National CineMedia, Inc. Reports Results for Fiscal Fourth Quarter and Full Year 2023
National CineMedia, Inc. (NCMI) announces record high revenue per attendee in Q4 2023, exceeding guidance with strong adjusted OIBDA. Launches $100 million share repurchase program. Q4 results show mixed performance with flat revenue, decrease in operating income, and adjusted OIBDA contraction. FY 2023 sees total revenue flat, operating loss, and adjusted OIBDA margin contraction. Q1 2024 outlook forecasts modest revenue and adjusted OIBDA. Company to host conference call on March 18, 2024.
Negative
NCM 's operating loss for FY 2023 was $180.9 million compared to operating income of $6.9 million for FY 2022.
NCM, Inc. reported a net income of $705.2 million for FY 2023, compared to a net loss of $28.7 million in the prior year.
The announcement of National CineMedia's (NCM) $100 million share repurchase program signals a strong vote of confidence by the company's board in its stock and financial health. Share buybacks are often used to return capital to shareholders and can indicate that the company believes its stock is undervalued. By leveraging operating cash flow for these repurchases, NCM is utilizing its generated cash in a way that can potentially enhance shareholder value. However, the flat revenue year-over-year and the decrease in total revenue for the fiscal year raise questions about growth prospects. Investors may scrutinize the company's strategic initiatives and their potential to drive future revenue increases.
Furthermore, the significant net income reported due to the cancellation of historical debt after NCM LLC's emergence from bankruptcy is a one-time event that investors should not expect to recur. The operating loss for the fiscal year and the contraction in adjusted OIBDA margin suggest underlying challenges in operational efficiency or market conditions that could affect long-term profitability. Investors will likely monitor the company's ability to manage these challenges while executing its capital return strategy.
NCM's increase in national advertising revenue, driven by a higher utilization rate, is a positive indicator of the company's ability to monetize its advertising platform. However, the decrease in local and regional advertising revenue, coupled with a drop in attendance, could be reflective of broader trends in the advertising industry or specific challenges in those market segments. The increase in active national advertisers and record revenue per attendee suggests that NCM is effectively leveraging its reach among moviegoers, a demographic that advertisers highly value for its youth and diversity.
However, the contraction in adjusted OIBDA margin may be a concern, as it might indicate rising costs or pricing pressures. The advertising industry is highly competitive and subject to rapid changes in technology and consumer behavior. NCM's strategic initiatives aimed at growing its advertising network will be important in maintaining and expanding its market position against these headwinds.
The mention of NCM LLC's Chapter 11 Case and related appeals indicates that the company has recently undergone a restructuring process. The legal and financial ramifications of emerging from Chapter 11 can be complex, often involving negotiations with creditors and adjustments to the company's capital structure. While the restructuring process can provide a path to reduce debt and improve the balance sheet, it can also lead to significant legal and administrative expenses.
Moreover, the reconsolidation of NCM LLC's intangible assets and the subsequent amortization expenses reflect the accounting adjustments that follow such legal proceedings. Stakeholders should be aware that these adjustments can significantly affect reported earnings and may not be indicative of the company's ongoing operational performance. It is essential to distinguish between these one-time restructuring impacts and the company's core operating metrics when evaluating its financial health.
03/18/2024 - 04:02 PM
Fourth quarter revenue per attendee reaches record high
Fourth quarter adjusted OIBDA significantly exceeds guidance
Announces $100 million
CENTENNIAL, Colo. --(BUSINESS WIRE)--
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
NCM today announced that its board of directors approved a new share repurchase program authorizing the Company to repurchase up to $100 million
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 $91.7 million $71.9 million 2% compared to $70.4 million 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 5% compared to $17.1 million
NCM LLC’s operating income for the fourth quarter of 2023 was $21.3 million $28.1 million $39.8 million $42.1 million 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 $91.7 million
NCM, Inc.’s operating income for the fourth quarter of 2023 was $20.5 million $28.1 million $23.7 million $0.24 $6.1 million $0.60
FY 2023 NCM LLC Results1
For fiscal year 2023, NCM LLC delivered total revenue of $259.8 million 4% compared to $249.2 million $190.1 million 2% compared to revenue of $187.2 million 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 18% compared to $43.5 million
NCM LLC’s operating loss for fiscal year 2023 was $180.9 million $6.9 million $52.7 million $57.3 million 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 34% compared to $249.2 million $155.1 million 38% compared to total revenue of $249.2 million
NCM, Inc.’s operating loss for fiscal year 2023 was $27.3 million $6.9 million $705.2 million $14.34 $28.7 million $3.50
1Q 2024 Outlook
For the first quarter of 2024, NCM, Inc. expects to earn total revenue of $34.5 million $35.5 million $34.9 million $7.5 million $6.5 million $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:
investors@ncm.com
MEDIA CONTACT:
press@ncm.com
Source: National CineMedia, Inc.
NCM, Inc. delivered total revenue of $90.9 million in Q4 2023, approximately flat compared to $91.7 million in Q4 2022.
NCM, Inc.'s operating income for Q4 2023 was $20.5 million compared to $28.1 million in Q4 2022.
NCM, Inc. reported a net income per share of $0.24 in FY 2023, compared to $0.60 in the prior year.
NCM, Inc. expects total revenue of $34.5 million to $35.5 million in Q1 2024, compared to $34.9 million in Q1 2023.
The conference call will be on March 18, 2024, at 5:00 p.m. Eastern Time. Participants can access it by dialing (877) 300-8521 or through the live audio webcast at www.ncm.com.
