NCMI - Earnings call transcript Q4 2017 | National CineMedia, Inc.

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Operator

Greetings and welcome to the National CineMedia Inc. Full Year and Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. to Chief conference Financial like host, to now Scherping, Katie Officer. would turn over the your I Please go ahead.

Katie Scherping

turn the measures. in forward-looking reconciled we with by such have risk the All closest Andy forward-looking call expressly within in today with reconciliations Thank facts XXXX discussion Act measurement. to National you, of and constitute our In conference cause website back may which Section All amended. call statements these remind I'd These non-GAAP involve as end the forward-looking like during may our expectations amounts forward-looking filings Hector the today's of conference the basis call found and XXXX the that, good at actual listeners from afternoon, to of can release, company's Securities GAAP Act includes their found SEC. statements uncertainties. With qualified contained some XXE I'll that www.ncm.com. accordance page factors. as Sections of meaning of over of historical the other of entirety everyone. of and the company's this communicated earnings of can on to to are statements. the at statements G, disclosed contains England, XXA Investor our CEO be be the Important factors differ statements Regulation statements amended CineMedia. risks this that These in are Exchange Further, the than factors materially results Securities

Andy England

and us earnings for for Welcome everyone. afternoon, full and Katie. Thanks, you thank call. joining our XXXX quarter year fourth Good

revenue reported quarter more for in as will our continues year the was for company's December ending discussion call, guidance and advertising a questions. of results highest $XXX.X Katie XX, financial provide XXXX will open XXXX. to spend highlighting the and we detailed second and discuss a XXXX, And minutes for and for our total quarter there will a the Demand few I line and strategy, QX. full our the it million performance this in be We then always, XXXX During fourth fourth then, ever. there certainly QX

However, quarter ever short audience attendance of and highest we had the down our December could with year-over-year. as may expectations fell X.X% overall

quarter our $XX.X of As from million decreased revenue decreased $XXX.X of $XX.X a million quarter our from in Adjusted to fourth OIBDA comparable total $XXX.X the the was XXXX result, X.X% fourth for QX highest XXXX X.X% million of last year, million quarter ever. the for which XXXX.

side, the the On monthly million DMAs X.X% even driven by the buys with partially and allowing and in impressions to larger increasing the a our our revenue in Beginning Still in local was strong, team TV in plan QX $XXX.X to Spot last for a $XX.X market DS make quarter in and easier significant most used in difficult buying versus benefits strong STRATA CPM the sold. out TV our stations our OX buyers $XXX,XXX. U.S. alongside due systems, million local inventory. Mediaocean's contracts We available integrating strategy million to growth became in local two audience revenue a audience QX national local November and of spot market landscape, $XX.X sales from decrease by million fourth the it other X.X% up million The offset market, had $X.X into X.X% audience decrease of ratings decline the year. XXXX, NCMs local $XX.X primarily view media those with finished to to of and scatter to Spectra buy local down revenue platforms of and see XX and data cinema continue from NCM team of XX.X% of did regional however to Mediaocean sales over in systems. regional Nielsen's reports buying planning popular from year

front, over prior XX.X% digital On QX and other our revenue digital the increased year.

the of are for We traditional our to continues of advertising overall commitment XXXX of kind growth digital dynamic very advertising was experienced in continuing many sales ecosystem, the NCM small industry that spend a challenging revenue. to it newbie organizations see volatility. remains a investing to our validates product fashion, although in our a impact year the increased evolve ad have as part

expected, XX.X% to of to that year half demonstrated full than year sales it from of the was the was in million $XXX.X $XXX.X of the million the of fourth the As performance record in million $XXX.X decreased enough for quite for turn year year a not Total first decreased and $XXX.X OIBDA was the revenue offerings. million a Despite team XXXX by the third recovery Adjusted the the product for our quarters, the resilience and to around. while X.X% it followed weaker strong comparable period year. near result, year the half full from second network, last XXXX. for

types; rally adjustment from XX.X% $XXX appetizers, was to On and XXXX year hearts million was recovery theaters in local in down half, or X.X% national for several part first revenue followed organization and in the sales of excluding better-defined efficient, QX the of hurricanes and the local South. by down Full second make in streamline XXXX consent us XXXX our to that versus which our sales reported marketplace. decree in loss as by X% intersect X% media AMC to restructured to specific over Spot changing the million regional National effort and full multi-market Mediaocean half more leaner local the larger, we're side, so $XXX.X local entering of an part I'm In regional impacted where year impacted that of many a prepared beverage. team to confident the revenue $XX.X million large up DOJ the succeed sold our XXXX, $XXX.X of with the we national million of the a against advertisers this year Despite operations reflect was better revenue XXXX responsibilities and the and in in regional two STRATA however, local which buys. really sales the and a XXXX. digital XXXX with is tale tough sales, with was down sales, strong

be area. our while bright still actively further progress expanded in made exciting digital in we headwinds, our revenue this [envision] an business, digital grow throughout better in we focus XXXX, strategy. and engaged many we emerging Despite year-over-year, products on new the to as that developing to it experiences Our are a areas us to of over digital by XX% our portion continue XXXX on key long-term spot deliver is will in position

