Cinemark Swings to Quarterly Loss Amid Pandemic, Eyes Reopening From June 19

Cinemark CEO Mark Zoradi
Matt Winkelmeyer/Getty Images

Cinemark CEO Mark Zoradi

The cinema giant, led by CEO Mark Zoradi, outlined reopening plans that hinge on deep cleaning and the box office success of Warner Bros. and Christopher Nolan's 'Tenet' release on July 17.

Cinema giant Cinemark Holdings swung to a loss for the first quarter due to the initial financial hit from the novel coronavirus pandemic starting in mid-March.

The company, led by CEO Mark Zoradi, on a morning analyst call said it plans to reopen its U.S. circuit in four phases starting on June 19 and that the reopening of its cinemas in Latin America will likely occur in August as Brazil especially remains a pandemic hotspot.

Cinemark plans to return to full operation by July 1. The first phase calls for a one-week, five-theater test run from June 19 to ensure operating efficiency. Then another one-third of Cinemark theaters will open a week later, on June 26; another third will open their doors July 3; and all theaters are expected to be open to patrons by July 10.

The phased reopening will hinge on the scale of the pandemic and health restrictions to contain it, especially in New York City and other major media markets. "Of course it depends on a continuing positive movement, relative to the decline of COVID-19, and the government restrictions being reduced across the country," Zoradi told analysts.

As part of its planned safety precautions, Cinemark will introduce deep cleaning, plexiglass barriers and ample hand sanitizing stations in its theaters. And expect more contactless ticketing checks at the multiplex. "It will be like an airline. If you bought a ticket online, it's on your smartphone and we scan and you walk right in," Zoradi said, citing the need to minimize printed tickets.

Cinemark will also offer a limited offering of popcorn and candy at the concession stand when its theaters reopen to minimize labor costs, before returning to selling pizza, burgers and other premium food offerings by the fall. On the movie product side, the chain will kick off its Hollywood tentpole offerings with the Russell Crowe starrer Unhinged on July 1, Christopher Nolan's Tenet on July 17, Disney's Mulan on July 24, Paramount's Spongebob Movie: Sponge on the Run on Aug. 7, and Warner Bros.' Wonder Woman 1984 on Aug. 14.

The theater chain's reopening plans will also depend on whether Warner Bros. will move ahead with the Tenet release after Nolan's much-anticipated blockbuster was already rescheduled amid the COVID-19 crisis. "I can't promise you, nor can Warner Bros. promise you, that Tenet will open on July 17," Zoradi said.

He added Warner Bros. will likely soon have to decide on whether it will pull the trigger on a major publicity campaign for Tenet. "If in fact they believe they have to change [the release date] — which they've given no indication as of today — we will be prepared to make that change and adjustment along the way that will not be a devastating change and adjustment for us," Zoradi told analysts.

The Cinemark theaters will also reopen as anticipated with classic Hollywood movies and "welcome back" pricing to help get consumers back into theater-going habit. After Nolan's Tenet plays on its screens, Zoradi said Cinemark theaters will return to traditional ticket pricing, including for premium platforms.

Cinemark initially will have a maximum 50 percent seating capacity in each of its theaters, with six feet between patrons for social distancing. "We can operate our theaters very profitably below that level," Zoradi assured analysts, while adding health and safety restrictions over the rest of the year could potentially raise the maximum seating limits.

Zoradi also said Cinemark will not return to any sense of normalcy before 2022, with next year offering a recovery for the exhibition industry, not least as the Hollywood studios have had to shuffle their tentpole release schedules. Like other exhibitors, Cinemark had delayed its quarterly earnings report amid the virus crisis. 

It posted a quarterly loss of $59.6 million, or 51 cents per share, compared with a profit of $32.7 million in the year-ago period, or 28 cents a share. Adjusted earnings before interest, taxes, depreciation and amortization, another profitability metric, fell to $66.2 million from $152.3. Revenue dropped 24 percent from $714.7 million to $543.6 million.

Zoradi in mid-April predicted it would take up to four months for shuttered cinema screens to fully reopen as the COVID-19 crisis recedes, likely starting July 1. "A return to normalcy may span multiple months driven by staggered theater openings due to government limits, reduced operating hours, lingering social distancing and a ramp-up of consumer comfort with public gatherings," he said. 

Cinemark last month laid off more than 17,500 domestic hourly theater employees, furloughed 50 percent of its headquarters corporate employees at 20 percent of salary, and cut the salaries of its remaining employees by half.

Cinemark said Wednesday that for the first quarter ended March 31, U.S. admissions revenue fell 25 percent to $232.3 million and U.S. concession revenues dropped 23 percent to $152.8 million. U.S. attendance hit 27.9 million patrons, down 28 percent, while the average ticket price increased 4.4 percent to $8.33 and concession revenues per patron increased 6 percent to $5.48.

MKM Partners analyst Eric Handler said in a first reaction: "Since these numbers are now more than three months old and theaters have been closed since mid-March, we doubt investors are going to be paying much attention to these results. Instead, we believe investors will be more focused on management's forward-looking statements about the gradual reopening of its business."

June 3, 7 a.m. Updated with comments by Cinemark execs made during an analyst call.

second-half film slate and [a] worsening COVID-19 situation in Brazil.""]