AMC issues ‘going concern’ warning, Cinemark predicts woes until 2022
Two large movie theater owners issued dire warnings on Wednesday about their ability to bounce back from the coronavirus.
AMC, the nation’s biggest cinema chain, said in a regulatory filing that there’s a “substantial doubt” about its ability to “continue as a going concern for a reasonable period of time.” Companies issue “going concern” warnings when running low on cash and AMC has been dogged by persistent rumors of bankruptcy since it was forced to shutter 630 theaters across the nation in March.
“We are generating effectively no revenue,” the filing said. AMC expects to take a first-quarter loss of up to $2.4 billion as revenue dropped 22 percent to $941.5 million, it added.
The company says its cash balance of $718.3 million will be enough to sustain it through the end of the summer, but warned that its business woes could persist even after stay-at-home orders are lifted as Hollywood studios have also been forced to push back production and delay the release of films.
Mark Zoradi, chief executive officer of rival movie theater chain Cinemark, expressed similar concerns — saying he doesn’t expect the industry to return to normal until 2022.
“The reality is, I don’t think we’re going to be able to get into a full-on rhythm again of product cycles and all that we had prior to COVID-19 until 2022,” Zoradi said on a first-quarter earnings call with analysts. “That’s more production-related than our operation-related because as studios have had to adapt to not being able to do filming and do post-production, they’ve had to move their schedules. Therefore, we’re going to adapt as well.”
In addition to a new program of deep cleaning, Cinemark plans to limit its seating capacity to 50 percent in each of its 525 theaters, with six feet between patrons for social distancing. The CEO, who said he expects the chain to begin reopening its doors on July 1, said Cinemark could still be profitable operating at that level.
During the first quarter, however, Cinemark posted a loss of $59.6 million, or 51 cents a share, compared with a profit of $32.7 million, or 28 cents a share, a year earlier. Adjusted earnings totaled $66.2 million. Revenue slid 24 percent from $714.7 million to $543.6 million.