~ Announces Quarterly Cash Dividend
~
~ Provides Second Quarter 2014 Outlook
~
National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the
managing member and owner of 45.8% of National CineMedia, LLC (NCM
LLC), the operator of the largest in-theatre digital media network
in North America, today announced consolidated results for the
fiscal first quarter ended March 27, 2014.
Total revenue for the first quarter of 2014 decreased 14.6% to
$70.2 million from $82.2 million for the comparable quarter last
year. Excluding revenue from the Fathom Events division that was
sold in December 2013, revenue decreased 4.7% from $73.7 million
for the first quarter of 2013. Adjusted OIBDA decreased 22.3% to
$22.6 million for the first quarter of 2014 from $29.1 million for
the comparable quarter last year and Adjusted OIBDA excluding
Fathom Events decreased 18.4% from $27.7 million for the first
quarter of 2013. Net loss for the first quarter of 2014 was $3.1
million, or $0.05 per diluted share compared to a net loss of $1.0
million, or $0.02 per diluted share for the first quarter of
2013.
The Company announced today that its Board of Directors has
authorized the Company’s regular quarterly cash dividend of $0.22
per share of common stock. The dividend will be paid on June 2,
2014, to stockholders of record on May 19, 2014. The Company
intends to pay a regular quarterly dividend for the foreseeable
future at the discretion of the Board of Directors dependent on
available cash, anticipated cash needs, overall financial
condition, future prospects for earnings and cash flows as well as
other relevant factors.
National CineMedia’s Chairman and CEO Kurt Hall said, “We are
very excited about our announcement earlier today regarding the
merger agreement with Screenvision as it will position the combined
new company to be much more competitive in the expanding video and
overall advertising marketplace, including the new online and
mobile advertising platforms. With the investments we will be
making to create one efficient national network, I am confident
that we will bring more advertising revenue to our theatre circuit
partners and a higher quality pre show to their patrons.”
Mr. Hall concluded, “As technology continues to empower
consumers to watch programming how and when they want and view
advertisements if they want, with our broader network reach and
improvements we are making to our audience targeting capabilities I
am confident that our theatre network will become the one place
where brands are comfortable their ads are being seen.”
Revenue excluding Fathom Events, Adjusted OIBDA and Adjusted
OIBDA excluding Fathom Events are non-GAAP measures. See the tables
at the end of this release for the reconciliations to the closest
GAAP basis measurements.
Supplemental Information
Integration payments due from Cinemark and AMC associated with
Rave Theatres for the quarter ended March 27, 2014 and March 28,
2013, respectively, were $0.2 million and $0.2 million. The
integration payments were recorded as a reduction of an intangible
asset.
2014 Outlook
For the second quarter of 2014, the Company expects total
revenue to be down 14% to 21% and Adjusted OIBDA is expected to be
down 24% to 36% from the second quarter of 2013 (excluding the
results of Fathom Events from 2013). The Company expects total
revenue in the range of $92.0 million to $100.0 million during the
second quarter of 2014, compared to total revenue excluding Fathom
for the second quarter of 2013 of $116.9 million and Adjusted OIBDA
in the range of $42.0 million to $50.0 million during the second
quarter of 2014 compared to Adjusted OIBDA excluding Fathom for the
second quarter of 2013 of $65.4 million.
The Company is withdrawing prior financial guidance for the full
year 2014 while it assesses the impact of the planned merger with
Screenvision that was announced earlier today.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts and other interested parties May 5, 2014 at
5:00 P.M. Eastern time. The live call can be accessed by dialing
1-877-407-9039 or for international participants 1-201-689-8470.
Participants should register at least 15 minutes prior to the
commencement of the call. Additionally, a live audio webcast will
be available to interested parties at www.ncm.com under the
Investor Relations section. Participants should allow at least 15
minutes prior to the commencement of the call to register, download
and install necessary audio software.
The replay of the conference call will be available until
midnight Eastern Time, May 19, 2014, by dialing 1-877-870-5176 or
for international participants 1-858-384-5517, and entering
conference ID 13580345.
About National CineMedia, Inc.
