National CineMedia - Q3 2022

Transcript

Operator (participant)

Please stand by. Good day, and welcome to the National CineMedia, Inc. Q3 2022 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Dan Dorenkamp, Director of Finance. Please go ahead, sir.

Dan Dorenkamp (Director of Finance)

Good afternoon. I'm joined today by our CEO, Tom Lesinski, and our CFO, Ronnie Ng. I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended. All statements, including our discussion about the future impacts of COVID-19, other than statements of historical facts communicated during this conference call, may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties. Important factors that can cause actual results to differ materially from the company's expectations are disclosed in the risk factors contained in the company's filings with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors. Further, our discussion today includes some non-GAAP measures.

In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today's earnings release or on the investor relations page of our website at ncm.com. Now I'll turn the call over to Tom.

Tom Lesinski (CEO)

Thank you, Dan, and good afternoon, everyone. Welcome to our Q3 earnings call. As the largest cinema advertising network in the U.S. with 75% of the opening weekend box office each week, we have a lot to be optimistic about. After 5 straight quarters of revenue growth and a strong upfront selling season, most of our pre-pandemic advertisers are now back on the screen. Our final upfront negotiations are wrapping up, and we're happy to report the return of longtime NCM clients across all key categories and many deepening their investment with us. Today, we're able to prove that cinema is one of the highest value mediums for advertisers to reach a young, diverse audience at scale in an unskippable, uninterrupted ad environment with the most culturally relevant content in the world on a 40-foot screen. People simply crave the shared moviegoing experience.

According to a recent study, going to the movies this summer ranked as a top must-see experience, with more adults attending than the opening weekend of new film releases compared to other popular summer activities, including baseball, beaches, or even live music events. The box office has had a strong recovery in 2022 on a number of fronts. The Q3 brought in $1.9 billion at the box office, up 40% from the Q3 of 2021, and July was the first billion-dollar box office month in three years. Six films reached or surpassed $300 million mark this year to date, the first time since 2019. Minions: The Rise of Gru delivered the biggest Fourth of July opening weekend ever, aided by the Gen Z demographic.

Top Gun: Maverick continued to deliver audiences months after its release, with the July total of $112 million and crossing the $700 million mark this quarter, once again proving how important an extended exclusive release window can be so key and successful to launching a film and creating long-term value. While there continues to be fewer films released this year than prior to the pandemic, movies earned about 50% more per film in 2022 versus 2019. In fact, the major releases this summer earned an average of $159.9 million domestically compared to $103.5 million in the summer of 2019.

While the release schedule was thinner than normal in the latter part of the summer and into early October, things have started to pick up considerably with the successful release of Smile, Halloween Ends, Black Adam, and Ticket to Paradise. An early holiday release kicks off with the Black Panther: Wakanda Forever sequel set to open this coming weekend. Diverse Gen Z and young millennials continue to drive the box office with 104 million 18- to 34-year-olds going to the movies in the Q3. This is 54% of the 18- to 34-year-old population in the U.S., and they were not alone. Audiences across all demographics also showed up for the preferred genre. 68% of the audiences that attended Minions were families, and 75% were under 25 years old.

The much anticipated horror movie Nope brought an incredibly diverse audience, with 33% African Americans, 20% Hispanic, and 17% Asian. It was also the second highest-rated R-rated movie since the start of the pandemic. More recently, The Woman King reminded the industry that women come to the movies for great content. The audience for The Woman King was 60% female and 81% diverse. In the Q3 of 2022, our total revenue was $49.5 million, an increase of more than 75% compared to the Q3 of 2021, when we generated $28.3 million of revenue. Driven by a strong box office at the beginning of the quarter, July 2022 revenue for NCM was nearly 2.5x greater than July of 2021.

Despite the fact that there were no tent-pole films released in August, we also significantly outperformed August of 2021 with a 67% increase in revenue. Ad sales continues to gain momentum in the Q3, with eight existing clients increasing their spend compared to the Q3 of 2021. Other growth categories on our screens included entertainment, QSR, CPG category, and business services. Importantly, the automotive category is now also showing solid recovery, with four major automakers on our screens in the Q3. That number will increase further as we look ahead into the last quarter of this year. In addition, our Platinum business continues to grow with seven Platinum deals secured year to date, versus only one deal that ran in 2021. Our upfront negotiations for the 2022/2023 TV and calendar year periods are now very close to being finalized.

We anticipate our projected total upfront revenue to be 85% of the average annual upfront revenue we earned from 2017 through 2019. To highlight the importance of upfront commitments to our results, in 2019, upfront revenue represented 68% of our total national revenue for the year. Deals include all the major ad categories, including entertainment, automotive, travel, wireless, insurance, QSR, CPG, travel, finance, technology, and pharma. With this level of upfront commitment and 2023 theater attendance expected to increase, we are very well positioned for growth in the Q4 and into 2023. On the local market side, our total revenue is up more than 75% in the Q3 2022 compared to the same quarter last year.

