National CineMedia(US:NCMI)2022-03-04 00:51Financial Data and Key Metrics Changes - National CineMedia reported total revenue of $63.5 million for Q4 2021, a 305% increase compared to the same period in the prior year and more than double the revenue for Q3 2021 [41] - The company achieved positive adjusted OIBDA of $18.4 million in Q4 2021, marking the first positive adjusted OIBDA since the pandemic began, compared to negative $9.9 million in Q4 2020 and negative $8.2 million in Q3 2021 [46] - For the full year 2021, total revenue was $114.6 million, a 26.8% increase from $90.4 million in 2020 [48] Business Line Data and Key Metrics Changes - The total network theater attendance for Q4 2021 was 112.1 million, which was 48% higher compared to Q3 2021 [43] - Advertising pricing improved, with national CPMs slightly exceeding those of Q4 2019 and up 38% compared to Q3 2021 [43] - Core operating expenses averaged approximately $5 million per month in Q4 2021, a 47% reduction compared to the pre-COVID run rate of $9.5 million per month [45] Market Data and Key Metrics Changes - The fourth quarter box office exceeded $2 billion, reaching 75% of 2019 levels and 73% of the five-year average from 2015 to 2019 [16] - The company noted that nearly 1 in 2 adults aged 18 to 34 attended movies in Q4 2021, indicating strong consumer demand for the cinema experience [16] Company Strategy and Development Direction - The company is focusing on expanding, diversifying, and improving its business to capitalize on a strong 2022 theatrical film slate with a return to exclusive release windows [10] - National CineMedia is enhancing its digital advertising platforms and audience-driven data solutions to provide more value to advertisers as TV ratings decline [11] - The company is also restructuring its sales organization to focus on larger markets favored by advertisers, aiming to increase gross margins [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022, citing strong upfront bookings and a packed film release slate as indicators of recovery [9] - The company anticipates that the advertising marketplace will remain robust, particularly among Gen Z and millennials, who are expected to be the fastest-growing consumer segment [20] - Despite macroeconomic headwinds, management believes that the cinema experience remains a powerful marketing platform for advertisers [20] Other Important Information - National CineMedia's cash balance at the end of 2021 was $58.6 million, with total liquidity of approximately $65.4 million, exceeding the liquidity covenant of $55 million [53] - The company announced a quarterly cash dividend of $0.05 per share, resulting in a current yield of 6.8% based on the closing share price [56] Q&A Session Summary Question: Update on the 2022 calendar upfront - Management noted that the upfront is tracking stronger than originally forecasted, correlating well with box office estimates for the year [64][66] Question: Components of upfront commitments - Management highlighted that advertisers are committing a year ahead of time, maintaining premium pricing despite uncertainties in the box office [68][69] Question: Attracting new advertisers - Management mentioned new opportunities in the crypto and sports gambling sectors, while noting that the automotive sector is facing supply chain challenges [77][78] Question: Political advertising opportunities - Management acknowledged potential opportunities in political advertising but emphasized the need to ensure that such advertising does not disrupt the movie-going experience [80][81]