AMC Entertainment lost between $2.1 billion and $2.4 billion in the first quarter of 2020 due to the coronavirus pandemic, the company revealed on Wednesday.
At this time, AMC’s financials are unaudited. The official Q1 results will be released on June 9, when executives will hold a conference call with media analysts.
AMC’s total revenues in Q1 were approximately $941.5 million. Last year, the comparable quarter generated $1.2 billion.
The first quarter cut off at the end of March. In the U.S., Q2 will be even worse than Q1.
Even adjusting out the impact of COVID-19, AMC would have lost more than twice what it did in Q1 2019. Free cash flow is in the negative, as you might imagine. As of April 30, 2020, AMC had a cash balance of $718.3 million, the company said. That’s including $215 million of borrowings under a senior secured revolving credit facility.
“We are generating effectively no revenue,” AMC said of the second quarter.
However, AMC believes it has the cash to reopen theaters, but the company’s liquidity depends on the timing of when theaters are allowed to open nationwide, how many new movies are available and the theater chain’s ability to generate revenue.
“We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain,” AMC said in the filing. “If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”
The “going concern” phrase generally could be a warning as to whether the company may have to file for bankruptcy or go out of business. Though it may not surprise to analysts or investors, as Wall Street has debated AMC’s liquidity for some time. In fact, last week, analyst Eric Handler of MKM Partners had upgraded AMC’s rating from a “sell” to “neutral” and said that the bankruptcy risk “appears to have subsided,” citing the target reopening date in Los Angeles County of July 4 as a reason for optimism.
AMC Theaters, which is controlled by the Chinese conglomerate Dalian Wanda Group, was forced to furlough more than 26,000 theater employees as a result of the coronavirus pandemic and then additionally furloughed 600 corporate employees, including the company’s CEO Adam Aron.