Third quarter revenue increased 27.7%; total
attendance up 23.5% year-over-year to 131.7 million
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 third quarter 2023, ended
September 28, 2023.
Q3 2023 NCM LLC Results1
“Our third quarter revenue growth of nearly 28% year-over-year
demonstrates the strong momentum of cinema advertising and solid
execution by our team,” said Tom Lesinski, CEO of NCM. “As
moviegoers went to the theaters in record numbers, advertisers
turned to NCM to connect with the hard-to-reach young audiences
that we deliver each week. With our strong and unlevered balance
sheet and our attractive advertising platform, NCM is well
positioned to unlock significant shareholder value going
forward.”
In the third quarter of 2023, NCM LLC delivered total operating
revenue of $69.6 million, up 27.7% compared $54.5 million in the
third quarter of 2022. NCM LLC’s national advertising revenue
increased to $52.0 million, up 31.0% compared to $39.7 million in
the third quarter of 2022, driven primarily by an increase in
impressions sold and network attendance. NCM LLC’s local and
regional advertising revenue increased to $12.9 million, up 31.6%
compared to $9.8 million in the third quarter of 2022, driven
primarily by an increase in contract activity and average size
within the beverage, government, and healthcare service
categories.
NCM LLC’s operating loss for the third quarter of 2023 was
$150.7 million compared to an operating loss of $4.2 million for
the third quarter of 2022, driven primarily by a $125.6 million
charge related to the net loss on Regal’s termination of its ESA.
NCM LLC’s adjusted operating OIBDA improved to $11.3 million from
$7.0 million for the third quarter of 2022 and adjusted OIBDA
margin improved by 260 basis points to 16.2% compared to 12.8% in
the third quarter of 2022.
In the third quarter of 2023, NCM LLC successfully completed its
financial restructuring, substantially strengthening NCM’s capital
structure. The financial restructuring eliminated $1.2 billion of
NCM LLC’s debt, resulting in negative $13.0 million of net debt,
net of cash.
Q3 2023 Company Wide Results1
In the third quarter of 2023, NCM, Inc. delivered total revenue
of $24.7 million, down 54.7% compared to $54.5 million in the third
quarter of 2022. NCM Inc.’s advertising revenue decreased to $22.3
million, down 59.1% compared to total revenue of $54.5 million in
the third quarter of 2022. These decreases were driven primarily by
the deconsolidation of NCM LLC for the period of April 11, 2023,
through August 7, 2023. NCM, Inc.’s management fee reimbursement
increased to $2.4 million, compared to a management fee
reimbursement of $0.0 million in the third quarter of 2022, driven
primarily by the deconsolidation of NCM LLC for the period of April
11, 2023, through August 7, 2023, for managing NCM LLC during the
third quarter of 2023 prior to the reconsolidation event.
NCM Inc.’s operating loss for the third quarter of 2023 was
$12.3 million compared to an operating loss of $4.2 million for the
third quarter of 2022. NCM Inc. reported net income of $181.8
million, or net income per share of $2.89, compared to a net loss
of $8.9 million, or a net loss per share of $1.09 in the prior
year, largely driven by a $35.3 million gain on remeasurement of
NCM LLC and a $168.0 million gain on reconsolidation of NCM LLC on
August 7, 2023, upon NCM LLC’s emergence from bankruptcy.
NCM’s Board of Directors and stockholders also approved a
reverse stock split of the Company’s common stock at a one-for-ten
ratio. The reverse stock split on August 3, 2023, and cancellation
of shares previously owned by Regal Cinemas, Inc. on August 7,
2023, resulted in approximately 13.4 million shares outstanding
prior to issuing shares in connection with NCM LLC’s emergence from
bankruptcy. As of September 28, 2023, there were 96,784,236 shares
outstanding.
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.
2023 Outlook:
For the fourth quarter of 2023, NCM LLC expects to earn total
revenue of $85.0 million to $88.0 million, compared to total
revenue for the fourth quarter 2022 of $91.7 million, and adjusted
OIBDA in the range of $30.0 million to $33.0 million, compared to
adjusted OIBDA for the fourth quarter 2022 of $42.0 million.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts, and other interested parties November 7, 2023,
at 5:00 P.M. Eastern Time. The live call can be accessed by dialing
1-877-300-8521 or for international participants 1-412-317-6026.
Participants should register at least 15 minutes prior to the
commencement of the call. Additionally, a live audio webcast will
be available to interested parties at www.ncm.com under the
Investor Relations section. Participants should allow at least 15
minutes prior to the commencement of the call to register, download
and install necessary audio software.
The replay of the conference call will be available until
midnight Eastern Time, November 23, 2023, by dialing 1-844-512-2921
or for international participants 1-412-317-6671, and entering
conference ID 10183946.
