The extent of the C-19 coronavirus hit taken so far by the largest US cinema chain was underlined by overall revenues tumbling to $18.9-M, compared to a year-earlier $1.5-B.
AMC’s US theater circuit was closed for all of Q-2. The international movie theaters resumed limited operations in early June. AMC had restarted at 37 theaters in 9 countries as of June 30.
The largest US movie theater chain said it aimed to have 66% of its domestic circuit open in August, ahead of the opening of Christopher Nolan’s Tenet on 3 September, and “essentially all international theaters should reopen” this month.
AMC recorded a loss of $5.44/share, compared to a year-earlier 0.08.share profit.
The Q-2 overall loss was $561.2-M, compared to a year-earlier profit of $49.4 -M
We are Neutral AMC in here.
AMC Entertainment recently completed a debt restructuring with most of its bondholders representing $2.6-B in subordinated debt to receive $300-M in new cash and ease worries about a possible bankruptcy protection filing.
“The result of all these actions during the quarter combined with this successful debt restructuring extends our ability, if need be, to weather a hypothetical suspension of all our theatre operations globally into 2021,” AMC Entertainment CEO Adam Aron said in a statement.
AMC’s recovery has been complicated by major Hollywood studios continuing to push back theatrical releases for their tentpoles, which forced AMC to delay its circuit reopening to this month.
“It should be no surprise to anyone that with our operations shut the world over, and almost no revenues coming in the door, this was the most challenging quarter in the 100-year history of AMC. That is why the progress the entire AMC team made since the second quarter began is all the more important and impressive in working to achieve three key priorities: to dramatically reduce operating and capital expenditures, to strengthen our liquidity position and to set plans in motion for the successful reopening of our theatres as soon as it would be wise to do so,” CEO Aron said in a statement.
On an analyst call, CEO Aron warned investors that “revenues may take time to ramp up” as AMC continues to navigate the C-19 chaos. “There’s signs that we’re starting to emerge from the deepest of the pandemic,” he added, as AMC’s international theaters have begun to open before the US circuit follows by turning its own lights on.
AMC executives detailed efforts to preserve cash during the chaos by eliminating non-essential costs, including marketing, promotion and travel and entertainment expenses. “AMC remains focused on driving down costs, preserving and increasing liquidity and reducing debt as we manage our way through the current market challenges,” CEO Aron told analysts.
He added AMC aimed at a target reduction in operating and capital expenditures “in the hundreds of millions of dollars.” The new debt covenants for AMC also enable possible asset sales, including movie theaters, with the proceeds of the sales to be split between the company and its bondholders.
CEO Aron defended his deal with Universal Studios to shrink the traditional theatrical window. “We saw a changing industry where we at AMC needed to figure out how to be included in the economics of all films,” he argued.
He confirmed the financial terms of the Universal agreement allowed AMC to “participate handsomely” in the new film release model for studio product that he believes will survive the medical emergency chaos.
Have a healthy week, Keep the Faith!
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