AMC Theatres Warns It Will Be Out of Cash by the End of the Year

With a delayed release slate and moviegoers wary of COVID-19, AMC Entertainment, parent to the world’s largest theatrical chain, said it will be out of cash by the end of the year or early 2021 without a renewed external infusion of funds.

Cash burn, or monthly use of cash to fund operations, is impacted by, among other things, the timing of resumption of theater operations, the timing of movie releases and the slate of future releases, theater attendance levels, landlord negotiations and minimum lease payments, costs associated with the enhanced safety and sanitation protocols, and food and beverage receipts.

“To meet its obligations as they become due, the company will require additional sources of liquidity or increases in attendance levels,” CFO Sean Goodman wrote in the Oct. 13 filing. “The required amounts of additional liquidity are expected to be material.”

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AMC said it has generated about $40 million to date selling new shares of stock, in addition to lopping off hundreds of millions of dollars owed on long-term debt.

The filing revealed what most observers already knew: The exhibition business is facing extinction if pandemic conditions remain the same and liquidity issues aren’t further addressed. And even if they are, the business realities facing theaters is dire.

“There can be no assurance that the assumptions used to estimate our liquidity requirements and future cash burn will be correct, or that we will be able to achieve more-normalized levels of attendance described above, which are materially higher than our current attendance levels, and our ability to be predictive is uncertain due to the unknown magnitude and duration of the COVID-19 pandemic,” Goodman wrote.

The filing stands in contrast to the confidence CEO Adam Aron has been projecting in recent weeks, including boasts that AMC, unlike rival Regal Cinemas, could remain open in the current business climate due in part to its groundbreaking distribution agreement with Universal Pictures. That deal allows Universal to significantly shrink the theatrical window in exchange for sharing revenue from early transactional VOD and premium VOD releases in the home.

As of Oct. 9, AMC had resumed operations at 494 of its 598 U.S. theaters, with limited seating capacities of between 20% and 40%, representing approximately 83% of the U.S. theaters and 77% of 2019 U.S. same-theater revenue.

Since the resumption of operations in its U.S. markets, AMC said it has seen more than 2.2 million moviegoers frequent theaters, representing a same-theater attendance decline of approximately 85% compared to the same period a year ago.

The remaining 17% of the U.S. theaters left to reopen are primarily located in California, Maryland, New York, North Carolina and the state of Washington, and include some of the chain’s most productive locations, representing approximately 23% of 2019 U.S. revenue.

Twenty-five theaters in North Carolina and Washington State are scheduled to reopen Oct. 16. AMC says it has an “active dialogue” with local and state government officials in the remaining states, however, there is “limited visibility” around the timing for resumption of theatre operations in these locales.

Meanwhile, AMC’s fiscal situation not only affects employees and shareholders, but landlords as well. The company said it had resumed operations at 308 leased and partnership international theaters. This represents about 86% of its international screens and approximately 90% of 2019 international same-theater revenue. Since the resumption of operations in its International markets June 3, AMC has seen more than 5.2 million consumers return, representing a same-theater attendance decline of approximately 74% compared with the same period a year ago.

“It is very difficult to estimate our liquidity requirements and future cash burn rates, and depending on the assumptions used regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly,” Goodman wrote.

Micheal Pachter, media analyst with Wedbush Securities in Los Angeles, doesn’t expect attendance levels to begin to normalize until mid-2021. He said that with 30% of moviegoers in the 50+ age group and another 30% between 30 and 50 (according to MPAA, 2018), a significant portion of moviegoers are not going to be bold enough to return to theaters without a virus vaccine. Losing a substantial portion of this demographic, and especially their children, is driving studios to delay theatrical releases.

“We think the relatively lackluster domestic box office for Tenet, juxtaposed with the seemingly tepid response to Mulan as a PVOD release, have made film releases seem like a risky business in the current environment,” Pachter wrote in a note.

AMC Entertainment’s Odeon Cinemas Re-Opening July 4 in U.K. Featuring Home Entertainment Releases

Odeon Cinemas, the British exhibitor owned by AMC Entertainment, is set to resume operations to the public July 4 after the government gave the green light for theaters. The chain, along with AMC’s 11,000 screens worldwide, has been largely shuttered due the coronavirus pandemic.

The scheduled re-opening comes as some health care officials in the U.K. worry a second wave of COVID-19 poses a “real risk” to consumers. Officials, including presidents of the Royal College of Physicians and the chair of the British Medical Association, stress politicians, civic leaders and businesses should work together to ensure the country is well-prepared when the wave hits later this year.

Unlike AMC Theatres, which is re-opening 450 screens on July 15 with mandatory masks, Odeon has not announced whether masks will be required for moviegoers.

“We’re currently awaiting detailed government guidelines for the cinema industry,” Odeon said in a statement. “We will be re-opening in line with these guidelines.”

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The chain said it would offer pre-packaged concessions, drinks, contactless ticketing, staggered showtimes, social distancing inside theaters, except among family members, enhanced cleaning protocols and an abundance of sanitizing options available to consumers and staff.

Movies to be screened include mostly current home entertainment releases: 1917, Star Wars: The Empire Strikes Back, Sonic the Hedgehog, Onward, Little Women, Bad Boys for Life, Dirty Dancing and The Greatest Showman, among others.

Most of the titles rank among the top 10 selling DVD, Blu-ray Disc and digital releases on the U.K.’s weekly Official Film Chart.

