NCMI - Earnings call transcript Q4 2023 | National CineMedia, Inc.

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Operator

Good afternoon, and welcome to the National CineMedia Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]

Please note, this event is being recorded. I would now like to turn the conference over to Chan Park, Vice President of Finance. Please go ahead.

Chan Park

afternoon. Good by Officer, Officer, Ronnie today our Lesinski; Chief Financial Chief Ng. our joined Tom Executive and I'm

I would other uncertainties. forward-looking this Exchange may conference Securities of like and conference Securities statements constitute of call to of Section remind statements our historical forward-looking Act of forward-looking within as listeners XXE XXXX statements of the as meaning XXXX XXA the statements Act the These contains of amended involve call and that risks facts All statements. amended. than communicated this during

to Important disclosed factors factors. that their differ contained with can materially risk statements the All the cause in are in actual are expectations SEC. by company's qualified filings results the entirety company's such factors the from in forward-looking expressly

today of earnings includes to amounts these non-GAAP our reconciliations can at some have page Relations accordance be basis These website measures. on back we G, of at with measurement. today's our ncm.com. found Further, release end discussion or Regulation the reconciled Investor the GAAP closest In the

call to Now the over turn Tom. I'll

Thomas Lesinski

Welcome The reestablished relevance like Mario cinema and XXXX audiences full to the cinema. office to box brands Brothers, Eras Swift's cultural the Tour and demonstrating with and Barbenheimer, of all This call. Taylor our hits fourth of earnings quarter year year Super power

and to major opening the XX went weekend than up moviegoers events sporting league X aged over attended Barbenheimer By all comparison, XX more of months.

tour. film than entire X attendees. more million example, also her significant over in concert live That's Taylor drove For Swift's demand, concert drawing U.S. Xx

all and with grossing Brothers: remind great The of continues PG-rated cinema's to over Super XX Additionally, the film became Movie Mario attendees families. success the reach of to ability uniquely us million like #X time of films

levels into changes were the by likely quarter the and number strike, total been excited quarter. that to Dune: NCM the million, due films beyond, strong we million, surpassing crossing releases Part impacted have fourth and Two, by largely Fourth XXXX of these slate levels. Empire, demand fourth estimated reaching XXXX levels. and our strong on big the XXX quarter approximately first. attendance us of So are quarter delays to not pushed It Hunter. These is see would audiences for negatively fourth XX If exceeded a cinema the that million. XX% consumer XXXX that Ghostbusters: were the Frozen to attendance attendance XX impacted latest movies clear remains screen to turning strike-related including Kraven to pushed attendance

For the for fourth consumers. XXXX quarter experience the of underscore appeal American cinematic of enduring the

the made Gen of our Z audience, of had including up millennials, significantly Z rating a surpasses average Notably, for period, which of the of average viewership, X.X. other offerings, Football, remains Gen audience, XX% XX of strong representing This quarter. video Sunday reach million core and our Night demonstrating Our NBC's of X.X. weekly rating premium an rating individuals with this cinema during XX% the cumulative a demographic, cornerstone

for young robust each as united the movies power the realize cinema that biggest are they enthusiasm and to of holds underscores being engagement continue in-theater millions influential NCM consumers the kind every to demographic This brands considerable with of turn The at who of the this experience. diverse week.

inventory of sold highly of initial to more theaters where out brands get see for saw Eras quickly of consumers available our are going to than the 'XX films, We Taylor movie front proved audiences. quarter X these the just in this Tour, following The with traditional weeks. Hollywood fourth with engaged also to The that NCM all Swift's

our attracted More productions also sizable new This Minus Heron, facilitated with than to marketplace. leaders, and diverse industry XX non-Hollywood in brands. extended including holding the as for trend One position or in brands unassociated previously the were #X Boy film, audiences. XX this which and such #X even Godzilla either these ad deals NCM half Specifically, of The

our $XX.X million, was NCM's results. sales comparable XXXX. quarter national fourth primarily and sales. offset were fourth quarter 'XX driven to results to local slightly Turning by by revenue of the These

