~ Announces Quarterly Cash Dividend
~~ Provides Third 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 second quarter ended June 26, 2014.
Total revenue for the second quarter of 2014 decreased 18.6% to
$99.9 million from $122.8 million for the comparable quarter last
year. Excluding revenue from the Fathom Events division that was
sold in December 2013, revenue decreased 14.5% from $116.9 million
for the second quarter of 2013. Adjusted OIBDA decreased 21.5% to
$52.0 million for the second quarter of 2014 from $66.2 million for
the comparable quarter last year and Adjusted OIBDA excluding
Fathom Events decreased 20.5% from $65.4 million for the second
quarter of 2013. Net income for the second quarter of 2014 was $3.6
million, or $0.06 per diluted share compared to net income of $9.5
million, or $0.17 per diluted share for the second quarter of 2013.
Excluding $1.7 million in pre-tax costs associated with the
proposed merger with Screenvision, net income for the second
quarter of 2014 would have been $4.7 million, or $0.08 per diluted
share.
For the six months ended June 26, 2014, total revenue decreased
17.0% to $170.1 million from $205.0 million for the six months
ended June 27, 2013. Excluding revenue from the Fathom Events
division that was sold in December 2013, revenue decreased 10.8%
from $190.6 million for the six months ended June 27, 2013.
Adjusted OIBDA decreased 21.7% to $74.6 million for the six months
ended June 26, 2014 from $95.3 million for the comparable period
last year and Adjusted OIBDA excluding Fathom Events decreased
19.9% from $93.1 million for the comparable six month period of
2013. Net income for the six months ended June 26, 2014 was $0.5
million, or $0.01 per diluted share compared to net income of $8.5
million, or $0.15 per diluted share for the first half of 2013.
Excluding $1.7 million in pre-tax costs associated with the
proposed merger with Screenvision, net income for the first half of
2014 would have been $1.6 million, or $0.03 per diluted share.
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 September
5, 2014, to stockholders of record on August 21, 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.
Commenting on the second quarter of 2014 results, Chairman and
CEO Kurt Hall said, “While our projected results for the first nine
months are expected to be below last year, we are experiencing
strong Q4 bookings and a significant increase in the number of
upfront discussions for the TV upfront year beginning this
October.” Mr. Hall continued, “The shifts we are making in pricing
strategy continue to help broaden our client base and inventory
utilization. This combined with the expected competitive benefits
associated with the Screenvision merger will position us very well
to reestablish revenue and Adjusted OIBDA growth in the
future.”
Mr. Hall concluded, “The Screenvision merger comes at a very
important time for us as the video advertising marketplace becomes
more competitive, demanding increased scope and near ubiquitous
geographic coverage and better audience targeting capabilities.
These strategic benefits and the expected operating expense
synergies of $30 million resulting from the merger will allow us to
invest to create more efficient and effective marketing products
for advertisers that will ultimately result in higher advertising
revenue for us and our theatre circuit partners.”
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 June 26, 2014 and June 27, 2013
and six months ended June 26, 2014 and June 27, 2013, respectively,
were $0.6 million, $0.9 million, $0.8 million and $1.1 million. The
integration payments were recorded as a reduction of an intangible
asset.
Third Quarter 2014 Outlook
For the third quarter of 2014, the Company expects total revenue
to be down 15% to 23% and Adjusted OIBDA is expected to be down 27%
to 37% from the third quarter of 2013 (excluding the results of
Fathom Events from 2013). The Company expects total revenue in the
range of $98.0 million to $108.0 million during the third quarter
of 2014, compared to total revenue excluding Fathom for the third
quarter of 2013 of $127.6 million and Adjusted OIBDA in the range
of $48.0 million to $55.0 million during the third quarter of 2014
compared to Adjusted OIBDA excluding Fathom for the third quarter
of 2013 of $75.6 million.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts and other interested parties August 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, August 19, 2014, by dialing 1-877-870-5176
or for international participants 1-858-384-5517, and entering
conference ID 13587320.
