~ Announces Quarterly Cash Dividend
~~ Increases Full Year 2015 Outlook ~
National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the
managing member and owner of 45.2% 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 third quarter ended October 1, 2015.
Total revenue for the quarter ended October 1, 2015 increased
10.8% to $111.7 million from $100.8 million for the comparable
quarter last year. Adjusted OIBDA increased 14.2% to $59.6 million
from $52.2 million for the third quarter of 2014. Net income for
the third quarter of 2015 was $7.7 million, or income of $0.13 per
diluted share compared to net income of $4.8 million, or income of
$0.08 per diluted share for the third quarter of 2014. Excluding
amortization expense of terminated derivatives and costs associated
with the terminated merger with Screenvision from the third quarter
of 2014, net income for the third quarter of 2014 would have been
$0.10 per diluted share.
Total revenue for the nine months ended October 1, 2015
increased 14.5% to $310.1 million from $270.9 million for the
comparable period last year. Adjusted OIBDA increased 22.0% to
$154.7 million from $126.8 million for the first nine months of
2014. Net income for the first nine months of 2015 was $8.8
million, or income of $0.15 per diluted share compared to net
income of $5.3 million, or income of $0.09 per diluted share for
the first nine months of 2014. Excluding amortization expense of
terminated derivatives and costs associated with the terminated
merger with Screenvision, net income for the first nine months of
2015 would have been $0.32 per diluted share and net income for the
first nine months of 2014 would have been $0.14 per diluted share.
Adjusted OIBDA and earnings per share excluding the amortization of
terminated derivatives and merger-related costs are non-GAAP
measures. 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 $0.22
per share of common stock. The dividend will be paid on December 4,
2015 to stockholders of record on November 20, 2015. The Company
intends to pay a regular quarterly dividend for the foreseeable
future at the discretion of the Board of Directors consistent with
the Company’s intention to distribute over time a substantial
portion of its free cash flow in the form of dividends to its
stockholders. 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.
Commenting on the Company’s third quarter operating results,
Kurt Hall, NCM’s Chairman and CEO said, “Our business continued to
benefit from the structural changes that are reshaping the broader
media marketplace. The Company’s 27% Q3 2015 national revenue
growth over 2014, combined with an approximate 15% increase in our
national upfront commitments for calendar 2016, while the national
TV upfront was down, provided clear evidence that we are gaining
video advertising market share.”
Mr. Hall continued, “The increase in our annual guidance for
2015 reflects higher than expected national inventory utilization,
continued CPM growth and a strong finish to the year by our local
business. We also expect to benefit from a highly anticipated Q4
film slate that is anchored by several tent pole films, including
Star Wars.”
Mr. Hall concluded, “I am very proud of our NCM team as 2015
will represent a record year for each of our national and local
advertising businesses. With great sales momentum coming out of
2015, the launch of more robust targeting and data analytics
products early next year and the expansion of our local sales
force, we are very well positioned for continued growth in 2016 and
beyond.”
Supplemental Information
Integration payments due from Cinemark and AMC associated with
Rave Theatres for the quarter ended October 1, 2015 and September
25, 2014 and the nine months ended October 1, 2015 and September
25, 2014 were $0.7 million, $0.6 million, $1.8 million and $1.4
million respectively. The integration payments were recorded as a
reduction of an intangible asset.
2015 Outlook
For the fourth quarter of 2015, the Company increases its
outlook and expects total revenue to be up 2% to 6% and Adjusted
OIBDA is expected to be down 6% to up 2% from the fourth quarter of
2014. The Company expects total revenue in the range of $125.0
million to $131.0 million during the fourth quarter of 2015,
compared to total revenue for the fourth quarter of 2014 of $123.1
million and Adjusted OIBDA in the range of $68.0 million to $74.0
million during the fourth quarter of 2015 compared to Adjusted
OIBDA for the fourth quarter of 2014 of $72.5 million.
