If they don't even have enough money to pay for their theaters until August, then how could they possibly afford to start making movies?
Posted on 04/09/2020 7:28:22 PM PDT by nickcarraway
MKM Partners' Eric Handler downgrades the stock to a "sell," estimating its "cash burn rate in a no-revenue environment is running at $155 million per month, which likely keeps AMC liquid until June/July." Wall Street analysts are seeing a Chapter 11 bankruptcy filing from cinema giant AMC Theatres as increasingly likely.
MKM Partners analyst Eric Handler on Thursday downgraded his rating on shares of the exhibitor from "neutral" to "sell," saying that "bankruptcy appears likely."
That followed Loop Capital analyst Alan Gould's Wednesday downgrade to a "sell" in a report that concluded: "We think bankruptcy is a distinct possibility, and at a minimum, the company will require a highly-dilutive financing."
Handler in his Thursday report explained: "Based on our view that theaters will be closed until at least August and our belief that AMC lacks the liquidity to stay afloat until that time, we expect the company will soon be faced with filing for bankruptcy. Further fueling our liquidity concerns is AMC's decision to stop paying rents to landlords effective April."
AMC, in which Chinese conglomerate Dalian Wanda Group owns a majority voting stake, has been looking for various ways to reduce costs, in late March furloughing all of its 600 corporate employees, including CEO Adam Aron, following the closure of all its cinemas. It had earlier already cut its dividend by 85 percent.
WATCH AMC Closes All U.S. Theaters Amid Spread of Coronavirus | THR News PLAY VIDEO Handler said though that even if AMC is able to tap government bailout funds, as management has signaled it plans to do, "we believe the weight of its balance sheet will make for tough sledding given the company's high leverage, thus making a reorganization inevitable." That comment was a reference to a potential Chapter 11 bankruptcy filing, which leads companies, their lenders and a court to develop a restructuring plan.
Handler highlighted that AMC, which he called "the exhibition company we view with the least financial flexibility," at the end of 2019 had $265 million of cash on hand and $332 million available on its credit lines for a total of nearly $600 million. "We believe the company's monthly cash burn rate in a no-revenue environment is running at $155 million per month, which likely keeps AMC liquid until June/July," he concluded.
Handler cut his fair value estimate for AMC's stock from $7.50 to $1 and lowered his first-quarter financial estimates. He cut his adjusted earnings before interest, taxes, depreciation and amortization estimates to a loss of $13 million, compared with a year-ago profit of $108 million. His revenue estimate went down to $931 million, reflecting "a domestic box office decline of 26 percent as theaters have been shuttered since mid-March and a 20 percent decline internationally."
Handler also cut his 2020 outlook for AMC's adjusted EBITDA to a loss of $293 million, compared with a $771 million profit in 2019. Full-year revenue he expects to fall 44 percent to $3.05 billion. The revisions assume cinemas remain closed until August.
Sell all your shares in typewriters and buggy whips while you are at it. The movie theatre model has been dying for years. It’s not sustainable.
I was last in a movie theater in the 20th Century.
That was before cell phones became prevalent. I can’t imagine how the combination of those and open mouthed chewing of snacks and sticky floors makes for a fun experience.
Add to that the occasional fart wafting over the crowd and I must conclude that this all can’t be blamed on Corona-19.
I have built a pretty good home Theater dark room, a projector the whole deal But for a special effects driven movie nothing beats an actual movie theater especially IMAX 3D. The cure is worse and more so with every passing day.
>>>So, it is still a communist Chinese company
It’s actually a publicly traded company. You could make an offer to buy up the Chinese shares and make it American again.
Open them up tomorrow, I ain’t going to any movies.
Not going to risk my life to see good movies or SJW crap.
Japan still makes movies where biological girls fall in love with biological males...and they don’t get as far as kissing until the credits roll.
90% of people are rude. Why go out and rub elbows?
Even country clubs and yacht clubs are full of smarmy salesmen and low class nouveau riche. I know very rich people, and they don’t, or can’t get away from the classless hoards.
Much better to invite your friends over for an evening at home.
That’s why I like KDramas.
Bet less than 10% ever gets to the businesses.
Restaurants are probably hit even harder than cinemas.
Over 50 here, and I do... albeit rarely.
There are great alternatives to what everyone sees as the typical theater. As an example, in Texas, we have Alamo Drafthouse. There is also Look theater, Studio Movie Grill, the Angekika, and several others that allow you to recline in comfy chairs, have a drink with a good meal, and watch a movie, all at the same time.
As I said, it is a rare occasion that we go, but it’s a nice change from the old fashioned poorly padded chairs, sticky floors, and crap-filled concession stands of the big chains like AMC.
Never underestimate the genius required to take a 900% profit margin business and run into bankruptcy in four weeks.
Dear Deer,
Do you think they don’t have money to make movies?
If making movies was not lucrative...nobody would make them.
Decent or not.
There is mucho dinero in porno town.
My son and I go for special showings like “1917” — it was was superb in the theater.
They were going bankrupt in a couple years anyway. The panicdemic just speeded it up to a couple months.
I can agree with that.
The niche ones like that should do OK ongoing.
Big movie theaters that were popular because they had the only good sound/pictures, probably not.
I do like to see movies in the theaters that have ripped out the little seats and replaced them with big giant recliners. And offer wine.
I’d still go out to the movies under those conditions.
But I am over 40.
I have sympathy for the people who work at the theaters who might lose their jobs. There aren’t many films I care to see, however.
I love theatres as well. This quarantine has likely killed off my local cheapie theatre, which runs new movies near the end of their run for 1/3 the price of a regular ticket.
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