National CineMedia, Inc. Reports Results for Fiscal Third Quarter 2021
Quarterly Cash Dividend Remains at
Company Encouraged with the Increase in Advertising Demand Following Recent Box Office Success
COVID-19 Pandemic
Beginning in 2021, the FDA approved multiple COVID-19 vaccines, which have been widely administered throughout
Despite the increase in network attendance, in-theater advertising revenue for the third quarter of 2021 remained significantly below historical levels. Given these lower revenue levels and future market uncertainties, the Company continued to manage its liquidity position through various cost-control measures. Since the beginning of the COVID-19 pandemic, the Company has significantly reduced payroll related costs through a combination of temporary furloughs, permanent layoffs and salary reductions. In total, the Company’s headcount has been reduced by almost 35% as compared to headcount levels prior to the COVID-19 pandemic.
NCM LLC’s cash balance as of
While the COVID-19 pandemic makes it challenging for management to estimate the future performance of our business, particularly over the near to medium term, the Company began to ramp up its business during the second and third quarters of 2021 and expects to continue to increase advertising revenues in the fourth quarter of 2021.
Q3 2021 Results
Total revenue for the third quarter ended
Total revenue for the first nine months ended
Dividend
The Company announced today that its Board of Directors has authorized the Company’s quarterly cash dividend of
From the CEO
Commenting on the Company’s third quarter 2021 operating results and future outlook, NCM CEO
2021 Outlook
Due to the continued uncertainties related to the COVID-19 pandemic over the near term and the impact of changes in consumer behavior on attendance following the reopening of the theaters, the Company is not providing revenue and Adjusted OIBDA guidance for the fiscal year ending
Supplemental Information
Integration and other encumbered theater payments due from AMC associated primarily with
Conference Call
The Company will host a conference call and audio webcast with investors, analysts and other interested parties
The replay of the conference call will be available until
About
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 pre-show; 2) the impact of pandemics, epidemics or disease outbreaks, such as the novel coronavirus (COVID-19) and the success of actions taken to mitigate such situations, vaccine rollouts, vaccine or mask mandates and potential changes to consumer behavior; 3) the availability and predictability of major motion pictures displayed in theaters; 4) increased competition for advertising expenditures; 5) our need for additional funding including the approved revolving loan agreement between
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Condensed Consolidated Statements of Income Unaudited |
|||||||||||||||||||
($ in millions, except per share data) |
|||||||||||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Revenue |
$ |
31.7 |
|
|
|
$ |
6.0 |
|
|
|
$ |
51.1 |
|
|
|
$ |
74.7 |
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
||||||||||||
Advertising operating costs |
5.2 |
|
|
|
1.1 |
|
|
|
9.9 |
|
|
|
8.4 |
|
|
||||
Network costs |
2.0 |
|
|
|
1.8 |
|
|
|
5.7 |
|
|
|
6.3 |
|
|
||||
Theater access fees and revenue share to founding members |
16.7 |
|
|
|
1.8 |
|
|
|
31.0 |
|
|
|
19.5 |
|
|
||||
Selling and marketing costs |
8.2 |
|
|
|
7.5 |
|
|
|
24.8 |
|
|
|
28.1 |
|
|
||||
Administrative and other costs |
9.6 |
|
|
|
5.8 |
|
|
|
29.4 |
|
|
|
23.0 |
|
|
||||
Impairment of long-lived assets |