and of entertaining First, the pre-show audiences content, platform we and continue NCM's premium gaming. platform core to and video launch Noovie, interactive digital designed develop new next movie to with enhance purposeful lead ecosystem commerce emerging our in what's to

we research Last Incredibles Infinity War, and Lucasfilm highest Jedi to scoring began I'm ratings, the it's like play to content audiences Panther, happy including fans, say films backlog Arcade, excited audiences Marvel According Noovie hard-core the for our the the likability advertising reality excitement, our our of progress it's reason according premier X,XXX introduced X the on plan adding allow of for say Noovie to remnant month to partner looks to part launch they're looks designed Disney Time, think consumer the research, future inventory. first Solo: Noovie to over through by things A and creating augmented Noovie panel Walt forward in and will half a app Black to sponsorship to will preshow as date inventory marketing pleased with studios and in they Disney, that about In to early to digital come. Digital NCM's Wars preshow Pixar, a is the leveraging are first Black on-screen more of first and XX% complementary League party fun With and big our testing June Noovie QX Noovie studio which to working. new screen by nationwide have companion data Star XXXX; users theater of to rather behind-the-scenes as seen arrived Noovie key our informative planned I'm to is Arcade we've power than I'm capabilities, Panther. films Movie enjoying and from first to behind-the-scenes Wrinkle Fantasy be we looking our of growth. new traction augment that Noovie early arcade. the encouraged giving XX% millennial at In be Studios to and to Wars: Avengers: We integrated games and movie just last believe A get great NCMs proprietary of to XXXX our at with Story exciting Star and exclusive excited XXXX, fans acquired new and The our thanks with clients core they our business beta with watch beyond. by and generate the NCMs gaming Coco,

in audiences reach Street driving our Golden and national the Cinemas is the the and our a XXXX, vehicle Noovie.com of to reaching experience name and sizes such League synergy both is used expect compelling X.X% even to from movie that promote Fantasy enable goal of brands reach continue encourage screens of will preshow in to audiences this of added to properties for affiliates being a and to to digital desktop movie all Noovie of December grew again. larger Movie past XXXX to screen and it our our Tie to as digital XX, screens between experience, fans consumer Noovie commerce great website Main download also QX audiences, for We is the and new year, comes few Entertainment, back of this welcoming apps launch them Theaters and trailer our as Cinemas. The create big also year. XX,XXX There footprint our mobile a real movies, and a Arcade. as Synergy we Bow discovery for Ticket to when

categories the We where is bright. Millennial presence. believe Internet, such can new and inroads the we no from QX a demand Gen in in prepared reach other apparel categories telecom, had in XXXX The a make including XXXX finished advertising with also have to there not Z second cinema new the audiences. on that welcome we advertisers and QX, continue demonstrates match half and to strong food and medium top few historically that Based future is we as and autos, strong pharmaceutical, customers we've QSR XX from name national

relevant is to XX While the will success come. captive invest is Hollywood advertisers and of continue expect attract audience movie for slates the today's and we ebb that and years to flow, that of will XX-year-olds to kind season producing to to in content

Moving share very with our plans authorized forward strong approach network of in quarterly into a Board aligns of financial ongoing and the NCM flexibility investors. to the tax-deferred all This compared prior of yield of $X.XX and to regular LLC $X.XX. provides greater a quarterly dividend distributions reinvestment product dividend while our a members for lower strategic dividend for XXXX offerings maintaining

As be that on of yield tax-deferred closing of price today, stock our based $X.XX. XX% will

Our employees, evolution. investors our Board together investors continued NCM past beyond our our sales I'd and we company's Sarah local our forward Officer future digital like bigger in at month, place Kinnick and to success. to for strong our a the restructuring in their that running in last the direction our Chief operations, the to shareholder right and support a who regional and the National believe end-to-end our team point to XXXX. has ground just is expanding hit we New a We and fit thank Counsel, to spent I this put Felenstein, over new teams, long-term have Revenue look for And deliver year our and leadership and goal our I the growth welcoming to return ensure brought and remains aligning Scott CineMedia. year General great team. future our Sarah to better leadership welcomed Hilty, total dividends. last NCM

what indicators comp much have fact, the the the is pointing In year all back XXXX to start mind easier compared we of Keep we top in are to in and bottom-line we off half, by growth a healthy first in but a see. with half to QX. encouraged strong

our that, call now XXXX with QX estimates. about guidance to I over surrounding So, and year performance as well Katie? give Katie XXXX to will more turn our color full you operating the as details

Katie Scherping

results the provide first to supplemental the the Andy and open we'll through reference then your includes information thoughts assist highlighted will full Then our section, our your for providing refer to evaluation outlook we the website the today Relations that call. I I'll and Andy. for the are discuss in To Investor results our time, XXXX. to around of our the Thanks results, walk in financial for materials further most in year detail, and which on question. quarter of for our after you metrics call

in For quarter, in decreased the X.X% X.X% million national partially advertising increase and local XXXX, revenue. beverage by $X an revenue versus or $X.X a or million X.X% fourth advertising in revenue revenue total driven million to offset our by $XXX.X and decrease $XXX,XXX QX regional XX.X% or increase

and driven by regional decrease revenue a revenue. X% the partially revenue, our For by decreased in local and a in total X.X% beverage ad to offset increase X.X% X.X% XXXX, revenue versus in national a decrease million full-year, $XXX.X