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 approximately19,900 screens
(approximately 19,000 connected to our Digital Content Network).
During 2013, over 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 39 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 third quarter, the dividend
policy and the merger with 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; and 11) receipt of regulatory
approval and satisfaction of other conditions for the merger with
Screenvision to close and the Company’s ability to timely and
successfully integrate Screenvision’s operations into those of NCM
LLC and achieve the anticipated expense synergies and increased
revenue. 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; the proposed
Screenvision merger; 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 26, 2013, for further information about these
and other risks.
NATIONAL CINEMEDIA,
INC.Condensed Consolidated Statements of
IncomeUnaudited($ in millions, except per share
data)
Quarter Ended Six Months Ended
June 26, 2014
June 27, 2013
June 26, 2014
June 27, 2013
REVENUE:
Advertising (including revenue from
founding members of $9.8, $11.2, $19.3 and
$20.1 respectively)
$ 99.9 $ 116.9 $ 170.1 $ 190.6 Fathom Events -
5.9 - 14.4 Total 99.9
122.8 170.1 205.0
OPERATING EXPENSES: Advertising operating costs 6.6 8.1 11.6 13.8
Fathom Events operating costs - 4.2 - 10.0 Network costs 4.4 5.1
9.0 10.1 Theatre access fees—founding members 17.9 18.1 35.3 33.7
Selling and marketing costs 14.1 15.7 29.1 31.1 Merger-related
administrative costs 1.7 - 1.7 - Other administrative and other
costs 7.1 7.4 14.7 15.1 Depreciation and amortization 7.8
6.2 15.6 11.6
Total 59.6 64.8 117.0
125.4 OPERATING INCOME 40.3 58.0
53.1 79.6 NON-OPERATING
EXPENSES: Interest on borrowings 13.0 12.8 26.1 26.1 Interest
income (0.5 ) (0.1 ) (0.9 ) (0.2 )
Accretion of interest on the discounted
payable to founding members under tax receivable agreement
3.5 3.4 7.3 6.8 Amortization of terminated derivatives 2.5 2.7 5.0
5.2 Other non-operating expense 0.1 1.2
0.2 1.2 Total 18.6
20.0 37.7 39.1 INCOME BEFORE
INCOME TAXES 21.7 38.0 15.4 40.5 Income tax expense 3.8
6.0 2.1 6.6
CONSOLIDATED NET INCOME 17.9 32.0 13.3 33.9 Less: Net income
attributable to noncontrolling interests 14.3
22.5 12.8 25.4 NET INCOME
ATTRIBUTABLE TO NCM, INC. $ 3.6 $ 9.5 $ 0.5 $
8.5 EARNINGS PER COMMON SHARE: Basic $ 0.06 $ 0.17 $
0.01 $ 0.16 Diluted $ 0.06 $ 0.17 $ 0.01 $ 0.15
NATIONAL CINEMEDIA, INC.Selected
Condensed Balance Sheet DataUnaudited ($ in
millions)
As of
June 26,2014
December 26,2013
Cash, cash equivalents and marketable securities $ 73.7 $ 126.0
Receivables, net 109.5 120.4 Property and equipment, net 25.2 25.6
Total assets 1,005.2 1,067.3 Borrowings 899.0 890.0 Total
equity/(deficit) (188.3 ) (146.1 ) Total liabilities and equity
1,005.2 1,067.3
NATIONAL CINEMEDIA,
INC.Operating DataUnaudited