AMC Theatres Has No Universal Movies Slated for Release

AMC Theatres is sticking to its guns, boycotting all new-release feature films from Universal Pictures. The world’s largest exhibitor June 9 revealed it remains in discussions with the studio regarding the latter’s plan to launch movies in theaters concurrent with premium VOD in the home.

“While we are in active dialogue with Universal, no movies made by Universal Studios are currently on our docket,” AMC CEO Adam Aron said in a statement.

AMC and Universal had a falling out after the studio’s PVOD release of Trolls World Tour generated an impressive $100 million in PVOD revenue in three weeks, resulting in studio boss Jeff Shell announcing all future theatrical titles would include concurrent digital retail distribution if possible.

Aron responded that AMC would boycott all future Universal and other studio titles earmarked for digital/theatrical distribution.

As previously disclosed, AMC formally revealed it lost $2.17 billion for the fiscal first quarter ended March 31. The exhibitor lost $130 million during the previous-year period. Revenue was $941.5 million, down 21.6% from revenue of $1.2 billion in the year-ago period.

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Leawood, Kansas-based AMC saw the wheels come off its business in mid-March when the movie theater industry worldwide essentially shut down due to the spread of the coronavirus. Indeed, Q1 revenue was up 10% through February compared with a year ago.

“In mid-March we were forced to pivot the entire company to respond to the effects of the pandemic,” CEO Adam Aron said in a statement.

Indeed, attendance in the quarter plummeted 24.2% to 60.4 million from 79.8 million in the previous-year period.

The CEO, who along with 600 other executives, was furloughed to cut costs, said the exhibitor strengthened its liquidity by working with landlords and studio partners to defer or abate theatre and film rents, respectively, as well as raising an additional $500 million of public market debt.

AMC’s Odeon Cinema unit in Europe just re-opened select screens in Oslo, Norway. In the U.S., the states of Georgia, Texas and California have greenlighted phased re-opening of select businesses, including movie theaters.

To that end, AMC has reopened 10 theaters in Norway, Germany, Spain and Portugal, and currently expects to be fully open globally in July. The company is planning to reopen almost all U.S. and U.K. theaters in July, to be positioned to showcase Warner Bros’ release of Christopher Nolan’s Tenet now slated for release July 17, followed by Disney’s Mulan now slated for release July 24.

Other pending titles include Unhinged, Saint Maud, Antebellum, The SpongeBob Movie: Sponge on the Run, Wonder Woman 1984, A Quiet Place Part II, The King’s Man, Black Widow, Soul, Dune, West Side Story and Top Gun: Maverick, among others.

“We are confident we are taking the necessary steps on a broad array of fronts to ensure AMC’s future success as we navigate these turbulent and uncertain times,” Aron said.

Regardless, AMC also disclosed that without a return to box office normality in the near future, it could face bankruptcy.

AMC Theatres Expects $2.4 Billion Q1 Loss; Says ‘Substantial Doubt’ Chain Can Continue

AMC Entertainment, parent of nation’s largest movie exhibitor AMC Theatres, June 3 disclosed it expects upwards of a $2.4 billion loss in the first quarter, ended March 31. That compares with a loss of $130 million during the previous-year period.

It projects revenue of $941.5 million, which is down 22% from revenue of $1.2 billion during the previous-year period. The company reports Q1 results June 9.

More importantly, AMC said that with most of its screens still shuttered due to the pandemic, “We are generating effectively no revenue,” which the chain said could raise “substantial doubt” about remaining in business.

“Even if government operating restrictions are lifted in certain jurisdictions, distributors may delay the release of new films until such time that operating restrictions are eased more broadly domestically and internationally,” AMC said in a statement.

The preliminary results are unaudited, subject to completion of the company’s quarterly financial reporting process, based on information known by management as of the date of this press release and do not represent a comprehensive statement of AMC’s financial results for the three months ended March 31, 2020.

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The exhibitor with 11,000 screens globally has been idled since mid March since the coronavirus pandemic spread. AMC said it expects first-quarter 2020 adjusted free cash flow to be ($220.0) million and free cash flow to be ($275.7) million, compared with ($49.8) million and ($113.4) million last year, respectively.

AMC Theatres Hires Mark Pearson to Forge Streaming Video Alliances

As previously announced, AMC Entertainment, the world’s largest theatrical distributor, wants to roll out the carpet for third-party streaming video platforms.

The company March 9 announced the hiring of Mark Pearson, former EVP of business development, operations and strategy at 20th Century Fox Television, as its chief strategy officer.

In this newly created role, Pearson will head strategy, business development, alliances and partnerships to advance the global positioning of AMC.

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Based in Los Angeles, Pearson will attempt to hone AMC’s strategic direction, initially concentrating on forging alliances with streaming services that could benefit from partnering with AMC and its vast theater network in the U.S., Europe and the Middle East.

Pearson brings nearly 20 years of film and TV studio and strategy experience to AMC. In 15 years at Fox TV, preceded by five years at Universal Pictures, he worked closely with studio management and distribution partners to identify and implement a range of growth initiatives.

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“Mark … is the perfect person to help AMC continue to innovate and create opportunities that benefit our existing studio partners, emerging streaming power houses, our customers and our shareholders,” CEO Adam Aron said in a statement. “His considerable experience in the SVOD space will greatly help AMC to create partnerships with streaming services including those from both established and emerging players.”