Announces Quarterly Cash Dividend of $0.22 Per
ShareUpdates Full Year 2016 Outlook and Provides Third Quarter
Outlook
National CineMedia, Inc. (NASDAQ:NCMI) (the Company), the
managing member and owner of 43.6% 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 and six months ended June 30, 2016.
Total revenue for the second quarter ended June 30, 2016
decreased 5.0% to $115.4 million from $121.5 million for the
comparable quarter last year. Adjusted OIBDA decreased 11.9% to
$59.4 million for the second quarter of 2016 from $67.4 million for
the second quarter of 2015. Net income for the second quarter of
2016 was $6.8 million, or income of $0.11 per diluted share,
compared to a net income of $10.1 million, or income of $0.17 per
diluted share, for the second quarter of 2015. As adjusted to
exclude costs associated with the terminated merger with
Screenvision and CEO transition-related costs, net income for the
second quarter of 2016 and the second quarter of 2015, would have
remained $0.11 per diluted share and $0.17 per diluted share,
respectively.
Total revenue for the six months ended June 30, 2016 decreased
3.4% to $191.6 million from $198.4 million for the comparable
period last year. Adjusted OIBDA decreased 12.3% to $83.4 million
for the first six months of 2016 from $95.1 million for the first
six months of 2015. Net income for the first six months of 2016 was
$2.5 million, or income of $0.04 per diluted share, compared to net
income of $1.1 million, or income of $0.02 per diluted share for
the first six months of 2015. As adjusted to exclude costs
associated with the terminated merger with Screenvision, CEO
transition-related costs and amortization of terminated
derivatives, net income for the first six months of 2016 would have
been $0.07 per diluted share and net income for the first six
months of 2015 would have been $0.19 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.
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
9, 2016 to stockholders of record on August 25, 2016. 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 second quarter of 2016 operating
results, Andy England, NCM’s CEO said, “I am pleased that we were
able to deliver a solid second quarter performance that exceeded
the midpoint of our revenue and Adjusted OIBDA guidance versus
record second quarter revenue and Adjusted OIBDA in 2015 that grew
22% and 30%, respectively.” Mr. England continued, “While the shift
of upfront commitment allocations to the fourth quarter of 2016 and
client churn have subdued performance versus the first nine months
of 2015, our fourth quarter bookings, proposal activity and
progress of this year’s upfront cycle give us confidence in our
business for the remainder of the year”. Mr. England concluded,
“Looking forward, we remain convinced that our combination of broad
national reach, a highly desirable Millennial audience, adjacency
to world-class movie studio content, and improvements in our data
and targeting capabilities position our unique premium video
offering very well for the future.”
2016 Outlook
For the third quarter of 2016, the Company expects total revenue
to be down 2% to up 4% and Adjusted OIBDA is expected to be down 6%
to up 6% from a strong third quarter in 2015 that grew revenue and
Adjusted OIBDA 11% and 14%, respectively versus the third quarter
of 2014. The Company expects total revenue in the range of $109.0
million to $116.0 million during the third quarter of 2016,
compared to total revenue for the third quarter of 2015 of $111.7
million and Adjusted OIBDA in the range of $56.0 million to $63.0
million during the third quarter of 2016, compared to Adjusted
OIBDA for the third quarter of 2015 of $59.6 million.
For the full year 2016, the Company updates its outlook and
expects total revenue to be down 1% to up 1% and Adjusted OIBDA to
be down 4% to approximately flat versus the full year 2015. The
Company expects total revenue in the range of $440.0 million to
$450.0 million for the full year 2016, compared to total revenue
for the full year 2015 of $446.5 million and Adjusted OIBDA in the
range of $220.0 million to $230.0 million for the full year 2016,
compared to Adjusted OIBDA for the full year 2015 of $229.9
million.