Quarter and Six Months Ended
June 26,2014
June 27,2013
Total Screens (100% Digital) at Period End (1)(6) 19,886 19,587
Founding Member Screens at Period End (2)(6) 16,451 16,357 DCN
(Digital Content Network) Screens at Period End (3)(6) 19,022
18,760
Quarter Ended
Six Months Ended (in millions)
June 26,2014
June 27,2013
June 26,2014
June 27,2013
Total Attendance for Period (4)(6) 175.4 187.2 341.9 341.7 Founding
Member Attendance for Period (5)(6) 150.4 160.7 294.4 289.5 Capital
Expenditures $ 3.1 $ 3.5 $ 5.3 $ 6.2 (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 DataUnaudited(In millions,
except advertising revenue per attendee, margin and per share
data)
Quarter Ended Six Months Ended
June 26, 2014
June 27, 2013 June 26, 2014 June
27, 2013 Advertising Revenue $ 99.9 $ 116.9 $ 170.1 $
190.6 Total Revenue $ 99.9 $ 122.8 $ 170.1 $ 205.0 Operating Income
$ 40.3 $ 58.0 $ 53.1 $ 79.6 Total Attendance (1) 175.4 187.2
341.9 341.7 Advertising Revenue / Attendee $ 0.570 $ 0.624 $ 0.498
$ 0.558 OIBDA $ 48.1 $ 64.2 $ 68.7 $ 91.2 Adjusted OIBDA $
52.0 $ 66.2 $ 74.6 $ 95.3 Adjusted OIBDA Margin 52.1 % 53.9 % 43.9
% 46.5 % Income Per Share – Basic $ 0.06 $ 0.17 $
0.01 $ 0.16 Income Per Share – Diluted $ 0.06 $ 0.17 $ 0.01 $ 0.15
(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 plus income tax expense, interest and other
costs and depreciation and amortization expense. Adjusted OIBDA
excludes from OIBDA non-cash share based compensation costs and
merger-related administrative 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, non-cash share based compensation programs,
levels of mergers and acquisitions, 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 or
costs associated with the Screenvision merger. 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 Six Months
Ended June 26, 2014 June 27, 2013
June 26, 2014 June 27, 2013
Consolidated net income $ 17.9 $ 32.0 $ 13.3 $ 33.9 Income tax
expense 3.8 6.0 2.1 6.6 Interest and other non-operating costs 18.6
20.0 37.7 39.1 Depreciation and amortization 7.8
6.2 15.6 11.6 OIBDA 48.1
64.2 68.7 91.2 Share-based compensation costs (1) 2.2 2.0 4.2 4.1
Merger-related administrative costs (2) 1.7 -
1.7 - Adjusted OIBDA $ 52.0
$ 66.2 $ 74.6 $ 95.3 Total revenue $
99.9 $ 122.8 $ 170.1 $ 205.0 Adjusted
OIBDA margin 52.1 % 53.9 % 43.9 % 46.5
% Adjusted OIBDA $ 52.0 $ 66.2 $ 74.6 $ 95.3 Rave
theatres integration payments 0.6 0.9
0.8 1.1 Adjusted OIBDA after
integration payments $ 52.6 $ 67.1 $ 75.4 $
96.4 (1) Share-based compensation costs are
included in network operations, selling and marketing and
administrative expense in the accompanying financial statements.
(2) Merger-related administrative costs represent legal,
accounting, advisory and other professional fees associated with
the proposed merger with Screenvision and are included in
administrative expense in the accompanying financial statements.
