Fourth quarter revenue per attendee reaches
record high
Fourth quarter adjusted OIBDA significantly
exceeds guidance
Announces $100 million share repurchase
program
National CineMedia, Inc. (NASDAQ: NCMI) (“the Company” or
“NCM”), the managing member of National CineMedia, LLC (“NCM LLC”),
the operator of the largest cinema advertising platform in the
U.S., today announced its results for the fourth quarter and full
year 2023, ended December 28, 2023.
“In 2023, NCM successfully re-established the importance of
cinema for best-in-class advertisers, with movies driving the
cultural conversation and the box office reaching its highest point
since 2019,” said Tom Lesinski, CEO of NCM. “We are very encouraged
by our strong fourth quarter performance, which led to a 43%
increase in active national advertisers and record revenue per
attendee. This resulted in strong adjusted OIBDA, significantly
exceeding our fourth quarter guide. Our confidence in the strength
of NCM’s business model and cash flow generation is highlighted by
our new $100 million share repurchase program. What remains clear
is that the biggest brands continue to turn to NCM as a trusted and
effective way to reach the millions of young, diverse
moviegoers.”
Share Repurchase Program
NCM today announced that its board of directors approved a new
share repurchase program authorizing the Company to repurchase up
to $100 million of shares of the Company’s common stock through
April 1, 2027. During the course of the program, NCM plans to use
operating cash flow distributions from NCM LLC to opportunistically
repurchase shares at prevailing market prices, while continuing to
invest capital in growing its advertising network through strategic
initiatives.
In determining the amount of capital to allocate to share
repurchases, the Company will take into account, among other
things, its historical and expected business performance, cash and
liquidity position, economic and market conditions, ongoing
strategic initiatives and the market price of the Company’s common
stock. The timing, manner, price, and amount of any repurchases
under the share repurchase program will be determined by the
Company in its discretion. Repurchases under the Company’s share
repurchase program may be made through open market transactions
(including the use of SEC Rule 10b5-1 trading plans), privately
negotiated transactions, accelerated share repurchases or other
structured transactions, subject to market conditions and
applicable legal requirements. The Company has no obligation to
repurchase shares, and the share repurchase program may be
modified, suspended, or discontinued at any time.
Q4 2023 NCM LLC Results1
In the fourth quarter of 2023, NCM LLC delivered total operating
revenue of $90.9 million, approximately flat compared to $91.7
million in the fourth quarter of 2022. NCM LLC’s national
advertising revenue increased to $71.9 million, up 2% compared to
$70.4 million in the fourth quarter of 2022, driven by a 14.1%
increase in utilization and offset by a 6% decrease in attendance.
NCM LLC’s local and regional advertising revenue decreased to $16.2
million, down 5% compared to $17.1 million in the fourth quarter of
2022, driven by a decrease in contract size and activity in the
government, electronics, and travel categories.
NCM LLC’s operating income for the fourth quarter of 2023 was
$21.3 million compared to operating income of $28.1 million for the
fourth quarter of 2022, driven by an increase in amortization
expenses associated with NCM LLC’s intangible assets based upon the
purchase price adjustments to NCM LLC’s intangible assets upon
reconsolidation on August 7, 2023, as well as an increase in
expenses incurred due to NCM LLC’s Chapter 11 Case and related
appeals. NCM LLC’s fourth quarter 2023 adjusted OIBDA was $39.8
million compared to $42.1 million for the fourth quarter of 2022
and adjusted OIBDA margin contracted by 210 basis points to 43.8%
compared to 45.9% in the fourth quarter of 2022. Please see the
Non-GAAP Reconciliations section below for further information
regarding adjusted OIBDA and adjusted OIBDA margin and non-GAAP
reconciliations.
Q4 2023 Company Wide Results1
In the fourth quarter of 2023, NCM, Inc. delivered total revenue
of $90.9 million, approximately flat compared to $91.7 million in
the fourth quarter of 2022.
