- Announces quarterly dividend of $0.03 per share
- Announces $200 million share-repurchase authorization
- AMC’s most senior officers voluntarily choose to take immediate
salary and other compensation reductions in exchange for
out-of-the-money share equivalent grant
AMC Entertainment Holdings, Inc. (NYSE: AMC) (“AMC” or “the
Company”), the largest theatrical exhibition company in the world,
today announced that, in conjunction with an updated capital
allocation strategy, its Board of Directors has authorized the
taking of three major actions.
QUARTERLY DIVIDEND
The Company declared a dividend for the quarter ended December
31, 2019, of $0.03 per share on shares of Class A and Class B
common stock. The dividend is payable in cash on March 23, 2020, to
shareholders of record on March 9, 2020. While the Company has
ample cash and liquidity currently to pay a higher dividend for the
just completed quarter, the Company believes that given recent
trading ranges for AMC shares, it is wiser to return cash to
shareholders in the form of share repurchases.
$200 MILLION COMPANY SHARE BUYBACK AUTHORIZATION
Concurrent with the decision to increase the proportion of
capital allocated to share buybacks, the Board has authorized up to
$200 million of Class A common stock repurchases over the next
three years.
AMC is committed to a balanced capital allocation approach to
achieve that highest long-term risk adjusted return for
shareholders. This includes investing in the business, reducing
leverage, and returning cash to shareholders through either
dividends or share buybacks. After reviewing the company’s capital
allocation strategy, the Board has determined that there is an
opportunity to enhance shareholder returns by increasing the
proportion of capital allocated to deleveraging and to share
buybacks. The dividend decrease of $0.17 per share compared to the
fourth quarter of 2018, reduces the total dividend payout for the
quarter by approximately $18.0 million, providing capital that can
be deployed towards share purchases and the decrease of net
debt.
Repurchases may be made at management’s discretion from time to
time through open market transactions including block purchases,
through privately negotiated transactions, or otherwise over the
next three years in accordance with all applicable securities laws
and regulations. The extent to which AMC repurchases its shares,
and the timing of such repurchases, will depend upon a variety of
factors, including liquidity, capital needs of the business, market
conditions, regulatory requirements and other corporate
considerations, as determined by AMC’s management team. Repurchases
may or may not be made under a Rule 10b5-1 plan, which would permit
common stock to be repurchased when the Company might otherwise be
precluded from doing so under insider trading laws. The repurchase
program does not obligate the Company to repurchase any minimum
dollar amount or number of shares and may be suspended for periods
or discontinued at any time. The Company had approximately 52.5
million shares of Class A common stock outstanding as of February
21, 2020.
SENIOR OFFICERS TAKE IMMEDIATE PAY REDUCTIONS IN EXCHANGE FOR
OUT-OF-THE-MONEY SHARE EQUIVALENT GRANTS
Believing that AMC shares are significantly undervalued, all of
the relevant senior officers of AMC have voluntarily signed on to a
new compensation program dependent on a one-time share equivalent
grant that is considerably out-of-the-money at present.
The current total target compensation of AMC’s participating
senior officers will be immediately reduced by an amount equal to
the sum of 15% of their cash salaries plus 15% of their target cash
bonus opportunity. This compensation decrease will be split into
thirds and applied evenly as reductions across each of three
categories: one-third lowering combined cash salary & cash
bonus, one-third lowering at-market restricted share equivalent
grant amounts that time vest and one-third lowering at-market
performance share equivalent grant amounts that vest based on
performance. Importantly, these sacrifices in lowered cash salary
and cash bonus, as well as in lowered restricted share equivalent
grant and performance share equivalent grant levels, will continue
at the new lower totals in each of the coming three years.
In exchange, the officers reducing their pay will receive now a
one-time grant of AMC share equivalents that with certain
exceptions has a 3-year time vesting provision and requires that
the AMC share price rise materially in order for vesting to occur.
This share equivalent grant is split into six equal tranches.
Initial vesting will not occur until the AMC share price recovers
on a 20-day VWAP basis to $12 per share, a 102% premium to
yesterday’s market close. The second tranche will vest only when
the AMC share price rises to $16, a 170% premium. The third tranche
vests at $20, a 237% premium. The subsequent tranches vest at $24,
$28 and $32, premiums of 305%, 372%, and 440% respectively.
All of the Company’s senior officers have signed on to this
program, excepting only those who are expected to retire prior to
the 3-year time vesting requirement. Twelve long-time existing
senior officers, led by the Company’s CEO and President, are taking
the aforementioned pay reductions. Two recent new-hire officers
agreed to lower compensation than they were earning previously
elsewhere in order to join AMC and to receive their
out-of-the-money share equivalent grants. The recently announced
out-of-the-money share equivalent grant of the Company’s new Chief
Financial Officer will be homogenized with the various vesting
requirements for all in the senior officer corps described
herein.
While the total compensation reductions equal to 15% of cash
salary and cash bonus as detailed here are envisioned to be in
effect for each of calendar years 2020, 2021 and 2022, the
Compensation Committee of the AMC Board of Directors will retain
its complete flexibility to set future compensation levels for any
individual AMC officer or officers as it sees fit at its sole
discretion. More detail on this program will be contained in an 8-k
filing by the Company.
