AMC Entertainment completes APE deals with investor Antara Capital
On February 7, 2023, AMC Entertainment Holdings issued 106,595,106 AMC Preferred Equity Units (APEs) for an aggregate purchase price of $75.1 million to Antara Capital, the company said in a regulatory filing.
The world’s largest movie theater chain simultaneously bought back $100 million of its 10%/12% Cash/PIK Toggle Second Lien Notes due 2026 in exchange for 91,026,191 APEs and cash equal to the accrued and unpaid interest on the exchange notes.
AMC intends to use the net proceeds from the sale primarily to further deleverage and/or bolster liquidity.
Lions Gate Entertainment tops Wall Street expectations
Lions Gate Entertainment Corp. (LGF.A) on Thursday reported fiscal third-quarter net income of $16.6 million, after reporting a loss in the same period a year earlier.
On a per-share basis, the Santa Monica, California-based company said it had net income of 7 cents. Earnings, adjusted for one-time gains and costs, came to 26 cents per share.
The results exceeded Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for a loss of 2 cents per share.
The motion picture producer and distributor posted revenue of $1 billion in the period, also exceeding Street forecasts. Five analysts surveyed by Zacks expected $865.3 million.
Mesa Air tops Wall Street profit estimates
Mesa Air Group Inc. on Thursday reported a loss of $9.1 million in its fiscal first quarter.
On a per-share basis, the Phoenix-based company said it had a loss of 25 cents. Losses, adjusted for non-recurring costs, came to 12 cents per share.
The results beat Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for a loss of 52 cents per share.
The regional airline posted revenue of $147.2 million in the period.
Yahoo to lay off more than 20% of staff
Yahoo said on Thursday it plans to lay off more than 20% of its total workforce as part of a major restructuring of its ad tech division.
The cuts will impact nearly 50% of Yahoo’s ad tech employees by the end of this year, including nearly 1,000 employees this week, the company said.
Yahoo, which is owned by private equity firm Apollo Global Management since a $5 billion buyout in 2021, added that the move would enable the company to narrow its focus and investment on its flagship ad business called DSP, or demand-side platform.
This comes as many advertisers have pared back their marketing budgets in response to record-high inflation rates and continued uncertainty about a recession.
A raft of U.S. companies from Goldman Sachs Group Inc to Alphabet Inc have also laid off thousands this year to ride out a demand downturn wrought by high inflation and rising interest rates.
Axios first reported the news of the layoffs at Yahoo.
PayPal forecasts strong full-year profit, says CEO Schulman to retire
PayPal Holdings Inc forecast full-year profit above Wall Street estimates on Thursday, as the payment firm’s customers undeterred by decades-high inflation continue to spend, and said Chief Executive Dan Schulman will retire at the end of the year.
Shares in the payments heavyweight rose 6% in extended trading after results.
PayPal said it expects full-year adjusted profit of roughly $4.87 on a per share basis. Analysts on average had expected $4.75 per share, according to Refinitiv IBES data.
The company’s upbeat forecast also comes alongside its previously announced commitment of lowering expenses in the backdrop of its key e-commerce segment feeling the pinch of a slowdown.
Last week, PayPal said it will lay off 7% of its workforce, or about 2,000 employees, joining a string of fintech firms which have slashed jobs to cut costs in an increasingly tumultuous operating environment.
Its revenue rose 9% on an FX-neutral basis to $7.4 billion in the fourth quarter ended Dec. 31.PayPal earned a profit of $1.24 per share on an adjusted basis in the quarter, versus $1.11 per share in the year-ago quarter.
Lyft forecasts revenue below estimates, blames cold weather, lower prices
Lyft Inc on Thursday forecast current-quarter revenue below Wall Street estimates, blaming extremely cold weather in some of its major markets and lower prices, especially during peak hours, sending its shares down 23% in extended trading.
Lyft forecast first-quarter revenue of about $975 million, which fell below analyst estimates of $1.09 billion, according to Refinitiv data.
Its forecast for first-quarter adjusted earnings before interest, taxes depreciation and amortization (EBITDA), a key measure of profitability that strips out some costs, was between $5 million and $15 million.
For the fourth quarter, Lyft reported an adjusted EBITDA of $126.7 million, excluding $375 million it had set aside for increasing insurance reserves. Analysts had forecast $91.01 million.
Active riders rose 8.7% increase to 20.36 million for the fourth quarter, Lyft said. Analysts were expecting 20.30 million, according to FactSet estimates.
Rideshare was “really back … we’re happy with the current marketplace conditions,” Zimmer said.
Revenue rose 21% to $1.18 billion, slightly above the average estimate of $1.16 billion.
