UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 5, 2024, National CineMedia, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal third quarter ended September 26, 2024. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
Exhibit No. |
Description |
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99.1 |
Press Release of National CineMedia, Inc. dated November 5, 2024. |
101 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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NATIONAL CINEMEDIA, INC. |
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Dated: |
November 5, 2024 |
By: |
/s/ Ronnie Y. Ng |
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Ronnie Y. Ng |
Exhibit 99.1
National CineMedia, Inc. Reports Results for
Fiscal Third Quarter 2024
Exceeds guidance with revenue of $62.4 million
Scatter revenue up 35% year-over-year
Centennial, CO - November 5, 2024 - National CineMedia, Inc. (NASDAQ: NCMI) (“the Company” or “NCM”), the managing member and owner of approximately 100% of National CineMedia, LLC (NCM LLC), the operator of the largest cinema advertising network reaching movie audiences in the U.S., today announced its consolidated results for the fiscal third quarter ended September 26, 2024.
“NCM delivered its fourth consecutive quarter of consistent results, achieving $62.4 million in revenue, and demonstrating our strength as the box office continues to accelerate,” said Tom Lesinski, CEO of NCM. “We continue to drive meaningful growth in our premium Platinum offering, which has more than doubled since last year, while attracting new, category-leading advertisers across our platform as brands increasingly turn to NCM for incremental reach of highly valuable audiences at scale. We are confident in NCM’s ability to capitalize on this momentum as we continue to focus on improving monetization and productivity. Looking ahead to 2025, there is a lot to be excited about with a highly anticipated film slate appealing to a diverse demographic of moviegoers.”
Q3 2024 NCM LLC Results1
Total revenue for the third quarter ended September 26, 2024 decreased 10.3% to $62.4 million as compared to $69.6 million for the third quarter of 2023. Operating loss decreased to $7.5 million for the third quarter of 2024 from $150.7 million for the third quarter of 2023. Adjusted OIBDA, a non-GAAP measure, decreased to $8.8 million for the third quarter of 2024 from $11.3 million for the third quarter of 2023, as adjusted to exclude depreciation, amortization, share-based compensation costs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses related to involvement in the Cineworld proceeding and Chapter 11 case, each as previously reported and described in the Company’s public filings made with the U.S. Securities and Exchange Commission (the “SEC”).
Total revenue for the nine months ended September 26, 2024 decreased 8.5% to $154.5 million as compared to $168.9 million for the nine months ended September 28, 2023. Operating loss decreased to $39.4 million for the nine months ended September 26, 2024 from $202.2 million for the nine months ended September 28, 2023. Adjusted OIBDA decreased to $10.7 million for nine months ended September 26, 2024 from $12.9 million for the nine months ended September 28, 2023, as adjusted to exclude depreciation, amortization, share-based compensation costs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses related to involvement in the Cineworld proceeding and Chapter 11 case, each as previously reported and described in the Company’s public filings made with the SEC.
Q3 2024 Consolidated Results
Total revenue for the third quarter ended September 26, 2024 increased 152.6% to $62.4 million as compared to $24.7 million for the third quarter of 2023. Operating loss decreased to $7.5 million for the third quarter of 2024 from $12.3 million for the third quarter of 2023. Net loss for the third quarter of 2024 was $3.6 million, or negative $0.04 per diluted share, compared to net income of $181.8 million, or $2.89 per diluted share, for the third quarter of 2023.
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1With 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.
1
Total revenue for the nine months ended September 26, 2024 increased 107.7% to $154.5 million as compared to $74.4 million for the nine months ended September 28, 2023. Operating loss decreased to $39.4 million for the nine months ended September 26, 2024 from $47.7 million for the nine months ended September 28, 2023. Net loss for the nine months ended September 26, 2024 was $47.0 million, or negative $0.49 per diluted share, compared to net income of $681.5 million, or $20.72 per diluted share, for the nine months ended September 28, 2023.
