National CineMedia(NCMI)

Search documents
National CineMedia(NCMI) - 2021 Q4 - Earnings Call Presentation
2022-03-03 22:04
Financial Performance - Q4 2021 - Total revenue increased by 304% to $63.5 million compared to Q4 2020[15] - National and Regional Sales revenue increased by 329% to $50.2 million compared to Q4 2020[15] - Local revenue increased by 134% to $8.2 million compared to Q4 2020[15] - Beverage revenue increased to $5.1 million from $0.5 million in Q4 2020[15] - Adjusted OIBDA improved from negative $9.9 million to positive $18.4 million[15] Financial Performance - FY 2021 - Total revenue increased 27% to $114.6 million compared to FY 2020[27] - National and Regional Sales revenue increased 28% to $85.7 million compared to FY 2020[27] - Local revenue increased 2% to $17.8 million compared to FY 2020[27] - Beverage revenue increased 79% to $11.1 million compared to FY 2020[27] - Adjusted OIBDA decreased 27% to negative $24.7 million[27] Liquidity and Capital Structure - NCM LLC began the fourth quarter of 2021 with a cash balance of $64.4 million and ended with $58.6 million[6] - The accounts receivable balance increased from $28.5 million to $53.0 million during Q4 2021[6] - A new $50 million revolving credit facility was secured on January 5, 2022, resulting in a ratings upgrade from S&P and $99.7 million of cash on hand[12] Cost Reduction - NCM LLC's headcount has been reduced by over 40% compared to pre-COVID-19 pandemic levels[8] Dividend - The dividend declared on March 3, 2022, is $0.05 per share for Q1 2022, representing an annualized dividend of $0.20 per share[40] Outlook - The company expects revenue of $32.0 to $35.0 million and Adjusted OIBDA of negative $7.0 million to negative $4.0 million for the first quarter of 2022[43]
National CineMedia(NCMI) - 2021 Q4 - Annual Report
2022-03-03 21:19
Part I [Business](index=8&type=section&id=Item%201.%20Business) NCM operates North America's largest cinema advertising network, leveraging its Noovie® pre-show and expanding digital offerings amidst post-pandemic recovery - NCM, Inc. is a holding company that manages NCM LLC, holding a **48.3% interest** as of December 30, 2021, with founding members Cinemark and Regal holding the remaining **51.7%** and former founding member AMC holding **0.0% ownership** at year-end[28](index=28&type=chunk) - The company's primary business is its cinema advertising network, featuring the Noovie® pre-show, which includes over **20,700 screens** in more than **1,600 theaters** across **195 Designated Market Areas® (DMAs)**[30](index=30&type=chunk) - The COVID-19 pandemic caused most network theaters to close for approximately **six months in 2020**, with revenue and attendance remaining below pre-pandemic levels despite all theaters reopening by **Q3 2021** and improved attendance with major film releases[34](index=34&type=chunk)[35](index=35&type=chunk) - The Noovie® pre-show includes a "Classic" version and a "Post-Showtime Inventory" format, with the latter present in theaters representing approximately **57% of the network's attendance** as of year-end 2021[37](index=37&type=chunk) - NCM is expanding its digital footprint with products like Noovie Trivia, Noovie ARcade, and the Noovie Audience Accelerator, with mobile apps downloaded approximately **6.5 million times** and contributing to a data set of over **274 million records** for targeted advertising as of December 30, 2021[55](index=55&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) Advertising Revenue Mix (FY 2021 vs. FY 2020) | Revenue Source | FY 2021 | FY 2020 | | :--- | :--- | :--- | | National Clients | 75% | 74% | | Regional & Local Advertisers | 16% | 19% | - The company's growth strategy involves increasing the value of cinema media through premium Post-Showtime Inventory and affiliate network expansion, diversifying its revenue model with branded content and digital/data solutions, and optimizing operational effectiveness by enhancing technology infrastructure[101](index=101&type=chunk)[106](index=106&type=chunk)[111](index=111&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business and industry risks, including pandemic impacts and competition, alongside corporate structure risks from debt and founding member influence - **Business & Industry Risks:** - **COVID-19 Pandemic:** The pandemic continues to disrupt business, with potential for new variants, government restrictions, and permanent changes in consumer behavior (e.g., adoption of streaming) posing significant threats - **Theater Attendance:** Declines in attendance, whether from competition with alternative film delivery methods or changes in patron behavior like reserved seating, could reduce the value of cinema advertising - **Dependence on Founding Members:** The business is critically dependent on the ESAs with Cinemark and Regal, where termination, lack of cooperation, or bankruptcy of a founding member could have a material negative impact - **Competition:** The company competes with all other forms of advertising, including larger and better-known platforms like television and digital media, for a share of the estimated **$265 billion U.S. advertising market**[118](index=118&type=chunk)[123](index=123&type=chunk)[135](index=135&type=chunk)[85](index=85&type=chunk) - **Corporate Structure Risks:** - **Holding Company Structure:** NCM, Inc. has no operations and depends on cash distributions from NCM LLC, which are subject to restrictions under