National CineMedia (NCM) operates NCM Media Networks, a leading
integrated media company reaching U.S. consumers in movie theaters,
online and through mobile technology. NCM presents cinema
advertising across the nation’s largest digital in-theater network,
comprised of theaters owned by AMC Entertainment Inc. (NYSE: AMC),
Cinemark Holdings, Inc. (NYSE: CNK), Regal Entertainment Group
(NYSE: RGC) and other leading regional theater circuits. NCM’s
theater advertising network covers 183 Designated Market Areas® (49
of the top 50) and includes over 19,800 screens (approximately
19,000 connected to our Digital Content Network). During 2013,
approximately 710 million patrons (on an annualized basis) attended
movies shown in theaters in which NCM currently has exclusive
cinema advertising agreements in place. NCM Digital offers
360-degree integrated marketing opportunities in combination with
cinema, encompassing 48 entertainment-related websites, online
solutions and mobile applications. National CineMedia, Inc.
(NASDAQ: NCMI) owns a 45.8% interest in and is the managing member
of National CineMedia LLC. For more information, visit www.ncm.com.
(NCMI-F)
Forward Looking Statements
This press release contains various forward-looking statements
that reflect management’s current expectations or beliefs regarding
future events, including statements providing guidance for second
quarter, the dividend policy and the acquisition of Screenvision.
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 inaccurate and, as a result, actual results could differ
materially from those expressed or implied in the forward looking
statements. The factors that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements are, among others, 1) the level of expenditures on
cinema advertising; 2) increased competition for advertising
expenditures; 3) technological changes and innovations; 4)
popularity of major motion picture releases and level of theatre
attendance; 5) shifts in population and other demographics that
affect theatre attendance; 6) our ability to renew or replace
expiring advertising and content contracts; 7) our need for
additional funding, risks and uncertainties relating to our
significant indebtedness; 8) fluctuations in operating costs; 9)
changes in interest rates, 10) changes in accounting principles. In
addition, the outlook provided does not include the impact of any
future unusual or infrequent transactions; sales and acquisitions
of operating assets and investments; any future noncash impairments
of intangible and fixed assets; amounts related to litigation; or
the related impact of taxes that may occur from time to time due to
management decisions and changing business circumstances, and 11)
receipt of regulatory approval and satisfaction of other conditions
for the acquisition of Screenvision to close and the Company’s
ability to timely and successfully integrate Screenvision’s
operations into those of NCM LLC. The Company is currently unable
to forecast precisely the timing and/or magnitude of any such
amounts or events. Please refer to the Company's Securities and
Exchange Commission filings, including the “Risk Factor” section of
the Company’s Annual Report on Form 10-K for the year ended
December 26, 2013, for further information about these and other
risks.
NATIONAL CINEMEDIA, INC. Condensed Consolidated
Statements of Income Unaudited ($ in millions, except
per share data) Quarter Ended March
27, March 28, 2014 2013 REVENUE:
Advertising (including revenue from founding members of $9.5 and
8.9, respectively) $ 70.2 $ 73.7 Fathom Events
-
8.5 Total 70.2 82.2
OPERATING EXPENSES:
Advertising operating costs (including $0.5 and $0.6 to related
parties, respectively) 5.0 5.7 Fathom Events operating costs
(including $0.0 and $0.9 to founding members, respectively) - 5.8
Network costs 4.6 5.0 Theatre access fees—founding members 17.4
15.6 Selling and marketing costs (including $0.2 and $0.2 to
founding members, respectively) 15.0 15.4 Administrative and other
costs 7.6 7.7 Depreciation and amortization 7.8
5.4 Total 57.4 60.6
OPERATING INCOME 12.8 21.6
NON-OPERATING EXPENSES:
Interest on borrowings 13.1 13.3 Interest income (including $0.3
and $0.0 from founding members, respectively) (0.4 ) (0.1 )
Accretion of interest on the discounted payable to founding members
under tax receivable agreement 3.8 3.4 Amortization of terminated
derivatives 2.5 2.5 Other non-operating expense 0.1
- Total 19.1 19.1 (LOSS)
INCOME BEFORE INCOME TAXES (6.3 ) 2.5 Income
tax (benefit) expense (1.7 ) 0.6 CONSOLIDATED
NET (LOSS) INCOME (4.6 ) 1.9 Less: Net (loss) income attributable
to noncontrolling interests (1.5 ) 2.9 NET
LOSS ATTRIBUTABLE TO NCM, INC. $ (3.1 ) $ (1.0 )
EARNINGS/(LOSS) PER SHARE: Basic $ (0.05 ) $ (0.02 ) Diluted $
(0.05 ) $ (0.02 )
NATIONAL CINEMEDIA, INC.
