AMC Theatres Discloses $2.17 Billion Quarterly Loss Amid Pandemic Closure

AFP PHOTO/Frederic J. BROWN

The movie theater chain, which expects to be "fully open globally" by July as it reopens, risks not surviving the coronavirus pandemic over high debt and liquidity concerns.

Exhibition giant AMC Theatres, hit by a shutdown of its circuit amid the coronavirus pandemic in mid-March, reported a deep first quarter loss due to onetime impairment charges, on sharply lower overall revenues, on Tuesday.

AMC, which has closed its theaters through to the end of June and is expected to detail its reopening plans during an analyst call, posted a quarterly loss of $2.17 billion, which included $1.85 billion of non-cash impairment charges, against a year-earlier loss of $130 million. The chain said it expects to be "fully open globally in July."

The adjusted per-share net loss for the first quarter was $2.22, against a year-earlier 98 cents. Total revenue for the first quarter was $941.5 million, against a year-earlier $1.2 billion. 

That earnings per-share line fell short of a Capital IQ consensus estimate for a first-quarter loss of $1.44, while the total revenue just missed on a consensus of $947 million.

The latest financial results came as the exhibition giant, which is owned by China's Dalian Wanda Group, faces Wall Street speculation it may not survive the COVID-19 crisis and may need to declare a Chapter 11 bankruptcy filing or restructure its high debt load to stay in business.

"AMC remains the highest risk in the exhibition space given its high debt and low available liquidity, resulting in a higher probability that the company will need to restructure," Wedbush analyst Michael Pachter said in a June 8 investors note.

Last week, AMC flagged that it expected its first-quarter financials, which during the second half of March were hit by the shutdown of its circuit, to include a loss of up to $2.4 billion, driven by a big impairment charge amid the novel coronavirus pandemic.

The exhibition giant also included in its statement risk language that "there were substantial doubts about its ability to continue operating as a going concern."

On a conference call, Aron told analysts he expected film-lovers to return to their local multiplex post-lockdown out of an "appreciation of communal experiences." And he was upbeat about the company's future prospects, whatever its immediate challenges.

"While cautious lawyers and accountants properly like for us to air the obvious substantial doubts should more calamity happen, I for one know that AMC will lift every rock and take every reasonable action we can to put AMC on a solid and improving path," Aron said.

He added AMC had already reopened 10 theaters in Norway, Germany, Spain and Portugal, "and currently expect to be fully open globally in July," including in the U.S. and the U.K. He added the cinema chain expected to screen Warner Bros’ release of Christopher Nolan’s Tenet on July 17, followed by Disney’s Mulan as that tentpole is slated for release on July 24.

Aron said 14 of the 15 countries AMC operates in globally have national safety guidelines for theater reopenings, excepting Saudi Arabia. "We can open our theaters very quickly," he added, with individual theaters taking from one to two weeks to get their lights back on and employees to fully return.

AMC will initially open with classic movie screenings, like rival circuits, but go quickly to new Hollywood tentpole releases. "Our attendance and our revenues will be much more lush on the new movie releases, rather than playing the repertory product," Aron said as his theaters open in July, ahead of the Tenet release, rather than June, as at other circuits.

The AMC boss said he expected Tenet and Mulan to play their scheduled July dates, while conceding that any of the upcoming studio releases may be delayed. "Those decisions are made by Warners and by Disney, and by the other studios who release," Aron told analysts.

Some exhibition analysts expect Warner Bros. and Disney may delay their planned releases if domestic audiences do not return to the local multiplex in strong numbers this summer. And Aron argued seating limitations amid the pandemic, even if at 25 percent capacity for each auditorium, would still allow AMC to profitably play Tenet and Mulan by adding showtimes and theaters to meet demand.

AMC also addressed in its statement how it will address its fight with Universal Pictures over the studio shifting Trolls World Tour to premium VOD amid the COVID-19 crisis and whether that will impact whether MGM's No Time to Die release in December plays on its international screens.

"While we are in active dialogue with Universal, no movies made by Universal Studios are currently on our docket," AMC said as it released its latest financial results.

In a strongly worded letter in late April sent to Universal Filmed Entertainment Group chairman Donna Langley, Aron threatened to no longer play any of the studio's films after comments made by NBCUniversal CEO Jeff Shell over the on-demand success of Trolls World Tour. With the next Universal release being Halloween Kills in mid-October, AMC has time to eventually settle with the studio. 

During the analyst call Aron added: "Relations are warm with Universal. There's nothing personal with this issue with Universal. This is just an issue about money. … We'll see how it all shakes out."

AMC furloughed or let go more than 26,000 employees as the virus crisis shuttered its circuit in March. The largest cinema chain in the U.S. and the world then went even further, furloughing all of its 600 corporate employees, including CEO Aron.

AMC execs were also coy about addressing a debt swap with bondholders that it is currently looking to complete to give it additional financial headroom. The debt exchange offer would see subordinated bondholders accept cuts of up to half of the $2.3 billion full face value on the existing debt.

June 9, 3 p.m. Updated with comments by top AMC execs made during an analyst call.