NCM LLC's debt agreements - **Substantial Debt:** NCM LLC's significant debt contains restrictive covenants that limit its ability to make investments, acquisitions, and distribute cash, potentially impairing financial condition - **Influence of Founding Members:** Cinemark and Regal can designate directors and hold veto power over certain major corporate actions, potentially creating conflicts of interest - **Tax Receivable Agreement (TRA):** The obligation to pay **90% of realized tax benefits** to founding members reduces cash flow that would otherwise be available to the company[171](index=171&type=chunk)[174](index=174&type=chunk)[178](index=178&type=chunk)[200](index=200&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[203](index=203&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) The company owns no material real property, leasing its corporate headquarters in Centennial, Colorado, and additional offices in major cities - The Company's headquarters are located in Centennial, Colorado, with additional leased advertising sales offices in New York, Los Angeles, and Chicago, and development offices in Los Angeles, New York, and Minneapolis[204](index=204&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) The company is not aware of any pending legal proceedings expected to materially affect its financial condition or operating results - The company is not currently involved in any litigation that is expected to have a material adverse effect on its financial condition or results of operations[205](index=205&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[206](index=206&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "NCMI", with a dividend policy subject to Board discretion and debt covenants, and includes details on Q4 2021 equity purchases - The company's common stock (**$0.01 par value**) is traded on The Nasdaq Global Market under the symbol "**NCMI**"[213](index=213&type=chunk) - The company intends to pay a regular quarterly dividend, but the declaration and amount are at the sole discretion of the Board of Directors and are dependent on business conditions, financial health, and restrictions under NCM LLC's credit agreements[214](index=214&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Oct 29 - Dec 2, 2021 | 40,128 | $3.18 | [Reserved](index=37&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[218](index=218&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2021 revenue increased to **$114.6 million** driven by attendance recovery, but operating losses continued, with liquidity managed through credit facility amendments Fiscal Year 2021 vs. 2020 Performance Summary (in millions) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $114.6M | $90.4M | 26.8% | | Operating Loss | $(68.6)M | $(61.0)M | 12.5% | | Net Loss Attributable to NCM, Inc. | $(48.7)M | $(65.4)M | (25.5)% | | Adjusted OIBDA | $(24.7)M | $(19.4)M | 27.3% | | Total Theater Attendance | 250.7M | 138.2M | 81.4% | - The increase in total revenue was primarily driven by the **81.4% increase** in network attendance and a **48.0% increase** in impressions sold as theaters reopened and major films were released[252](index=252&type=chunk) - Operating expenses rose **21.0%** to **$183.2 million**, largely due to a **107.7% increase** in theater access fees paid to founding members, which are tied to active screens and attendance[255](index=255&type=chunk)[257](index=257&type=chunk) - The company's liquidity position decreased, with total liquidity (cash plus revolver availability) at **$109.3 million** at year-end 2021, down from **$186.2 million** in 2020, and operating activities used **$95.2 million** in cash in 2021, a significant shift from providing **$55.3 million** in 2020[277](index=277&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - Subsequent to year-end, in January 2022, NCM LLC amended its credit agreement to suspend financial covenants through **Q4 2022** and entered into a new **$50.0 million** revolving credit agreement to bolster liquidity[231](index=231&type=chunk)[232](index=232&type=chunk) - A key critical accounting estimate is the valuation allowance against deferred tax assets, with the company maintaining a valuation allowance of **$223.8 million** due to a three-year cumulative loss, which significantly reduces the corresponding payable to founding members under the Tax Receivable Agreement (TRA)[309](index=309&type=chunk)[310](index=310&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its variable-rate debt, which constituted **43%** of total borrowings at year-end 2021 - The company is exposed to interest rate risk on its variable-rate debt, which constituted **43% of total borrowings** at year-end 2021[301](index=301&type=chunk) - A hypothetical **100 basis point (1%) change** in market interest rates would increase or decrease annual cash interest expense by approximately **$4.8 million** based on the debt levels outstanding at December 30, 2021[314](index=314&type=chunk) [Financial Statements and Supplementary Data](index=55&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for fiscal years 2021 and 2020, highlighting a **$48.7 million** net loss, a **$383.5 million** total deficit, and **$95.2 million** net cash outflow from operations [Consolidated Balance Sheets](index=58&type=section&id=Consolidated%20Balance%20Sheets) As of December 30, 2021, total assets were **$817.4 million**, total liabilities **$1,200.9 million**, and a total