AMC Entertainment Gains After Losses From Covid Begin to Ebb
(Bloomberg) -- AMC Entertainment Holdings Inc., the largest movie-theater chain in the world, rose in late trading after posting a fourth-quarter loss that was smaller than analysts expected, benefiting from the continued reopening of cinemas.
The company reported an adjusted fourth-quarter loss of $3.15 a share on Wednesday, compared with the average analyst expectation of a $3.53 loss. Revenue slumped to $162.5 million. AMC took noncash impairment charges of $466.1 million.
The outlook is improving: Theaters in the two largest U.S. markets, Los Angeles and New York City, are opening back up, suggesting ticket sales should continue their rise from nearly zero during parts of 2020. The company has more than $1 billion in cash on hand and is confident it can ride out the rest of the pandemic without the risk of bankruptcy.
“Our most important single point of focus, after ensuring a safe and clean environment for our theater guests and workforce, has been to strengthen AMC’s liquidity profile,” Chief Executive Officer Adam Aron said in a statement. The company has raised about $2.2 billion from new debt and equity since March 2020, he said.
AMC shares rose more than 11% extended trading. They have more than quadrupled this year, largely due to “meme” investors who have pumped up the stock.
The appetite for AMC news among Reddit-following investors was so strong that AMC’s conference call reached capacity and was offline for about 30 minutes for some users. Meanwhile, some listeners streamed it live on YouTube. Aron said it wouldn’t be appropriate to comment on the interest from internet investors, but that their “enthusiasm” for the company made him optimistic.
About 90% of the Leawood, Kansas-based chain’s domestic locations were open as of March 5, while the company expects most European locations to be back by May 7, when Walt Disney Co. is expected to release its newest Marvel film, “Black Widow.” The chain is now focused on accommodating a “surge” of moviegoers. It said about 40 major films were delayed in 2020 due to Covid and will start showing in the spring.
Attendance will probably still be muted. Last year, 8.1 million customers visited the chain in the fourth quarter, down about 90% from the same period last year. In 2021, box-office receipts will probably be at least 50% below what they were in 2019, and the chain wouldn’t predict when revenue would return to pre-pandemic levels.
While Reddit traders have caused AMC’s stock to soar, and Aron said he is “ebullient” about prospects in the next year, analysts have raised concerns that the underlying business remains troubled. The company has raised more than $1 billion since December in an effort to avoid bankruptcy. It will make about $165 million of interest payments in 2021 and has cut all nonessential spending.
AMC’s bonds were among the top gainers in the U.S. high-yield market ahead of the results. Its 12% notes due 2026, which traded as low as 5 cents on the dollar in October, have rallied to 83.5 cents as of Wednesday. AMC’s 10.5% notes due 2025 traded up 1.25 cents to 108.25 ahead of results.
The chain hasn’t sold any shares since January, but the company “will carefully examine the raising of additional capital in whatever form we think is most attractive,” Aron said. He also said he is focused on deleveraging. AMC had about $10.8 billion in debt and lease obligations as of Sept. 30, filings show.
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