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.
Oh Please Please!!
“Nobody under 40 goes to a theater anymore.”
Actually, the movie theaters with reclining seats etc. have been pretty popular with the under 30 crowd.
We go to 5-6 movies every year. Takes us back to when we were dating.
Love the theatres with the restaurant that brings food to your seat
Maybe where you live?
Hope the world is ending bros are happy.
I’m just sad our nearby Drive-ins aren’t opening on time.
I hope they survive this damn virus crap.
Wang Jianlin, owner of Wanda Group and therefore AMC, is a CCP member.
The new cineplex “bowling alley/curved screen” thing makes me nauseated anyway.
Dinosaur? LOL - not by a long shot. 2018 was a record breaking year in the US with box office receipts of 11.9 billion and 2019 was just slightly lower.
P.S. That does not include any concessions, of course.
Because they employ Americans on our soil.
Inflation adjust that take and compare with 1996ish.
Maybe in the big cities they still go?
In the rest of the country, parking lot is nearly empty every time we drive by, even Sat evenings.
Nothing really good to see anymore other than some franchise stuff.
Why? The larger screens...I generally like watching movies on a nearby massive 6 story screen that shows first run movies. The visuals and sound is much better than 20 years ago. But it’s a free country to go or stay home. Hollywood had record box office in 2018 and it was slightly lower in 2019, so yes, it is still viable.
The movie chains like AMC don’t make the movies, they just show them. Movie companies, such as, Disney, Fox (Disney), Paramount, etc make the movies.
Be still my heart
I’ve said it again : they FAKED their numbers on more than a few movies.
Anyone here who said BLACK PANTHER was a blockbuster is an idiot. I know more than a few people “high up” who told me they inflated the numbers. The entire board room aside from probably 3 are all obama ass kissers.
I know. It’s amazing what happens when a company is forced to close their doors generating zero revenue for an entire month - movie theaters shut down mid March. The nerve of those companies actually needing revenue to stay in business.
“That Tiger King stuff is not worthy.”
watched my first episode tonight ... basically, it’s Honey Boo-Boo with tigers, and i found Honey Boo-Boo more compelling .. some here on FR have been recommending Money Heist on netflix ...
Hollywood is in real trouble, they are not fully prepared for a wold without mass move theater chains to distribute films to. Direct sales to consumers is the alternative but through what platforms? Deals need to be made and fast. Hollywood itself might go broke before this is all over.
Boo hoo.
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