stockholders' deficit of **$383.5 million** Consolidated Balance Sheet Summary (in millions) | | Dec 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $101.2 | $180.3 | | Receivables, net | $53.0 | $16.2 | | Intangible assets, net | $606.3 | $627.8 | | **Total Assets** | **$817.4** | **$886.2** | | **Liabilities & Equity** | | | | Long-term debt, net | $1,094.3 | $1,049.6 | | Payable to founding members under TRA | $16.4 | $33.5 | | **Total Liabilities** | **$1,200.9** | **$1,154.8** | | **Total Equity/(Deficit)** | **$(383.5)** | **$(268.6)** | [Consolidated Statements of Income](index=59&type=section&id=Consolidated%20Statements%20of%20Income) Fiscal 2021 revenue reached **$114.6 million**, but **$183.2 million** in operating expenses resulted in a **$68.6 million** operating loss and a **$48.7 million** net loss attributable to NCM, Inc Consolidated Statement of Income Summary (in millions) | | Year Ended Dec 30, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Revenue | $114.6 | $90.4 | | Operating Loss | $(68.6) | $(61.0) | | Net Loss Attributable to NCM, Inc. | $(48.7) | $(65.4) | | Net Loss Per Share (Basic & Diluted) | $(0.61) | $(0.84) | [Consolidated Statements of Cash Flows](index=61&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Fiscal 2021 saw **$95.2 million** net cash used in operating activities, a reversal from 2020, with overall cash and cash equivalents decreasing by **$79.1 million** Consolidated Cash Flow Summary (in millions) | | Year Ended Dec 30, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(95.2) | $55.3 | | Net cash (used in) provided by investing activities | $(5.4) | $15.6 | | Net cash provided by financing activities | $21.5 | $53.5 | | **Change in Cash and Cash Equivalents** | **$(79.1)** | **$124.4** | [Notes to Consolidated Financial Statements](index=63&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and balances, covering revenue recognition, intangible assets, income taxes, related-party transactions, debt, and commitments - **Note 2 (Revenue):** Revenue is disaggregated by customer type: National/regional, Local, and Founding Member beverage revenue, with a provision for potential "make-goods" (undelivered ad impressions) of **$2.4 million** at year-end 2021[396](index=396&type=chunk)[399](index=399&type=chunk) - **Note 5 (Intangible Assets):** The company's intangible assets, primarily related to ESAs with founding members, had a net book value of **$606.3 million**, with no impairment charges recorded in 2021 despite triggering events due to adverse macroeconomic trends[408](index=408&type=chunk)[409](index=409&type=chunk)[412](index=412&type=chunk) - **Note 10 (Borrowings):** Total outstanding debt was **$1.108 billion** as of Dec 30, 2021, with the company securing amendments to its credit agreement to waive non-compliance with financial covenants and provide liquidity, and entering a new **$50 million** revolving credit agreement subsequent to year-end[449](index=449&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) - **Note 13 (Commitments):** The ESAs and affiliate agreements are considered short-term leases under ASC 842, exempting them from balance sheet recognition as ROU assets/liabilities, and the company has minimum revenue guarantees to network affiliates of up to **$126.3 million** over the agreements' remaining terms[485](index=485&type=chunk)[489](index=489&type=chunk) - **Note 16 (Subsequent Events):** In January 2022, the company further amended its credit agreement, extending the covenant waiver holiday through **Q4 2022**, and in March 2022, declared a quarterly cash dividend of **$0.05 per share**[504](index=504&type=chunk)[508](index=508&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=88&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable, indicating no changes in or disagreements with the company's accountants - Not applicable[509](index=509&type=chunk) [Controls and Procedures](index=88&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 30, 2021, with no material changes identified - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of **December 30, 2021**[511](index=511&type=chunk) - Management concluded that the Company's internal control over financial reporting was effective as of **December 30, 2021**, based on the COSO framework[512](index=512&type=chunk) - The company's independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[514](index=514&type=chunk)[518](index=518&type=chunk) [Other Information](index=90&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[525](index=525&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=90&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2022 Proxy Statement - Information required by this item is incorporated by reference from the Company's 2022 Proxy Statement[528](index=528&type=chunk) [Executive Compensation](index=90&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2022 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement[530](index=530&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=90&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2022 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement[531](index=531&type=chunk)[532](index=532&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=90&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's 2022 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement[533](index=533&type=chunk)[534](index=534&type=chunk) [Principal Accounting Fees and