National CineMedia, Inc. Reports Results for Fiscal Second Quarter 2022
National CineMedia, Inc. (NCMI) reports significant recovery in Q2 2022, with total revenue soaring 379.3% to $67.1 million, surpassing consensus estimates. Operating income improved to $5.6 million from a loss of $29.6 million year-on-year. Adjusted OIBDA turned positive at $15.1 million, compared to a negative $18.7 million in Q2 2021. While net loss narrowed to $0.7 million, the company anticipates continued growth, projecting Q3 revenue between $53.0 million and $57.0 million, and aiming for full-year revenue of $265.0 million to $285.0 million.
- Total revenue increased 379.3% to $67.1 million in Q2 2022.
- Operating income improved to $5.6 million from a loss of $29.6 million.
- Adjusted OIBDA reached $15.1 million, up from negative $18.7 million.
- Full-year revenue projections of $265.0 million to $285.0 million.
- Quarterly dividend of $0.03 authorized, indicating positive cash flow.
- Net loss of $0.7 million, though improved from $22.7 million.
- Attendance remains below historical levels despite increases.
Second Quarter Revenue and AOIBDA exceeds Consensus Estimates
Management guides to first full year of positive AOIBDA since the pandemic began
Q2 2022 Results
Total revenue for the second quarter ended
Total revenue for the six months ended
COVID-19 Pandemic
All of the theaters within our network are open and an increasing number of major motion pictures have been released during the third and fourth quarter of 2021 and the first six months of 2022, resulting in the highest attendance numbers within our network since the start of the COVID-19 pandemic. While network attendance increased substantially, it remained below historical second quarter levels. Fewer films and lower overall industry attendance resulted in lower in-theater advertising revenue. The movie slate for 2022 improved, while experiencing impacts from post-production delays. As of the release date, variants of the COVID-19 virus continue to circulate throughout
Given the 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,
NCM LLC’s cash balance as of
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 second quarter 2022 operating results and future outlook, NCM CEO
2022 Outlook
For the third quarter of 2022, the Company expects to earn total revenue of
For the full year 2022, the Company expects to earn total revenue of
Supplemental Information
Other encumbered theater payments due primarily from AMC associated 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 and results of operations, including statements concerning the ultimate impact of the COVID-19 pandemic on the Company and future theater attendance levels, among others. 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; 3) the availability and predictability of major motion pictures displayed in theaters; 4) increased competition for advertising expenditures; 5) changes to relationships with NCM LLC’s founding members; 6) inability to implement or achieve new revenue opportunities; 7) failure to realize the anticipated benefits of the 2019 amendments to
Condensed Consolidated Statements of Income Unaudited ($ in millions, except per share data) |
|||||||||||||||
|
Quarter Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Revenue |
$ |
67.1 |
|
|
$ |
14.0 |
|
|
$ |
103.0 |
|
|
$ |
19.4 |
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