For full year 2015, the Company increases its outlook and
expects total revenue to be up 10% to 12% and Adjusted OIBDA to be
up 12% to 15% from the full year 2014. The Company expects total
revenue in the range of $435.0 million to $441.0 million for the
full year 2015, compared to total revenue for the full year 2014 of
$394.0 million and Adjusted OIBDA in the range of $223.0 million to
$229.0 million for the full year 2015 compared to Adjusted OIBDA
for the full year 2014 of $199.3 million.
Conference Call
The Company will host a conference call and audio webcast with
investors, analysts and other interested parties November 9, 2015
at 5:00 P.M. Eastern time. The live call can be accessed by dialing
1-800-946-0744 or for international participants 1-719-325-2339.
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 23, 2015, by dialing 1-877-870-5176
or for international participants 1-858-384-5517, and entering
conference ID 8124845.
About National CineMedia, Inc.
National CineMedia (NCM) is America’s Movie Network. As the #1
weekend network in the U.S., NCM helps brands get in front of the
movies that shape the national conversation. More than 700 million
moviegoers annually attend theatres that are currently under
contract to present NCM’s FirstLook pre-show in over 40 leading
national and regional theatre 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
approximately 20,050 screens in approximately 1,600 theaters in 187
Designated Market Areas® (49 of the top 50). NCM Digital goes
beyond the big screen, extending in-theatre campaigns into online
and mobile marketing programs to reach entertainment audiences.
National CineMedia, Inc. (NASDAQ:NCMI) owns a 45.2% interest in,
and is the managing member of, National CineMedia, LLC. For more
information, visit www.ncm.com.
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 and projections for fourth quarter
and full year 2015, the dividend policy, network expansion,
competition in the broader advertising marketplace and technology
improvements. 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 theatre
attendance; 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 January 1, 2015, for further information about these and
other risks.
NATIONAL CINEMEDIA,
INC.Condensed Consolidated Statements of
IncomeUnaudited($ in millions, except per share
data)
Quarter Ended Nine Months Ended October
1,
2015
September 25,
2014
October 1,
2015
September 25,
2014
REVENUE: Advertising (including revenue from founding members of
$6.5, $9.1, $23.2 and $28.4, respectively) $ 111.7 $ 100.8 $ 310.1
$ 270.9 OPERATING EXPENSES: Advertising operating costs 7.8 6.5
21.9 18.1 Network costs 4.3 4.4 13.0 13.4 Theatre access
fees—founding members 17.6 17.0 54.0 52.3 Selling and marketing
costs 16.9 14.7 49.9 43.8 Merger-related costs — 2.0 34.3 3.7
Administrative and other costs 9.3 6.9 26.3 21.6 Depreciation and
amortization 8.0 8.6 24.2 24.2 Total
63.9 60.1 223.6 177.1 OPERATING INCOME
47.8 40.7 86.5 93.8 NON-OPERATING
EXPENSES: Interest on borrowings 13.0 12.7 39.2 38.8 Interest
income (0.5 ) (0.3 ) (1.4 ) (1.2 ) Accretion of interest on the
discounted payable to founding members under tax receivable
agreement 3.5 3.5 10.6 10.8 Amortization of terminated derivatives
— 2.6 1.6 7.6 Other non-operating expense 0.1 0.7
0.2 0.9 Total 16.1 19.2 50.2
56.9 INCOME BEFORE INCOME TAXES 31.7 21.5 36.3 36.9 Income
tax expense 4.8 2.1 6.3 4.2
CONSOLIDATED NET INCOME 26.9 19.4 30.0 32.7
Less: Net income attributable to
noncontrolling interests
19.2 14.6 21.2 27.4 NET INCOME
ATTRIBUTABLE TO NCM, INC. $ 7.7 $ 4.8 $ 8.8 $ 5.3 NET INCOME
PER NCM, INC. COMMON SHARE: Basic $ 0.13 $ 0.08 $ 0.15 $ 0.09
Diluted $ 0.13 $ 0.08 $ 0.15 $ 0.09
NATIONAL CINEMEDIA, INC.Selected
Condensed Balance Sheet DataUnaudited ($ in
millions)
As of October 1,
2015
January 1,
2015
Cash, cash equivalents and marketable securities $ 80.5 $ 80.6
Receivables, net 124.0 116.5 Property and equipment, net 22.9 22.4
Total assets 1,006.2 991.4 Borrowings 936.0 892.0 Total
equity/(deficit) (228.3 ) (208.7 ) Total liabilities and equity
1,006.2 991.4
NATIONAL CINEMEDIA,
INC.Operating DataUnaudited
Quarter and Nine Months Ended October 1,
2015
September 25,
2014
Total Screens (100% Digital) at Period End (1)(6) 20,047
20,050 Founding Member Screens at Period End (2)(6) 16,407
16,450 DCN (Digital Content Network) Screens at Period End (3)(6)
19,425 19,168
Quarter Ended
Nine Months Ended (in millions)
October 1,
2015
September 25,
2014
October 1,
2015
September 25,
2014
Total Attendance for Period (4)(6) 164.1 163.5 517.3 505.4 Founding
Member Attendance for Period (5)(6) 138.3 138.7 436.2 433.1 Capital
Expenditures $ 3.3 $ 1.7 $ 8.3 $ 7.0
(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
Digital Content Network.
