 75.8 51.8 51.8 Tot
Slide 15: Summary Valuation Multiple Reconciliation (Post-ASC 842)
Summary Valuation Multiple Reconciliation (Post-ASC 842) 15 Post- ASC 842 Year Ended: PF 2016 PF 2017 2018A 2018A Share Price as of: 12/30/2016 12/29/2017 12/31/2018 4/19/2019 Equity Value $3,725.8 $1,944.9 $1,294.9 $1,697.7 Historical Net Debt $4,302.7 $4,653.6 $5,114.7 $5,114.7 FLO Adjustment (ASC
Slide 16: ASC Adjustments By Quarter
ASC 842 Adjustments By Quarter 16For detailed definitions and reconciliations of all non-GAAP financial measures, see the investor relations section of our website at www.amctheatres.com and our Form 8-K furnished earlier today Adjustments to Income Statement Three Months Three Months Three Months T
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