About National CineMedia, Inc.
National CineMedia (NCM) is America’s Movie Network. As the
largest cinema advertising platform in the U.S., we unite brands
with young, diverse audiences through the power of movies and
popular culture. NCM’s The Noovie® Show is presented exclusively in
42 leading national and regional theater circuits including 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 offers broad reach and
unparalleled audience engagement with more than 18,400 screens in
over 1,450 theaters in 190 Designated Market Areas® (all of the top
50). NCM Digital and Digital-Out-Of-Home (DOOH) go beyond the big
screen, extending in-theater campaigns into online, mobile, and
place-based marketing programs to reach entertainment audiences.
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. 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) failure to realize the anticipated benefits of
the post-showtime inventory in our network; 6) technological
changes and innovations; 7) economic conditions, including the
level of expenditures on and perception of cinema advertising; 8)
our ability to renew or replace expiring advertising and content
contracts; 9) the ongoing effects of NCM LLC’s recent emergence
from bankruptcy; 10) reinvestment in our network and product
offerings may require significant funding and resulting
reallocation of resources; and 11) 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
29, 2022 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 of intangibles recorded for network
theater screen leases, excluding non-cash share-based compensation
costs, termination of the Regal ESA, advisor fees related to the
Cineworld proceeding and NCM LLC’s Chapter 11 Case, certain sales
force reorganization costs and impairment of long lived-assets. 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.
NATIONAL CINEMEDIA, INC.
Condensed Consolidated Statements of Income Unaudited ($
in millions, except per share data)
Quarter Ended
Nine Months Ended
September 28, 2023
September 29, 2022
September 28, 2023
September 29, 2022
Revenue
$
24.7
$
54.5
$
74.4
$
157.5
OPERATING EXPENSES:
Advertising operating costs
8.3
6.3
15.0
19.3
Network costs
1.5
2.1
4.1
6.2
ESA theater access fees and revenue
share
7.3
21.3
30.6
62.4
Selling and marketing costs
6.3
10.4
16.9
31.0
Administrative and other costs
7.3
10.8
40.6
30.2
Impairment of long-lived assets
—
—
—
5.8
Depreciation expense
0.6
1.5
2.1
5.1
Amortization expense
5.7
6.3
12.8
18.7
Total
37.0
58.7
122.1
178.7
OPERATING LOSS
(12.3
)
(4.2
)
(47.7
)
(21.2
)
NON-OPERATING EXPENSES:
Interest on borrowings
0.3
19.8
27.5
57.3
Gain on modification and retirement of
debt, net
—
—
0.4
(5.9
)
Loss (gain) on re-measurement of the
payable under the tax
receivable agreement
9.3
(2.2
)
12.7
4.0
Gain on sale of asset
—
—
(0.3
)
—
Gain on deconsolidation of affiliate
—
—
(557.7
)
—
Gain on re-measurement of investment in
NCM LLC
(35.3
)
—
(35.5
)
—
Gain on reconsolidation of NCM LLC
(168.0
)
—
(168.0
)
—
Other non-operating (income) expense
(0.4
)
(0.1
)
0.2
(0.3
)
Total
(194.1
)
17.5
(720.7
)
55.1
INCOME (LOSS) BEFORE INCOME TAXES
181.8
(21.7
)
673.0
(76.3
)
Income tax expense
—
—
—
—
CONSOLIDATED NET INCOME (LOSS)
181.8
(21.7
)
673.0
(76.3
)
Less: Net loss attributable to
noncontrolling interests
—
(12.8
)
(8.5
)
(41.5
)
NET INCOME (LOSS) ATTRIBUTABLE TO NCM,
INC.
$
181.8
$
(8.9
)
$
681.5
$
(34.8
)
NET INCOME (LOSS) PER NCM, INC. COMMON
SHARE
Basic
$
2.89
$
(1.09
)
$
21.58
$
(4.28
)
Diluted
$
2.89
$
(1.09
)
$
20.72
$
(4.28
)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
62,765,418
8,160,581
31,574,026
8,137,137
Diluted
62,804,688
8,160,581
32,487,898
8,137,137
Dividends declared per common share
$
—
$
0.03
$
—
$
0.11
NATIONAL CINEMEDIA, INC.
Selected Condensed Balance Sheet Data Unaudited ($ in
millions)
As of
September 28, 2023
December 29, 2022
Cash, cash equivalents, restricted cash
and marketable securities
$
23.0
$
64.8
Receivables, net
$
69.3
$
92.0
Property and equipment, net
$
14.6
$
13.0
Total assets
$
539.0
$
792.4
Borrowings, gross
$
10.0
$
1,129.0
Total equity/(deficit)
$
409.3
$
(464.0
)
Total liabilities and equity
$
539.0
$
792.4
NATIONAL CINEMEDIA, LLC.