NCM, Inc.’s operating income for the fourth quarter of 2023 was
$20.5 million compared to operating income of $28.1 million for the
fourth quarter of 2022. NCM Inc. reported net income of $23.7
million, or net income per share of $0.24, compared to net income
of $6.1 million, or a net income per share of $0.60 in the prior
year, largely driven by an increase in amortization expenses
associated with NCM LLC’s intangible assets based upon the purchase
price adjustments to NCM LLC’s intangible assets upon
reconsolidation on August 7, 2023, an increase in expenses incurred
due to NCM LLC’s Chapter 11 Case and related appeals, as well as an
increase in weighted average shares outstanding. This is offset by
a decrease in interest expense due to the cancellation of
historical debt after NCM LLC’s emergence from bankruptcy.
FY 2023 NCM LLC Results1
For fiscal year 2023, NCM LLC delivered total revenue of $259.8
million, up 4% compared to $249.2 million in fiscal year 2022. NCM
LLC’s national advertising revenue increased to $190.1 million, up
2% compared to revenue of $187.2 million in fiscal year 2022,
driven by a 9% increase in impressions sold and an 11% increase in
network attendance compared to the prior year. NCM LLC’s local and
regional advertising revenue increased to $51.1 million, up 18%
compared to $43.5 million in fiscal year 2022, driven by a
year-over-year increase in contract activity and average deal size
within the government, healthcare, travel, and education service
categories.
NCM LLC’s operating loss for fiscal year 2023 was $180.9 million
compared to operating income of $6.9 million for fiscal year 2022.
This loss was primarily related to the disposal of the intangible
asset related to the Regal ESA. NCM LLC’s fiscal year 2023 adjusted
OIBDA was $52.7 million compared to $57.3 million for fiscal year
2022 and adjusted OIBDA margin contracted by 270 basis points to
20.3% compared to 23.0% in fiscal year 2022.
FY 2023 Company Wide Results1
In fiscal year 2023, NCM, Inc. delivered total revenue of $165.2
million, down 34% compared to $249.2 million in fiscal year 2022.
NCM, Inc.’s advertising revenue decreased to $155.1 million, down
38% compared to total revenue of $249.2 million in fiscal year
2022. This decrease was primarily due to the deconsolidation of NCM
LLC for the period of April 11, 2023, through August 7, 2023,
during NCM LLC’s Chapter 11 Case.
NCM, Inc.’s operating loss for fiscal year 2023 was $27.3
million compared to operating income of $6.9 million for fiscal
year 2022. NCM, Inc. reported net income of $705.2 million, or net
income per share of $14.34, compared to a net loss of $28.7
million, or a net loss per share of $3.50 in the prior year.
1Q 2024 Outlook
For the first quarter of 2024, NCM, Inc. expects to earn total
revenue of $34.5 million to $35.5 million, compared to total
revenue for the first quarter 2023 of $34.9 million, and adjusted
OIBDA in the range of negative $7.5 million to $6.5 million,
compared to adjusted OIBDA for the first quarter 2023 of negative
$10.9 million.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts, and other interested parties on March 18,
2024, at 5:00 p.m. Eastern Time. The conference call can be
accessed by dialing (877) 300-8521 or for international
participants (412) 317-6026. Participants should allow at least 15
minutes prior to the commencement of the call to register, download
and install necessary audio software. Additionally, a live audio
webcast will be available to interested parties at www.ncm.com
under the Investor Relations section.
The replay of the conference call will be available until
midnight Eastern Time, April 3, 2024, by dialing (844) 512-2921 or
for international participants (412) 317-6671, and conference ID
10187153. A replay of the audio webcast will also be available at
www.ncm.com under the Investor Relations section.
About National CineMedia, Inc.
National CineMedia (NCM) is the largest cinema advertising
platform in the US. With unparalleled reach and scale, NCM connects
brands to sought-after young, diverse audiences through the power
of movies and pop culture. A premium video, full-funnel marketing
solution for advertisers, NCM enhances marketers' ability to
measure and drive results. NCM’s Noovie® Show is presented
exclusively in 45 leading national and regional theater circuits
including the only three national chains, AMC Entertainment Inc.