Senators blast Southwest Airlines for ‘unmitigated disaster’ over holiday travel period
Southwest Airlines on Thursday faced harsh criticism from U.S. senators at a hearing investigating the airline’s meltdown that disrupted travel plans for 2 million customers, with one lawmaker calling the situation an “unmitigated disaster.
“Senators recounted to Southwest a litany of horrendous travel stories: People missing funerals and holiday gatherings, passengers forced to drive for 17 or more hours across the country after flights were canceled and cancer patients who could not get treatment.
Democratic Senator Jacky Rosen called it an “unmitigated disaster” that had a “devastating impact on families.”
Ted Cruz, the top Republican on the Senate Commerce Committee, called the cancellation of more than 16,000 flights “an epic screwup” but said he was confident Southwest executives “are committed to doing everything possible to prevent its recurrence.”
Southwest Chief Operating Officer Andrew Watterson told reporters that the airline has already paid hundreds of millions of dollars in compensation and reimbursements for expenses and will cut 2022 bonuses to executives when they are awarded in March.
Disney makes peace with activist investor Nelson Peltz’s Trian Fund
Activist investor Nelson Peltz on Thursday ended his quest for a board seat at Walt Disney Co after Chief Executive Bob Iger laid out plans to fix the home of Mickey Mouse, cheering investors.
“The proxy fight is over. This is a win for all shareholders,” a spokesperson for Peltz’s Trian Fund Management said.
The decision came only hours after Disney reported earnings that topped Wall Street expectations and Iger outlined a corporate restructuring that included 7,000 job cuts and addressed many of Peltz’s criticisms.
After weeks of trading increasingly personal barbs, Peltz extended an olive branch to Disney saying he congratulated the company and its CEO on new “operating initiatives” that dovetail with his thinking.Disney issued a statement applauding Peltz’s decision to end the board challenge. “We have tremendous faith in Bob Iger’s leadership and the transformative vision for Disney’s future he set forth yesterday,” the board said.
Pepsi price hikes fuel 10% jump in the fourth-quarter sales
PepsiCo reported better-than-expected sales in the fourth quarter after hiking prices for its drinks and snacks, but it warned that consumers may be less willing to accept those increases as this year progresses.
Revenue rose more than 10% to $28 billion. That was better than the $26.8 billion Wall Street had forecast, according to analysts polled by FactSet.
Pepsi raised prices 16% in the October-December period __ and 14% overall in 2022 __ as it battled double-digit percentage cost increases for ingredients like cooking oil, potatoes and seasonings. The price increases boosted results; Frito-Lay snacks and Quaker products booked double-digit revenue gains in North America even though sales volumes were down 1% and 3%, respectively.
Pepsi’s net income fell 60% to $535 million, largely due to a $1.5 billion impairment charge for its SodaStream brand and other assets.
Mortgage rates inch back up this week
The average long-term U.S. mortgage rate ticked up slightly this week after four weeks of declines, a possible sign of stability that could draw in home shoppers with spring buying season weeks away.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate inched up to 6.12% this week from 6.09% last week. The average rate a year ago was 3.69%.
The average long-term rate reached a two-decade high of 7.08% in the fall as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and and bring down stubborn, four-decade high inflation.
Donald Trump is back on Facebook
Meta Platforms Inc has restored former U.S. President Donald Trump’s access to Facebook and Instagram, Meta spokesperson Andy Stone confirmed on Thursday, following a two-year suspension after the deadly Capitol Hill riot on Jan. 6, 2021.
Meta in January said it would lift Trump’s suspension “in the coming weeks” and would institute heightened penalties of a suspension between one month and two years if the former president violated its content policies again.
Trump now regains access to key platforms for voter outreach and political fundraising ahead of another run for the White House in 2024. He had 23 million followers on Instagram and 34 million on Facebook as of January.
Benchmarks recoil after strong start
The major U.S. stock averages are falling after starting the session in positive territory.
The Dow, S&P and Nasdaq are all trading beneath the redline as commodities like oil and gold slip in afternoon trading, with the yellow metal down roughly 0.80% to $1,875.60 an ounce and oil slipping almost 1.26% to $77.48 a barrel.
Meanwhile, blue-chip stock leading the Dow’s early 200 point rally are dropping as shares of Nike and Boeing fall into red territory.
Baxter profit forecast falls short, to lay off up to 5% workforce
Medical device maker Baxter International on Thursday forecast 2023 profit well below Wall Street estimates and said it would cut up to 5% of its global workforce.
Medical device makers are still grappling with supply-chain shortages that began during the pandemic, with rising costs of raw materials, labor and transportation piling on more pressure.
