AMC Theaters Burned Through $275 Million In the First Quarter of 2020
Shares of AMC Theaters (NYSE: AMC) have been surging on hopes that the economy is on a path to reopening -- and that appetite for returning to public entertainment venues will be strong once consumers are able to do so. And yet, against this backdrop, AMC reported an expected net loss of $2.18 billion, which includes $1.85 billion in non-cash impairment charges related to the temporary closure of its theaters due to coronavirus. Free cash flow (revenue less cash operating and capital expenses, which measures the rate of cash accumulation or burn added to or subtracted from the balance sheet) was negative $275 million in the first quarter.
Amazingly, AMC took epic steps to ax costs and raise fresh cash. It's optimistic that it will be operating again by July, albeit at partial capacity like the first handful of theaters it was able to reopen in Norway. Though only 25% of seats were available and the slate of movies is limited at the moment, CEO Adam Aron said it sold 83% of those tickets and ironically did the same amount of business as this same time last year.
Thus, talk of bankruptcy is way too premature -- perhaps, as I've said before regarding AMC, even totally unnecessary. Nevertheless, the movie theater apocalypse is here, and the fact that AMC did the same amount of business with severe restrictions as it did last year when pandemic wasn't a concern is telling. The world's largest purveyor of films may need to do some right-sizing of the business during its recovery.
Source Fool.com
