AMC Theatres Posts $4.58 Billion Full-Year 2020 Loss Amid Pandemic

AMC Theatres
Noam Galai/WireImage

A view outside the AMC Lincoln Square 13 movie theater on March 5, 2021, in New York City.

The cinema giant, led by CEO Adam Aron, also reported a quarterly loss of $946.1 million amid a steep revenue collapse.

Cinema giant AMC Theatres posted a steep fourth-quarter and full-year loss and revenue fall as it reopens theaters in New York City at limited capacity amid the novel coronavirus pandemic.

The company, led by president and CEO Adam Aron, posted quarterly revenue falling 88 percent to $162.5 million as the forced closure of parts of its circuit due to the pandemic and a lack of new movies continued to affect the business. And the chain's net loss for the fourth quarter grew to $946.1 million, compared to a year-earlier loss of $13.5 million. The per-share loss was $6.21, against a year-earlier 13 cents.

The full-year 2020 loss came to $4.58 billion, against a year-earlier full-year loss of $149.1 million, or a per-share loss of $39.15, compared to a year-earlier $1.44 loss. As of March 5, AMC said it had opened 527 of its 589 domestic theaters, and around 78 percent of its 356 international locations.

On an earnings call with investors, Aron touted that studios were lining up their major theatrical releases — like Black Widow, Top Gun: Maverick and F9 — for the summer season. "The CEOs of two major studios each told me that a good metaphor for AMC’s circumstance is that we are LaGuardia Airport closed by a thunderstorm with tons of planes circling overhead all waiting and needing to land," he said.

Aron estimated that around 40 major movie titles delayed from a 2020 release will hit AMC screens starting in May.

During the financial quarter ending Dec. 31, 2020, AMC recorded $466.1 million in non-cash impairment charges to reflect the fair value of its operations after they faced shutdowns during much of 2020 and delays or cancellations of Hollywood tentpole film releases.

The fourth-quarter financials for 2019 included around $84.3 million of expenses related to impairments of long-lived assets and another $9.6 million of expenses associated with a derivative liability, which was offset by around $41.5 million of income from a nonrecurring tax benefit from international operations.

Wall Street has focused more on AMC's liquidity position, though. On the analyst call following release of the latest financials, Aron said AMC had cash on hand to carry on business to the end of 2021 and into 2022. "I am now in a position to say that I am optimistic and confident about AMC’s ability to weather this COVID-19 storm. Our focus no longer is on survival, but now has turned instead to directing a surge in moviegoing and on the recovery of AMC, objectives that feel to us like they are right around the corner," he told analysts.

Aron also disclosed that AMC and Warner Bros. had reached an agreement to shrink the theatrical window after the movie theater chain earlier slammed the Hollywood studio for premiering its entire 2021 theatrical release slate simultaneously on HBO Max. "You may have noticed that we're playing Warner movies. You should properly assume we came to an agreement with Warner and that any changes in their strategy are being done in ways where AMC shareholders should benefit," he said, without revealing the terms of the deal.

In another reversal, AMC in July struck a historic agreement with Universal that allowed the studio's movies to be made available on premium video-on-demand after just 17 days of play in cinemas, including three weekends.

At the end of January, AMC unveiled a new European financing deal, raising more than $400 million to help the company through a difficult period with additional liquidity. The company back then also estimated "that its financial runway has been extended deep into 2021."

Echoing executives at other U.S. movie chains, Aron told analysts that pent-up demand for moviegoing once pandemic lockdowns lifted would allow the exhibition industry to rebound. "Don't just assume that people aren't going to go to theaters. We're going to find out post-pandemic that people will go to theaters and will be really happy that they got out of their homes," he argued.

Aron also confirmed that Chinese conglomerate Wanda Group had given up its majority stake in AMC Entertainment while remaining the chain's largest shareholder. He said the U.S.-based division of Wanda converted its Class B common shares, with three votes each in AMC, to regular Class A shares, each with a single vote, on Dec. 29, as part of wider at-the-market equity issue programs by the embattled chain to raise fresh operating cash.

Aron said Wanda now had a diluted voting stake of less than 10 percent in the parent of AMC Theatres, while retaining two seats on its board of directors. With no controlling shareholder in place, AMC will be "governed just as is most other publicly traded companies with a wide array of shareholders," he added.

Aron also addressed a question about possible closures of marginally profitable or money-losing theaters and whether mergers and acquisitions post-pandemic were likely. "People are overstating that streaming is somehow going to cause screen closures. But I do think given what our industry has lived through this past year, our eagerness to continue to operate money-losing theaters has a very low point of desirability. So I think we'll be much tougher," Aron told analysts.

"Is there M&A activity? I guess we'll all find out together," he added.

Cinema chains received a huge boost Feb. 22 when New York City, the country's second-largest moviegoing market behind Los Angeles, said that theaters, which have been shut down for nearly a year because of COVID-19, will be permitted to reopen from March 5, albeit with restrictions in place, including a 25 percent capacity limit. Aron said that AMC could reopen locations in Los Angeles as soon as March 19.