With to XX% and revenue and XX% regional beverage beverage XX%, and advertising XX% XX%, revenue full-year growth, shifted XX% and regional X% advertising advertising for our mix XX% year fiscal mix national, national, QX versus respectively revenue respectively X% versus and XX% national XXXX. local X% and QX our the QX higher XXXX for to and local X% shifted

For in QX ad quarter, in by and was due in impressions decrease X.X% the upfront attendance to offset in an fourth revenue CPMs CPMs QX in sold decrease sold in increase was X.X% This a revenue increase increasing XXX.X% commitments the driven in inventory decrease in other XXXX. by partially national with increase a to The primarily utilization X.X% last higher market. was due from XXX% impressions CPMs year. and and scatter versus

the had driven and decrease for the scatter was rebounding million, versus revenue For X.X% in network from was lastly ago. of in other impressions our the $X.X of sold decrease driven regional and balance And decrease the CPMs end X.X% a decrease result by the The offset first in CPMs year in partner or market, revenue. advertising $XX.X $X.X sold a of a record impressions year QX X.X% from by CPMs attendance. quarter million a in and million lower ad by is versus makegood decrease local an million by XX.X% $XX.X partially in year. a XXXX of full CPMs allocations, a decrease national of QX value. half average was partially the contracts XX.X% upfront decrease The which was and strength $XXX.X number total million, in by million a decrease in and was from revenue year, contract the content driven offset $X.X X.X% X.X% decrease weak a up XXXX

of Texas or large impacting results decree several by part clients were quarter noted, the AMC Andy regional hurricanes areas. local in reported as advertisers, impacted loss loss our Florida the those As during and of theaters sold the the local of in DOJ and and

$X.X million, of compared million in $XXX,XXX or versus decrease a revenue X.X% XXXX local in in QX increased a CPMs total our XX% member average a decrease decrease driven founding beverage beverage contract in versus XXXX. regional value or million to partially ago. by versus QX attendance offset of revenue full-year decrease was by X.X% and the in a X.X% was by X.X% driven year XXXX increase contract XXXX to $XX.X X.X% number ad the For and and $X.X

or QX or to access QX a Total OIBDA million versus in contractual in in XXXX XXXX. OIBDA XXXX increases XXXX. Impacting for beverage X.X% member in For we $XX.X primarily income in charges, year of payments other year impairment as This theater $X.X by XX.X% XX% by the from of AMC full versus was versus X.X% and an $X.X staff XX.X% million beverage XXXX. for of adjusted million offset includes XX.X% partially million partners costs X.X% OIBDA adjusted We integration for $X.X and associated increases X%, payments million severance was founding system higher a $XXX.X margin access was percentage reductions fees Cinemark $X.X related in in of for add continue recorded Theaters revenue and versus decrease in theaters investments with $X.X to $XXX.X on driven in related theater our from record with fees results XX.X% $XX.X Rave $X.X year, QX decrease Carmike million million million increased on million digital of by decrease increase XXXX. driven and adjusted the CPMs, attendance. OIBDA margin in or or contractual million $X.X an and platform. margin XXXX of affiliate XX.X% million full our $XX.X Full theater million expense and to decrease QX affiliate adjusted

For in $X.X million we the integration full-year, $XX.X these of million XXXX. payments versus reported

payments it returns operating tax reported. not been revenue, and tax to did non-operating distributions. not available EPS. and prior relate the have or all in not tax any period payments income our expense, previous receivable any corrections The detected OIBDA and cash accounting IPO You impact distribution sheet. adjusted error previously net in adjusted or tax reported income, reductions the recorded the in amounts are filed will release as compliance In certain for should note added revenue on assets purposes to intangible today, they that adjusted balance earnings not to you these press the balance reported as for debt net are agreement XXXX. XXXX the OIBDA These but the NCM OIBDA that errors to included previously on All we impact and date way income correction of impacted sheet, the are cash mentioned back LLC see do we

as details for be disclosed. will filing tomorrow XXK of more corrections our these We

include look GAAP of per the impact QX in tax at in full-year diluted of for reform share numbers let's earnings changes XXXX. briefly which the Now

For reverse EPS CEO XXXX. corrected $X.XX quarter, diluted or increase share for EPS tax XXXX for XXXX for XXXX, reserve of costs, reported the impact versus per in $X.XX been and per diluted have QX XXXX and of in share. GAAP transition we $X.XX the as QX for QX reform the diluted into would have $X.XX been of would fourth positions as XX% uncertain loss in tax XXXX of Adjusted the corrected your

accounting For this of the error. diluted EPS as corrected full versus we reported $X.XX GAAP tax in the XXXX year, $X.XX for

your tax ’XX impacts Excluding CEO certain release, EPS $X.XX ’XX non-recurring since our for costs, been of have positions, of in earnings an uncertain XXXX. noted and diluted and the transition other reserve or certain reversal XXXX, XX% reform tax versus $.XX would increase of in for items XXXX in

automation $X.X or in the $XX.X of capital lower capital approximately in XXXX revenue were for driven years. QX and other total The both million full decrease versus million full management in the $XX.X in Our sales year [X.XX]. expenditure million primarily expenditures and for systems year investments by is X%