Baxter, which is in the process of spinning off its kidney care units, is also exploring alternatives for its biopharma solutions business, including a potential sale.
The company revealed plans to consolidate its operations into four units in the coming months, adding that it will begin financial reporting with its new segments during the second half of 2023.
Baxter expects to save over $300 million through its cost reduction plans, including the layoffs, in 2023.
The company said it expects to earn profit in the range of $2.75 per share and $2.95 per share, below analysts’ expectations of $3.56, according to Refinitiv.
As of Dec.31, Baxter had about 60,000 employees globally, according to its latest annual regulatory filing.
Ben & Jerry;s owner Unilever says price hikes will continue into this year
Unilever Plc said on Thursday it would continue to raise prices for its detergents, soaps and packaged food to offset rising input costs, and ease up those hikes in the second half of 2023.
The London-based company, which makes products like Fairy washing-up liquid, Dove soaps, savory food spread Marmite, and Ben & Jerry’s ice cream, expects cost inflation to continue in 2023, forecasting net material inflation in the first half of around 1.5 billion euros ($1.6 billion).
Price increases would continue in the second half “but it will be a lower rates of increases … we are probably past peak inflation, but not yet past peak pricing,” Pitkethly said.
Underlying price growth for the fourth quarter was a record 13.3% while underlying volumes fell 3.6%.Underlying sales at Unilever rose 9.2% in the fourth quarter, beating a company-provided analyst estimate of an 8.2% increase.
“Unilever have a playbook for inflation. A business as broad-based as they are is always facing inflationary pressures somewhere in the world, so they know the drill,” said Steve Clayton, head of equity funds, Hargreaves Lansdown. “Some analysts may want to trim their margin forecasts a touch, but the underlying message here is that Unilever is coping just fine against a challenging trading environment.”
Reuters contributed to this report.
Credit Suisse warns of more losses after ‘catastrophic’ earnings report
Credit Suisse Group has reported its biggest annual loss since the 2008 global financial crisis after rattled clients pulled billions from the bank, and it warned that a further “substantial” loss would come this year.
Battered by one scandal after another, the bank saw a sharp acceleration in withdrawals in the fourth quarter, with outflows of more than 110 billion Swiss francs ($120 billion), although it said the picture has been improving.
The results, described as “catastrophic” by Ethos, which represents some Credit Suisse shareholders, sent the bank’s shares down as much as 10%.
Switzerland’s second-biggest bank has begun a major overhaul of its business cutting costs and jobs to revive its fortunes, including creating a separate business for its investment bank under the CS First Boston brand. The bank successfully completed a 4 billion Swiss franc fundraising in December.
Chief Executive Ulrich Koerner said: “We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation.”
“We have done a prudent and also hopefully a somewhat careful planning,” he told reporters.
But analysts were alarmed by the scale of losses and outflows.
Credit Suisse’s “operational performance was even worse than feared and the level of outflows quite staggering,” Thomas Hallett, analyst at Keefe, Bruyette & Woods, said in a note.
“With heavy losses to continue in 2023, we expect to see another wave of downgrades and see no reason to own the shares.”
For the fourth quarter, the bank made a net loss of 1.39 billion francs. That brought its total net loss in 2022 to 7.29 billion francs, marking its second straight year in the red.
Hilton misses 2022 room growth view on China COVID curbs; Q4 profit jumps
Hilton Worldwide Holdings Inc on Thursday missed its room growth expectations for 2022, pressured by a volatile COVID-19 environment in China, a key tourism market where hotel operators have struggled to expand last year.
Hilton, which owns brands including Waldorf Astoria Hotels & Resorts, reported a net unit growth of 4.7% in 2022, below its earlier forecast of about 5% growth.
China’s strict COVID-19 curbs, which have now been lifted, had halted construction of some luxury properties and impeded travel to a key global tourism markets.
Hilton reported robust results for the fourth quarter ended Dec. 31, aided by strong travel demand despite mounting economic worries.
For the quarter, Hilton said revenue per available room, or RevPAR — a key metric for investors — rose 24.8% on a currency neutral basis from a year earlier.
Excluding items, Hilton earned $1.59 per share, beating analyst expectations of $1.22 per share. Its revenues rose about 33% to $2.44 billion, compared with $2.38 billion, according to Refinitiv data.
The company forecast an adjusted profit per share between $5.42 and $5.68 per share for 2023. Analysts polled by Refinitiv expect a 2023 profit of $5.60 per share.
Hilton expects annual net unit growth between 5.0% and 5.5%. Capital returns are projected to be between $1.7 billion and $2.1 billion, compared with $1.7 billion last year.