This are the the audience due the impact to pace is despite business kept resilience of actors' very release drop We our in strike the model quarter X% and in pleased on revenue of organization. our performance to that on NCM related fourth the a schedule. strong across largely

quarter XXXX per highest set company's the in NCM record in of In revenue the for attendee its a fourth fact, history.

quarter fourth representing the saw a scatter active the quarter than XX a in prior up longer-term increase. year, compared was of commitments, with revenue compared in and fourth period. national the XX the the the better fourth national quarter's prior Approximately quarter period for XXXX, revenue the XX% much the to fourth X% quarter same marketplace to participation National XX% same of attributable was in to of advertisers upfront

saw as prior Local but as category government industries marketing same a cyclical demand also be by diversity such greater revenue year. local than the restaurants, period beverages, greater nonalcoholic in than of contributed continued and led in much entertainment percentage initiatives, arts to the a past years

highest results. at of resilience the the their the box to point and XXXX, quarterly office year proving office box industry. XXXX levels since cinema full were Turning

of box ], films the XXXX prior XX% at Brothers, and the the For of [ Spider-Man: and domestic Across the full XX% up Barbie, Super by Universe versus Galaxy, office driven year, year $X.X Mario the levels, like was Oppenheimer. Spider-Verse billion, Guardians 'XX, (sic)

and came XX% Games, $XXX box led Hunger and million X% of at billion, XXXX in approximately levels, brought by, The million, year-over-year $X.X $XXX Taylor course, up Swift at Fourth of which respectively. office in and quarter

demand XX slower past traditional linear a both Over market ad impacted months, and media. the has across

of in ad a NCM's ROI for offerings tighter face However, been budgets. revenue advertisers, the of result has as differentiated high and our resilient

coming bounce quarter, we the over said, see ad more quarters. This continues expect across the channels all significant inflation and spending environment improves a consumer as an the in to fourth rebound to back began normalize and

findings premium proved from quarter, ad our 'XX. was Xx Lumen study This covering to terms X yet digital And attention we variety October social FAST Research, again in digital to an and XXx live and and study advantage that podcast. XX attention AVOD in competitors sports, that that it's of rank or of released #X media. by attention. is a This cinema a continues attention X of nets, study, than to premium measures leading list categories, higher Cinemas' completed which of mediums. The and attention technology second company, links key across expanded of

November saw in 'XX. also XX%, key Cinema previous Attention across XX-second spot The including remain high for average hard-to-reach compared scores seconds growth in study year-over-year our conducted the Gen audiences. viewed, in to study demographics, up Z of a be audience demonstrated to consistent unique for NCM's ad links both and high Lumen brands. showcases all with cinema work across blockbusters attention indie create advertising's proves smaller that to movies. captive ROI ability and once again

are apples-to-apples comparison this who With has NCM new the platform. attention to video Adelaide, clients us premium NCM provide channels more offerings off platforms, quality across and attention measurement, in first Adelaide an sites, advertising to more. guarantees, for placements, opaque transact enable of leading attractive to otherwise been are advertise against for allowing NCM's This in as the cinema new guarantees These company innovative time rating attention is a Building with solution rating with this assured choose guarantees an partnered even by attention and clients. our metric, offered environment. study, a also brands results

redefining to brands multichannel by their the make advertising is experience NCM offering marketing the advertisers part movie for cinema of experience. opportunity

advertisers more NCM a content activations experiential connection cinema wide immersive drive impact, -- solutions individual social range theater a of films, consumers, sponsorships to in drive in far including and As to reach our providing much branded moviegoer. that turnkey we work with long-form the with media continue is to shareable that lobbies, brands creating preshow, moments with between category-leading editorial scalable beyond and transform advertising, custom show takeovers

is on film the cosmetic in NCM's of Mean industry-leading awareness short NCM of from ensures date, debuted can recall. XX% e.l.f., that that take XX-minute aired it to ever film has This new ad screen leading reach movie longest content advantage a Girls example, XX. XXX% the company, for the and January big on lift Take, ahead brand unprecedented with an these a trends.