Services](index=90&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on fees paid to independent auditors for accounting and other services is incorporated by reference from the company's 2022 Proxy Statement - Information required by this item is incorporated by reference from the Proxy Statement[535](index=535&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=91&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section indexes all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and certifications, referencing financial statements and schedules - This item refers to the Index to Financial Statements on page **55** and the Exhibit Index beginning on page **92** of the report[537](index=537&type=chunk) [Form 10-K Summary](index=96&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company's filing - Not applicable[544](index=544&type=chunk)
National CineMedia(NCMI) - 2021 Q3 - Earnings Call Transcript
2021-11-09 03:55
Financial Data and Key Metrics Changes - The third quarter revenue was $31.7 million, up 428% compared to Q3 2020 and up 126% sequentially from Q2 2021, but still below the $110.5 million in Q3 2019 [47] - Adjusted OIBDA for Q3 was negative $8.2 million, an improvement from negative $11.2 million in Q3 2020 and a $10.5 million improvement from Q2 2021 [49] - The average cash burn rate for Q3 was approximately $11.2 million per month, an 18.2% improvement from $13.7 million in Q2 [51] Business Line Data and Key Metrics Changes - National CPMs increased low-single digits compared to Q3 2020 and mid-single digits compared to Q2 2021 [44] - National utilization rates were up 831 basis points compared to Q3 2020 and up 2.3 times compared to Q2 2021 [45] - Local cinema ad sales faced challenges due to COVID-related economic supply chain and staffing issues, but government, education, and healthcare categories were less impacted [22][23] Market Data and Key Metrics Changes - The attendance for Q3 2021 was nearly 15 times that of the prior year and 1.5 times that of the prior quarter, trending back towards pre-pandemic levels [43] - The fourth quarter is expected to see a significant increase in revenue, with a forecast of $9 million to $12 million for the quarter compared to over $33 million in Q4 2020 [67] Company Strategy and Development Direction - The company is focusing on diversifying its business and driving cinema advertising revenue growth as theater attendance trends towards historical levels [7] - A new cinema advertising management system was launched to enhance consumer analytics and improve sales efficiency [24][25] - The company aims to become a premier source of movie-related consumer data and analytics, enhancing its competitive position against TV and digital platforms [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the cinema business, citing strong box office results and increased advertiser demand [17][34] - The company expects to achieve positive adjusted OIBDA in Q4 2021, marking the first quarter of positive adjusted OIBDA since Q1 2020 [52][69] - There is confidence in capturing additional video advertising market share as TV ratings decline, making the young audience more attractive to advertisers [111] Other Important Information - The company has a current cash balance of $66.9 million, with total liquidity of approximately $73.7 million, which is in compliance with liquidity covenants [60] - A quarterly cash dividend of $0.05 per share was authorized, resulting in a current yield of 5.2% based on the closing share price [63] Q&A Session Summary Question: What is the main reason for advertisers not closing deals? - Management noted that there is no significant issue with the advertising platform, but the auto business is affected by chip shortages [73] Question: How is the pricing for Platinum Spots? - Platinum pricing is currently higher than pre-pandemic levels, and it will continue to be part of both scatter and upfront sales [77] Question: What is the correlation between theater access fees and ad revenue? - Theater access fees are paid monthly and are correlated to attendance, but advertising commitments are often made months in advance, leading to a lag [84][85] Question: How is the upfront ad sales positioned? - The company is seeing high demand for reaching the 18 to 34-year-old demographic, which is valuable due to the lack of availability in traditional media [90][91] Question: Are new ad categories like gaming affecting demand? - New categories such as gaming and e-gaming are entering the market, contributing to ad demand and pricing [94][95]
National CineMedia(NCMI) - 2021 Q3 - Quarterly Report
2021-11-08 21:19
[PART I - Financial Information](index=4&type=section&id=PART%20I) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited financial statements reflect a significant net loss and total deficit, with management expressing substantial doubt about the company's ability to continue as a going concern [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Data (As of September 30, 2021 vs. December 31, 2020) | Balance Sheet Item | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $110.1 | $180.3 | ▼ $70.2 | | Total current assets | $153.6 | $199.9 | ▼ $46.3 | | Total assets | $820.1 | $886.2 | ▼ $66.1 | | Long-term debt, net | $1,093.6 | $1,049.6 | ▲ $44.0 | | Total liabilities | $1,205.3 | $1,154.8 | ▲ $50.5 | | Total equity/(deficit) | $(385.2) | $(268.6) | ▼ $116.6 | [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Q3 