(NYSE:AMC), Cinemark Holdings, Inc. (NYSE:CNK) and Regal
Entertainment Group (a subsidiary of Cineworld Group PLC). NCM’s
cinema advertising platform consists of more than 18,400 screens in
over 1,400 theaters in 190 Designated Market Areas® (all of the top
50). National CineMedia, Inc. (NASDAQ:NCMI) owns and is the
managing member of National CineMedia LLC. For more information,
visit www.ncm.com and www.noovie.com.
Forward-Looking Statements
This press release contains various forward-looking statements
that reflect management’s current expectations or beliefs regarding
future events, including statements regarding the Company’s
anticipated future financial performance and intentions with
respect to its stock repurchase program. Investors are cautioned
that reliance on these forward-looking statements involves risks
and uncertainties. Although the Company believes that the
assumptions used in the forward-looking statements are reasonable,
any of these assumptions could prove to be inaccurate and, as a
result, actual results could differ materially from those expressed
or implied in the forward-looking statements. The factors that
could cause actual results to differ materially from those
expressed or implied in the forward-looking statements are, among
others, 1) level of theater attendance or viewership of the Noovie®
show; 2) the availability and predictability of major motion
pictures displayed in theaters, including as a result of strikes or
other production delays in the entertainment industry; 3) increased
competition for advertising expenditures; 4) inability to implement
or achieve new revenue opportunities; 5) changes to the ESAs or
network affiliate agreements and the relationships with NCM LLC’s
ESA Parties and network affiliates, 6) failure to realize the
anticipated benefits of the post-showtime inventory in our network;
7) technological changes and innovations; 8) economic conditions,
including the level of expenditures on and perception of cinema
advertising; 9) our ability to renew or replace expiring
advertising and content contracts; 10) the ongoing effects of NCM
LLC’s recent emergence from bankruptcy; 11) reinvestment in our
network and product offerings may require significant funding and
resulting reallocation of resources; and 12) fluctuations in and
timing of operating costs. In addition, the outlook provided does
not include the impact of any future unusual or infrequent
transactions; sales and acquisitions of operating assets and
investments; any future non-cash impairments of intangible and
fixed assets; amounts related to litigation or the related impact
of taxes that may occur from time to time due to management
decisions and changing business circumstances. The Company is
currently unable to forecast precisely the timing and/or magnitude
of any such amounts or events. Please refer to the Company’s
Securities and Exchange Commission filings, including the “Risk
Factor” section of the Company’s Annual Report on Form 10-K for the
year ended December 28, 2023 and subsequent Quarterly Reports on
Form 10-Q, for further information about these and other risks.
Investors are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the date they
are made. The Company undertakes no obligation to update any
forward-looking statement, whether as a result, of new information,
future events or otherwise, except as required by law.
This press release contains references to Non-GAAP financial
measures including Adjusted OIBDA (Operating Income Before
Depreciation and Amortization expense, adjusted to exclude non-cash
share-based payment costs, advisor fees related to abandoned
financing transactions, impairment of long-lived assets, sales
force reorganization costs, termination of the Regal ESA and
advisor fees related to involvement in the Cineworld Proceeding and
Chapter 11 Case). A reconciliation of these measures is available
in this press release and on the investor page of the Company’s
website at www.ncm.com.
____________________
1 With respect to operating data, all activity during NCM LLC’s
financial restructuring from April 11, 2023, to August 7, 2023,
when NCM LLC was deconsolidated from NCM, Inc., represents activity
and balances for NCM, Inc. standalone. All activity and balances
prior to the deconsolidation of NCM LLC on April 11, 2023, and
after the reconsolidation of NCM LLC on August 7, 2023, represent
NCM, Inc. consolidated, inclusive of NCM LLC. The operating results
for NCM LLC, which management believes better represent the
Company's historical consolidated performance, are presented within
the body of this release.