business. cinema, to and with NCMX, extensive We're new opportunities advertising drive to foot industry-leading also on in we capabilities traffic guarantees for looking These web brands powerful relevant business leverage for traffic, audiences new year, as will brands past in ways ad advertise business initiatives lifts, to After their moviegoing campaign offer optimize the continuing our KPIs research on deterministic another We're intelligence to sales cinema platform spending. first and over data outcomes. downloads, testing rolling help new data the the are the to our data heightened most more such app screen. enhance

Over a shown we of NCM time, the tap current These can potential highly self-serve, screen ad buying and expanding conducted broaden Through advertising And advertisers which on big single schedule cinema access quarter, utilization lead new buy, network. ads ads. create real-time to through will and valued this ad self-serve their cinema programmatic, into of we the by programmatic expect completed to plan, big these brands cinema XX,XXX beta Additionally, of to platform company's high NCM can can auditorium launch the testing brands across our ways inventory. the data-driven from screens. commercial trading inventory. and programs own screen pool in initiatives the

As $XX.X earn 'XX, expects we of total to million. look quarter $XX.X NCM the revenue first ahead into to of million

Girls, The release The films Dune off the this Ghostbusters: to the first Frozen of release Empire of great we with and started coming Two, with quarter Beekeeper, weekend. look forward Mean

into XXXX, approved our million we $XXX today, has our in and through a the our repurchase Board announced new also runs year Importantly, which the representing confidence future. business program, that share

Ronnie in intent the greater detail later opportunistically program market Our will the repurchase news use is prevailing at to discuss prices. shares call. in to this

deliver continue take to we're is drive and spend, proposition to continued future of our ROI And optimize set an NCM are campaigns and growth to and brand bright, The for premium continuing success. unparalleled advertising business has box cinema advertising improve long-term cinema up value on momentum. innovations great our to platform. positioning with impactful steps office we advertising video underway, and

to more details With and results outlook. that, over call with turn you operating our future to the I'll Ronnie on provide

Ronnie Ng

Tom, you, good Thank and afternoon.

year I results I to if Before results discussing quarter today, I year. entirety would the it year, to NCM want of that similar relates which Inc.'s be the results full to NCM, note will of consolidated for LLC's the businesses as operating have the XXXX, the discuss full and been were

on year our the high finished NCM as to continuing note, fundamentals results strong improve. with a deliver to delighted are We sales

revenue As our The in for fourth to a of quarter revenue since year. the set Tom attendee our management combination the per and the ability mentioned, expense capture full inception OIBDA of more XXXX quarter per attendee resulted the record the company. adjusted for of and stronger-than-expected disciplined highest

we During the process, successfully first drove sales monetization quarter, and management our our impressions. teams since Chapter emerged from of XX record-high

than for revenue beverage the attendee fourth was more XX% of to X% compared quarter per XXXX. period fourth Excluding quarter in to the the and over higher compared same revenue, $X.XX, XXXX, up

due this The were spend significantly their advertising key XXXX. year-over-year the XX% national the from of collectively quarter actors' quarter lower total quarter compared the Despite over strikes, to we fourth certain top in advertisers by increase and advertisers. XX to writers' from fourth increased spend to able attendance

saw services, number care. health traditional goods of we consumer packaged categories financial as across and a strong Additionally, growth such

experienced improved continue and pricing and the upfront growth through to discipline both the improvement we quarter. market, was The utilization in navigate in firm scatter choppy result we of markets a Although advertising during a markets. both

above the pricing well quarter levels XX%, and XX% respectively. by XXXX fact, for In both utilization and both were

and to guidance $XX.X year $XX.X for Local utilization quarter quarter $XX the by down activity to offset NCM's million driven million advertising XXXX, $XX.X and and exceeded fourth which revenue total of the spend attendance. the up National driven within a revenue million to in was $XX.X $XX.X in fourth to government X% the the comparable was fourth CPMs, compared decreased in million, revenue our million, XX% was revenue and period in million higher prior $XX million. X% in $XX.X million, of and region compared increase quarter increased the regional to by reduced slightly categories. X% in XXXX, primarily Eastern advertising but in by the a the decrease travel same