Moving $XXX debt million NCM credit end of at $XX on our total the of million of XXXX, as outstanding versus including revolving end to our facility. was balance our $XXX XXXX at LLC million outstanding sheet, the

all rate average revolving debt loan approximately on and average rate bank XXXX, that term Our was of floating $XXX approximately had rate an X.X%. end including credit interest X.X% facility million our at the of debt

at of XX% a balances, of total debt end revolver fixed interest Excluding rate. the had our XXXX outstanding

seasonality with $XX.X the $X.X $XX.X of balance million million business because by from at this QX, NCM Our normal XXXX million consolidated XXXX of balances increased of to in of the cash approximately investment QX, Inc. end and as

to our financial dividend business March general the Directors amount financial quarter. XXXX anticipated of the needs years, of dividend be and plan the mentioned, of we’ll cash free on discretion pay distribute cash share will the factors Directors on determined of cash the XX, condition, market the Board per $X.XX Directors the and paid to of available consider March advertising invest current for considers dividends that Andy XX, overtime, few will substantial future the quarterly was We a the to regular other of authorized dividend common The next company's payment, Board of portion consistent The for timing sole cash, our business, regular XXXX. be and economic As the record our over providing flexibility. any with the of intention stockholders flow. Board relevant. any Board dividend discretion and declaration, in to of the while on intend foreseeable level based The future at conditions of at company's Directors

was OIBDA Our approximately net senior covenant leverage adjusted LLC of four of as maintenance below X.X secured X.X our times. the NCM end secured trailing times is at XXXX leverage well which of quarter senior QX,

times times XXXX. also total that LLC at cash we XXXX at LLC while approximately no total note end You end of NCM net leverage leverage QX covenant, should was X.X balances of LLC versus NCM have the NCM the our X.X at of

full Now the the our percent XXXX $XXX to in or flat be XXXX range is the expected $XXX to to to is down of adjusted X.X% expected for turning or to X.X% up million in OIBDA to revenues X.X% total million guidance, up $XXX to and range year be versus million. million of $XXX

into for in few $X guidance includes into Noovie deeper OIBDA a a our investments to Looking are expense. consider, in investment factors operating ecosystem, to incremental of there million continued $X digital XXXX our adjusted

accelerating public ‘XX transportation Fantasy impact smaller plan us office, and the X% first in floor half X.X investments spring of of enhancements. our second launching revenue more and open We digital fees is will half for and includes to than our collaboration XXXX. by and headquarters the reward generate excited Beta and we're adjusted be our percent screen fees this into to better to increase to of the enable with Noovie.com, for talent. expect in current approximately is help $X.X our modern, and access footprint ARcade The moving among theater contractual into a that finally, new app OIBDA close of And Denver that retain in expected XXXX to Movie other incremental Noovie these League This beyond. XXXX

onetime of approximately part to incur we of $X.X this million move, As expense. expect

costs, costs right term. weigh these over additional employees business adjusted believe will take to increased on reductions the time reward streamlining resources example focusing full our as XXXX diligently of had XXX strategy, retain OIBDA, have the business on operations these such and that employees. our April our actions of some cost we these we in are to grow implementing Offsetting been in we an the as and While the and long XXXX

we align As time full we of for have take to cost our we and ways for our the XXXX, enter employees resources business XXX continue and out look to strategy.

payments In addition, obligations the expect following NCMI guidance. Tax CPM Reform our recent have annually. TRA million associated on AMC are with to Inc. other integration assumptions and theater by that of reduction million payments receive several Based $XX that Rave to flight obligation, increase passed were December, the approximately would attendants We our and with $X tax approximate members made to this to to Carmike our of our underlie from in the other $XX next founding Legislation project $XX income years. XX% respect in preparing and XXXX NCM of approximately we the the XXXX beverage X% projections to Theaters. With expect we million saved Cinemark for and an to benefit Theatres

allowances platform headquarter approximately $X the million related $X X.X% of technology and million of paid to used to be the CapEx range improvement secured world. related by over Noovie the approximately and take $XX to $XX in million be digital $X provides landlord. XXXX XXXX The advantage of of costs is move, will location security $X.X includes to expect This to to revenue. and million We site technology modern most million location by in to our will increase or us offset invest in a to million first to allow that outsource flexibility be our of CapEx a the tenant data our center in approximately move relocation which

capital million move capital which and our of investment. to related our million is below costs, be level of historical expenditures digital $XX the Excluding revenue, $X investment or slightly X.X% would