NATIONAL CINEMEDIA,
INC.
Condensed Consolidated
Statements of Income Unaudited
($ in millions, except per
share data)
Quarter Ended
Year Ended
December 28,
2023
December 29,
2022
December 28,
2023
December 29,
2022
Revenue
$
90.9
$
91.7
$
165.2
$
249.2
OPERATING EXPENSES:
Advertising operating costs
15.7
7.9
30.7
27.2
Network costs
2.2
2.2
6.3
8.4
ESA theater access fees and revenue
share
12.5
19.9
43.1
82.3
Selling and marketing costs
12.7
11.8
29.6
42.8
Administrative and other costs
16.7
14.1
57.3
44.3
Impairment of long-lived assets
—
—
—
5.8
Depreciation expense
1.0
1.4
3.1
6.5
Amortization expense
9.6
6.2
22.4
25.0
Total
70.4
63.6
192.5
242.3
OPERATING INCOME (LOSS)
20.5
28.1
(27.3
)
6.9
NON-OPERATING EXPENSES:
Interest on borrowings
0.4
22.4
27.9
79.7
Loss (gain) on modification and retirement
of debt, net
—
6.3
0.4
(5.9
)
(Gain) loss on re-measurement of the
payable under the tax receivable agreement
(3.4
)
(1.8
)
9.3
2.2
Gain on sale of asset
—
(2.2
)
(0.3
)
(2.2
)
Gain on deconsolidation of affiliate
—
—
(557.7
)
—
Gain on re-measurement of investment in
NCM LLC
—
—
(35.5
)
—
Gain on reconsolidation of NCM LLC
0.2
—
(167.8
)
—
Other non-operating (income) expense
(0.4
)
(0.4
)
(0.3
)
(0.7
)
Total
(3.2
)
18.0
(724.0
)
73.1
INCOME (LOSS) BEFORE INCOME TAXES
23.7
10.1
696.7
(66.2
)
Income tax expense
—
—
—
—
CONSOLIDATED NET INCOME (LOSS)
23.7
10.1
696.7
(66.2
)
Less: Net income (loss) attributable to
noncontrolling
interests
—
4.0
(8.5
)
(37.5
)
NET INCOME (LOSS) ATTRIBUTABLE TO NCM,
INC.
$
23.7
$
6.1
$
705.2
(28.7
)
NET INCOME (LOSS) PER NCM, INC. COMMON
SHARE
Basic
$
0.24
$
0.75
$
14.73
$
(3.50
)
Diluted
$
0.24
$
0.60
$
14.34
$
(3.50
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
96,809,697
8,170,167
47,882,944
8,196,801
Diluted
96,905,454
17,004,280
48,574,583
8,196,801
NATIONAL CINEMEDIA,
INC.
Selected Condensed Balance
Sheet Data
Unaudited ($ in
millions)
As of
December 28, 2023
December 29, 2022
Cash, cash equivalents, restricted cash
and marketable securities
$
37.6
$
64.8
Receivables, net
$
96.6
$
92.0
Property and equipment, net
$
15.8
$
13.0
Total assets
$
567.7
$
792.4
Borrowings, gross
$
10.0
$
1,121.1
Total equity/(deficit)
$
434.5
$
(515.3
)
Total liabilities and equity
$
567.7
$
792.4
NATIONAL CINEMEDIA,
LLC.