Selected Condensed Balance Sheet Data Unaudited ($ in
millions) As of March 27,
December 26, 2014 2013 Cash, cash equivalents
and marketable securities $ 78.8 $ 126.0 Receivables, net 85.4
120.4 Property and equipment, net 24.9 25.6 Total assets 998.4
1,067.3 Borrowings 907.0 890.0 Total equity/(deficit) (179.2 )
(146.1 ) Total liabilities and equity 998.4 1,067.3
NATIONAL CINEMEDIA, INC. Operating Data
Unaudited Quarter Ended March
27, March 28, 2014 2013 Total
Screens (100% Digital) at Period End (1)(6) 19,850 19,292 Founding
Member Screens at Period End (2)(6) 16,472 15,478 DCN (Digital
Content Network) Screens at Period End (3)(6) 19,020 18,444
Quarter Ended March 27, March
28, (in millions)
2014 2013 Total Attendance for
Period (4)(6) 166.5 154.6 Founding Member Attendance for Period
(5)(6) 144.0 128.8 Capital Expenditures $ 2.2 $ 2.7 (1)
Represents the total screens within NCM LLC’s advertising network.
(2) Represents the total founding member screens. (3) Represents
the total number of screens that are connected to the DCN. (4)
Represents the total attendance within NCM LLC’s advertising
network. (5) Represents the total attendance within NCM LLC’s
advertising network in theatres operated by the founding members.
(6) Excludes screens and attendance associated with certain AMC
Rave and Cinemark Rave theatres for all periods presented.
NATIONAL CINEMEDIA, INC. Operating Data
Unaudited (In millions, except advertising revenue per
attendee, margin and per share data) Quarter
Ended March 27, March 28, 2014
2013 Advertising Revenue $ 70.2 $ 73.7 Total Revenue $ 70.2
$ 82.2 Operating Income $ 12.8 $ 21.6 Total Attendance (1)
166.5 154.6 Advertising Revenue / Attendee 0.422 0.477 OIBDA
$ 20.6 $ 27.0 Adjusted OIBDA $ 22.6 $ 29.1 Adjusted OIBDA Margin
32.2 % 35.4 % Loss Per Share – Basic $ (0.05 ) $ (0.02 )
Loss Per Share – Diluted $ (0.05 ) $ (0.02 ) (1) Represents
the total attendance within NCM LLC’s advertising network. Excludes
attendance associated with certain AMC Rave and Cinemark Rave
theatres for all periods presented.
(See attached tables for the non-GAAP
reconciliation)
NATIONAL CINEMEDIA, INC.Non-GAAP
ReconciliationsUnaudited
OIBDA, Adjusted OIBDA and Adjusted OIBDA Margin
Operating Income Before Depreciation and Amortization (“OIBDA”),
Adjusted OIBDA and Adjusted OIBDA margin are not financial measures
calculated in accordance with generally accepted accounting
principles (GAAP) in the United States. OIBDA represents
consolidated net income (loss) plus income tax expense, interest
and other costs and depreciation and amortization expense. Adjusted
OIBDA excludes from OIBDA non-cash share based compensation costs.
Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA by
total revenue. These non-GAAP financial measures are used by
management to evaluate operating performance, to forecast future
results and as a basis for compensation. The Company believes these
are important supplemental measures of operating performance
because they eliminate items that have less bearing on its
operating performance and so highlight trends in its core business
that may not otherwise be apparent when relying solely on GAAP
financial measures. The Company believes the presentation of these
measures is relevant and useful for investors because it enables
them to view performance in a manner similar to the method used by
the Company’s management, helps improve their ability to understand
the Company’s operating performance and makes it easier to compare
the Company’s results with other companies that may have different
depreciation and amortization policies and non-cash share based
compensation programs, or different interest rates or debt levels
or income tax rates. A limitation of these measures, however, is
that they exclude depreciation and amortization, which represent a
proxy for the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues in the Company’s
business. In addition, Adjusted OIBDA has the limitation of not
reflecting the effect of the Company’s share based payment costs.
OIBDA or Adjusted OIBDA should not be regarded as an alternative to
operating income, net income or as indicators of operating
performance, nor should they be considered in isolation of, or as
substitutes for financial measures prepared in accordance with
GAAP. The Company believes that consolidated net income is the most
directly comparable GAAP financial measure to OIBDA. Because not
all companies use identical calculations, these non-GAAP
presentations may not be comparable to other similarly titled
measures of other companies, or calculations in the Company’s debt
agreement.
