AMC Theatres reported total revenue of $119.5 million in the third quarter of 2020, a 90.9% decrease compared to revenue of $1.32 billion for the same period last year. The company also reported a net loss of $905.8 million, or $8.41 per basic and diluted share. These losses were primarily due to the massive theatre closures caused by the coronavirus pandemic, but also because there have only been two major theatrical releases since March. Despite the losses, AMC Theatres president and CEO Adam Aron is optimistic.
“The magnitude of the impact of the global pandemic on the theatrical exhibition industry was again evident in our third quarter results, as theatre operations in the U.S. were suspended for nearly two-thirds of the quarter. And yet, despite unrelenting obstacles, the AMC team continued to make significant progress in pursuit of our three key priorities: to strengthen our liquidity position; to dramatically reduce operating and capital expenditures; and to continue to safely and successfully restore our operations,” said Aron in a November 2 news release.
Health and safety
Aron reiterated that AMC Theatres has committed to the safe reopening of theatres as local and state governments allow. By the end of September, 467 of AMC’s U.S. theatres were reopened with limited seating capacity ranging between 20% and 40%. As of October 20, approximately 539 of 600 U.S. theatres and approximately 261 of 358 international locations have reopened.
Since then, some states like those along the West Coast have rolled back theatre reopening and temporarily imposed restrictions. As the theatres reopen, AMC is using its AMC Safe & Clean policies and protocols that were developed with the help of Clorox and faculty from Harvard’s school of public health. To date, customer feedback has been very positive about the health and safety measures taken.
Aron also addressed key financial concerns.
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“Of paramount importance, as well, are our efforts to strengthen our liquidity profile. Starting in March, we raised approximately $900 million of gross proceeds from new debt and equity capital, secured more than $1 billion of concessions from creditors and landlords, and raised more than $80 million from asset sales,” Aron said.
“The duration and impact of this pandemic are still affecting us to this day and are certain to continue to affect our results going forward. And yet, as has been the case at AMC for 100 years, we have remained resilient and resourceful. The liquidity enhancing and leverage reducing actions that we already have taken and will further need to take, combined with our relentless focus on efficiency and cash management, are all crucial to navigating through this storm,” added Aron.
AMC Theatres' Quarterly highlights
Other financial highlights from the quarter include the following:
- Total attendance during the quarter was 6.5 million, a 92.5% decrease compared to 87.1 million for the third quarter of 2019.
- Total attendance at U.S. theatres was 2 million, a 96.8% decrease compared to 61.2 million for the third quarter of 2019.
- Total attendance at international theatres was 4.5 million, a 82.5% decrease compared to 25.9 million for the third quarter of 2019.
- The average number of screens for Q3 was 4 million, compared to 10.7 million in Q3 2019.
- AMC Theatres had $417.9 million in cash as of September 30, not including restricted cash of $10.9 million.
Operational highlights for the third quarter include the following:
- AMC Theatres has an agreement to sell its Baltic region theatres for $77 million.
- Implemented significant personnel-related cost cutting measures including the cancellation of pending merit pay raises, elimination of reduction of non-healthcare benefits, and the elimination of 176 corporate level positions.
- Other costs including contractor expenses, non-essential operating expenses (e.g., marketing, promotion, travel and entertainment) and non-essential capital expenditures were terminated or deferred.
- Wherever possible, AMC Theatres renegotiated theatre leases.
CFO Sean Goodman shared additional financial information, including the strategy of efficiency. The theatres that are open are doing so in a cost efficient manner. For example, in some areas, the theatres are only open on the weekends. In others, theatres only have two showings per day rather than four. This helps cut AMC’s costs while still being open to thee public. As a result of the company’s cost cutting, asset sales, and other fund sourcing, Goodman said AMC Theatres has “sufficient liquidity to last through to the beginning of 2021, even in a worst case scenario where the current low attendance situation continues.” The company is hoping to raise additional capital, however, and if it does, the company’s cash position is less dire.
“Now, while our liquidity runway in the worst case scenario is limited, this is only if we are not able to raise additional capital. And our goal is to raise additional capital. Throughout the coronavirus crisis, we have taken deliberate and decisive actions to navigate through the storm,” said Goodman on the earnings call. “In a period of only seven months, we have raised approximately $900 million of gross proceeds from new debt and equity. We’ve raised more than $18 million from asset sales. And we've negotiated more than a billion dollars of concessions from creditors and landlords. And we are not finished.”
This has certainly been a tough year for many subscription companies, and AMC Theatres is among those hardest hit. They have done a good job of navigating the changes through creative financing and cost-cutting, pivoting to offer streaming rentals and purchases, implementing a Safe & Clean program to ensure guests remain safe when theatres reopen, and a solid strategy to get through the next weeks and months. Given all their challenges, and the huge decreases in revenue and attendance, it would be easy to give up, but AMC Theatres remains positive and nimble which will serve them well as they ride out the pandemic.