the in expenses were Fourth to $XX.X year. driven prior by to Turning compared factors. quarter $XX.X operating expenses. million, X This our million was variance

adjustments upon associated NCM case First, second, price NCM appeals. an on And and increase in increase intangible incurred an X, amortization expenses related LLC's XXXX. LLC's XX due purchase August in to reconsolidation assets to Chapter expenses with

slightly our to adjusted financial compared amortization related affiliate as period of of Regal last share-based were year. XXXX onetime adjusted operating and costs in operating to personnel items, higher related the new million, for slightly charges and The to expenses fees million access a other depreciation, fees, $XX.X noncash and same $XX.X comp, Excluding during professional higher quarter expenses higher increase the the agreement, affiliate was theater higher X% result restructuring, fourth our costs.

operating reclassified affiliate expense from since relationship theater is As agreement, revenue agreement to costs. was and advertising the ESA, new Regal fees an the reminder, a access the of share

was compared guidance was well million onetime ESA OIBDA, exceeded lower-than-expected tighter $XX to million Fourth of quarter and range of year. operating and the Adjusted despite items, in OIBDA attendance. million. was charges The prior expenses, revenue million, fees $XX.X steady lower result $XX.X and our management to paid $XX excluding driven partners, adjusted affiliate to noncash by --

for expenditures, was cash less from cash $X.X negative million. by the quarter, flow free defined flow as capital Total operations

generated However, of positive restructuring-related the when million. have expenses, excluding cash would quarter free $X.X flow

the In Turning compared to which NCM in XXXX. up $XXX.X total million were largely year. was full of revenue, up year. by compared XXXX, driven X% to $XXX.X results These total the local, million in revenue to XX% prior generated

X% education impressions current XX% XXXX. sold activity increase network government, in year's for from revenue and categories. with the saw to the up XX by top categories, year-over-year, X% and advertising the in a care gains XX% a an increase attendance notable compared was service local year National health increase in Specifically, driven in

XX incurred in a related expenses. amount XXXX. Turning restructuring to onetime We Chapter of to expenses our significant our

other expenses year amortization compensation. related to full our For and depreciation, operating restructuring, XXXX, in million, charges share-based which included noncash financial $XXX.X were $XXX.X million items, onetime

to and Excluding these last the access were largely $XXX.X million. affiliate the affiliate increase attendance same charges, agreement. million, our the in theater XXXX adjusted expenses operating fees compared related higher higher new to adjusted costs XX% increased for Regal was operating to expenses period of $XXX.X from X% the The year due

the to our the results year onetime $XX.X in items, year was charges previously mentioned million, Full our midpoint noncash XXXX XXXX. of adjusted estimates to $XX.X rationale. OIBDA, Again, excluding and million full compared due substantially exceeded

was Total flow free cash $XX.X for the year negative million.

would However, when the $XX.X for excluding remove been been we Further, would flow $XX.X million. cash restructuring-related expense expenses, of for year interest free then cash free flow for $XX.X have million cash the the un-levered have year if million. year,

to balance to cash, of debt consolidated fourth cash the was annual Turning completed our cash $XX million, total restricted of approximately August debt resulting compared our of XXXX, company approximately related million $XX.X total the in the was of of elimination The to billion restructuring, net had in million the securities debt of sheet. and financial in end of XXXX. quarter, equivalents, fixed cash and of at charges. marketable in end reduction $X.X the which At $XX

capital next noted in X programmatic over plan repurchase our a authorizing to common prevailing purchase As advertising of and of also approved shares new prices $XXX stock. such invest to has our the remarks, the in opportunistically as network We to market our million new Board while Tom's at program, self-serve. continuing up innovations to through shares company years, growing

maximize our through and long-term approach strength confidence our program to flow operating repurchase be repurchase shareholder our by to in of a investment return cash demonstrates to capital from the The stockholders. manner business balanced our value a expected commitment funded in is program generated capital over LLC program. to of distributions NCM deploying course share and This disciplined the the of of