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.7 |
|
|
||||
Depreciation expense |
2.5 |
|
|
|
3.1 |
|
|
|
8.4 |
|
|
|
9.5 |
|
|
||||
Amortization of intangibles recorded for network theater screen leases |
6.2 |
|
|
|
6.2 |
|
|
|
18.5 |
|
|
|
18.4 |
|
|
||||
Total |
50.4 |
|
|
|
27.3 |
|
|
|
127.7 |
|
|
|
114.9 |
|
|
||||
OPERATING LOSS |
(18.7 |
) |
|
|
(21.3 |
) |
|
|
(76.6 |
) |
|
|
(40.2 |
) |
|
||||
NON-OPERATING EXPENSES: |
|
|
|
|
|
|
|
||||||||||||
Interest on borrowings |
16.6 |
|
|
|
13.7 |
|
|
|
48.2 |
|
|
|
40.9 |
|
|
||||
Interest income |
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.6 |
) |
|
||||
Loss on modification and retirement of debt, net |
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
0.3 |
|
|
||||
Loss on re-measurement of the payable to founding members under the tax receivable agreement |
(1.8 |
) |
|
|
(1.0 |
) |
|
|
(3.2 |
) |
|
|
(0.7 |
) |
|
||||
Other non-operating expense (income) |
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
||||
Total |
14.8 |
|
|
|
12.7 |
|
|
|
45.8 |
|
|
|
40.0 |
|
|
||||
LOSS BEFORE INCOME TAXES |
(33.5 |
) |
|
|
(34.0 |
) |
|
|
(122.4 |
) |
|
|
(80.2 |
) |
|
||||
Income tax benefit |
— |
|
|
|
(3.1 |
) |
|
|
— |
|
|
|
(7.7 |
) |
|
||||
CONSOLIDATED NET LOSS |
(33.5 |
) |
|
|
(30.9 |
) |
|
|
(122.4 |
) |
|
|
(72.5 |
) |
|
||||
Less: Net loss attributable to noncontrolling interests |
(18.3 |
) |
|
|
(18.2 |
) |
|
|
(65.1 |
) |
|
|
(42.3 |
) |
|
||||
NET LOSS ATTRIBUTABLE TO NCM, INC. |
$ |
(15.2 |
) |
|
|
$ |
(12.7 |
) |
|
|
$ |
(57.3 |
) |
|
|
$ |
(30.2 |
) |
|
|
|
|
|
|
|
|
|
||||||||||||
NET LOSS PER NCM, INC. COMMON SHARE |
|
|
|
|
|
|
|
||||||||||||
Basic |
$ |
(0.19 |
) |
|
|
$ |
(0.16 |
) |
|
|
$ |
(0.72 |
) |
|
|
$ |
(0.39 |
) |
|
Diluted |
$ |
(0.19 |
) |
|
|
$ |
(0.16 |
) |
|
|
$ |
(0.72 |
) |
|
|
$ |
(0.39 |
) |
|
|
|
|
|
|
|
|
|
||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
|
||||||||||||
Basic |
80,359,723 |
|
|
|
78,016,737 |
|
|
|
79,652,152 |
|
|
|
77,925,552 |
|
|
||||
Diluted |
80,359,723 |
|
|
|
78,016,737 |
|
|
|
79,652,152 |
|
|
|
77,925,552 |
|
|
||||
|
|
|
|
|
|
|
|
||||||||||||
Dividends declared per common share |
$ |
0.05 |
|
|
|
$ |
0.07 |
|
|
|
$ |
0.15 |
|
|
|
$ |
0.33 |
|
|
|
|||||||||
Selected Condensed Balance Sheet Data |
|||||||||
Unaudited ($ in millions) |
|||||||||
|
As of |
||||||||
|
|
|
|
||||||
Cash, cash equivalents and marketable securities |
$ |
111.3 |
|
|
|
$ |
181.8 |
|
|
Receivables, net |
28.5 |
|
|
|
16.2 |
|
|
||
Property and equipment, net |
21.8 |
|
|
|
27.5 |
|
|
||
Total assets |
820.1 |
|
|
|
886.2 |
|
|
||
Borrowings, gross |
1,108.0 |
|
|
|
1,060.3 |
|
|
||
Total equity/(deficit) |
(385.2 |
) |
|
|
(268.6 |
) |
|
||
Total liabilities and equity |
820.1 |
|
|
|
886.2 |
|
|
|
|||||
Operating Data |
|||||
Unaudited |
|||||
|
Quarter Ended |
||||
|
|
|
|
||
Total Screens (100% Digital) at Period End (1)(5)(6) |
20,776 |
|
|
20,698 |
|
Founding Member Screens at Period End (2)(5)(6) |
16,500 |
|
|
16,752 |
|
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
(in millions) |
|
|
|
|
|
|
|
||||||||
Total Attendance for Period (3)(5) |
75.7 |
|
|
5.2 |
|
|
138.6 |
|
|
125.8 |
|
||||
Founding Member Attendance for Period (4)(5) |
60.6 |
|
|
4.1 |
|
|
109.3 |
|
|
103.9 |
|
||||
Capital Expenditures (7) |
$ |
0.9 |
|
|
$ |
2.4 |
|
|
$ |
4.3 |
|
|
$ |
7.9 |
|
(1) |
Represents the total screens within NCM LLC’s advertising network. |
|
(2) |
Represents the total founding member screens. |
|
(3) |
Represents the total attendance within NCM LLC’s advertising network. |
|
(4) |