Operating Data
Unaudited
($ in millions, except
advertising revenue per attendee, margin and per share
data)
Quarter Ended
Year Ended
December 28,
2023
December 29,
2022
December 28,
2023
December 29,
2022
Revenue breakout:
National advertising revenue
$
71.9
$
70.4
$
190.1
$
187.1
Local and regional advertising revenue
16.2
17.1
51.1
43.5
ESA advertising revenue from beverage
concessionaire agreements
2.8
4.2
18.6
18.6
Total advertising revenue
$
90.9
$
91.7
$
259.8
$
249.2
Other operating data:
Operating income (loss)
$
21.3
$
28.1
$
(180.9
)
$
6.9
Adjusted OIBDA (1)
$
39.8
$
42.1
$
52.7
$
57.3
Adjusted OIBDA margin (1)
43.8
%
45.9
%
20.3
%
23.0
%
(1)
Adjusted OIBDA and Adjusted OIBDA
margin are not financial measures calculated in accordance with
GAAP in the United States. See attached tables for the non-GAAP
reconciliations.
NATIONAL CINEMEDIA, LLC. Non-GAAP
Reconciliations Unaudited
Adjusted OIBDA and Adjusted OIBDA Margin
Adjusted Operating Income Before Depreciation and Amortization
(“Adjusted OIBDA”) and Adjusted OIBDA margin are not financial
measures calculated in accordance with GAAP in the United
States.
Adjusted OIBDA represents operating income before depreciation
and amortization expense adjusted to also exclude amortization of
intangibles, non-cash share-based payment costs, executive
transition costs, advisor fees related to abandoned financing
transactions, impairment of long-lived assets, sales force
reorganization costs, termination of the Regal ESA and advisor fees
related to involvement in the Cineworld Proceeding and Chapter 11
Case. Our management use this non-GAAP financial measure to
evaluate operating performance, to forecast future results and as a
basis for compensation. The Company believes this is an important
supplemental measure of operating performance because it eliminates
items that have less bearing on its operating performance and
highlight trends in its core business that may not otherwise be
apparent when relying solely on GAAP financial measures. The
Company believes the presentation of this measure is relevant and
useful for investors because it enables them to view performance in
a manner similar to the method used by the Company’s management,
helps improve their ability to understand the Company’s operating
performance and makes it easier to compare the Company’s results
with other companies that may have different depreciation and
amortization policies, amounts of amortization of intangibles,
non-cash share-based compensation programs, executive transition
costs, advisor fees related to abandoned financing transactions,
impairment of long-lived assets, sales force reorganization costs,
termination of the Regal ESA and advisor fees related to
involvement in the Cineworld Proceeding and Chapter 11 Case,
interest rates, debt levels or income tax rates.
Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA
by total revenue. Our management use this non-GAAP financial
measure to evaluate operating performance, to forecast future
results and as a basis for compensation. The Company believes this
is an important supplemental measure of operating performance
because it eliminates items that have less bearing on its operating
performance and highlight trends in its core business that may not
otherwise be apparent when relying solely on GAAP financial
measures. The Company believes the presentation of this measure is
relevant and useful for investors because it enables them to view
performance in a manner similar to the method used by the Company’s
management, helps improve their ability to understand the Company’s
operating performance and makes it easier to compare the Company’s
results with other companies that may have different depreciation
and amortization policies, amounts of amortization of intangibles,
non-cash share-based compensation programs, executive transition
costs, advisor fees related to abandoned financing transactions,
impairment of long-lived assets, sales force reorganization costs,
termination of the Regal ESA and advisor fees related to
involvement in the Cineworld Proceeding and Chapter 11 Case,
interest rates, debt levels or income tax rates.
A limitation of both of these measures, however, is that they
exclude depreciation and amortization, which represent a proxy for
the periodic costs of certain capitalized tangible and intangible
assets used in generating revenues in NCM LLC’s business. In
addition, Adjusted OIBDA and Adjusted OIBDA margin have the
limitation of not reflecting the effect of the Company’s
depreciation, amortization of intangibles, non-cash share-based
payment costs, executive transition costs, advisor fees related to
abandoned financing transactions, impairments of long-lived assets,
sales force reorganization costs, termination of the Regal ESA and
advisor fees related to involvement in the Cineworld Proceeding or
Chapter 11 Case. Adjusted OIBDA should not be regarded as an
alternative to operating income, net income or as indicators of
operating performance, nor should it be considered in isolation of,
or as substitutes for financial measures prepared in accordance
with GAAP. The Company believes that operating income is the most
directly comparable GAAP financial measure to Adjusted OIBDA, and
operating margin is the most directly comparable GAAP financial
measure to Adjusted OIBDA margin. Because not all companies use
identical calculations, these non-GAAP presentations may not be
comparable to other similarly titled measures of other companies,
or calculations in NCM LLC’s debt agreement.