In repurchase subject executed addition, the will regulatory at discretion is authorization the Board's be limitations. and to

review a going an structure we of this year, needs Earlier Turning to our forward. our guidance. current operating did assessment of and

was SG&A, fees to XX% and For compared or year, million Compared affiliate pre-COVID. $XX.X million it this was to access $XXX.X XXXX. past excluding reference, our costs, lower theater in

XXXX. included cost business X% units operating savings, expenses. of initiatives savings In compared in million in SG&A over for combined initiatives, total to head a annual certain These we reduction will the which count. termination in result these of $XX mid-January in with of in will in affiliate million of over implemented result net consolidation reductions the agreements, a XXXX, additional savings resulted network We estimate select and reduction $X that

quarter $XX.X XXXX, expect mind, in between of we and $XX.X this revenue seasonally With be quarter, the to is slower which a first for million. million

In the be quarter first $X.X negative negative $X.X of for expect million. OIBDA XXXX we adjusted between and addition, to million

we the would a time, I be discuss seeing. While will minute not XXXX trends full year at are this like guidance to formal and take giving of some we

expecting due the We XXXX reiterate year. for like by as is to this are film issue. cinema in proven limited softness theatrical that a year. to would some see the not we in I over prolonged that Interest releases industry levels movie the releases strong, consumer attendance strike slate the past compelling at do as

Mickey be Deadpool are excited original such there XXXX, films said, content, forward Guy, and and we Wicked: Borderlands, Mufasa. Despicable both That X, X, about as sequels XX, X, look Gladiator to Me The as Part many X, Fall still to

office we the second rebound a XXXX, of stay Looking and for the decade. tone to anticipate half will box the positive

to opportunities OIBDA NCM to sheet due is historically positioned capital of strong significant NCM flow low expenditures future. generate conversion shareholders. to is a free and the generate cash balance company has offerings, over with un-lever free for multiple The value adjusted XX%. cash to a and its unmatched for With well positioned

the for line questions. please open Operator,

Operator

Eric with Riley question from Wold first The is Securities. B. Instructions] [Operator

Eric Wold

A of change be I'll with NCM, as and committed. what of I was that couple in talking of contrast as kind you, dollars Can outcome the will biggest out customers not well Tom. guarantees to as outcome place both with the should around before? that offering that, does that expected? would you kind kind questions. start be is upfront What the Reports the guess, just business of there you

Thomas Lesinski

guarantees. ever this is first outcome we've the business offered Well, time

such important selling view it's That's our of point we So from very traditional way major next of step, in delivery we attention that the have that past, was an go really business. promise in to doing in To it and this can our a inventory. Eric, change ability a faith way of outcomes.

fact, In companies video premium offer very few this. close anything to

and Some announced, a digital we have believe, media material But a to this is significant that the we it's companies marketplace. do. going change impact, on

Eric Wold

impact Got about are that think mostly offerings, actually you expectations as do those? programmatic for the be are drive there what self-serve to and on think it. you help fills? And could then those both of Or CPM inventory new the

Thomas Lesinski

about in you interesting. in budgets programmatic, we've Madison because out that significant inventory, offering real inventory. short are never But the Avenue So new the programmatic we've we that programmatic. few are attracted it's reason it just in budgets When think only been to. that very of we're That's had that. already in sell time accounts there is access we're one And utilizing offering reason platforms

inventory. important well we're it's company, technology of on ad CPM growth Our do that sell to part traditional as going you, to disclosed But just be haven't can programmatic our company cinema goal significant. a haven't the tell before the being first response different compared able of being expensive already as we inventory to platform. been to traditional through And It's the to more levels have I to is sell an we this. gotten programmatic. platform And that we've been obviously our a has happy

I comes down to be more quarter, think, as further for able forward. Eric, But details it programmatic, once into share we'd happy more the just get it on and road we're specifics. be we we'll to provide literally one

Operator

question next the with Instructions] Goss Research. [Operator from is Jim Barrington

