Cinemark, the No. 3 U.S. exhibitor, reported first-quarter results below Wall Street expectations, revealing the extent of the damage done to its business by COVID-19 on its business.
Revenue for the period ending March 31 totaled $543.6 million, down 24% from the year-ago period due to the closure of theaters in March. Wall Street analysts had been forecasting $556.6 million. Net losses of 51 cents a share undershot analysts’ expectation for 16 cents and compared with a 28-cents-per-share profit in the 2019 quarter.
In the company’s earnings release, CEO Mark Zoradi said employees have “shifted our attention to domestic re-opening, which we plan to initiate in a multi-phased approach beginning June 19.” As the number of COVID-19 cases continues to decline in most states, businesses have begun to reopen, though there are clouds of uncertainty swirling around businesses dependent on public gatherings. While there are major studio tentpoles slated to open in July, major markets like New York, Chicago and San Francisco have not yet come back into the picture.
Cinemark shares, which had recently been on the mend, declined in pre-market trading. The company had delayed the reporting of its quarterly numbers as it dealt with the devastating effects of the pandemic.
MKM partners analyst Eric Handler wrote in a note to clients that the quarterly numbers are less important than the company’s outlook for the second half of 2020. “Since these numbers are now more than three months old and theatres have been closed since mid-March, we doubt investors are going to be paying much attention to these results,” he wrote. “Instead, we believe investors will be more focused on management’s forward-looking statements about the gradual reopening of its business.”
In addition to the U.S., he noted that Latin America remains a question for Cinemark in terms of the timing and extent of a coronavirus recovery.