The Company has not provided a reconciliation of the
forward-looking non-GAAP Adjusted OIBDA measure to forward-looking
GAAP operating income due to the inability to predict the amount
and timing of impacts outside of the Company’s control on certain
items, including the timing of revenue and charges reflected in our
reconciliation of historic numbers, the amount of which, based on
historical experience, could be significant and are difficult to
reasonably predict. Accordingly, a reconciliation of this non-GAAP
measure is not available without unreasonable effort.
The following table reconciles operating loss to Adjusted OIBDA
for the periods presented (dollars in millions):
Quarter Ended
Year Ended
December 28,
2023
December 29,
2022
December 28,
2023
December 29,
2022
Operating income (loss)
$
21.3
$
28.1
$
(180.9
)
$
6.9
Depreciation expense
1.0
1.4
4.6
6.5
Amortization expense
9.5
6.3
29.8
25.0
Share-based compensation costs (1)
1.6
2.0
5.5
7.1
Advisor fees related to abandoned
financing transactions
—
0.5
—
0.5
Impairment of long-lived assets (2)
(0.7
)
—
8.9
5.8
Sales force reorganization costs (3)
—
—
—
0.4
Loss on termination of Regal ESA (4)
—
—
125.6
—
Fees and expenses related to the Cineworld
Proceeding and Chapter 11 Case included within Operating Income
(5)
7.1
3.8
59.2
5.1
Adjusted OIBDA
$
39.8
$
42.1
$
52.7
$
57.3
Total revenue
$
90.9
$
91.7
$
259.8
$
249.2
Adjusted OIBDA margin
43.8
%
45.9
%
20.3
%
23.0
%
Adjusted OIBDA
$
39.8
$
42.1
$
52.7
$
57.3
Integration and encumbered theater
payments
5.2
3.8
7.2
5.4
Adjusted OIBDA after integration and
encumbered
theater payments
$
45.0
$
45.9
$
59.9
$
62.7
(1)
Share-based compensation costs
are included in network operations, selling and marketing and
administrative expense in NCM LLC’s unaudited Condensed
Consolidated Financial Statements.
Quarter Ended
Year Ended
December 28,
2023
December 29,
2022
December 28,
2023
December 29,
2022
Share-based compensation costs included in
network costs
$
0.1
$
0.2
$
0.5
$
0.7
Share-based compensation costs included in
selling and marketing costs
0.3
0.5
1.1
1.7
Share-based compensation costs included in
administrative and other costs
1.2
1.3
3.9
4.7
Total share-based compensation costs
$
1.6
$
2.0
$
5.5
$
7.1
(2)
The impairment of long-lived
assets primarily relates to the write down of certain internally
developed software no longer in use or acquired.
(3)
Sales force reorganization costs
represents redundancy costs associated with changes to NCM LLC’s
sales force implemented during the first quarter of 2022.
(4)
The net impact of Regal’s
termination of the Regal ESA resulting from the disposal of the
intangible asset partially offset by the surrender of Regal’s
ownership in the Company and the forgiveness of prepetition
claims.
(5)
Advisor and legal fees and
expenses incurred in connection with the Company’s involvement in
the Cineworld Proceeding and Chapter 11 Case during the year ended
December 28, 2023, as well as retention related expenses and
retainers to the members of the special and restructuring
committees of the Company’s Board of Directors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240318797941/en/
INVESTOR CONTACT: Chan Park investors@ncm.com
MEDIA CONTACT: Pam Workman press@ncm.com
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