Operating Data Unaudited (In millions, except
advertising revenue per attendee, margin and per share
data)
Quarter Ended
Nine Months Ended
September 28, 2023
September 29, 2022
September 28, 2023
September 29, 2022
Revenue breakout:
National advertising revenue
$
52.0
$
39.7
$
118.2
$
116.7
Local and regional advertising revenue
12.9
9.8
34.9
26.4
ESA advertising revenue from beverage
concessionaire agreements
4.7
5.0
15.8
14.4
Total advertising revenue
$
69.6
$
54.5
$
168.9
$
157.5
Other operating data:
Operating loss
$
(150.7
)
$
(4.2
)
$
(202.2
)
$
(21.2
)
Adjusted OIBDA (1)
$
11.3
$
7.0
$
12.9
$
15.2
Adjusted OIBDA margin (1)
16.2
%
12.8
%
7.6
%
9.7
%
(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 (loss) before
depreciation expense adjusted to also exclude amortization of
intangibles recorded for network theater screen leases and non-cash
share-based compensation costs, impairment of long-lived assets,
termination of the Regal ESA, advisor fees related to the Cineworld
proceeding and Chapter 11 Case and certain sales force
reorganization costs. Adjusted OIBDA margin is calculated by
dividing Adjusted OIBDA by total revenue. Our management uses these
non-GAAP financial measures to evaluate operating performance, to
forecast future results and as a basis for compensation. The
Company believes these are important supplemental measures of
operating performance because they eliminate items that have less
bearing on its operating performance and so 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 these measures 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 policies, amortization of
intangibles recorded for network theater screen leases, non-cash
share based compensation programs, non-recurring sales force
reorganization costs, non-recurring advisor fees, non-recurring
contract termination expenses, impairments of long-lived assets,
interest rates, debt levels or income tax rates. A limitation of
these measures, however, is that they exclude depreciation and
amortization of intangibles recorded for network theater screen
leases, which represent a proxy for the periodic costs of certain
capitalized tangible and intangible assets used in generating
revenues in the Company’s business. In addition, Adjusted OIBDA has
the limitation of not reflecting the effect of the Company’s
share-based payment costs, impairments of long-lived assets,
termination of the Regal ESA and advisor fees related to the
Cineworld proceeding or Chapter 11 Case. Adjusted OIBDA should not
be regarded as an alternative to operating income, net income or as
an indicator of operating performance, nor should it be considered
in isolation of, or as a substitute for financial measures prepared
in accordance with GAAP. The Company believes that operating income
(loss) is the most directly comparable GAAP financial measure to
Adjusted OIBDA. 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 the Company’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
Nine Months Ended
September 28, 2023
September 29, 2022
September 28, 2023
September 29, 2022
Operating loss
$
(150.7
)
$
(4.2
)
$
(202.2
)
$
(21.2
)
Depreciation expense
1.0
1.5
3.6
5.1
Amortization expense
7.8
6.3
20.3
18.7
Share-based compensation costs (1)
1.2
2.1
3.9
5.1
Impairment of long-lived assets (2)
9.6
—
9.6
5.8
Sales force reorganization costs (3)
—
—
—
0.4
Loss on termination of Regal ESA (4)
125.6
—
125.6
—
Fees and expenses related to the Cineworld
Proceeding and Chapter 11 Case included within Operating Income
(5)
16.8
1.3
52.1
1.3
Adjusted OIBDA
$
11.3
$
7.0
$
12.9
$
15.2
Total revenue
$
69.6
$
54.5
$
168.9
$
157.5
Adjusted OIBDA margin
16.2
%
12.8
%
7.6
%
9.7
%
Adjusted OIBDA
$
11.3
$
7.0
$
12.9
$
15.2
Integration and encumbered theater
payments
0.9
0.3
2.1
1.6
Adjusted OIBDA after integration and
encumbered
theater payments
$
12.2
$
7.3
$
15.0
$
16.8
(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
Nine Months Ended
September 28, 2023
September 29, 2022
September 28, 2023
September 29, 2022
Share-based compensation costs included in
network costs
$
0.1
$
0.2
$
0.4
$
0.5
Share-based compensation costs included in
selling and
marketing costs
0.2
0.5
0.8
1.2
Share-based compensation costs included in
administrative
and other costs
0.3
1.3
1.0
3.4
Share-based compensation costs included in
administrative fee
- managing member
0.6
—
1.7
—
Total share-based compensation costs
$
1.2
$
2.1
$
3.9
$
5.1
(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 nine months
ended September 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/20231107128538/en/
INVESTOR CONTACT: Dan Dorenkamp 800-844-0935
investors@ncm.com
MEDIA CONTACT: Pam Workman press@ncm.com
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