Supplemental Information
Integration payments due from Cinemark and AMC associated with
Rave Theatres for the quarter ended June 30, 2016 and July 2, 2015
and the six months ended June 30, 2016 and July 2, 2015 were $0.7
million, $0.8 million, $0.8 million and $1.1 million, respectively.
The integration 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 August 8, 2016 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 22, 2016, by dialing 1-877-870-5176
or for international participants 1-858-384-5517, and entering
conference ID 13641253.
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 nearly
20,500 screens in over 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 43.6% 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 the third quarter
and full year 2016, the dividend policy, fourth quarter bookings,
proposal activity and the activity at this year’s upfront cycle and
our beliefs about our business for the remainder of the year.
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 December 31, 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 Six Months Ended June 30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
REVENUE:
Advertising (including revenue from
founding members of $7.2, $9.0, $14.5 and $16.7,
respectively)
$ 115.4 $ 121.5 $ 191.6 $ 198.4 OPERATING EXPENSES: Advertising
operating costs 8.3 8.3 13.3 14.1 Network costs 4.3 4.2 8.8 8.7
Theatre access fees—founding members 18.9 19.2 37.6 36.4 Selling
and marketing costs 19.1 17.0 37.7 33.0 Merger-related costs — 0.9
— 34.3 Administrative and other costs 9.4 8.3 24.3 17.0
Depreciation and amortization 8.9 8.2 17.6
16.2 Total 68.9 66.1 139.3 159.7
OPERATING INCOME 46.5 55.4 52.3 38.7
NON-OPERATING EXPENSES: Interest on borrowings 13.5 13.1 26.9 26.2
Interest income (0.4 ) (0.3 ) (1.0 ) (0.9 )
Accretion of interest on the discounted
payable to founding members under tax receivable
agreement
3.4 3.5 7.0 7.1 Amortization of terminated derivatives — — — 1.6
Other non-operating expense — — — 0.1
Total 16.5 16.3 32.9 34.1 INCOME BEFORE
INCOME TAXES 30.0 39.1 19.4 4.6 Income tax expense 4.5
5.8 2.4 1.5 CONSOLIDATED NET INCOME 25.5 33.3
17.0 3.1 Less: Net income attributable to noncontrolling interests
18.7 23.2 14.5 2.0 NET INCOME
ATTRIBUTABLE TO NCM, INC. $ 6.8 $ 10.1 $ 2.5 $ 1.1 NET
INCOME PER NCM, INC. COMMON SHARE: Basic $ 0.11 $ 0.17 $ 0.04 $
0.02 Diluted $ 0.11 $ 0.17 $ 0.04 $ 0.02
NATIONAL CINEMEDIA, INC.Selected
Condensed Balance Sheet DataUnaudited ($ in
millions)
As of June 30, 2016 December 31,
2015 Cash, cash equivalents and marketable securities $ 64.4 $
85.4 Receivables, net 126.3 148.9 Property and equipment, net 27.6
25.1 Total assets 1,045.7 1,073.7 Borrowings 942.0 936.0 Total
equity/(deficit) (166.4 ) (171.7 ) Total liabilities and equity
1,045.7 1,073.7
NATIONAL CINEMEDIA, INC.