2021 vs Q3 2020 Performance (Three Months Ended) | Metric | Q3 2021 (in millions) | Q3 2020 (in millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $31.7 | $6.0 | ▲ 428.3% | | Operating Loss | $(18.7) | $(21.3) | Improved | | Net Loss Attributable to NCM, Inc. | $(15.2) | $(12.7) | Worsened | | Basic and Diluted EPS | $(0.19) | $(0.16) | Worsened | YTD 2021 vs YTD 2020 Performance (Nine Months Ended) | Metric | YTD 2021 (in millions) | YTD 2020 (in millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | $51.1 | $74.7 | ▼ 31.6% | | Operating Loss | $(76.6) | $(40.2) | Worsened | | Net Loss Attributable to NCM, Inc. | $(57.3) | $(30.2) | Worsened | | Basic and Diluted EPS | $(0.72) | $(0.39) | Worsened | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Nine Months Ended) | Cash Flow Activity | Sep 30, 2021 (in millions) | Sep 24, 2020 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(92.5) | $85.9 | ▼ $178.4 | | Net cash (used in) provided by investing activities | $(3.6) | $15.5 | ▼ $19.1 | | Net cash provided by financing activities | $25.9 | $60.4 | ▼ $34.5 | | **Change in Cash and Cash Equivalents** | **$(70.2)** | **$161.8** | **▼ $232.0** | - Financing activities in the first nine months of 2021 included proceeds from issuing **$50.0 million in term loans**, offset by dividend payments of **$12.9 million** and debt issuance costs of **$7.2 million**[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - The company's business was significantly impacted by the COVID-19 pandemic, with advertising revenue remaining **significantly below historical levels**[27](index=27&type=chunk) - Management has concluded that conditions raise **substantial doubt about the Company's ability to continue as a going concern**[36](index=36&type=chunk) - As of September 30, 2021, NCM LLC had total outstanding debt of **$1.108 billion**[79](index=79&type=chunk) - On November 8, 2021, the company declared a quarterly cash dividend of **$0.05 per share**, totaling approximately **$4.0 million**[116](index=116&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a Q3 revenue recovery alongside ongoing financial strain, highlighting liquidity management efforts and reiterating substantial doubt about continuing as a going concern [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q3 2021 vs. Q3 2020 Revenue Breakdown (in millions) | Revenue Category | Q3 2021 | Q3 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | National and regional | $22.9 | $3.5 | $19.4 | 554.3% | | Local | $5.4 | $2.3 | $3.1 | 134.8% | | Founding member beverage | $3.4 | $0.2 | $3.2 | NM | | **Total Revenue** | **$31.7** | **$6.0** | **$25.7** | **428.3%** | - The dramatic increase in Q3 2021 revenue was driven by a significant rise in theater attendance, from **5.2 million in Q3 2020 to 75.7 million in Q3 2021**, as theaters reopened[138](index=138&type=chunk)[140](index=140&type=chunk) - For the first nine months of 2021, total revenue **decreased by 31.6% to $51.1 million**, primarily due to the inclusion of a pre-pandemic first quarter in the 2020 results[155](index=155&type=chunk) - Total operating expenses for the nine months ended September 30, 2021 **increased 11.1% to $127.7 million**, driven by higher theater access and administrative costs as operations resumed[159](index=159&type=chunk) [Financial Condition and Liquidity](index=36&type=section&id=Financial%20Condition%20and%20Liquidity) - The company has implemented significant cost-saving measures to preserve cash, including furloughs, salary reductions, and a **reduction in the quarterly dividend to $0.05 per share**[180](index=180&type=chunk) Liquidity Summary (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | $111.3 | $181.8 | | NCM LLC revolving credit facility availability | $6.8 | $4.4 | | **Total liquidity** | **$118.1** | **$186.2** | - The company **does not expect to meet its financial covenants within one year**, raising substantial doubt about its ability to continue as a going concern[182](index=182&type=chunk) - Operating cash flow for the first nine months of 2021 was a **net use of $92.5 million**, a sharp reversal from the **$85.9 million of cash provided** in the same period of 2020[186](index=186&type=chunk)[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its variable-rate debt, with a 1% change impacting annual interest expense by approximately $4.8 million - The company is exposed to interest rate risk on its variable-rate debt, with **43% of total borrowings** at variable rates as of September 30, 2021[196](index=196&type=chunk)[184](index=184&type=chunk) - A **100-basis point (1%) fluctuation** in market interest rates would change annual cash interest expense by approximately **$4.8 million**[196](index=196&type=chunk)[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls during the quarter - Based on an evaluation as of September 30, 2021, management concluded that the company's **disclosure controls and procedures were effective**[200](index=200&type=chunk) - **No material changes** occurred during the third quarter of 2021 that are reasonably likely to materially affect the company's internal control over financial reporting[202](index=202&type=chunk) [PART II - Other Information](index=41&type=section&id=PART%20II) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending litigation that would materially affect its financial condition or operations - The company is not aware of any pending litigation that