AMC Entertainment (AMC-US), the largest movie theater operator in the United States, announced its second-quarter earnings on Thursday (4th), as costs soared nearly 60% and losses exceeded expectations. It plans to pay a special dividend in the form of preferred stock, triggering equity dilution. Worries sent shares down more than 10% in after-hours trading.
AMC closed up 2.47% on Thursday and tumbled 10.50% in after-hours trading at $16.70 a share.
AMC is looking to increase the number of shares to raise money, but has come up with creative solutions after shareholders rejected a proposal to issue new shares last year. The company said on Thursday that it will pay a dividend in the form of preferred stock to all common stockholders later this month, and has applied to the New York Stock Exchange to put about 517 million preferred shares under the symbol “APE” on Aug. 22. It went public today, arguing that it was a response to retail investors helping the company out of the brink of bankruptcy in early 2021.
“AMC’s newly issued preferred stock APE provides AMC with a currency that can be used to strengthen its balance sheet in the future, including paying down debt or raising new equity,” said Adam Aron, CEO of AMC.
Aron said that APE fundamentally strengthens the company and makes the company’s operations more flexible. If the company needs to do this or chooses to do it, it can raise funds and greatly reduce any existential risks. “We will continue to work hard to get through this epidemic, for recovery and transformation.”
Q2 (ending June 30) key figures for earnings report Revenue: 162% YoY increase to $1.17 billion vs. $1.16 billion (Consensus expected in a Refinitiv survey) Net loss: 24 cents vs. 21 cents (a Refinitiv survey expected consensus)
During the peak of the new crown epidemic, AMC was forced to close its movie theaters due to epidemic prevention restrictions and faced significant losses. In response to the slowdown of the epidemic this year, audiences returned to movie theaters. Coupled with the assists of strong films such as “Doctor Strange 2: Out of Control Multiverse” and “Jurassic World: Domination”, revenue in the second quarter surged by 162%. However, every Stock losses were still higher than expected.
“The question remains whether AMC can generate enough revenue from each person to avoid operating losses without scaring audiences away with high prices,” said Third Bridge analyst Jamie Lumley.