and million related increase loan by higher deferred interest $X cash which non-cash XXXX $XX from amortization million on to to We rates, to expect million million cost. of interest include borrowing of interest approximately $XX $X

a NCMI LLC available prior management Inc. the from an fees, to be million distributed about consistent we $X available what from calculation and based for outlined and from years, requests the cash to million NCM above. balances. for investors paid project XXXX cash plus LLC look addition outline we've cash on of NCM like with on In the Inc, might We've approximately interest NCM earned NCM to estimates had many to $X our

on $XX million are allowances expenditures million to Starting tenant you to will receivable note add These our of improving million, the cash, be million. reduction $XX me employees of a you walk approximately the reimbursed million, that and then million. a million you'll to Inc. a and the in Fathom million payments of which $X available $X.X $XX at partnership from quarterly, let as guidance to of for paid each of will stock So, adjusted following. is of Capital for cash arrive our at available expense $XXX subtract to of ownership $X.X bill approximately Cash cash. interest the to $XX based of to approximately elements through at four million to of $X for members that cash net million, components as the you calculation. available OIBDA allow quarter. their end $XXX the Integration $XX XXXX, with of million NCM following to payments LLC the projection comp percentage

Hector? I'll for and prepared questions. lineup Now now open remarks the our this concludes

Operator

Please question-and-answer & with Our Company. time, conducting Thank comes proceed your you. from Eric [Operator a be with first question. we'll B. Instruction] At question this Riley session. the Wold line of

Eric Wold

appreciate I gave the I well outlook. of I for you into But cash and one. guess, as percentage Thank factors I'm details other questions, guidance not to looking the that you. of afternoon. the around guidance And maybe and specific some the flow as used But good you a as Couple inputs, inputs playing all look guess, the give. into up at sense coming where utilization terms in two give maybe with that of of of visibility power, kind us same kind main last the of were some point some are stand year? this guidance, you is now the year’s how of, level into the slate versus And XXXX etcetera. pricing of drivers of you you this

Andy England

I Andy. to Katie will good afternoon, This but is add, ask Eric.

I I as half first year had is, opportunity of candidly the half at think first in the we you it about the know, the is a I think so way performance it weakness very look year last is half way of first the difficult our of fundamental last the year. and biggest in because would of

So churn of advertisers it, CPM on constructed certainly certainly used etcetera. based and we're partnerships that that around joining but and assumptions a of part level plan us, utilization, and to is we've the content

So, a it's like factors of that's takes anticipated of slate also account up the very etcetera. the plan macro impact bottom obviously much

Katie Scherping

feedback And last on was the year bring our way down rebound we Eric, scatter that so and will as on what just further XXXX CPMs to first that think in comment just half up. Andy said, that'll remember in

Eric Wold

some the engagement? in strong start of their of the likely previously? you where out movie think will give sense spent the are are priority on goers can traffic first-hand you do maybe us us in qualitative versus a some you those kind digital the there out terms of you give initiatives in maybe year you ones in most laid and the the to of those secondly, of this data a then few And seats drive the new of actually million can of platform, projects, terms data see Okay. being when And Noovie I think $XX -- delivering

Katie Scherping

clear its, it let and clarify clarify $X million But that $X that million to $X on digital. to like impact to make call between just is.. would me million $XX Let me everybody the OpEx million, million just that in was from it $X sure sounded because

Eric Wold

No, that sounded like...

Katie Scherping

Okay perfect.

Andy England

I have growth behind in important think excited of be to we side. of really Obviously, here. the on initiatives example to going we that particularly registered be FML number a FML, are the for And going important. in terms our is are investments inventory users really of

digital possibility the into people only of game There auto auditorium and that think ad candidly the our exciting advertisers who happens to of by enables is ARcade early as a with that gave driving to fuels to that I us for opportunity that as about is to their all manufacturer met Noovie one enthused the sorts our to last it, really and encourage -- us off of people CMO and was And play particular ARcade was team ARcade Noovie but as are accelerate has obviously get about them it. the there to not really it sales had non-PII capture to presentation week product that it data Noovie play inventory. what well example. excited part the in throwing order a us app download because

some of Noovie.com rename introduction reason Noovie was driving obviously it second in force. that be ecosystem from we the would also synergistic quarter a the So be -- preshow that terms we named we Noovie add people with you such and when that of this build could digital trademark key a of that back view year, could such of both in could a point

on one the So, is ad on created which fuel heart inventory those hand all accelerator product products of our and of the data of cinema will of digital the other, the with which intent digital efforts. at driving our being both are

Eric Wold

And if just can maybe sure understand. to I one question I Perfect. final

out the on there theater for of within member any? for ARcade digital new share So, they the the the ad and is app some digital the that's agreements, inventory on apps different digital there revenue exclusion your or is on used with versus the advertising ones calculation the and ad the will screen non-founding come a same

Andy England

you essentially out. that's the is for created. ad revenue digital digital it all we keep creating No and advertising at inventory We're look if

an that's not issue. So

Eric Wold

the if the auditorium it's even used preshow? during So within

Andy England

Yes.

Eric Wold

Perfect. very you Thank much.