would **materially and adversely affect** its financial condition or results of operations[204](index=204&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company highlights the critical risk of failing to meet financial covenants, which raises substantial doubt about its ability to continue as a going concern - A significant risk is that the company **does not expect to meet its financial covenants** under its Senior Secured Credit Facility within the next year[206](index=206&type=chunk) - Failure to meet covenants could allow lenders to **accelerate debt repayment**, which the company would be unable to satisfy with current liquidity[206](index=206&type=chunk) - These conditions raise **substantial doubt about the company's ability to continue as a going concern**, which could lead to investors losing all or part of their investment[207](index=207&type=chunk)[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company discloses shares repurchased from employees to satisfy tax withholding obligations on vested restricted stock - The company repurchased a total of **92,589 shares** from employees during Q3 2021 to fund tax withholding obligations on vested restricted stock[209](index=209&type=chunk)[210](index=210&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including a new CFO employment agreement, executive certifications, and XBRL data files - Exhibits filed with the report include the employment agreement for CFO Ronnie Y. Ng, certifications from the CEO and CFO, and XBRL financial data[214](index=214&type=chunk)
National CineMedia(NCMI) - 2021 Q2 - Earnings Call Transcript
2021-08-10 02:53
Financial Data and Key Metrics Changes - In Q2 2021, the company recorded $14 million in revenue, up 250% compared to Q2 2020, but significantly below the $110.2 million in Q2 2019, reflecting a 75% decline in attendance compared to 2019 levels [34][40] - Adjusted OIBDA for Q2 was negative $18.7 million, compared to negative $12.7 million in Q2 2020, primarily due to increased theater access fees as attendance rose [36] - The GAAP loss per diluted share was $0.28 in Q2 2021, compared to a loss of $0.18 in Q2 2020 [41] Business Line Data and Key Metrics Changes - The cinema advertising business is recovering, with 97% of theaters in the network open by the end of Q2 2021, leading to a small amount of in-theater revenues compared to none in Q2 2020 [13][14] - Approximately half of the top 20 upfront partners from 2019 have returned for 2021, with another 25% expected to return by the end of Q3 [16] Market Data and Key Metrics Changes - The company noted a significant pent-up demand for cinema experiences, evidenced by strong box office performances of films like "A Quiet Place 2" and "F9" [8][10] - The advertising market is seeing a shift as traditional TV viewership declines, creating opportunities for cinema advertising as marketers seek premium video GRPs [17][18] Company Strategy and Development Direction - The company is focusing on diversifying its marketing and product offerings by expanding its online presence and consumer analytics [7][21] - New digital advertising offerings are being developed, including partnerships with platforms like YouTube and TikTok to reach younger audiences [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the cinema business, anticipating a return to pre-pandemic revenue levels by the end of 2021, contingent on the stability of the film release schedule [54] - The company is managing liquidity through a short-term revolving debt facility to bridge working capital deficits as advertising revenue rebuilds [46][47] Other Important Information - The company declared a quarterly cash dividend of $0.05 per share, resulting in a current yield of 6.5% based on the closing share price [48] - Total debt at the end of Q2 2021 increased to $1.01 billion, with an average interest rate of approximately 5.6% [45] Q&A Session Summary Question: What trends are seen in the scatter market? - Management noted that the scatter market is recovering well, with traditional advertisers returning, including entertainment clients and CPG companies [60][61] Question: How are advertisers feeling about their budgets and pricing? - Advertisers are focused on flexibility rather than price, wanting the ability to shift their advertising dollars as needed [65][66] Question: Is theater attendance a good proxy for advertiser confidence? - Consistent movie attendance is crucial for building advertiser confidence, with blockbuster films helping but not being the sole factor [74][75]
National CineMedia(NCMI) - 2021 Q2 - Quarterly Report
2021-08-09 20:18
[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements for July 1, 2021, reflect COVID-19 impact, showing weakened balance sheet, Q2 revenue rebound, but expanded losses and negative operating cash flow [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of July 1, 2021, total assets decreased to $851.0 million, liabilities increased to $1,200.0 million, and equity deficit worsened to $(349.0) million Condensed Consolidated Balance Sheet Data (in millions) | Metric | July 1, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $175.5 | $199.9 | | **Total Assets** | $851.0 | $886.2 | | **Total Current Liabilities** | $53.4 | $50.0 | | **Long-term Debt, net** | $1,093.8 | $1,049.6 | | **Total Liabilities** | $1,200.0 | $1,154.8 | | **Total Equity/(Deficit)** | $(349.0) | $(268.6) | [Unaudited Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Q2 2021 revenue rose to $14.0 million, but operating loss widened; YTD revenue fell to $19.4 million, with net loss expanding to $(42.1) million Condensed Consolidated Statements of Income (in millions, except per share data) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $14.0 | $4.0 | $19.4 | $68.7 | | **Operating Loss** | $(29.6) | $(23.8) | $(57.9) | $(18.9) | | **Consolidated Net Loss** | $(46.9) | $(33.4) | $(88.9) | $(41.6) | | **Net Loss Attributable to NCM, Inc.