Commenting on the out-of-the-money share equivalent grant
program, AMC CEO and President Adam Aron said, “All the relevant
senior officers of AMC have deep conviction about AMC’s future, and
therefore each of us is putting our money where our mouth is. We
are voluntarily and enthusiastically trading immediate reductions
in current cash salary and cash bonus dollars along with reductions
in current at-market share equivalent grants in exchange for AMC
stock that will not vest until the AMC share price approximately
doubles and triples or more. We have every confidence that will
occur and will be doing all in our power to make that happen.”
About AMC Entertainment Holdings, Inc.
AMC is the largest movie exhibition company in the United
States, the largest in Europe and the largest throughout the world
with more than 1,000 theatres and more than 11,000 screens across
the globe. AMC has propelled innovation in the exhibition industry
by: deploying its Signature power-recliner seats; delivering
enhanced food and beverage choices; generating greater guest
engagement through its loyalty and subscription programs, web site
and mobile apps; offering premium large format experiences and
playing a wide variety of content including the latest Hollywood
releases and independent programming. AMC operates among the most
productive theatres in the United States' top markets, having the
#1 or #2 market share positions in 21 of the 25 largest
metropolitan areas of the United States. AMC is also #1 or #2 in
market share in 12 of the 15 countries it serves in North America,
Europe and the Middle East. For more information, visit
www.amctheatres.com.
Website Information
This press release, along with other news about AMC, is
available at www.amctheatres.com. We routinely post information
that may be important to investors in the Investor Relations
section of our website, www.investor.amctheatres.com. We use this
website as a means of disclosing material, non-public information
and for complying with our disclosure obligations under Regulation
FD, and we encourage investors to consult that section of our
website regularly for important information about AMC. The
information contained on, or that may be accessed through, our
website is not incorporated by reference into, and is not a part
of, this document. Investors interested in automatically receiving
news and information when posted to our website can also visit
www.investor.amctheatres.com to sign up for E-mail Alerts.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as
“forecast,” “plan,” “estimate,” “will,” “would,” “project,”
“maintain,” “intend,” “expect,” “anticipate,” “prospect,”
“strategy,” “future,” “likely,” “may,” “should,” “believe,”
“continue,” “opportunity,” “potential,” and other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These
forward-looking statements are based on information available at
the time the statements are made and/or management’s good faith
belief as of that time with respect to future events, and are
subject to risks, trends, uncertainties and other facts that could
cause actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. These
risks, trends, uncertainties and facts include, but are not limited
to, risks related to: the timing, price, or amount of repurchases,
if any, under the Company’s share repurchase program; general
volatility of the capital markets and the market price of the
Company’s Class A common stock; motion picture production and
performance; AMC’s lack of control over distributors of films;
intense competition in the geographic areas in which AMC operates;
AMC Stubs A-List may not meet anticipated revenue projections which
could negatively impact projected operating results; increased use
of alternative film delivery methods or other forms of
entertainment; shrinking exclusive theatrical release windows;
general and international economic, political, regulatory and other
risks, including risks related to the United Kingdom’s exit from
the European Union or widespread health emergencies, such as the
novel coronavirus or other pandemics or epidemics; risks and
uncertainties relating to AMC’s significant indebtedness; AMC’s
ability to execute cost cutting and revenue enhancement
initiatives; box office performance; limitations on the
availability of capital; certain covenants in the agreements that
govern AMC’s indebtedness may limit its ability to take advantage
of certain business opportunities; AMC’s ability to refinance its
indebtedness on favorable terms; optimizing AMC’s theatre circuit
through construction and the transformation of its existing
theatres may be subject to delay and unanticipated costs; failures,
unavailability or security breaches of AMC’s information systems;
risks relating to impairment losses, including with respect to
goodwill and other intangibles, and theatre and other closure
charges; AMC’s ability to utilize interest expense deductions,
interest deduction carry forwards and net operating loss
carryforwards to reduce its future tax liability or valuation
allowances taken with respect to deferred tax assets; our ability
to recognize certain international deferred tax assets which do not
have a valuation allowance recorded; review by antitrust
authorities in connection with acquisition opportunities; risks
relating to the incurrence of legal liability including costs
associated with recently filed class action lawsuits; general
political, social and economic conditions and risks, trends,
uncertainties and other factors discussed in the reports AMC has
filed with the SEC. Should one or more of these risks, trends,
uncertainties or facts materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those indicated or anticipated by the forward-looking
statements contained herein. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date they are made. Forward-looking statements
should not be read as a guarantee of future performance or results
and will not necessarily be accurate indications of the times at,
or by, which such performance or results will be achieved. For a
detailed discussion of risks, trends and uncertainties facing AMC,
see the section entitled “Risk Factors” in AMC’s reports on Forms
10-K and Form 10-Q filed with the SEC, and the risks, trends and
uncertainties identified in its other public filings. AMC does not
intend, and undertakes no duty, to update any information contained
herein to reflect future events or circumstances, except as
required by applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20200227005928/en/
INVESTOR RELATIONS: John Merriwether, 866-248-3872
InvestorRelations@amctheatres.com MEDIA CONTACT: Ryan
Noonan, (913) 213-2183 rnoonan@amctheatres.com
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