Reaffirms Full Year 2017 Outlook
National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the managing member and owner of 39.3% of National CineMedia, LLC (NCM LLC), the operator of the largest in-theater digital media network in North America, today announced consolidated results for the fiscal second quarter and six months ended June 29, 2017.
Total revenue for the second quarter ended June 29, 2017 decreased 15.9% to $97.1 million from $115.4 million for the comparable quarter last year. Adjusted OIBDA decreased 28.8% to $42.3 million for the second quarter of 2017 from $59.4 million for the second quarter of 2016. Operating income decreased 39.1% to $28.3 million for the second quarter of 2017 from $46.5 million for the second quarter of 2016. Included in Adjusted OIBDA and operating income were $1.7 millionand $0.7 million of non-cash impairment charges during the second quarter of 2017 and second quarter of 2016, respectively, on investments obtained in prior years in exchange for advertising services. Net income for the second quarter of 2017 was $1.5 million, or net income of $0.02 per diluted share, compared to net income of $6.8 million, or net income of $0.11 per diluted share, for the second quarter of 2016. As adjusted to exclude the CEO transition-related costs in 2017 and 2016 and early lease termination expense in 2017, net income for the second quarter of 2017 would have been $0.03 per diluted share and net income for the second quarter of 2016 would have remained $0.11 per diluted share.
Total revenue for the six months ended June 29, 2017 decreased 11.8% to $169.0 million from $191.6 million for the comparable period last year. Adjusted OIBDA decreased 28.2% to $59.9 million for the first six months of 2017 from $83.4 million for the first six months of 2016. Operating income decreased 36.1% to $33.4 million for the first six months of 2017 from $52.3 million for the first six months of 2016. Included in Adjusted OIBDA and operating income were $3.1 millionand $0.7 million of non-cash impairment charges during the first six months of 2017 and the first six months of 2016, respectively, on investments obtained in prior years in exchange for advertising services. Net loss for the first six months of 2017 was $3.5 million, or a loss of $0.06 per diluted share, compared to net income of $2.5 million, or income of $0.04 per diluted share for the first six months of 2016. As adjusted to exclude the CEO transition-related costs and early lease termination expense, net loss for the first six months of 2017 would have been $0.05 per diluted share and net income for the first six months of 2016 would have been $0.07 per diluted share. Adjusted OIBDA and adjusted earnings per share are non-GAAP measures. See the tables at the end of this release for the reconciliations to the closest GAAP basis measurement.
Commenting on the Company’s second quarter of 2017 operating results and second half of 2017 positioning, Andy England, NCM’s CEO said, “The second quarter completed a challenging first half of 2017, but the second half of 2017 is shaping up nicely so far with the third quarter pacing ahead of last year. This gives us a solid sales foundation to build upon to finish out the year strong and reaffirm our guidance for 2017, as we look forward to the launch of our new Nooviepre-show this fall.”
For the full year 2017, the Company reaffirms its outlook of total revenue to be down 6% to 1% and Adjusted OIBDA to be down 12% to 6% from the full year 2016. The Company expects total revenue in the range of $422.0 million to $442.0 million for the full year 2017, compared to total revenue for the full year 2016 of $447.6 million and Adjusted OIBDA in the range of $202.0 million to $217.0 million for the full year 2017 compared to Adjusted OIBDA for the full year 2016 of $230.7 million. This outlook includes the impact of an 8% increase in the theater access fee paid to the founding members that occurs every five years as well as the non-cash impairment charges of $3.1 million recorded for the first six months of 2017, described above. During 2017, the Company expects to record approximately $18.0 million to $20.0 million in integration payments from Cinemark and AMC associated with Rave Theatres and Carmike Theatres, which are recorded as a reduction of an intangible asset.
Integration payments due from Cinemark and AMC associated with Rave Theatres and Carmike Theatres for the quarter ended June 29, 2017 and June 30, 2016 and six month ended June 29, 2017 and June 30, 2017 were $4.3 million, $0.7 million, $4.7 million and $0.8 million, respectively. The integration payments were recorded as a reduction of an intangible asset.
The Company will host a conference call and audio webcast with investors, analysts and other interested parties August 7, 2017 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, August 21, 2017, by dialing 1-844-512-2921 or for international participants 1-412-317-6671, and entering conference ID 13666483.
About National CineMedia, Inc.
National CineMedia (NCM) is America’s Movie Network. As the #1 Millennial weekend network in the U.S., NCM is the connector between brands and movie audiences. According to Nielsen, more than 750 million moviegoers annually attend theaters that are currently under contract to present NCM’s pre-show in 49 leading national and regional theater circuits including AMC Entertainment Inc. (NYSE:AMC), Cinemark Holdings, Inc. (NYSE:CNK) and Regal Entertainment Group(NYSE: RGC). NCM’s cinema advertising network offers broad reach and unparalleled audience engagement with over 20,600 screens in approximately 1,700 theaters in 187 Designated Market Areas® (all of the top 50). NCM Digital goes beyond the big screen, extending in-theater campaigns into online and mobile marketing programs to reach entertainment audiences. National CineMedia, Inc. (NASDAQ:NCMI) owns a 39.3% interest in, and is the managing member of, National CineMedia, LLC. For more information, visit www.ncm.com.
This press release contains various forward-looking statements that reflect management’s current expectations or beliefs regarding future events, including statements providing guidance and projections for the full year 2017, and beliefs about our third quarter and remainder of the year sales prospects. 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) level of theater attendance or viewership of the pre-show; 2) increased competition for advertising expenditures; 3) technological changes and innovations; 4) economic conditions, including the level of expenditures on cinema advertising; 5) our ability to renew or replace expiring advertising and content contracts; 6) our need for additional funding, risks and uncertainties relating to our significant indebtedness; 7) fluctuations in operating costs; 8) changes in interest rates; and 9) 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. 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 29, 2016, for further information about these and other risks.