Operating DataUnaudited
Quarter Ended June 30, 2016
July 2, 2015 Total Screens (100% Digital) at Period End
(1)(6) 20,471 20,150 Founding Member Screens at Period End (2)(6)
17,028 16,471 DCN (Digital Content Network) Screens at Period End
(3)(6) 20,061 19,396
Quarter Ended Six
Months Ended (in millions)
June 30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
Total Attendance for Period (4)(6) 172.2 191.8 344.5 353.2 Founding
Member Attendance for Period (5)(6) 145.9 161.8 294.1 297.9 Capital
Expenditures $ 3.0 $ 2.9 $ 7.0 $ 5.0
__________
(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 Six Months Ended June
30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
Revenue breakout: National advertising revenue $ 83.0 $ 88.5
$ 133.2 $ 139.3 Local and regional advertising revenue 25.3
24.0 44.1 42.5
Total advertising revenue (excluding beverage) $ 108.3 $
112.5 $ 177.3 $ 181.8 Total revenue $
115.4 $ 121.5 $ 191.6 $ 198.4
Per attendee data:
National advertising revenue per attendee $ 0.482 $ 0.461 $ 0.387 $
0.394 Local and regional advertising revenue per attendee $ 0.147 $
0.125 $ 0.128 $ 0.120 Total advertising revenue (excluding
beverage) per attendee $ 0.629 $ 0.587 $ 0.515 $ 0.515 Total
revenue per attendee $ 0.670 $ 0.633 $ 0.556 $ 0.562 Total
attendance (1) 172.2 191.8 344.5 353.2
Other operating
data: Operating income $ 46.5 $ 55.4 $ 52.3 $ 38.7 OIBDA (2) $
55.4 $ 63.6 $ 69.9 $ 54.9 Adjusted OIBDA (2) $ 59.4 $ 67.4 $ 83.4 $
95.1 Adjusted OIBDA margin (2) 51.5 % 55.5 % 43.5 % 47.9 %
Income per share – basic $ 0.11 $ 0.17 $ 0.04 $ 0.02 Income per
share – diluted $ 0.11 $ 0.17 $ 0.04 $ 0.02 Adjusted income
per share – basic (2) $ 0.12 $ 0.17 $ 0.07 $ 0.19 Adjusted income
per share – diluted (2) $ 0.11 $ 0.17 $ 0.07 $ 0.19
___________
(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 operating income before depreciation and amortization
expense. Adjusted OIBDA excludes from OIBDA non-cash share based
compensation costs, the merger termination fee and related merger
costs and Chief Executive Officer transition 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, CEO turnover, interest rates,
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, costs associated with the terminated merger with
Screenvision, or costs associated with the resignation of the
company’s Chief Executive Officer. 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 operating 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 operating income to OIBDA and
Adjusted OIBDA for the periods presented (dollars in millions):
Quarter Ended Six Months
Ended
Quarter Ended
Year Ended June 30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
October 1,
2015
December 31,
2015
Operating income $ 46.5 $ 55.4 $ 52.3 $ 38.7 $ 47.8 $ 148.0
Depreciation and amortization 8.9 8.2
17.6 16.2 8.0 32.2
OIBDA $ 55.4 $ 63.6 $ 69.9 $ 54.9 $ 55.8 $ 180.2 Share-based
compensation costs (1) 3.7 2.9 10.3 5.9 3.8 14.8 Merger-related
costs (2) — 0.9 — 34.3 — 34.3 CEO transition costs (3) 0.3
— 3.2 — —
0.6 Adjusted OIBDA $ 59.4 $ 67.4
$ 83.4 $ 95.1 $ 59.6 $ 229.9 Total
revenue $ 115.4 $ 121.5 $ 191.6 $ 198.4
$ 111.7 $ 446.5 Adjusted OIBDA margin 51.5 %
55.5 % 43.5 % 47.9 % 53.4 % 51.5
% Adjusted OIBDA $ 59.4 $ 67.4 $ 83.4 $ 95.1 $ 59.6 $ 229.9
Rave theatres integration payments 0.7 0.8
0.8 1.1 0.7
2.7 Adjusted OIBDA after integration payments $ 60.1
$ 68.2 $ 84.2 $ 96.2 $ 60.3 $ 232.6
___________
(1)
Share-based compensation costs are included in network
operations, selling and marketing and administrative expense in the
accompanying financial statements as shown in the following table
(dollars in millions).
Quarter
Ended Six Months Ended
Quarter Ended
Year Ended June 30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
October 1,
2015
December 31,
2015
Share-based compensation costs included
in network costs
$ 0.3 $ 0.2 $ 0.6 $ 0.3 $ 0.3 $ 0.9
Share-based compensation costs included
in selling and marketing costs
1.5 1.2 3.1 2.5 1.4 5.5
Share-based compensation costs included
in administrative and other costs
1.9 1.5 6.6 3.1 2.1 8.4
Total share-based compensation costs $ 3.7 $ 2.9 $ 10.3 $ 5.9 $ 3.8
$ 14.8
(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.