Q4 2024 Outlook
For the fourth quarter of 2024, NCM LLC expects to earn total revenue of $82.0 million to $86.0 million, and Adjusted OIBDA in the range of $28.0 million to $30.0 million for the fourth quarter of 2024.
Supplemental Information
Integration and other encumbered theater payments due primarily from AMC associated with Carmike Theaters for NCM LLC for the quarter ended September 26, 2024 and September 28, 2023, and the nine months ended September 26, 2024 and September 28, 2023, were $1.2 million, $0.9 million, $2.2 million and $2.1 million, respectively. These payments were recorded as a reduction of an intangible asset on the Balance Sheet and are not included in operating results or Adjusted OIBDA.
Conference Call
The Company will host a conference call and audio webcast with investors, analysts, and other interested parties, November 5, 2024, at 5:00 P.M. Eastern Time. The live call can be accessed by dialing 1-844-481-2522 or, for international participants, 1-412-317-0550. 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 19, 2024, by dialing 1-844-512-2921 or, for international participants, 1-412-317-6671 and entering conference ID 10194114.
About National CineMedia, Inc.
National CineMedia, Inc. (NCM, NASDAQ:NCMI) 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 41 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 18,100 screens in over 1,400 theaters in 195 Designated Market Areas® (all of the top 50). NCM is the managing member and owner of approximately 100% 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. 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) changes to the ESAs or network affiliate agreements and the relationships with NCM LLC’s ESA Parties and network affiliates; 5)inability to implement or achieve new revenue opportunities; 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 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
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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, 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 compensation costs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses 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.
INVESTOR CONTACT: |
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MEDIA CONTACT: |
Chan Park |
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Amy Tunick |
investors@ncm.com |
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press@ncm.com |
3
NATIONAL CINEMEDIA, INC.
Condensed Consolidated Statements of Income
Unaudited
($ in millions, except per share data)
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Three Months Ended |
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Nine Months Ended |
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September 26, 2024 |
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September 28, 2023 |
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September 26, 2024 |
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September 28, 2023 |
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REVENUE |
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$ |
62.4 |
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$ |
24.7 |
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$ |
154.5 |
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$ |
74.4 |
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OPERATING EXPENSES: |
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Network operating costs |
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3.3 |
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2.6 |
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10.6 |
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6.9 |
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ESA Parties and network affiliate fees |
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32.9 |
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14.5 |
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82.1 |
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42.8 |
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Selling and marketing costs |
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10.1 |
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6.3 |
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29.6 |
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16.9 |
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Administrative and other costs |
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12.9 |
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7.3 |
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39.8 |
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40.6 |
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Depreciation expense |
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1.2 |
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0.6 |
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3.4 |
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2.1 |
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Amortization expense |
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9.5 |
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5.7 |
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28.4 |
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12.8 |
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Total |
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69.9 |
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37.0 |
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193.9 |
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122.1 |
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OPERATING LOSS |
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(7.5 |
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(12.3 |
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(39.4 |
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(47.7 |
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NON-OPERATING EXPENSE (INCOME): |
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Interest on borrowings |
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0.4 |
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0.3 |
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1.3 |
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27.5 |
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Interest income |
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(0.7 |
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— |
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(1.7 |
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— |
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Loss on modification and retirement of debt, net |
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— |
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— |
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— |
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0.4 |
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(Gain) loss on re-measurement of the payable under the tax |
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(3.0 |
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9.3 |
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9.3 |
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12.7 |
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Gain on sale of asset |
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— |
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— |
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— |
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(0.3 |
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Gain on deconsolidation of NCM LLC |
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— |
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— |
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— |
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(557.7 |
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Gain on re-measurement of investment in NCM LLC |
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— |
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(35.3 |
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— |
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(35.5 |
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Gain on reconsolidation of NCM LLC |
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— |
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(168.0 |
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— |
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(168.0 |
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Other non-operating (income) expense, net |
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(0.6 |
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(0.4 |
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(1.3 |
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0.2 |
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Total |
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(3.9 |
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(194.1 |
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7.6 |
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(720.7 |
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(LOSS) INCOME BEFORE INCOME TAXES |
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(3.6 |
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181.8 |
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(47.0 |
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673.0 |
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Income tax expense |
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— |
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— |
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— |
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— |
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CONSOLIDATED NET (LOSS) INCOME |
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(3.6 |
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181.8 |
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(47.0 |
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673.0 |
