AMC Theatres Reports "Minimal" Economic Impact From Coronavirus Crisis

Adam Aron - Getty - H 2020
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“Our theaters, which are predominantly in the United States and northern Europe, appear to have felt little or no pain,” CEO Adam Aron told analysts as he detailed Italian theater closures.

Exhibition giant AMC Theatres, which is owned by China's Dalian Wanda Group, on Thursday reported it swung to a fourth-quarter loss on lower U.S. theater attendance and a one-time impairment charge, even as overall revenues rose 2.4 percent.

The latest financial results came as the exhibition giant told analysts that 22 of its 47 theaters in Italy will be closed for a week due to the coronavirus crisis in that European market, but that the overall financial impact from the outbreak so far was "minimal."

AMC Theatres posted a loss of $13.5 million, compared to a year-earlier profit of $170.6 million. The latest quarter included around $84.3 million of expense related to impairments of "long-lived assets," the company said.

The diluted earnings per share came to a loss of 13 cents, against a year-earlier per-share profit of 43 cents. The per-share loss missed on a Wall Street forecast for a profit of 10 cents.

Overall revenues at AMC Theatres rose 2.4 percent to $1.448 billion. The average U.S. ticket price rose 6.4 percent during the latest quarter, even as U.S. market attendance slipped 4.4 percent to 62.3 million patrons. That was offset by AMC Theatres posting record food and beverage revenues per patron in the U.S. and international markets.

AMC Theatres said its ticket subscription service, Stubs A-List, now has more than 900,000 members. That comes as rival MoviePass went out of business. Overall attendance at AMC theaters internationally fell 1.6 percent to 92.5 million patrons during the latest quarter.

In a statement, AMC Entertainment president and CEO Adam Aron said "these impressive results illustrate the power of customer engagement through the AMC platform, especially from our A-List subscription program and AMC Stubs loyalty program in the U.S., returns from our industry-leading recliner seating investments both in the U.S. and overseas, as well as the strength of our diversified geographic footprint."

AMC in its forward-looking statement that accompanied its latest quarterly results referred to "widespread health emergencies, such as the novel coronavirus or other pandemics or epidemics" as an investor risk. Hollywood has already seen delays in the releases of some movie tentpoles as the new coronavirus forces the shuttering of cinemas in China, Italy and other international markets.

North American exhibitors have been consulting disease experts and other authorities as they monitor the spread of the coronavirus to their home markets and any potential impact on domestic cinema-going. Aron addressed the issue on an analyst call as he said his company does not have movie theaters in China, South Korea or Iran, but does have screens in Italy, some of which will be closed for a week as a precaution.

"As best as we can tell, the economic impact on AMC from the coronavirus has been minimal. While it's conceivable that could change, as of today, our theaters, which are predominantly in the United States and northern Europe, appear to have felt little or no pain," the exec reported.

Aron added AMC is "vigilantly monitoring" reports of the coronavirus spread worldwide and is taking advice from government authorities in the U.S. and Europe, as well as from medical experts.

Back in Europe, AMC has 47 theaters in Italy, of which 22, mostly smaller venues around Milan, have been shuttered for a week at the instance of local government and medical authorities. "Milan is not on a quarantine or a lockdown. We did this cooperatively with the local government, just as a precaution," Aron told analysts.

There are another seven theaters in northeastern Italy that have closed and reopened in recent days as local government authorities alternate on whether doors should close or remain open to avoid the spread of the new virus. Aron put the cost in lost revenue for AMC from the Italian theater closures at between $500,000 and $1 million.

"If the coronavirus were to hit the United States in a huge way, that would be a big problem for us. But what's happened in Milan is not," Aron said. He also told analysts AMC Theatres does not have interruption insurance for the coronavirus outbreak as a protection against future losses.

Feb. 27, 3 p.m. Updated with comments by AMC Theatres execs around the impact of the coronavirus crisis made during an analyst call.