||||||||
Advertising operating costs |
|
8.3 |
|
|
|
3.2 |
|
|
|
13.0 |
|
|
|
4.7 |
|
Network costs |
|
2.1 |
|
|
|
1.9 |
|
|
|
4.1 |
|
|
|
3.7 |
|
Theater access fees and revenue share to founding members |
|
23.2 |
|
|
|
11.2 |
|
|
|
41.1 |
|
|
|
14.3 |
|
Selling and marketing costs |
|
10.4 |
|
|
|
8.9 |
|
|
|
20.6 |
|
|
|
16.6 |
|
Administrative and other costs |
|
9.7 |
|
|
|
9.6 |
|
|
|
19.4 |
|
|
|
19.8 |
|
Impairment of long-lived assets |
|
— |
|
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
Depreciation expense |
|
1.5 |
|
|
|
2.6 |
|
|
|
3.5 |
|
|
|
5.9 |
|
Amortization of intangibles recorded for network theater screen leases |
|
6.3 |
|
|
|
6.2 |
|
|
|
12.4 |
|
|
|
12.3 |
|
Total |
|
61.5 |
|
|
|
43.6 |
|
|
|
119.9 |
|
|
|
77.3 |
|
OPERATING INCOME (LOSS) |
|
5.6 |
|
|
|
(29.6 |
) |
|
|
(16.9 |
) |
|
|
(57.9 |
) |
NON-OPERATING EXPENSES: |
|
|
|
|
|
|
|
||||||||
Interest on borrowings |
|
20.4 |
|
|
|
16.9 |
|
|
|
37.6 |
|
|
|
31.6 |
|
Interest income |
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
(Gain) loss on modification and retirement of debt, net |
|
(5.9 |
) |
|
|
0.4 |
|
|
|
(5.9 |
) |
|
|
0.8 |
|
(Gain) loss on re-measurement of the payable to founding members under the tax receivable agreement |
|
(0.1 |
) |
|
|
0.1 |
|
|
|
6.3 |
|
|
|
(1.4 |
) |
Other non-operating (income) expense |
|
(0.1 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
0.1 |
|
Total |
|
14.2 |
|
|
|
17.3 |
|
|
|
37.7 |
|
|
|
31.0 |
|
LOSS BEFORE INCOME TAXES |
|
(8.6 |
) |
|
|
(46.9 |
) |
|
|
(54.6 |
) |
|
|
(88.9 |
) |
Income tax expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
CONSOLIDATED NET LOSS |
|
(8.6 |
) |
|
|
(46.9 |
) |
|
|
(54.6 |
) |
|
|
(88.9 |
) |
Less: Net loss attributable to noncontrolling interests |
|
(7.9 |
) |
|
|
(24.2 |
) |
|
|
(28.7 |
) |
|
|
(46.8 |
) |
NET LOSS ATTRIBUTABLE TO NCM, INC. |
$ |
(0.7 |
) |
|
$ |
(22.7 |
) |
|
$ |
(25.9 |
) |
|
$ |
(42.1 |
) |
|
|
|
|
|
|
|
|
||||||||
NET LOSS PER NCM, INC. COMMON SHARE |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.53 |
) |
Diluted |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
|
||||||||
Basic |
|
81,467,651 |
|
|
|
80,115,377 |
|
|
|
81,254,152 |
|
|
|
79,298,366 |
|
Diluted |
|
81,467,651 |
|
|
|
80,115,377 |
|
|
|
81,254,152 |
|
|
|
79,298,366 |
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share |
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.10 |
|
Selected Condensed Balance Sheet Data Unaudited ($ in millions) |
|||||||
|
As of |
||||||
|
|
|
|
||||
Cash, cash equivalents and marketable securities |
$ |
74.4 |
|
|
$ |
102.5 |
|
Receivables, net |
|
63.6 |
|
|
|
53.0 |
|
Property and equipment, net |
|
13.5 |
|
|
|
21.3 |
|
Total assets |
|
789.9 |
|
|
|
817.4 |
|
Borrowings, gross |
|
1,129.8 |
|
|
|
1,108.0 |
|
Total equity/(deficit) |
|
(431.3 |
) |
|
|
(383.5 |
) |
Total liabilities and equity |
|
789.9 |
|
|
|
817.4 |
|
Operating Data Unaudited |
|||
|
Quarter Ended |
||
|
|
|
|
Total Screens ( |
20,634 |
|
20,883 |
Founding Member Screens at Period End (2)(5) |
16,416 |
|
16,492 |
|
Quarter Ended |
|
Six Months Ended |
||||||||
(in millions) |
|
|
|
|
|
|
|
||||
Total Attendance for Period (3)(5) |
|
124.2 |
|
|
49.1 |
|
|
200.2 |
|
|
62.9 |
Founding Member Attendance for Period (4)(5) |
|
100.1 |
|
|
38.5 |
|
|
161.1 |
|
|
48.7 |
Capital Expenditures (6) |
$ |
0.8 |
|
$ |
0.9 |
|