(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 Nine Months Ended
October 1,
2015
September 25,
2014
October 1,
2015
September 25,
2014
Revenue breakout: National advertising revenue $ 79.8 $ 62.9
$ 219.9 $ 174.0 Local advertising revenue 25.5 28.9
67.2 68.7 Total advertising revenue (excluding
beverage) $ 105.3 $ 91.8 $ 287.1 $ 242.7 Total revenue $
111.7 $ 100.8 $ 310.1 $ 270.9
Per attendee data:
National advertising revenue per attendee $ 0.486 $ 0.385 $ 0.425 $
0.344 Local advertising revenue per attendee $ 0.155 $ 0.177 $
0.130 $ 0.136 Total advertising revenue (excluding beverage) per
attendee $ 0.642 $ 0.561 $ 0.555 $ 0.480 Total advertising revenue
per attendee $ 0.681 $ 0.617 $ 0.599 $ 0.536 Total attendance (1)
164.1 163.5 517.3 505.4
Other operating data:
Operating income $ 47.8 $ 40.7 $ 86.5 $ 93.8 OIBDA (2) $ 55.8 $
49.3 $ 110.7 $ 118.0 Adjusted OIBDA (2) $ 59.6 $ 52.2 $ 154.7 $
126.8 Adjusted OIBDA margin (2) 53.4 % 51.8 % 49.9 % 46.8 %
Income per share – basic $ 0.13 $ 0.08 $ 0.15 $ 0.09 Income per
share – diluted $ 0.13 $ 0.08 $ 0.15 $ 0.09 Adjusted income
per share – basic (2) $ 0.13 $ 0.10 $ 0.32 $ 0.14 Adjusted income
per share – diluted (2) $ 0.13 $ 0.10 $ 0.32 $ 0.14
(1)
Represents the total attendance within NCM LLC’s advertising
network. Excludes screens and attendance associated with certain
AMC Rave and Cinemark Rave theatres for all periods presented.
(2)
OIBDA, Adjusted OIBDA, Adjusted OIBDA margin and adjusted income
per share are not financial measures calculated in accordance with
GAAP in the United States. See attached tables for the non-GAAP
reconciliations.
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 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 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 proposed 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 Nine Months Ended
October 1,
2015
September 25,
2014
October 1,
2015
September 25,
2014
Consolidated net income $ 26.9 $ 19.4 $ 30.0 $ 32.7 Income tax
expense 4.8 2.1 6.3 4.2 Interest and other non-operating costs 16.1
19.2 50.2 56.9 Depreciation and amortization 8.0 8.6
24.2 24.2 OIBDA $ 55.8 $ 49.3 $ 110.7 $ 118.0
Share-based compensation costs (1) 3.8 0.9 9.7 5.1 Merger-related
costs (2) — 2.0 34.3 3.7 Adjusted OIBDA
$ 59.6 $ 52.2 $ 154.7 $ 126.8 Total revenue $ 111.7 $ 100.8 $ 310.1
$ 270.9 Adjusted OIBDA margin 53.4 % 51.8 %
49.9 % 46.8 % Adjusted OIBDA $ 59.6 $ 52.2 $
154.7 $ 126.8 Rave theatres integration payments 0.7
0.6 1.8 1.4 Adjusted OIBDA after integration payments
$ 60.3 $ 52.8 $ 156.5 $ 128.2
(1)
Share-based compensation costs are included in network
operations, selling and marketing and administrative expense in the
accompanying financial statements.