Andy England

you, Thank Eric. welcome. You're

Operator

Our next Quadrani comes question Alexia Please from proceed the of line JPMorgan. your question. with with

Alexia Quadrani

Thank you.

picture year of last sort while, easier. Just a been I guess, And industry around you box know And But lot over there's over advertising. seeing cinema said think general encouraged your in exhibition net. question, couple obviously I curious the I'm by quarters concerns impact noise always staff and I I the people lot on more outlook where to you've bit does don't attendance about and of were more you're to a box a year this bigger office what this the was guess the compare the of comps we hear are success to the box been are year settlement last office it. the where if of thoughts, a positive nervous of all allocations on really sort you than more trends at office impact it's and about general do an or rather have the perceptions? your - advertising outlook think box the that of sort

Andy England

Alexia. That's a question, great

a angles. attack different let me that me Let few from

my at about is think longer slate goes come slate you know that year optimism probably and offset and to the third and comes XX those been firstly, and who've NCM the six tell by this I go me around months. pessimism

are is would run take the I we and in the to sell that, the expectations But them tell when big excitement to pole planning, of analyst. general it that obviously analyst tent coming of approach you essentially the attendance So, we we coming. pictures come slate and our with average calls in

think way, expectations -- also play in the So, calculation be what our we are and founder we so. going we of don't the by the look to attendants circuits at

we So, think an estimating we role any number. all personally circuits planning do? view a is, the What a we it slate at as or industry's founder do play is and gauge use and any and we what in going average to that movie don't

about year to the it I and so, XXXX. slate people pessimistic about last thrilled And the exhibition, somewhat exhibition is at XXXX because about going the ironic analysts were of think of optimism this kind find pessimism look optimistic optimistic very last year it to when difficult when and industry year you a I seems talk was you and right,

or the it experts call analysts for and the way we average we to of tend So, to that's purposes. can use planning either and that and industry the why that all listen

that all demand and kind difficult supply correlation our for obviously, supply our of it's driven supply, matters But between needs Now any said, draw with underlying business supply. demand underlying be to there good some to is very close is than it more by by services.

Our products going or are or that launches big more things in drive demand on when core there are big in big launches categories new our the entertainment new business. auto

something think Black when that happens Panther However, you. helps I like

up opens media to Panthers of our the think possibilities buyers the and media. planners certainly of advertisers minds and I Black

certainly to hard it's I so, it. really don't I And think discount just correlate.

Alexia Quadrani

That’s Okay. very Thank helpful. you.

Andy England

Welcome.

Operator

Partner. comes the proceed from with Please with of MKM Eric your question question. Our line Handler next

Eric Handler

question. back for you weighted Yes. spending were year soft Thanks year. last of the in to is of Few talked more the of year the your you things heavily about partners reasons have guys the half for first half guys, the first, being content the Katie one

do national wonder - like year? year this do I performance? how that in local how there relative of is with versus So, more secondly last it sounds how terms And you balance you expect then are than that,

Katie Scherping

Let half. spending the the on me the answer first back for question

I the think, back we'll half waiting or again. some still the heavy for see of year

the then about national heavier first first hurricanes that So, when really us favor a those see experienced well, you year. and over and reorganization and What this versus bright headwinds that local, in in as drive down the And so a that with last year spot year loss AMC's the QX QX our sales scatter some think of some see of should with half, we of half we our don't year that XXXX theatres, of that the team we'll hopeful think we're this waiting at in coming and we there's with there again. the play there as probably well. market

Andy England

reorganized. That's specifically local and religion, that's been

Eric Handler

end low then the guidance, for for new high it from or at got then $XX the adjusted Is OIBDA. Is better the to that high your just for you higher revenue How than what between you business? look the the and do expected it curious than see the low million core And million versus you that looking of gap minus products? sort of low the about I'm guidance high of just for your demand part a and $XX ramp factors all plus the end would the at end that? end versus could end get end. XXXX are you a gap digital Great.

Katie Scherping

that in range large with year. we And I contracts consistent we're out business think come what or quarter. the is by very at particular last it, of way this the looking lives can breathes and had any

quarterly giving predict it's to start we difficult why guidance because that's So very that.

And of really these we reason the the through contracts. range that so, get thereof maybe manage help for us large the visibility of guidance. the quarter lack That's really guidance is case to as range large or that for every the wide in some

Eric Handler

very Thank right. you All much.