** | $(22.7) | $(13.8) | $(42.1) | $(17.5) | | **Basic & Diluted EPS** | $(0.28) | $(0.18) | $(0.53) | $(0.22) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Six months ended July 1, 2021, saw negative operating cash flow of $(61.6) million, with cash and cash equivalents decreasing by $32.9 million Condensed Consolidated Statements of Cash Flows (in millions) | Metric | Six Months Ended July 1, 2021 | Six Months Ended June 25, 2020 | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(61.6) | $107.4 | | **Net cash (used in) provided by investing activities** | $(2.9) | $15.5 | | **Net cash provided by financing activities** | $31.6 | $66.6 | | **Change in cash and cash equivalents** | $(32.9) | $189.5 | | **Cash and cash equivalents at end of period** | $147.4 | $245.4 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail COVID-19 impact, Q2 revenue rebound, significant debt, credit agreement amendments, related-party transactions, and subsequent dividend declaration - As of July 1, 2021, approximately **97.0%** of the theaters in the company's network were open, leading to the highest attendance since the start of the COVID-19 pandemic. However, advertising revenue remained significantly below historical levels[27](index=27&type=chunk) - AMC redeemed its membership units in exchange for NCM, Inc. common stock on March 23, 2021, reducing its ownership in NCM LLC to **0.0%** as of July 1, 2021[26](index=26&type=chunk) Disaggregation of Revenue (in millions) | Revenue Type | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | National and regional | $8.9 | $1.7 | $12.6 | $51.5 | | Local | $3.0 | $2.3 | $4.2 | $11.7 | | Founding member beverage | $2.1 | $0.0 | $2.6 | $5.5 | | **Total Revenue** | **$14.0** | **$4.0** | **$19.4** | **$68.7** | Total Outstanding Debt (in millions) | Borrowings | July 1, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Revolving credit facility | $167.0 | $167.0 | | Term loans - first tranche | $261.9 | $263.3 | | Term loans - second tranche | $49.9 | $0.0 | | Senior unsecured notes due 2026 | $230.0 | $230.0 | | Senior secured notes due 2028 | $400.0 | $400.0 | | **Total borrowings** | **$1,108.8** | **$1,060.3** | - On March 8, 2021, NCM LLC amended its Credit Agreement, incurring a new **$50.0 million** term loan and obtaining a waiver of non-compliance with key financial covenants through the quarter ending June 30, 2022 (Extended Covenant Waiver Holiday)[76](index=76&type=chunk)[78](index=78&type=chunk)[82](index=82&type=chunk) - On August 9, 2021, the company declared a cash dividend of **$0.05 per share**, payable on September 6, 2021[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses COVID-19 impact, Q2 revenue rebound, weak H1 performance, cost-saving measures, and liquidity efforts, while remaining optimistic about industry recovery - As of July 1, 2021, approximately **97.0%** of the company's network theaters were open, resulting in the highest attendance since the start of the pandemic, though advertising revenue remained significantly below historical levels[119](index=119&type=chunk) - To ensure liquidity, the company has reduced headcount by **over 30%** compared to pre-pandemic levels and secured board approval for a new **$20.0 million** unsecured revolving loan agreement between NCM Inc. and NCM LLC[120](index=120&type=chunk)[121](index=121&type=chunk) Q2 2021 vs Q2 2020 Results of Operations (in millions) | Metric | Q2 2021 | Q2 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $14.0 | $4.0 | 250.0% | | **Total Operating Expenses** | $43.6 | $27.8 | 56.8% | | **Operating Loss** | $(29.6) | $(23.8) | 24.4% | | **Adjusted OIBDA** | $(18.7) | $(12.7) | 47.2% | YTD 2021 vs YTD 2020 Results of Operations (in millions) | Metric | YTD 2021 | YTD 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $19.4 | $68.7 | (71.8)% | | **Total Operating Expenses** | $77.3 | $87.6 | (11.8)% | | **Operating Loss** | $(57.9) | $(18.9) | 206.3% | | **Adjusted OIBDA** | $(34.9) | $1.7 | (2152.9)% | - The company has implemented numerous cost-saving measures, including employee furloughs and salary reductions, suspension of the 401K match, deferral of capital expenditures, and a reduction in the quarterly dividend to **$0.05 per share**[173](index=173&type=chunk)[178](index=178&type=chunk) - Under its amended credit agreement, NCM LLC must maintain a minimum liquidity of **$55.0 million** and is restricted from making cash distributions to its members (including NCM, Inc.) until at least the third quarter of 2022, subject to meeting certain leverage covenants[176](index=176&type=chunk)[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on variable-rate debt, where a 100-basis point increase would raise annual interest expense by $4.8 million - The company's primary market risk is interest rate risk related to its $175.0 million revolving credit facility and term loans[189](index=189&type=chunk) - A 100-basis point fluctuation in market interest rates