AMC Theatres’ Q3 Revenue Down 91% Due to Pandemic

AMC Theatres Optimistic About a Post-Pandemic Future

Despite an incredibly challenging year

AMC Entertainment Holdings, Inc., parent company of AMC Theatres, was hit hard by the pandemic, severely impacting the company’s ability to raise revenue from theatre ticket sales, concessions and subscription fees. AMC’s international theatres began closing in early February 2020, followed by U.S. theatres in March.

As of October 1, 467 domestic theatres, or about 78% of the total, had reopened with COVID safety protocols in place and limited seating available. In December, in some jurisdictions, theatres were forced to close again. At year end, AMC had 394 open theatres in the U.S. operating at between 20% and 40% total capacity, and 109 international theatres had opened with limited seating. Meanwhile, the company worked hard throughout last year to hang on financially, and they remain optimistic that they will survive.

Optimistic about the future

“This past year has presented AMC with the most challenging market conditions in the 100-year history of the company. As unprecedented as these times have been, so too is the unprecedented drive and commitment of the AMC team to take swift and decisive actions to ensure our survival and our success,” said AMC CEO and president Adam Aron in a March 10, 2021 earnings release.

“As we sit here today, we see that vaccinations are occurring in the United States at a brisk clip, our theatres in New York City have finally opened with theatres in Los Angeles likely opening shortly as well, blockbuster movie titles are currently scheduled to be released in significant quantity in the coming few months, and we have more than $1 billion of cash on hand. Taking these facts together, we have reason to be optimistic about AMC’s ability to get to the other side of this pandemic,” Aron added.

AMC Theatres Hopes to Raise $125M to Avoid Bankruptcy
Image courtesy of AMC Theatres

Available cash

Aron is referring to the $2.2 billion in gross cash proceeds the company raised through new debt and equity capital, $1 billion in concessions from creditors and landlords, $80 million from asset sales, and $600 million convertible notes converted from debt to equity. The company believes this cash on hand is sufficient to help the company get past the pandemic.

“I am confident that the actions that we have taken have positioned us well to capitalize on pent-up demand for movie going as the rollout of vaccines accelerates,” Aron said. “We look forward to returning to an environment of unfettered movie theatre access for our guests, and we are eager to showcase the sizable and widely anticipated slate of new films that our studio partners have to offer.”

Fourth quarter highlights

AMC Theatres shared the following financial and operational highlights from the company’s fourth quarter of 2020.

  • 8.1 million movie goers in the U.S. and abroad visited an AMC theatre in the fourth quarter, compared to 92.6 million in the fourth quarter of 2019, a 91.3% decrease.
  • In the U.S., 4.8 million movie goers visited an AMC theatre, compared to 62.3 million in the fourth quarter of 2019, a 92.3% decrease.
  • Internationally, 3.3 million movie goers visited an AMC theatre, an 89.2% decrease.
  • The company operated an average of 7.2 million screens in the fourth quarter, compared to 10.7 million in the fourth quarter of 2019, a 32.1% decrease.
  • Total revenue was $162.5 million, compared to $1.45 billion in the fourth quarter of 2019.
  • Total net loss was $(946.1) million, compared to $(13.5) million in the fourth quarter of 2019.

Cost savings

To help the company stay afloat, AMC implemented a number of cost savings measures including the following:

  • Furloughing all corporate and theatre level employees while theatres were closed
  • Cancelling of annual merit pay increases
  • Elimination or reduction of non-healthcare benefits, including the company’s 401(k) match
  • Elimination of 176 corporate-level positions and almost all outside contractors
  • Termination or deferring of all non-essential capital expenditures

Current status update

As of last week, 527 of AMC’s 589 domestic locations and 356 international locations had reopened. Where theatres have not been allowed to reopen, AMC is working with local governments to discuss when operations can resume.

Membership programs

AMC Theatres has several membership programs, AMC Stubs A-List and AMC Stubs Premiere memberships, extensions of the company’s AMC Stubs Insider loyalty program. The company paused memberships while theatres were closed. The company posted noticed on its website in March and June 2020 and referred members to the company’s AMC Safe & Clean page for updates. Members were also to be notified via email when they would be charged again.

The company’s website includes this message for Stubs A-List members:

Insider Take

AMC Theatres seems to have nine lives. Despite all that COVID through at it last year, the theatre chain managed to stay alive. This is a credit to management in terms of strategy and creating financial footing to keep the company going until theatre going can return to normal, whatever normal looks like. The company seems to have implemented a good system for cleaning and safety measures, while also treating members well, pausing memberships and extending benefits without pressure to return before members were ready. The company has done virtually everything in its power to remain viable. We hope they succeed.

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