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Less: Net loss attributable to noncontrolling interests |
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— |
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— |
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— |
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(8.5 |
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NET (LOSS) INCOME ATTRIBUTABLE TO NCM, INC. |
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$ |
(3.6 |
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$ |
181.8 |
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$ |
(47.0 |
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$ |
681.5 |
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NET (LOSS) INCOME PER NCM, INC. COMMON SHARE |
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Basic |
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$ |
(0.04 |
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$ |
2.89 |
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$ |
(0.49 |
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$ |
21.58 |
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Diluted |
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$ |
(0.04 |
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$ |
2.89 |
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$ |
(0.49 |
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$ |
20.72 |
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WEIGHTED AVERAGE SHARES OUTSTANDING: |
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Basic |
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95,221,502 |
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62,765,418 |
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96,183,328 |
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31,574,026 |
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Diluted |
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95,221,502 |
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62,804,688 |
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96,183,328 |
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32,487,898 |
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NATIONAL CINEMEDIA, INC.
Selected Condensed Balance Sheet Data
Unaudited
($ in millions)
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As of |
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September 26, 2024 |
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December 28, 2023 |
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Cash, cash equivalents, marketable securities and restricted cash |
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$ |
52.5 |
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$ |
37.6 |
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Receivables, net |
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$ |
62.8 |
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$ |
96.6 |
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Property and equipment, net |
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$ |
15.3 |
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$ |
15.8 |
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Total assets |
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$ |
526.1 |
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$ |
567.7 |
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Borrowings, gross |
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$ |
10.0 |
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$ |
10.0 |
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Total equity |
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$ |
385.5 |
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$ |
434.5 |
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Total liabilities and equity |
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$ |
526.1 |
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$ |
567.7 |
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4
NATIONAL CINEMEDIA, LLC
Operating Data
Unaudited
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Three Months Ended |
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September 26, 2024 |
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September 28, 2023 |
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Total Screens (100% Digital) at Period End (1)(5) |
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18,141 |
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18,489 |
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ESA Party Screens at Period End (2)(5) |
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9,492 |
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9,604 |
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Three Months Ended |
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Nine Months Ended |
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September 26, 2024 |
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September 28, 2023 |
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September 26, 2024 |
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September 28, 2023 |
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Total Attendance for Period (3)(5) (in millions) |
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121.6 |
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131.7 |
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290.2 |
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356.6 |
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ESA Party Attendance for Period (4)(5) (in millions) |
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74.3 |
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77.8 |
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179.0 |
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207.4 |
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Capital Expenditures (6) (in millions) |
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$ |
1.0 |
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$ |
0.6 |
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$ |
3.3 |
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$ |
2.3 |
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NATIONAL CINEMEDIA, LLC
Operating Data
Unaudited
($ in millions)
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Three Months Ended |
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Nine Months Ended |
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September 26, 2024 |
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September 28, 2023 |
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September 26, 2024 |
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September 28, 2023 |
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Revenue breakout: |
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National advertising revenue |
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$ |
46.8 |
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$ |
52.0 |
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$ |
117.9 |
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$ |
118.2 |
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Local and regional advertising revenue |
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11.4 |
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12.9 |
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26.5 |
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34.9 |
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ESA Party advertising revenue from beverage concessionaire |
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4.2 |
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4.7 |
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10.1 |
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15.8 |
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Total advertising revenue (excluding beverage) |
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$ |
62.4 |
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$ |
69.6 |
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$ |
154.5 |
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$ |
168.9 |
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Other operating data: |
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Operating loss |
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$ |
(7.5 |
) |
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$ |
(150.7 |
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$ |
(39.4 |
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$ |
(202.2 |
) |
Adjusted OIBDA (1) |
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$ |
8.8 |
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$ |
11.3 |
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$ |
10.7 |
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$ |
12.9 |
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Adjusted OIBDA margin (1) |
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14.1 |
% |
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16.2 |
% |
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6.9 |
% |
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7.6 |
% |
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5
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 non-cash share-based compensation costs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses 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, non-cash share-based compensation programs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses 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, non-cash share-based compensation programs, impairment of long-lived assets, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses 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, non-cash share-based compensation costs, impairment of long-lived intangibles, workforce reorganization costs, loss on termination of Regal ESA, satellite transition costs, system optimization costs and fees and expenses related to involvement in the Cineworld proceeding and 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.