would change the company's annual cash interest expense by approximately **$4.8 million** based on outstanding balances as of July 1, 2021[189](index=189&type=chunk)[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of July 1, 2021, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of July 1, 2021, the Chief Executive Officer concluded that the company's disclosure controls and procedures were effective[192](index=192&type=chunk) - No changes occurred during the quarter ended July 1, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[194](index=194&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending litigation that would have a material adverse effect on its operating results or financial condition - The company reports no material legal proceedings[196](index=196&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 - No material changes to risk factors were reported since the last Form 10-K filing[197](index=197&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 64,251 shares from employees during the quarter to satisfy tax withholding obligations upon restricted stock vesting Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2 - April 29, 2021 | 3,711 | $4.52 | | April 30 - May 27, 2021 | 60,540 | $4.27 | | May 28 - July 1, 2021 | — | $— | [Item 3. Defaults Upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[200](index=200&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) The company reports no other information - None[203](index=203&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements and required certifications
National CineMedia(NCMI) - 2021 Q1 - Earnings Call Presentation
2021-05-12 22:46
Q1 '21 Earnings Supplemental Presentation Liquidity and COVID-19 Update Forward-Looking Statements 2 This presentation contains various forward-looking statements that reflect management's current expectations or beliefs regarding future events. Investors are cautioned that reliance on these forward-looking statements involves risks and uncertainties. Although the Company believes that the assumptions used in the forward-looking statements are reasonable, any of these assumptions could prove to be inaccurat ...
National CineMedia(NCMI) - 2021 Q1 - Earnings Call Transcript
2021-05-11 02:35
National CineMedia, Inc. (NASDAQ:NCMI) Q1 2021 Results Conference Call May 10, 2021 5:00 PM ET Company Participants Ted Watson - SVP, Finance Tom Lesinski - CEO Conference Call Participants Eric Wold - B. Riley Securities Mike Hickey - The Benchmark Company Jim Goss - Barrington Research Operator Good day and welcome to the National CineMedia, Incorporation First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being rec ...
National CineMedia(NCMI) - 2021 Q1 - Quarterly Report
2021-05-10 20:44
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-Q ____________________________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 1, 2021 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 001-33296 _____________________________________________ ...
National CineMedia(NCMI) - 2020 Q4 - Earnings Call Presentation
2021-03-10 00:32
COVID-19 Impact and Theater Operations - As of December 2020, 60% of National CineMedia's (NCM) advertising network theaters were closed due to COVID-19, improving to 48% by March 8, 2021[6] - NCM LLC's payments are tied to attendance, active screens, and revenue, resulting in reduced expenses during theater closures and periods of lower attendance[7] Financial Position and Liquidity - NCM LLC started Q4 2020 with $1574 million in cash, ending with $1239 million[8] - Accounts receivable increased from $90 million to $162 million during Q4 2020[8] - NCM LLC has a liquidity runway of 12-13 months without further revenue, before considering bank debt covenants[8] Credit Agreement Amendment - NCM LLC amended its Credit Agreement on March 8, 2021, modifying covenants and waiving compliance through June 30, 2022[11] - The amendment sets specific leverage ratios for the quarter ending around September 29, 2022: 675 to 100 for the consolidated net total leverage ratio and 550 to 100 for the consolidated net senior secured leverage ratio[11] - NCM LLC is restricted from making cash distributions until after delivering a compliance certificate for the quarter ending around September 29, 2022, and only if certain conditions are met, including a senior secured financial covenant leverage ratio of 400 to 100 or less and outstanding revolving loans of $390 million or less[13] - NCM LLC will incur $500 million in new incremental term loans for general corporate purposes, with an interest rate of LIBOR plus 800% and a maturity of December 20, 2024[15] 2020 Highlights and Subsequent Events - NCM upgraded its planning, proposal, and inventory tracking system, expecting annual overhead savings of approximately $12 million from 2019 levels[18] - Total first- and second-party data sets for NCM's digital platform reached over 170 million as of December 31, 2020, up from 106 million a year prior[20] - NCM signed a long-term cinema advertising affiliate agreement with Harkins Theatres, adding approximately 500 screens and 33 theaters beginning in May 2021[22] Q4 and YTD 2020 Financial Performance - Q4 2020 total revenue decreased 893% to $157 million compared to Q4 2019[25] - Q4 2020 Adjusted OIBDA decreased 1119% to -$99 million[25] - YTD 2020 total revenue decreased 797% to $904 million compared to YTD 2019[39] - YTD 2020 Adjusted OIBDA decreased 1093% to -$194 million[39]