The following tables reconcile consolidated net income to OIBDA
and Adjusted OIBDA for the periods presented (dollars in
millions):
Quarter Ended March 27, March
28, 2014 2013 Consolidated net (loss) income $
(4.6 ) $ 1.9 Income tax (benefit) expense (1.7 ) 0.6 Interest and
other non-operating costs 19.1 19.1 Depreciation and amortization
7.8 5.4 OIBDA 20.6 27.0 Share-based
compensation costs (1) 2.0 2.1 Adjusted
OIBDA $ 22.6 $ 29.1 Total revenue $ 70.2 $
82.2 Adjusted OIBDA margin 32.2 % 35.4 %
Adjusted OIBDA $ 22.6 $ 29.1 Rave theatres integration
payments 0.2 0.2 Adjusted OIBDA after
integration payments $ 22.8 $ 29.3
(1) Share-based compensation costs are
included in network operations, selling and marketing and
administrative expense in the accompanying financial statements.
Outlook (in millions)
Quarter Ending June 26, 2014
Low
High
Consolidated net income $ 11.9 $ 17.9 Income tax expense 1.6 2.9
Interest and other 19.0 19.2 Depreciation and amortization
7.6 7.9 OIBDA 40.1 47.9 Share-based compensation costs (1)
1.9 2.1 Adjusted OIBDA 42.0 50.0 Total
revenue $ 92.0 $ 100.0 (1)
Share-based compensation costs are included in network operations,
selling and marketing and administrative expense in the
accompanying financial statements.
Revenue and Adjusted OIBDA excluding Fathom Events
Revenue excluding Fathom Events and Adjusted OIBDA excluding
Fathom Events are not financial measures calculated in accordance
with generally accepted accounting principles (GAAP) in the United
States. Revenue excluding Fathom Events represents total revenue
less revenue of our Fathom Events operating segment which was sold
on December 26, 2013. Adjusted OIBDA excluding Fathom Events
represents Adjusted OIBDA (defined above) less operating income of
our Fathom Events operating segment. These non-GAAP financial
measures are used to provide readers a comparison of our first
quarter 2014 results and outlook for the second quarter and full
year 2014 to our results in the comparable period of 2013 without
the Fathom Events operating segment included. The Company believes
these are important supplemental measures because they eliminate a
portion of our business that was disposed of to highlight trends in
its ongoing business that may not otherwise be apparent when
relying solely on GAAP financial measures. Revenue excluding Fathom
Events and Adjusted OIBDA excluding Fathom Events should not be
regarded as an alternative to revenue, operating income, net income
or as indicators of operating performance, nor should they be
considered in isolation of, or as substitutes for financial
measures prepared in accordance with GAAP. The Company believes
that revenue and consolidated net income are the most directly
comparable GAAP financial measures. Because not all companies use
identical calculations, these non-GAAP presentations may not be
comparable to other similarly titled measures of other
companies.
The following table reconciles total revenue to revenue
excluding Fathom Events for the periods presented (dollars in
millions):
Quarter Ended Quarter Ended
Year Ended March 28, June 27, December
26, 2013 2013 2013 Revenue $ 82.2 $ 122.8
$ 462.8 Fathom Events revenue (8.5 ) (5.9 )
(36.5 ) Revenue excluding Fathom Events $ 73.7 $ 116.9
$ 426.3
The following table reconciles consolidated net income to
Adjusted OIBDA excluding Fathom Events for the periods presented
(dollars in millions):
Quarter Ended Quarter Ended
Year Ended March 28, June 27, December
26, 2013 2013 2013 Consolidated net income
$ 1.9 $ 32.0 $ 129.8 Income tax expense 0.6 6.0 20.2 Interest and
other non-operating costs 19.1 20.0 52.0 Depreciation and
amortization 5.4 6.2 26.6 Fathom operating income (1.4 ) (0.8 )
(6.5 ) Share-based compensation costs (1) 2.1
2.0 5.9 Adjusted OIBDA excluding Fathom Events
$ 27.7 $ 65.4 $ 228.0
(1) Share-based compensation costs are included in
network operations, selling and marketing and administrative
expense in the accompanying financial statements.
National CineMedia, Inc.Investor Contact:David
Oddo, 800-844-0935investors@ncm.comorMedia Contact:Amy Jane
Finnerty, 212-931-8117amy.finnerty@ncm.com
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