National CineMedia, Inc. Reports Results for Fiscal Third Quarter 2018

Announces Quarterly Cash Dividend of $0.17 per Share

(November 5, 2018) – National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the managing member and owner of 48.8% of National CineMedia, LLC (NCM LLC), the operator of the largest cinema advertising network reaching movie audiences in North America, announced today consolidated results for the fiscal third quarter and first nine months ended September 27, 2018.

Total revenue for the third quarter ended September 27, 2018 decreased 5.4% to $110.1 million from $116.4 million for the comparable quarter last year. Operating income decreased 15.9% to $42.3 million for the third quarter of 2018 from $50.3 million for the third quarter of 2017. Adjusted OIBDA decreased 14.4% to $53.6 million for the third quarter of 2018 from $62.6 million for the third quarter of 2017. Net income for the third quarter of 2018 was $11.2 million, or net income of $0.14 per diluted share, compared to net income of $13.7 million, or net income of $0.21 per diluted share, for the third quarter of 2017. As adjusted to exclude CEO transition-related costs, the reversal of a reserve for uncertain tax positions, and early lease termination expense, net income per share for the third quarter of 2018 would have remained the same and net income per share for the third quarter of 2017 would have decreased to $0.19 per diluted share. See the tables at the end of this release for the reconciliations to the closest GAAP basis measurement. Additionally, during the third quarter of 2018, the Company re-purchased $7.7 million of our senior unsecured notes due in 2026. The re-purchase is expected to result in interest savings to maturity of approximately $3.5 million.

Total revenue for the first nine months ended September 27, 2018 increased 6.5% to $304.0 million from $285.4 million for the comparable period last year. Operating income increased 11.7% to $93.5 million for the first nine months of 2018 from $83.7 million for the first nine months of 2017. Adjusted OIBDA increased 5.5% to $129.2 million for the first nine months of 2018 from $122.5 million for the first nine months of 2017. Included in Adjusted OIBDA and operating income were $0.4 million and $3.1 million of non-cash impairment charges during the first nine months of 2018 and 2017, respectively, on investments obtained in prior years in exchange for advertising services. Net income for the first nine months of 2018 was $13.5 million, or net income of $0.16 per diluted share, compared to net income of $17.6 million, or net income of $0.28 per diluted share, for the first nine months of 2017. As adjusted to exclude CEO transition-related costs, the reversal of a reserve for uncertain tax positions, and early lease termination expense, net income per share for the first nine months of 2018 would have remained the same and net income per share for the first nine months of 2017 would have decreased to $0.27 per diluted share. See the tables at the end of this release for the reconciliations to the closest GAAP basis measurement.

The Company announced today that its Board of Directors has authorized the Company’s regular quarterly cash dividend of $0.17 per share of common stock. The dividend will be paid on November 30, 2018 to stockholders of record on November 15, 2018. The declaration, payment, timing and amount of any future dividends payable will be at the sole discretion of the Board of Directors who will take into account general economic and advertising market business conditions, the Company’s financial condition, available cash, current and anticipated cash needs, and any other factors that the Board of Directors considers relevant. While it is the intention of the Company to continue its practice of distributing a substantial proportion of its free cash flow, the Board of Directors continues to review the factors listed above and others as deemed relevant to determine a sustainable distribution rate which balances the operating and strategic needs of the Company with those of its lenders and stockholders.

Commenting on the Company’s first nine months of 2018 operating results and fourth quarter of 2018 positioning, NCM President and Interim CEO Cliff Marks said, “Q3 was indicative of the volatility of our business, with National spending moving out of the quarter and Local and Regional spend down. However, we remain in firmly positive territory year to date and expect both our National and Local and Regional business to be solid in Q4, so we are confident in the updated guidance for the full year 2018. We made good progress against our strategy in Q3, with the expansion of our Noovie local offerings, the pay down of $7.7 million of debt, and the release of our industry-first big screen augmented reality activation with The Walt Disney Studios, the Ralph Breaks the Internet Noovie ARcade Game.”

2018 Outlook
For the full year 2018, the Company updates its outlook of total revenue to be up 2.1% to 5.6% and reaffirms its outlook of Adjusted OIBDA to be flat to up 4.8% from the full year 2017. The Company expects total revenue in the range of $435.0 million to $450.0 million for the full year 2018, compared to total revenue for the full year 2017 of $426.1 million and Adjusted OIBDA in the range of $205.0 million to $215.0 million for the full year 2018 compared to Adjusted OIBDA for the full year 2017 of $205.1 million. During 2018, the Company expects to record approximately $19.0 to $20.0 million in integration and other encumbered theater payments from Cinemark and AMC associated with the Rave Theatres and Carmike Theatres acquisitions, which are recorded as a reduction of an intangible asset.

Supplemental Information
Integration and other encumbered theater payments due from Cinemark and AMC associated primarily with Rave Theaters and Carmike Theaters for the quarter ended September 27, 2018 and September 28, 2017 and nine months ended September 27, 2018 and September 28, 2017 were $5.5 million, $6.9 million, $13.3 million, and $11.6 million respectively. These payments were recorded as a reduction of an intangible asset.

Conference Call
The Company will host a conference call and audio webcast with investors, analysts and other interested parties November 5, 2018 at 8:30 A.M. Eastern Time. The live call can be accessed by dialing 1-877-407-9716 or for international participants 1-201-493-6779. 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, November 19, 2018, by dialing 1-844-512-2921 or for international participants 1-412-317-6671, and entering conference ID 13684337.

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 700 million moviegoers annually attend theaters that are currently under contract to present NCM’s Noovie pre-show in 56 leading national and regional theater circuits including AMC Entertainment Inc. (NYSE:AMC), Cinemark Holdings, Inc. (NYSE:CNK) and Regal Entertainment Group (a subsidiary of Cineworld Group PLC, LON: CINE). NCM’s cinema advertising network offers broad reach and unparalleled audience engagement with over 21,100 screens in over 1,700 theaters in 188 Designated Market Areas® (49 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 48.8% interest in, and is the managing member of, National CineMedia, LLC. For more information, visit www.ncm.com.

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