National CineMedia(US:NCMI)2021-11-09 03:55Financial 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]