AMC (NYSE:AMC) released its Q-1 earnings report after hours Tuesday, which missed on both Top and bottom lines after closing down all its theaters for the C-19 coronavirus chaos.
The movie theater chain, which expects to be “fully open globally” by July as it reopens, risks not surviving the medical emergency chaos over high debt and liquidity concerns.
Tuesday it reported a deep Q-1 loss due to 1-time impairment charges, on sharply lower overall revenues.
AMC, which has closed its theaters through to the end of June and is detailed its reopening plans during an analyst call, posted a Quarterly loss of $2.17 billion, which included $1.85-B of non-cash impairment charges, against a year-earlier loss of $130-M. The adjusted per share net loss for Q-1 was $2.22, Vs a year-earlier at $0.98.
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 C-19 coronavirus 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 8 June investors note
Management told analysts on a conference call that the firm expected film-lovers to return to their local multiplex post-lockdown out of an “appreciation of communal experiences.” And 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,” CEO Aron said.
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,” he 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 Warner and by Disney, and by the other studios who release,” he told analysts.
AMC also addressed in its statement how it will address its dust-up with Universal Pictures over the studio shifting Trolls World Tour to premium VOD amid the C-19 coronavirus chao 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.
CEO Aron in a strongly-worded letter in late April sent to Universal Filmed Entertainment Group Chair Donna Langley 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 settle the issue with the studio.
Some exhibition analysts expect Warner Bros. and Disney (NYSE:DIS) may delay their planned releases if domestic audiences do not return to the local multiplex in strong numbers this Summer. Mr. Aron argued seating limitations even if at 25% capacity for each theater, would allow AMC to profitably play Tenet and Mulan by adding showtimes and theaters to meet demand.
He added AMC had already reopened 10 theatres in Norway, Germany, Spain and Portugal, “and currently expect to be fully open globally in July,” including in the US and the UK. He added the cinema giant expected to screen Warner Bros’ release of Christopher Nolan’s Tenet on 17 July, followed by Disney’s Mulan as that tentpole is slated for release on 24 July.
AMC furloughed or let go more than 26,000 employees as the crisis shuttered its circuit in March. The largest cinema chain in the US and the World then went even further, furloughing all of its 600 corporate employees, including CEO Aron.
AMC finished trading Tuesday at 5.99, -0.46, there is strong support at 5.75, the major resistance is at 7.21.
HeffX-LTN”s overall technical outlook for AMC is Bullish with a Very Bullish bias in here as our Key indicators are turning Very Bullish.
My target price is 12.18, and a speculative Buy if you can stand the risk.
Have a healthy day, Keep the Faith!