(3)
Chief Executive Officer transition costs represent severance,
consulting and other costs and are included in administrative
expense in the accompanying financial statements.
Outlook (in millions)
Quarter Ending
September 29, 2016
Year Ending
December 29, 2016
NCM, Inc. NCM, Inc. Low
High Low High Operating income $
43.6 $ 50.0 $ 164.3 $ 172.9 Depreciation and amortization
8.6 8.8 34.6 35.0 OIBDA 52.2 58.8 198.9 207.9
Share-based compensation costs (1) 3.7 3.9 17.7 18.1 CEO transition
costs (2) 0.1 0.3 3.4 4.0 Adjusted
OIBDA $ 56.0 $ 63.0 $ 220.0 $ 230.0 Total revenue $ 109.0 $ 116.0 $
440.0 $ 450.0
___________
(1)
Share-based compensation costs are included in network
operations, selling and marketing and administrative expense in the
accompanying financial statements.
(2)
Chief Executive Officer transition costs represent severance,
consulting and other costs.
Adjusted Net Income and Earnings per Share
Adjusted net income and earnings per share are not financial
measures calculated in accordance with GAAP in the United States.
Adjusted net income and earnings per share are calculated using
reported net income and income per share and exclude the
amortization of terminated derivatives, merger-related costs and
CEO transition-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. Adjusted net income
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
income 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 adjusted net income and earnings per share excluding
the amortization of terminated derivatives, merger-related costs
and CEO transition-related costs for the periods presented (dollars
in millions):
Quarter Ended Six Months Ended June
30,
2016
July 2,
2015
June 30,
2016
July 2,
2015
Net income as reported $ 6.8 $ 10.1 $ 2.5 $ 1.1 Amortization of
terminated derivatives — — — 1.6 Merger-related costs (1) — 0.9 —
34.3 CEO transition costs (2) 0.3 — 3.2 —
Stock-based compensation expense for
modified equity awards (3)
— — 2.3 —
Effect of noncontrolling interests (56.4%,
54.8%, 56.4% and 54.9%, respectively)
(0.2 ) (0.5 ) (3.1 ) (19.7 ) Effect of provision for income taxes
(38% effective rate) — (0.2 ) (0.9 )
(6.2 ) Net effect of adjusting items 0.1 0.2
1.5 10.0 Net income excluding adjusting items $ 6.9 $ 10.3 $
4.0 $ 11.1 Weighted Average Shares Outstanding as reported
Basic 59,831,675 58,974,581 59,721,270 58,931,628 Diluted
60,556,539 59,595,019 60,314,112 59,360,245 Weighted Average
Shares Outstanding as adjusted Basic 59,831,675 58,974,581
59,721,270 58,931,628 Diluted 60,556,539 59,595,019 60,314,112
59,360,245 Basic income per share as reported $ 0.11 $ 0.17
$ 0.04 $ 0.02 Net effect of adjusting items 0.01 —
0.03 0.17 Basic income per share excluding adjusting
items $ 0.12 $ 0.17 $ 0.07 $ 0.19 Diluted income per share
as reported $ 0.11 $ 0.17 $ 0.04 $ 0.02 Net effect of adjusting
items — — 0.03 0.17 Diluted income per
share excluding adjusting items $ 0.11 $ 0.17 $ 0.07 $ 0.19
___________
(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.
(2)
Chief Executive Officer transition costs represent severance,
consulting and other costs.
(3)
Consists of non-cash stock-based compensation expense associated
with modifications to the former CEO’s equity awards pursuant to
his Separation and General Release Agreement.
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version on businesswire.com: http://www.businesswire.com/news/home/20160808006028/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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