6
The following table reconciles NCM LLC's operating loss to Adjusted OIBDA for the periods presented (dollars in millions):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 26, 2024 |
|
|
September 28, 2023 |
|
|
September 26, 2024 |
|
|
September 28, 2023 |
|
||||
Operating loss |
|
$ |
(7.5 |
) |
|
$ |
(150.7 |
) |
|
$ |
(39.4 |
) |
|
$ |
(202.2 |
) |
Depreciation expense |
|
|
1.2 |
|
|
|
1.0 |
|
|
|
3.4 |
|
|
|
3.6 |
|
Amortization expense |
|
|
9.5 |
|
|
|
7.8 |
|
|
|
28.4 |
|
|
|
20.3 |
|
Share-based compensation costs (1) |
|
|
3.1 |
|
|
|
1.2 |
|
|
|
9.2 |
|
|
|
3.9 |
|
Impairment of long-lived assets (2) |
|
|
— |
|
|
|
9.6 |
|
|
|
— |
|
|
|
9.6 |
|
Workforce reorganization costs (3) |
|
|
0.2 |
|
|
|
— |
|
|
|
3.1 |
|
|
|
— |
|
Loss on termination of Regal ESA, net (4) |
|
|
— |
|
|
|
125.6 |
|
|
|
— |
|
|
|
125.6 |
|
Satellite transition costs (5) |
|
|
0.2 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
System optimization costs (6) |
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
Fees and expenses related to the Cineworld proceeding and |
|
|
2.0 |
|
|
|
16.8 |
|
|
|
5.4 |
|
|
|
52.1 |
|
Adjusted OIBDA |
|
$ |
8.8 |
|
|
$ |
11.3 |
|
|
$ |
10.7 |
|
|
$ |
12.9 |
|
Total revenue |
|
$ |
62.4 |
|
|
$ |
69.6 |
|
|
$ |
154.5 |
|
|
$ |
168.9 |
|
Adjusted OIBDA margin |
|
|
14.1 |
% |
|
|
16.2 |
% |
|
|
6.9 |
% |
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted OIBDA |
|
$ |
8.8 |
|
|
$ |
11.3 |
|
|
$ |
10.7 |
|
|
$ |
12.9 |
|
Integration and encumbered theater payments |
|
|
1.2 |
|
|
|
0.9 |
|
|
|
2.2 |
|
|
|
2.1 |
|
Adjusted OIBDA after integration and encumbered |
|
$ |
10.0 |
|
|
$ |
12.2 |
|
|
$ |
12.9 |
|
|
$ |
15.0 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 26, 2024 |
|
|
September 28, 2023 |
|
|
September 26, 2024 |
|
|
September 28, 2023 |
|
||||
Share-based compensation costs included in network costs |
|
$ |
0.1 |
|
|
$ |
0.1 |
|
|
$ |
0.4 |
|
|
$ |
0.4 |
|
Share-based compensation costs included in selling and |
|
|
0.5 |
|
|
|
0.2 |
|
|
|
1.3 |
|
|
|
0.8 |
|
Share-based compensation costs included in administrative and |
|
|
2.5 |
|
|
|
0.9 |
|
|
|
7.5 |
|
|
|
2.7 |
|
Total share-based compensation costs |
|
$ |
3.1 |
|
|
$ |
1.2 |
|
|
$ |
9.2 |
|
|
$ |
3.9 |
|
7