AMC Entertainment Sees Q3 Sales Plunge, Had $419M In Cash As Of Sept. 30; Plans To Sell More Stock To Raise Cash

·3 min read

AMC Entertainment expects revenues for the three months ended September 30 of $119 million, versus nearly $1.32 billion for the prior year’s quarter, and the struggling theater chain anticipates material write-downs of assets, according to an SEC filing Tuesday morning with preliminary financial results.

Cash and cash equivalents stood at $417.9 million. Interest expense for the three months will be approximately $94 million, compared to $85 million for the year ago. Debt is a hefty $5.5 billion. The high debt racked up by acquisitions before COVID has become a major problem as the virus drags on and the company has to divert a significant portion of its cash flow to interest payments.

AMC also said it will sell up to 15 million shares to raise fresh cash. It recently raised close to $55 million selling the same number of shares.

The stock, which had rallied over the past few days, was down over 9% on the news.

Excluding impairments, AMC said operating costs and expenses for the three months ended September 30 will be in a range of approximately $584 million-$604 million — compared with $1.296 billion the year before.

Media companies are starting to announce quarterly earnings today (with Netflix this afternoon). AMC hasn’t scheduled an official release date for its results yet and noted the preliminary numbers it put out today are not final and could change.

The company announced last week that it could run out of cash by year end with some dire language it reiterated in today’s filing.

“As previously disclosed, in the absence of significant increases in attendance from current levels or the availability of significant additional sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021. Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity and/or increases in attendance levels. The required amounts of additional liquidity will be material. Due to these factors, as previously disclosed, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time.”

AMC is actively continuing to explore potential sources of new cash including renegotiating leases, assets sales and minority investors.

The new stock sale will bring in some funds. Also, theaters are reopening in New York state Friday, although not New York City. At this point it’s a race against time.

AMC said that as of October 16 it had resumed operations at 519 of its 598 U.S. theatres, with limited seating capacities of between 20%-40%, representing approximately 87% of the U.S. theatres and 80% of 2019 U.S. same-theatre revenue. It’s served more than 2.6 million guests since then, an attendance decline of approximately 85% compared to the same period a year ago.

The remaining 13% of the U.S. theatres left to reopen are primarily located in California, Maryland and New York, and include some of AMC’s most productive theatres, representing approximately 20% of 2019 U.S. revenue. Twelve theatres in New York state are scheduled to open October 23.

The company said it “has an active dialogue with local and state government officials, however there is limited visibility around the timing for resumption of the remaining theatre operations,” which would include NYC and Los Angeles, which still remains shut. Without the theatrical bang of the two biggest markets, Hollywood studios have postponed major releases, which has made it even harder for theaters to attract audiences.

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