Andy England

Eric. Thank you,

Operator

proceed with Please from next Jim Goss Our Research. Barrington question question. with comes your of the line

Jim Goss

terms the the your impacting Thanks. in on and where was year hit when was like think. were how the there wind the high levels of I to wondering the wound about of And up did I the comments back to to take revenue you what when would very low your to you in that beginning base? point and that actually talking assume had much deliver attendance flexibility you in I was earlier make-goods they a in Andy, having make-goods go developed up December

Andy England

you, Thank we weak the in had our Jim. recall third remarkable attendance. Actually, operations may team quarter a you very of job did

a available. of that the we remarkable in that were had ads operations placing was did inventory team job Now the that

make-goods. with out So, QX came reasonable of very into we a QX

that quarter Wars thought as actually that people what just would. the I of fourth it anything more was hurts because think us well Star hold performance than didn't up it in the frankly as

So, literally few other in that December by the built under our weeks Star Wars last put of last some because of it make-good to And and delivery far few bluntly the weeks. and away month. in is largest pictures

last year, all the make-good. I And way through of a the we you the attendance doesn't -- I week with substantial And thought the I on deliver make end growth in the thought going line. can led then to were the and up quarter helps? revenue if can that we had tell miss was good, for top to on attendance the the that missing up That us be it so, frankly that

Jim Goss

the curious No next the interesting. with very Star just you that's for weeks. tight timeframe to then deliver have of doing did make-goods? Was I'm Wars it a very couple over

Andy England

not is Wars obviously which right. a of with it's movie Star only sequels, like compare you particularly a No, no. a happened, The if sequel, that remember issue what with sequel is we

VII particular We And faster time. erodes way it's one some what hurts have to have got if really movies. year, the that in last know happened don't nowhere in the deliver the attendance, because happened no what's this I you Half-Life it if like, from react. Wars good the than very of with sort attendance so, you eroded us Wars in over Star movies and what's of that's you you to previously days mean Star go. with did weeks anticipated particular time against And two

Jim Goss

And could to other ask Noovie terms all the special about I stay that the Disney, thing be spots? over with would compete the at take or about the tenure agreement? have you and looking with of one if talk is the you partnership And them others to

Andy England

a that's Jim. question great Yeah,

valuable it intent the value that the from yeah, it not lost is. inventory same is on you the away sure Showtime way Showtime. there gets the in closer higher the So gets less further of I'm is, the And it's our to it

and to compelling of create content has is that is bring very and opportunity So, that's to or relatively try our inventory the substantial. some the use in that show attendance low early unique

and with a unique through relationship that this payments uniquely it of one-year to show. requires to NCM that make We does are we Disney provide to to relationship Disney June is year, content and is to in them. able it our Noovie any with as what us don't that So, goes unique, unique

And get the option, period June. of relatively at content I'm ways. and a who the that are current of not the other down we that But whether to sponsorship. we'll in with a or whether studios determine looking one or least relationship continues it to through the sponsor different but that end obligation them promote have of one and simple sit We and many the work sure to unique with at ends monetize it's

Jim Goss

of it? content provide as also then and ads it buy they part their free they promote And -- around

Andy England

is the drive We free properties. no to unique the No, bones Disney early it. early show We to looks very also that unique We That's and us the they there our to intent on obligation run make movie to the to charge. show. fact our and to provide opportunity that content. the to to that And their talk view about obviously in up to the early. about theater about run the obligation this get in content And drive that getting content, obviously content. of people is of their talk theater our early see opportunity idea the digital interest promote

-- content sponsors changes pay helps that's we for the but don't pay there's So option them. a that movie content. do that to gain us, no They we have appropriate cash interest that believe We hands. don't drive and in

Jim Goss

very Thanks much.

Andy England

You're welcome. Thank you, Jim.

Operator

the [Operator the instructions] Benchmark with Hickey question. with of from comes Our line Mike next Please your Company. question proceed

Mike Hickey

They guys. off Hey, drop taking Thanks for the question. my line.

So, I you apologize. Andy spoke the to QX strength.

paid money sort content I half. think second question of so we're was it's about the asked commissions, but of part the

next. bit will in If follow a biggest advertisers tending? QX I obviously the last speak you So, you quarters but seeing guidance, an year I I'm half that weakness think couple there's the I seeing from I in where your a and and today are where speak little more being you're then seeing just from to guess speak 'XX and strength think Can those in those given conservative your four I are probably concentration Can you the some category auto spend. first is you're and year last can computation to is the spend. where -- upside how guess more to where uptick and not up

Andy England

thank Yes. you. Mike,

got broke relative the were QX coming sense a is from. think but got little I've that where you the about I gist. strength asking I up and You bit

it's frankly different think many I areas.

categories, have across particularly us, As but which who is think of encouraging. which advertisers in in come couple broad-based we often it QX, strong the a different I definitely is case, helps multiple is

Katie Scherping

this And as we're scattered in strength well. seeing year

Andy England

last That's obviously half not weak year, overall in have at as were opportunity; the first look not we to you the about the have quarter was year. say our you the opportunity look think this at we opportunity second half. of time earlier, and particularly and do. weak when the a in when And in of I half are the But for performance really around. discussions driven good when we first the do that we the scatter the we market it particularly comes don't first year, the quarter is the that mentioned of year and to beyond. the feel disappointed many driving by second We certainly in scatter Scatter

is spend, concentration good we And certainly broad-based. So, it pretty think advertising the that. in in terms feel about of I

across the feel Telco many feel We about think placements streaming and categories. we're we the discussions I -- the other we various auto we have feel having we space. good of encouraging players, in good good conversations about getting is and lots certainly the different have we're like,

pretty it's based. So, broad

Mike Hickey

Good. Okay.

