In-theater digital media network National CineMedia revenue falls 5.6% in first quarter report
‘We experienced gains in Local and Regional, Digital and Beverage revenue offset by softness in national advertising sales during the first quarter of 2017’
CENTENNIAL, Colo. May 4, 2017 — National CineMedia, Inc., the managing member and owner of 39.3% of National CineMedia, LLC, the operator of the largest in-theater digital media network in North America, today announced consolidated results for the fiscal first quarter ended March 30, 2017.
Total revenue for the first quarter ended March 30, 2017 decreased 5.6% to $71.9 million from $76.2 million for the comparable quarter last year. Adjusted OIBDA decreased 26.7% to $17.6 million for the first quarter of 2017 from $24.0 million for the first quarter of 2016. Operating income decreased 12.1% to $5.1 million for the first quarter of 2017 from $5.8 million for the first quarter of 2016. Included in Adjusted OIBDA and operating income was a $1.4 million non-cash impairment charge during the first quarter of 2017 on an investment obtained in prior years in exchange for advertising services. Net loss for the first quarter of 2017 was $5.0 million, or a net loss of $0.08 per diluted share, compared to net a loss of $4.3 million, or a net loss of $0.07 per diluted share, for the first quarter of 2016. As adjusted to exclude the CEO transition-related costs, net loss for the first quarter of 2017 would have remained $0.08 per diluted share and net loss for the first quarter of 2016 would have been $0.05 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 June 1, 2017 to stockholders of record on May 18, 2017. 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. 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 first quarter 2017 operating results, Andy England, NCM’s CEO, said, “We experienced gains in Local and Regional, Digital and Beverage revenue offset by softness in national advertising sales during the first quarter of 2017. As noted on our prior call, 2017 will be a transitional year for NCM as we evolve from being the largest cinema network into a truly progressive, integrated digital media company.”
Mr. England continued, “As part of our transition, we anticipate that the first three quarters of 2017 will be challenging, followed by a solid Q4, aided by content partner spending and major movie releases. We expect the value of our 2017 strategic refocusing, including investments in our pre-show, digital properties, CRM, National Spot sales, and network affiliate growth, will be reflected beginning late this year, driving growth in 2018 and beyond.”
For the full year 2017, the Company updates its outlook and expects 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.
Integration payments due from Cinemark and AMC associated with Rave Theatres and Carmike Theatres for the quarter ended March 30, 2017 and March 31, 2016 were $0.4 million and $0.1 million, respectively. The integration payments were recorded as a reduction of an intangible asset.