Cinemark management have their fingers crossed that the cinema chain will be able to reopen its shuttered theaters by July 1.
During a call with investors on Wednesday, Cinemark CFO and chief operating officer Sean Gamble said they are planning to be able to ramp up operations by late June, bringing back employees and starting marketing, and reopening at the start of July.
“We’ve been modeling an approximate four month ramp up, anticipating a July 1 reopen. That falls fairly inline with how the studios have begun lining up their content,” Gamble said during the conference call that was streamed on the company’s website.
Gamble said that the ramp up would include re-hiring and training, as well as renewed marketing efforts and a three-month slow build of operations. In an effort to be cautious and not overextend the business, Gamble said Cinemark would slowly build up its operations and expenditures from there depending on demand and whether management is confident attendance levels will sustain.
There’s been much debate and concern that even after the novel coronavirus pandemic subsides, consumers aren’t going to be eager to flock back to theaters, concert venues, sporting events and other potentially crowded spaces.
“In our current modeling we are anticipating that a return to normalcy could take a couple of months to fully get going as a result of staggered theater openings from ongoing governmental limitations, reduced operating hours and potentially ongoing social distancing needs,” Gamble said.
“Even at peak periods of time in a normal environment, our occupancy levels on average typically range between 20% and 30%, and we can operate very profitably in those scenarios,” Gamble continued. “We wanted to flag that to the point that to the extent we either have to or elect to maintain some degree of social distancing — whether that be 50% of our seats being sold or certain spacing limitations between seats that are sold — we can execute that and do so very successfully and very profitably.”
Cinemark, like other exhibitors and companies in Hollywood, has taken drastic measures to ensure the business will be able to survive and recover from the pandemic. As CFO, Gamble has undertaken a formal daily review and approval process for all outgoing procurement and payment requests, and discussing with landlords and major suppliers whether certain contractual payments can be delayed.
Earlier this week, the chain revealed that it has laid off more than 17,500 hourly employees and furloughed 50% of its corporate employees at 20% of their salary. On Monday, Cinemark also said it planned to issue $250 million worth of debt securities for general corporate purposes and to increase liquidity.
The movie theater chain has been grossly impacted by the continued novel coronavirus pandemic, forced to shut theater operations across the country. The company’s CEO, Mark Zoradi, whose pay rose to $6.3 million in 2019, is currently going without a salary as the company’s revenues have ceased.
Cinemark is relying on relief from the $2 trillion CARES Act. Based on a review of its potential, the company said it expects to receive an approximately $20 million cash tax refund in 2020 related to qualified improvement property expenditures from 2018 and 2019.