$ |
1.6 |
|
$ |
3.4 |
|
|
|
|
|
|
|
|
||||
(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 each period presented. |
|
(6) |
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 |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Revenue breakout: |
|
|
|
|
|
|
|
||||||||
National advertising revenue |
$ |
50.7 |
|
|
$ |
8.6 |
|
|
$ |
77.0 |
|
|
$ |
11.8 |
|
Local and regional advertising revenue |
|
10.5 |
|
|
|
3.3 |
|
|
|
16.6 |
|
|
|
5.0 |
|
Total advertising revenue (excluding beverage) |
$ |
61.2 |
|
|
$ |
11.9 |
|
|
$ |
93.6 |
|
|
$ |
16.8 |
|
|
|
|
|
|
|
|
|
||||||||
Total revenue |
$ |
67.1 |
|
|
$ |
14.0 |
|
|
$ |
103.0 |
|
|
$ |
19.4 |
|
|
|
|
|
|
|
|
|
||||||||
Per attendee data: |
|
|
|
|
|
|
|
||||||||
National advertising revenue per attendee |
$ |
0.408 |
|
|
$ |
0.175 |
|
|
$ |
0.385 |
|
|
$ |
0.188 |
|
Local and regional advertising revenue per attendee |
$ |
0.085 |
|
|
$ |
0.067 |
|
|
$ |
0.083 |
|
|
$ |
0.079 |
|
Total advertising revenue (excluding beverage) per attendee |
$ |
0.493 |
|
|
$ |
0.242 |
|
|
$ |
0.468 |
|
|
$ |
0.267 |
|
Total revenue per attendee |
$ |
0.540 |
|
|
$ |
0.285 |
|
|
$ |
0.514 |
|
|
$ |
0.308 |
|
Total attendance (1) |
|
124.2 |
|
|
|
49.1 |
|
|
|
200.2 |
|
|
|
62.9 |
|
|
|
|
|
|
|
|
|
||||||||
Other operating data: |
|
|
|
|
|
|
|
||||||||
Operating income (loss) |
$ |
5.6 |
|
|
$ |
(29.6 |
) |
|
$ |
(16.9 |
) |
|
$ |
(57.9 |
) |
Adjusted OIBDA (2) |
$ |
15.1 |
|
|
$ |
(18.7 |
) |
|
$ |
8.2 |
|
|
$ |
(34.9 |
) |
Adjusted OIBDA margin (2) |
|
22.5 |
% |
|
|
(133.6 |
)% |
|
|
8.0 |
% |
|
|
(179.9 |
)% |
|
|
|
|
|
|
|
|
||||||||
Loss per share - basic |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.53 |
) |
Loss per share - diluted |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
||||||||
Adjusted loss per share - diluted (2) |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.53 |
) |
(1) |
Represents the total attendance within NCM LLC’s advertising network. Excludes screens and attendance associated with certain AMC Carmike theaters for all 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 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, such as the ongoing COVID-19 pandemic, 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 income (loss) to Adjusted OIBDA for the periods presented (dollars in millions):
|
Quarter Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss) |
$ |
5.6 |
|
|
$ |
(29.6 |
) |
|
$ |
(16.9 |
) |
|
$ |
(57.9 |
) |
Depreciation expense |
|
1.5 |
|
|
|
2.6 |
|
|
|
3.5 |
|
|
|
5.9 |
|
Amortization of intangibles recorded for network theater screen leases |
|
6.3 |
|
|
|
6.2 |
|
|
|
12.4 |
|
|
|
12.3 |
|
Share-based compensation costs (1) |
|
1.7 |
|
|
|
2.1 |
|
|
|
3.0 |
|
|
|
4.8 |
|
Impairment of long-lived assets (2) |
|
— |
|
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
Sales force reorganization costs (3) |
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
Adjusted OIBDA |
$ |
15.1 |
|
|
$ |
(18.7 |
) |
|
$ |
8.2 |
|
|
$ |
(34.9 |
) |
Total revenue |
$ |
67.1 |
|
|
$ |
14.0 |
|
|
$ |
103.0 |
|
|
$ |
19.4 |
|
Adjusted OIBDA margin |
|
22.5 |
% |
|
|
(133.6 |
)% |
|
|
8.0 |
% |
|
|
(179.9 |
)% |
|
|
|
|
|
|
|
|
||||||||
Adjusted OIBDA |
$ |
15.1 |
|
|
$ |
(18.7 |
) |
|
$ |
8.2 |
|
|
$ |
(34.9 |
) |
Integration and encumbered theater payments |
|
1.1 |
|
|
|
0.2 |
|
|
|
1.3 |
|
|
|
0.2 |
|