Represents the total attendance within NCM LLC’s advertising network in theaters operated by the founding members. |
|
(5) |
Excludes screens and attendance associated with certain AMC Carmike theaters for certain periods presented. |
|
(6) |
Excludes the temporary theater closures in response to the COVID-19 pandemic. |
|
(7) |
Includes certain other implementation costs associated with Cloud Computing Arrangements. |
|
|||||||||||||||
Operating Data |
|||||||||||||||
Unaudited |
|||||||||||||||
(In millions, except advertising revenue per attendee, margin and per share data) |
|||||||||||||||
|
|||||||||||||||
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Revenue breakout: |
|
|
|
|
|
|
|
||||||||
National and regional advertising revenue |
$ |
22.9 |
|
|
$ |
3.5 |
|
|
$ |
35.5 |
|
|
$ |
55.0 |
|
Local advertising revenue |
5.4 |
|
|
2.3 |
|
|
9.6 |
|
|
14.0 |
|
||||
Total advertising revenue (excluding beverage) |
$ |
28.3 |
|
|
$ |
5.8 |
|
|
$ |
45.1 |
|
|
$ |
69.0 |
|
|
|
|
|
|
|
|
|
||||||||
Total revenue |
$ |
31.7 |
|
|
$ |
6.0 |
|
|
$ |
51.1 |
|
|
$ |
74.7 |
|
|
|
|
|
|
|
|
|
||||||||
Per attendee data: |
|
|
|
|
|
|
|
||||||||
National and regional advertising revenue per attendee |
$ |
0.303 |
|
|
|
NM |
|
|
$ |
0.256 |
|
|
$ |
0.437 |
|
Local advertising revenue per attendee |
$ |
0.071 |
|
|
|
NM |
|
|
$ |
0.069 |
|
|
$ |
0.111 |
|
Total advertising revenue (excluding beverage) per attendee |
$ |
0.374 |
|
|
|
NM |
|
|
$ |
0.325 |
|
|
$ |
0.548 |
|
Total revenue per attendee |
$ |
0.419 |
|
|
|
NM |
|
|
$ |
0.369 |
|
|
$ |
0.594 |
|
Total attendance (1) |
75.7 |
|
|
5.2 |
|
|
138.6 |
|
|
125.8 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Other operating data: |
|
|
|
|
|
|
|
||||||||
Operating loss |
$ |
(18.7 |
) |
|
$ |
(21.3 |
) |
|
$ |
(76.6 |
) |
|
$ |
(40.2) |
|
Adjusted OIBDA (2) |
$ |
(8.2 |
) |
|
$ |
(11.2 |
) |
|
$ |
(43.1 |
) |
|
$ |
(9.5) |
|
Adjusted OIBDA margin (2) |
(25.9 |
)% |
|
(186.7 |
)% |
|
(84.3 |
)% |
|
(12.7) |
% |
||||
|
|
|
|
|
|
|
|
||||||||
Loss per share - basic |
$ |
(0.19 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.72 |
) |
|
$ |
(0.39) |
|
Loss per share - diluted |
$ |
(0.19 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.72 |
) |
|
$ |
(0.39) |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted loss per share - diluted (2) |
$ |
(0.19 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.72 |
) |
|
$ |
(0.38) |
|
(1) |
Represents the total attendance within NCM LLC’s advertising network. Excludes screens and attendance associated with certain AMC Carmike theaters for certain periods presented. |
|
(2) |
Adjusted OIBDA, Adjusted OIBDA margin and adjusted loss per share are not financial measures calculated in accordance with GAAP in |
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 following tables reconcile operating loss to Adjusted OIBDA for the periods presented (dollars in millions):
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Operating loss |
$ |
(18.7 |
) |
|
$ |
(21.3 |
) |
|
$ |
(76.6 |
) |
|
$ |
(40.2 |
) |
Depreciation expense |
2.5 |
|
|
3.1 |
|
|
8.4 |
|
|
9.5 |
|
||||
Amortization of intangibles recorded for network theater screen leases |
6.2 |
|
|
6.2 |
|
|
18.5 |
|
|
18.4 |
|
||||
Share-based compensation costs (1) |
1.7 |
|
|
0.8 |
|
|
6.5 |
|
|
1.1 |
|
||||
Impairment of long-lived assets (2) |
— |
|
|
— |
|
|
— |
|
|
1.7 |
|
||||
Executive transition costs (3) |
0.1 |
|
|
— |
|
|
0.1 |
|
|
— |
|
||||
Adjusted OIBDA |
$ |
(8.2 |
) |
|
$ |
(11.2 |
) |
|
$ |
(43.1 |
) |
|
$ |
(9.5 |
) |
Total revenue |
$ |
31.7 |
|
|
$ |
6.0 |
|
|
$ |
51.1 |
|
|
$ |
74.7 |
|
Adjusted OIBDA margin |
(25.9 |
)% |
|