Outlook (in millions)
Quarter Ending September 25,
2014
Low
High
Consolidated net income $ 16.8 $ 17.8 Income tax expense 2.7 2.7
Interest and other non-operating costs 18.0 19.0 Depreciation and
amortization 7.5 8.0 OIBDA 45.0 47.5 Share-based
compensation costs (1) 2.0 2.5 Merger-related administrative costs
(2) 1.0 5.0 Adjusted OIBDA $ 48.0 $ 55.0 Total
revenue $ 98.0 $ 108.0 (1) Share-based
compensation costs are included in network operations, selling and
marketing and administrative expense in the accompanying financial
statements. (2) Merger-related administrative costs
represent legal, accounting, advisory and other professional fees
associated with the proposed merger with Screenvision and are
included in 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 second
quarter and full year 2014 results and outlook for the third
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 Six Months
Ended Quarter Ended June 27, 2013
June 27, 2013
September 26,2013
Revenue $ 122.8 $ 205.0 $ 135.1 Fathom Events revenue (5.9 )
(14.4 ) (7.5 ) Revenue excluding Fathom Events $
116.9 $ 190.6 $ 127.6
The following table reconciles consolidated net income to
Adjusted OIBDA excluding Fathom Events for the periods presented
(dollars in millions):
Quarter Ended
Six MonthsEnded
QuarterEnded
June 27, 2013
June 27, 2013
September 26,2013
Consolidated net income $ 32.0 $ 33.9 $ 42.3 Income tax expense 6.0
6.6 6.4 Interest and other non-operating costs 20.0 39.1 18.7
Depreciation and amortization 6.2 11.6 7.2 Fathom operating income
(0.8 ) (2.2 ) (1.1 ) Share-based compensation costs (1) 2.0
4.1 2.1 Adjusted OIBDA excluding
Fathom Events $ 65.4 $ 93.1 $ 75.6
(1) Share-based compensation costs are included in
network operations, selling and marketing and administrative
expense in the accompanying financial statements.
Net Income and Earnings per Share Excluding Merger-Related
Administrative Costs
Net income and earnings per share excluding merger-related
administrative costs are not financial measures calculated in
accordance with generally accepted accounting principles (GAAP) in
the United States. Net income and earnings per share excluding
merger-related administrative costs are calculated using reported
net income and earnings per share and the merger-related
administrative costs shown in the below table. These non-GAAP
financial measures are used by management as an additional tool to
evaluate operating performance. 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 a method used by the
Company’s management and helps improve their ability to understand
the Company’s operating performance. Net income excluding
merger-related administrative costs should not be regarded as an
alternative to net income and should not be regarded as an
alternative to earnings per share 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 net income and earnings per share
are the most directly comparable GAAP financial measures. Because
not all companies use identical calculations, these presentations
may not be comparable to other similarly titled measures of other
companies.
The following table reconciles net income and earnings per share
as reported to net income and earnings per share excluding
merger-related administrative costs for the periods presented
(dollars in millions):
Quarter Ended Six Months
Ended June 26, 2014 June 27, 2013
June 26, 2014 June 27, 2013 Net
income as reported $ 3.6 $ 9.5 $ 0.5 $ 8.5 Merger-related
administrative costs (1)(2) 1.7 - 1.7 - Effect of provision for
income taxes (38% effective rate) (0.6 ) -
(0.6 ) - Net effect of merger-related administrative costs
1.1 - 1.1 - Net income excluding
merger-related administrative costs $ 4.7 $ 9.5 1.6
$ 8.5 Weighted Average Shares Outstanding as reported
Basic 58,722,025 55,062,723 58,670,412 54,837,169 Diluted
59,000,127 55,716,742 59,006,383 55,293,746 Weighted Average
Shares Outstanding as adjusted Basic 58,722,025 55,062,723
58,670,412 54,837,169 Diluted 59,000,127 55,716,742 59,006,383
55,293,746 Basic income per share as reported $ 0.06 $ 0.17
$ 0.01 $ 0.16 Net effect of merger-related administrative costs
0.02 - 0.02 - Basic
income per share excluding merger-related administrative costs $
0.08 $ 0.17 $ 0.03 $ 0.16 Diluted income per
share as reported $ 0.06 $ 0.17 $ 0.01 $ 0.15 Net effect of
merger-related administrative costs 0.02 -
0.02 - Diluted income per share excluding
merger-related administrative costs $ 0.08 $ 0.17 $ 0.03
$ 0.15 (1) Merger-related
administrative costs represent legal, accounting, advisory and
other professional fees associated with the proposed merger with
Screenvision and are included in administrative expense in the
accompanying financial statements. (2) The effect of
noncontrolling interests was not included in this calculation as
the merger related costs were only recorded at NCM, Inc. and not at
NCM LLC and therefore, the expenses were not attributable to
noncontrolling interests.
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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