An AMC theater remains closed on March 17, 2020 in New York City.
Photograph by Victor J. Blue/Getty ImagesFrom the coronavirus to murder hornets, 2020 may sometimes feel like a disaster movie that lost the plot. While everyone could use a little escapism now, forced closures and premier delays mean that people can’t drown their sorrows in popcorn butter at a theater.
The latest updates from Cinemark Holdings (CNK) and AMC Entertainment Holdings (AMC) don’t provide much cheer either. Early Wednesday, Cinemark reported first-quarter earnings that missed consensus expectations. The company said it lost 51 cents a share, three times the per-share loss of 17 cents analysts were expecting. Revenue of $543.6 million was also below the $557.51 million average analyst estimate.
Cinemark said that adjusted earnings before interest, taxes, depreciation, and amortization was $66.2 million, below the $152.3 million a year earlier. The average ticket price increased 0.6% to $6.39, and concession sales rose 3.2% to $4.16 per patron.
Cinemark’s quarter ended on March 31, but it said that it shut all of its theaters in the middle of March due to the spread of Covid-19. Management said that it planned to begin a multiphase reopening plan on June 19, and was optimistic that moviegoers would welcome the distraction of an immersive experience at the theater after so many months of sheltering at home.
AMC also had downbeat news about its first-quarter results, due out June 9. The chain said that it expects to report revenue of $941.5 million, below the $947.06 million consensus estimate, and that its net loss will spike on a year-over-year basis, to more than $2 billion, from $130.2 million in the first quarter of 2019.
Investors have been expecting difficult first quarters from the theater chains. The companies have been burning through cash while theaters remain shut, and their second quarters will look even worse, as they will include the longest stretches of forced closures. (Indeed, some may be hoping that AMC will report dismal results, in hopes it will spur a potential takeover from Amazon.com (AMZN) or another party.)
The focus is now on two things. The first: remarks about reopening plans. Cinemark tried to strike an optimistic tone about pent-up demand in its press release, and it hasn’t said it would cancel theater openings yet. (The company was slated to open five new theaters before the end of the year.) We’ll get more details from AMC when it reports next week, but most theater operators will likely look to have as many screens open as possible, likely with some form of distancing and increased cleaning regimens.
Yet the second factor—what attendance will actually look like—may be more important. As we’ve seen from restaurant data, there certainly is evidence that people are willing to go out and resume old habits. It remains to be seen whether they view sitting in a theater with strangers for hours as riskier than going to a restaurant, and if they see the movies on offer as worth the risk.
Cinemark stock was up 0.4% to $15.98 on Wednesday morning, while AMC was up 3.3% to $5.78.
Write to Teresa Rivas at teresa.rivas@barrons.com
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