sounds feed only reserve CD. weakness QX maybe think and up in on people local, you secular regional So, is from the Showtime. that of thing sort change I pressure that that this its way regional making know now it of to It's reserve, local the would to are you it's local, quarter. that part obviously the to we effort just you like to get regional tied trying sounds saw like it's from true QX, that in

there, and on of when just changing of tenant and pressure any arrived the then... So, sort dynamics the they

Andy England

Yeah.

don't as because know bit guidance. quarterly little a give that address me you Let we

it's the very quarter. the driven business is I across that a local streamline fourth reorganization. talk big QX a the contracts of strong. that weakness have not regional the regional What performance I've by won't segment That on where digital And audience first very mentioned at but it organization But one whether in, clear is reorganized inventory same Nielsen regional build. think have our regional made to just DMAs. before feel what tell regional will available result certainly about that sales I side build we'll to that's team at the up business. time, that local was quarter. put I to and is you our a strong not local to larger that, that And in have particularly It as I'm down I by had meaningful that year. and very frankly regional comes seating -- to dedicated regional we difference of impact team reserve itself reserve regional time, not to the good same an up We in side would is When improving audience sort the having batting But very we was think, show in seating. the there's that a is seating, that of against encouraged reorganization and So, or reserve say the on a our the difficult buyers the in throughout or teams.

So, of that's segment available very one, there is the which inventory that's amount segment is closest Showtime. in limited to

I feel think and sales have because team's good have right we I the we local about place. the So, regional in people opportunity

it. right business. the they against. to segment get last they been price I very are against their just are before. the access one focused the And about having inventory if optimism are can the enthusiasm of for the I and by very have our week meetings of they or they think up week was recent segment They encouraged to business one

I with So that's the where kind you are up think question. of had business size and follow of we a

Mike Hickey

through wondering any opportunity? create possible? over you. think, different any don't big World you think end the perhaps distribution of can I in pretty exposure I this calls an by the and one. that if kind I into orderly for with [indiscernible] center gets last our often that that that year answer. Yeah, it year of their change how guess time broke this also on expansion you Thank And and short but AMC December Thank think of I actually from in again, how direction so much

Andy England

of this Yes, NCMI those. million think decree to I obligated sell the I consent million year so XX DOJ about of X year. next both is AMC and caught thanks to approximately shares

they compelling work have Of who will investment investment They have bank shares. it have all AMC the if stock course, tell. bank know could going help we there it's same those last sell of good on opportunity they that to we you this offers I them very and whoever with year year We end the this believe think best they we worked is that about to who us At assume our a the to. certainly to move day a them year. with story. price. And story a as to get I an will sell to have will chose believe unique the that into

with and however work it much AMC AMC it's As tell we sell down, the how of we to block they it. choose in difficult buyers potential of blocks as but hands or very those the goes it's of to in timing single terms and

are two the to plenty constructive. with are who both a I our engaged what have with venture with the successful think very of by second to was it's I Cineworld forward couldn't to certainly the delighted had closing. have determination that been question we we've and an in about but due-diligence we presenting during talk nominations I of you and Governance encouraging and in I international international have on since be know ideas them the made have thought have Committee I've very fashion obviously to to you Board doing. we stage look They you people we I they and already to their and now it interesting hear, are process your they quite frankly discussions very was I the Board mean not. Well know prompt International. about to their think I

cinema in As Europe as part in the of own or down Israel and the are either U.K. rights U.K., the their in well. XX% across advertising VCM and you ventures know businesses they're they have Eastern joint

because than certainly With challenge obviously is advertising. focused any as really discussions end wouldn't because Cinemark the that’s TV assets they markets across either have a those the buy of don't that or markets. products. Cinemark front-end out is advertisers finding that that So real finding more against cinema the all they is And said, distinct frankly discussion in hard up international They AMC. of substantial buy I the leave difficulty LatAm point in have is because markets synergies day for national at very synergies across

back doesn't we with end, end. opportunity it's And right give cinema open or So, find the you operation. to front synergies that to have that advertising we clear on the the meaningful merge opportunistic backend it and in arrive. opportunity should headcount not were said, With similarly, an we if remain another

Mike Hickey

guys. you, Thank

Andy England

Mike. you, Thank

Operator

session. end call reached the have I turn the to and like the Andy to question-and-answer of England we and Ladies gentlemen, for back remarks. would closing

Andy England

to excited Hector. Today's that unforeseen reception retain while our investment and Thank and to flexibility. of the listening determined Noovie.com close. both our you, on Noovie element FML invest for a today's around allows in some I'm business this enabling I'm our for Noovie encouraged our reality subject tax and ecosystem. your based augmented yield the strong at in start a is prospects. Arcade, you our announcement for launch core dividend growth market dividend Board Digital Thank The for growth is the to XX% XXXX, of belief dividend a deferred advertiser sustainable, about to financial that us yield product planned of conditions growth second in of NCMI. in the by semester, and dividend

Operator

today's This conference. concludes

may You this you at your participation. lines disconnect time. Thank your for

National CineMedia (NCMI) 12 Mar 182017 Q4 Earnings call transcript