Adjusted OIBDA after integration and encumbered theater payments |
$ |
16.2 |
|
|
$ |
(18.5 |
) |
|
$ |
9.5 |
|
|
$ |
(34.7 |
) |
|
|
|
|
|
|
|
|
||||||||
(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 |
|
Six Months Ended |
||||||||
|
|
|
|
|
|
|
|
||||
Share-based compensation costs included in network costs |
$ |
0.2 |
|
$ |
0.2 |
|
$ |
0.3 |
|
$ |
0.3 |
Share-based compensation costs included in selling and marketing costs |
|
0.4 |
|
|
0.5 |
|
|
0.7 |
|
|
1.0 |
Share-based compensation costs included in administrative and other costs |
|
1.1 |
|
|
1.4 |
|
|
2.0 |
|
|
3.5 |
Total share-based compensation costs |
$ |
1.7 |
|
$ |
2.1 |
|
$ |
3.0 |
|
$ |
4.8 |
(2) |
The impairment of long-lived assets primarily relates to the write down of internally-developed software no longer in use. |
|
(3) |
Sales force reorganization costs represent redundancy costs associated with changes to the Company’s sales force implemented during the first quarter of 2022. |
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, sales force reorganization costs and loss on re-measurement of the payable to founding members under the tax receivable agreement for the periods presented (dollars in millions):
|
Quarter Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net loss as reported |
$ |
(0.7 |
) |
|
$ |
(22.7 |
) |
|
$ |
(25.9 |
) |
|
$ |
(42.1 |
) |
Impairment of long-lived assets (1) |
|
— |
|
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
Sales force reorganization costs (2) |
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
Effect of noncontrolling interests ( |
|
— |
|
|
|
— |
|
|
|
(3.1 |
) |
|
|
— |
|
Effect of provision for income taxes ( |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss (gain) on re-measurement of the payable to founding members under the tax receivable agreement (4) |
|
(0.1 |
) |
|
|
— |
|
|
|
6.3 |
|
|
|
— |
|
Net effect of adjusting items |
$ |
(0.1 |
) |
|
$ |
— |
|
|
$ |
9.4 |
|
|
$ |
— |
|
Net loss excluding adjusting items |
$ |
(0.8 |
) |
|
$ |
(22.7 |
) |
|
$ |
(16.5 |
) |
|
$ |
(42.1 |
) |
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding as reported |
|
|
|
|
|
|
|
||||||||
Diluted |
|
81,467,651 |
|
|
|
80,115,377 |
|
|
|
81,254,152 |
|
|
|
79,298,366 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted loss per share as reported |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.32 |
) |
|
$ |
(0.53 |
) |
Net effect of adjusting items |
|
— |
|
|
|
— |
|
|
|
0.12 |
|
|
|
— |
|
Diluted loss per share excluding adjusting items |
$ |
(0.01 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.53 |
) |
(1) |
The impairment of long-lived assets primarily relates to the write down of internally-developed software no longer in use. |
|
(2) |
Sales force reorganization costs represents redundancy costs associated with changes to the Company’s sales force implemented during the first quarter of 2022. |
|
(3) |
The rates utilized to tax effect the adjusting items represent the effective tax rates for the respective periods. |
|
(4) |
The loss (gain) on the re-measurement of the payable to the founding members is related to the change in our payable to the founding members under the tax receivable agreement resulting from a change in projected taxable income before TRA deductions for the years ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220808005701/en/
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