(2)
Merger-related costs primarily include the merger termination fee
and legal, accounting, advisory and other professional fees
associated with the terminated merger with Screenvision.
Outlook (in millions)
Quarter Ending
December 31, 2015
Year Ending
December 31, 2015
NCM, Inc. NCM, Inc. Low
High Low High Consolidated net
income $ 34.3 $ 38.3 $ 64.6 $ 68.6 Income tax expense 6.4 7.2 12.7
13.5 Interest and other non-operating costs 16.0 16.3 66.2 66.5
Depreciation and amortization 7.8 8.2 32.0
32.4 OIBDA 64.5 70.0 175.5 181.0 Share-based compensation
costs (1) 3.5 4.0 13.2 13.7 Merger-related costs (2) —
— 34.3 34.3 Adjusted OIBDA $ 68.0 $ 74.0 $
223.0 $ 229.0 Total revenue $ 125.0 $ 131.0 $ 435.0 $ 441.0
(1)
Share-based compensation costs are included in network
operations, selling and marketing and administrative expense in the
accompanying financial statements.
(2)
Merger-related costs primarily include the merger termination fee
and legal, accounting, advisory and other professional fees
associated with the terminated merger with Screenvision.
Net Income and Earnings per Share Excluding the Amortization
of Terminated Derivatives and Merger-Related Costs
Net income and earnings per share excluding the amortization of
terminated derivatives and merger-related costs are not financial
measures calculated in accordance with GAAP in the United States.
Net income and earnings per share excluding the amortization of
terminated derivatives and merger-related costs are calculated
using reported net income and income per share and the amortization
of terminated derivatives and merger-related 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 the amortization of terminated derivatives and
merger-related 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 income per share
as reported to net income and earnings per share excluding the
amortization of terminated derivatives and merger-related costs for
the periods presented (dollars in millions):
Quarter Ended Nine Months Ended
October 1,
2015
September 25,
2014
October 1,
2015
September 25,
2014
Net income as reported $ 7.7 $ 4.8 $ 8.8 $ 5.3
Merger-related costs (1) — 2.0 34.3 3.7 Amortization of terminated
derivatives — 2.6 1.6 7.6 Effect of noncontrolling interests
(54.8%, 54.2%, 54.8% and 54.2%, respectively) — (2.5 ) (19.7 ) (6.1
) Effect of provision for income taxes (38% effective rate)
— (0.8 ) (6.2 ) (2.0 ) Net effect of adjusting
items — 1.3 10.0 3.2 Net income
excluding adjusting items $ 7.7 $ 6.1 $ 18.8 $ 8.5 Weighted
Average Shares Outstanding as reported Basic 59,014,887 58,744,395
58,959,381 58,695,073 Diluted 59,625,214 59,043,769 59,452,580
58,987,945 Weighted Average Shares Outstanding as adjusted
Basic 59,014,887 58,744,395 58,959,381 58,695,073 Diluted
59,625,214 59,043,769 59,452,580 58,987,945 Basic income per
share as reported $ 0.13 $ 0.08 $ 0.15 $ 0.09 Net effect of
adjusting items — 0.02 0.17 0.05 Basic
income per share excluding adjusting items $ 0.13 $ 0.10 $ 0.32 $
0.14 Diluted income per share as reported $ 0.13 $ 0.08 $
0.15 $ 0.09 Net effect of adjusting items — 0.02
0.17 0.05 Diluted income per share excluding
adjusting items $ 0.13 $ 0.10 $ 0.32 $ 0.14
(1)
Merger-related costs primarily include the merger termination
payment and legal, accounting, advisory and other professional fees
associated with the terminated merger with Screenvision.
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version on businesswire.com: http://www.businesswire.com/news/home/20151109006593/en/
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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