Cinemark, the third-largest movie theater chain in the U.S., hopes to reopen at least some of its doors to the public in July, but don’t expect the same movie-going experience as before the coronavirus pandemic.
CEO Mark Zoradi told analysts the company has plotted out several different scenarios depending on when state and local social distancing regulations are lifted, noting that no one is sure when public locations like movie theaters will be allowed to reopen or what kind of restrictions will be put in place by health officials.
Staggered seating arrangements to allow some space between moviegoers and shortened hours could be among the steps that are taken, but the company expects it could be profitable even it if only fills less than a third of its available seating.
“Even at peak periods of time in a normal environment, our occupancy levels range from 20% to 30% and we can operate profitably during those scenarios,” he said.
He added that Cinemark has seen attendance as low as 10% and still was able to turn a profit.
Last year, Cinemark garnered $3.28 billion in revenue from concessions and ticket sales. Some $715 million of that total came during the first quarter (January through March) and $958 million came during the second quarter (April through June).
The company shuttered its theater locations on March 18 and is expected to be closed through June.
As of March 31, Cinemark had around $480 million in cash, including the money it had collected from drawing down on its revolver. It also has worked with landlords and suppliers to modify the timing of some payments and suspended its quarterly dividend to conserve cash.
“Our runway pushes well into 2021,” the company said on the call.
Ahead of the call, shares of Cinemark were down between 6% and 7%. By the time it ended, it had recouped its losses and ended the day up 0.35% at $11.43. Since January, Cinemark shares, which are valued at $1.3 billion, have fallen 66%.
Cinemark, which operates 345 theaters in the U.S., is hoping to open at least some theaters on July 1.
That July date is based on the current studio release schedule, which sees Christopher Nolan’s “Tenet” arriving in theaters July 17 and Disney’s “Mulan” arriving on July 24.
The company laid off its 17,500 domestic hourly employees in March, but hopes to begin rehiring in June so that it can train new workers before opening to the public.
Depending on state and local restrictions, the company may only be able to open some of its theaters or may be forced to shorten its hours or only open on certain days of the week.
Zoradi said theaters could play “library” movies, movies that have already previously been released in cinemas, during the two- to three-week period where there isn’t a new movie release. Companies like Fatham Events often host these kinds of releases, bringing back movies like “Gone With the Wind,” “Batman” and “Star Wars” to the big screen.
If social distancing restrictions are still in place, Zoradi said the company would either sell every other reserved seat in the theater or suspend reservations and just sell 50% of the tickets per theater. The second option would allow families to sit together and moviegoers to choose their distance from others, he said.
The company said it does not currently plan on having temperature devices to screen for patrons with fevers.
Cinemark is optimistic that upcoming titles like “Mulan,” “Wonder Woman 1984” and “Black Widow” will lure people back to cinemas this summer and into the fall. Although, it said it would amend its operations if demand spikes or slows in the months after reopening.
“We believe pent-up demand for out-of-home entertainment, along with a backlog of strong film content, bodes well for exhibition,” the company said.