(186.7 |
)% |
|
(84.3 |
)% |
|
(12.7 |
)% |
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted OIBDA |
$ |
(8.2 |
) |
|
$ |
(11.2 |
) |
|
$ |
(43.1 |
) |
|
$ |
(9.5 |
) |
Integration and encumbered theater payments |
0.2 |
|
|
— |
|
|
0.3 |
|
|
1.4 |
|
||||
Adjusted OIBDA after integration and encumbered theater payments |
$ |
(8.0 |
) |
|
$ |
(11.2 |
) |
|
$ |
(42.8 |
) |
|
$ |
(8.1 |
) |
(1) |
Share-based compensation costs are included in network operations, selling and marketing and administrative expense in the accompanying financial tables as shown in the following table (dollars in millions). |
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Share-based compensation costs included in network costs |
$ |
0.2 |
|
|
$ |
— |
|
|
$ |
0.5 |
|
|
$ |
0.1 |
|
Share-based compensation costs included in selling and marketing costs |
0.4 |
|
|
0.3 |
|
|
1.4 |
|
|
0.5 |
|
||||
Share-based compensation costs included in administrative and other costs |
1.1 |
|
|
0.5 |
|
|
4.6 |
|
|
0.5 |
|
||||
Total share-based compensation costs |
$ |
1.7 |
|
|
$ |
0.8 |
|
|
$ |
6.5 |
|
|
$ |
1.1 |
|
(2) |
The impairment of long-lived assets primarily relates to the write off of certain internally developed software. |
|
(3) |
Executive transition costs represent costs associated with the search for a new Company CFO during the third quarter of 2021. |
Adjusted Net Loss and Loss per Share
Adjusted net loss and loss per share are not financial measures calculated in accordance with GAAP in
The following table reconciles as reported net loss and loss per share to adjusted net loss and loss per share excluding the impairment of long-lived assets and executive transition costs for the periods presented (dollars in millions):
|
Quarter Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Net loss as reported |
$ |
(15.2 |
) |
|
|
$ |
(12.7 |
) |
|
|
$ |
(57.3 |
) |
|
|
$ |
(30.2 |
) |
|
Impairment of long-lived assets (1) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.7 |
|
|
||||
Executive transition costs (2) |
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
||||
Effect of noncontrolling interests (51.7%, 52.0%, 51.7% and 52.0%, respectively) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.9 |
) |
|
||||
Effect of provision for income taxes (0.0%, 19.8%, 0.0% and 20.4% blended rates, respectively) (2) |
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.2 |
) |
|
||||
Net effect of adjusting items |
$ |
0.1 |
|
|
|
$ |
— |
|
|
|
$ |
0.1 |
|
|
|
$ |
0.6 |
|
|
Diluted net loss excluding adjusting items |
$ |
(15.1 |
) |
|
|
$ |
(12.7 |
) |
|
|
$ |
(57.2 |
) |
|
|
$ |
(29.6 |
) |
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted Average Shares Outstanding as reported |
|
|
|
|
|
|
|
||||||||||||
Diluted |
80,359,723 |
|
|
|
78,016,737 |
|
|
|
79,652,152 |
|
|
|
77,925,552 |
|
|
||||
|
|
|
|
|
|
|
|
||||||||||||
Diluted loss per share as reported |
$ |
(0.19 |
) |
|
|
$ |
(0.16 |
) |
|
|
$ |
(0.72 |
) |
|
|
$ |
(0.39 |
) |
|
Net effect of adjusting items |
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
||||
Diluted loss per share excluding adjusting items |
$ |
(0.19 |
) |
|
|
$ |
(0.16 |
) |
|
|
$ |
(0.72 |
) |
|
|
$ |
(0.38 |
) |
|
(1) |
The impairments of long-lived assets primarily relate to the write off of certain internally developed software. |
(2) |
Executive transition costs represent costs associated with the search for a new Company CFO during the third quarter of 2021. |
(3) |
The rates utilized to tax effect the adjusting items represent the effective tax rates for the respective periods. |
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