James Goss

questions. A couple of

coming you I roughly. with had sheet, buyback. share cash. in will, with share coming strengths know of are this the program the a you balance pleasure up one very about million terms attractions buyback you strong bankruptcy key you of was X flirtation years, out over no if voiced of some that issue, $XXX and of debt, the And First, now

key you $XX have at of you quarter So through allocating much or behind in to I you cash walk and thought, if several of if toward over safe -- free making it's the that so the of $XX.X buybacks just about un-levered year benefit such the cash think judgment you had a mentality threatens wanted you're end and period. the million, flow million. if it said you you

Thomas Lesinski

of cash you, very going walk going have our you got with flow kind details But particularly can I tell 'XX. going that will positions substantially. through Ronnie I'm we it, Jim. through analyzed into of to But projections, We're this how Ronnie to forward walk the and number. our we've you comfortable close around

Ronnie Ng

Yes.

It So quarter a the X-year a XXXX. question. is of which it's program, ending is the end of Jim, great at first

million that of the more inclusive period cover the XXXX (sic) to there would share year, ] is free it recovery and quarter share over think be than cash this So for million more repurchase $XXX the cover first XXXX more of substantiate and [ obviously than that would be this We 'XX. flow XXXX time, or a and of cash for the that than in will program, enough $XXX business that. flow free

to level -- at $XX-plus free million box a that of from before, cited a But recovering believe is I could then the to that look we that where the flow doesn't more you be seem you do If fully. there that sure, enough. over 'XX business next office in get will perspective, say years, X the back it cash

James Goss

that just follow-on to And Okay. one part.

trading over number work Or you months. time? where of be element. of Does strategic-type the one could take a thing do You more another? and I opportunistic structured has stock of for repurchases against be is a XXbX-X imagine it there'd it versus also indicated a think that place combination this, interest total front-loading period given been will And an that in

Ronnie Ng

we I over think time a or the is approved to what what X by is with here for period Board. years next plan do Well, of we're what's in allowed the put a substantial

go we're do. what that will obviously dictate and see we executing conditions we how to about it, mostly Now the like, what going market are

Thomas Lesinski

long-term I Jim, to repurchasing And on. think more shares reasonable plan, is obviously, the that believe though, of going happen that be earlier could the where think this but prices there's think undervalued, situation to it's it's the in stock now at current it's a logical acquisition lower that are we now, is more the share of price that where given today. to

James Goss

one advertiser development? the latter What is or I setting it existing penetration is. for subsequent more incremental in advertisers? revenue numbers And is now, stage important right Okay. the other of imagine within growth improve a maybe And separate budgets ad issue.

Thomas Lesinski

categories. goal Jim, that this been And So in market in is more job our you existing is share goal, good particularly But too a to existing with do to we've addition real quarter. from our know our advertiser base. want to that to past to in things, doing and X is advertisers fourth grow that, I get optimize

cinema and never in start we've significant number a addition in Just what our more customer capabilities before. we based interest, lot business that of advertisers. And players the have significant I in new until the advertised And We pharma we think of are could with already programmatic, that some there in got doing a have. plenty help studies. fourth were quarter, NCMX, drive attribution on new out really And advertisers never the we they added there on of did now alone research space. will those

advertisers' new advertisers to on great is to bring budgets, business. platform. goal from to also keep So stealing the a existing our the way share that's And but grow

Operator

Tom This to closing would concludes back the remarks. conference like any our to turn over Lesinski for question-and-answer session. I

Thomas Lesinski

year audiences Okay. affirmed The your CineMedia. be marketplace. after our of NCM brands platform continues continues Through Well, really industry-leading advertising you premium video leader quarter questions National new in that to our this quarter. and movies these and thank for deliver to a are to support scale, returning sought-after past overall NCM back, driving and

to coming momentum solid year XXXX, a forward ahead. have looking We we're the out and of

So support, thank past the Board I want the shareholders NCM and their and advisers our to I all NCM the their particularly support work and for team, hard for year. guidance thank and over

look us movies. to forward appreciate seeing again you. Thank the all you you We at and call joining on the

Operator

Thank presentation. conference now attending The has concluded. today's for you

now may You disconnect.

National CineMedia (NCMI) 18 Mar 242023 Q4 Earnings call transcript