Government, healthcare, and education remain our top three local categories, up 65%, 52%, and 82% respectively for the Q3 compared to the Q3 of 2021. As anticipated, we're now beginning to see a rebound of client categories impacted by the pandemic, with travel and tourism up 182%, entertainment up 448%, automotive up 500%, and utilities up 600% in the Q3 year-over-year. Our digital business continues its trajectory of growth, growing year-over-year and quarter-over-quarter revenue increases in 2022. Our Q3 revenue in 2022 was up almost 30% compared to the Q3 in 2021. Year to date, we have seen a 34% increase in the digital sales business overall. Our biggest category continues to be government, delivering 56% of our digital revenue in the quarter.

While still a small part of our revenues, the growth of our data-driven digital business is strengthening our position in the marketplace as a premium video platform, providing our advertisers with the campaign analytics they require to evaluate the effectiveness of their media buys. Additionally, this data helps add scale by bundling cinema and digital movie audiences, delivering a unique solution that differentiates us from other media platforms. On the affiliate front, we recently secured more than 800 screens and approximately 16.5 million annual attendees to our network for the long term. We added VIP Cinemas to our network, which operates a circuit of 17 theaters across eight states from South Florida to central Kansas. We also extended our service agreements with 10 exhibitors in the U.S., including Cinergy Entertainment, GQT Movies, MJR Digital Cinemas, and United Entertainment Corp.

As cord cutting continues to rise, it's expected to reach 50% by the end of this year. Advertisers are increasingly challenged on how to reach their targets efficiently across all platforms, including CTV and streaming. Even with the option to stream a new release at home after its theatrical run, almost all moviegoers say the availability of new releases on streaming platforms does not lessen their desire to go to the movies. In fact, frequent moviegoers are also the most avid streamers. Cinema advertising is not just delivering performance metrics for clients advertising at theaters, it's also consistently outperforming other mediums in comparison. Our unique reach among the coveted 18-34 year-old demographic tops almost all ad-supported streaming apps. NCM averaged a 6.7 weekly rating during the quarter, beating the broadcast prime average every week.

When compared to network television's performance this past summer, the movies are looking like a much better bet for advertisers these days. Cinema also appears to be benefiting from the various challenges digital platforms are facing as they deal with government privacy concerns and changes in online privacy controls. Our expanded ability to leverage valuable consumer information to deliver insights that provides various measurable data is a game changer for us. Our proprietary data intelligence platform, NCMx, has made cinema even more targetable and measurable with our power to supercharge our audience by leveraging over 290 million records, one of the largest deterministic moviegoer datasets available. This has allowed more brands and agencies to include NCM in their media plans as performance-oriented KPIs are now a must-have for all media buyers.

We recently further strengthened our analytical capabilities through a new partnership with iSpot, the real-time TV measurement company, extending the value and capabilities of NCMx. Our iSpot integration expands the opportunities for our brand clients to plan, buy, and optimize video investments holistically. Cinema advertising is one of the few mediums able to engage and connect with a young, diverse audience at a national scale. Now, the iSpot partnerships enable us to prove how cinema advertising extends the reach for buys across CTV, broadcast, and cable. Our ability to marry these unique data analytics capabilities with our broad national network differentiates NCM from other cinema advertising companies and TV networks, and we have the results to prove it.

Through several multi-year, multi-category proprietary intercept studies, we're demonstrating strong awareness in recall metrics with impressive case studies across categories, proving sales lift, foot traffic build, and incremental ROI on specific campaigns. Recently, we partnered with two technology clients that had not advertised on NCM's network in the past. In both cases, our capacity to measure and report success metrics was a key factor in their decision to join our network. One of these companies has already renewed the coming year, increasing their budget by 50%. We're seeing more of these success stories across brands and categories, proving once again the value of our audience. As we look ahead to the Q4, there's a strong slate of films releasing across all genres set to open exclusively in theaters. The entire quarter is rich with premium content with a mix of films for everyone.

On November 11, the highly anticipated Black Panther: Wakanda Forever opens, followed by likely Oscar nominees, The Fabelmans, and great family fare, including Strange World and Puss in Boots: The Last Wish. The much-anticipated release of Avatar: The Way of Water opens on December 14, and is projected to bring in big box office numbers and diverse audiences in the theaters well into the Q1 of 2023. Before I turn the call over to Chief Financial Officer, Ronnie Ng, I wanted to make a few comments about our delayed bond interest payment and long-term partnership and exhibitor services agreement, or ESA with Regal. As has been previously disclosed in court filings, Cineworld filed a motion indicating an intent to reject the ESA, and also stated that Regal currently plans on engaging with us regarding advertising services. NCM LLC filed a lawsuit to enforce our non-compete and exclusivity agreements.

As the litigation with Cineworld is ongoing, it would be premature for us to comment any further on this call. Separately, after utilizing a portion of our 30-day grace period allowed by the bond indenture, last week, we made the interest payment on our senior secured notes due 2028. As Ronnie will discuss in more detail in a few minutes, on a consolidated basis, we currently have over $64 million of cash and sufficient liquidity to run our business for the foreseeable future. As you can tell, despite the challenges presented by the pandemic and recent Regal bankruptcy filing, we remain optimistic about the future prospects of our business. We have nearly completed a highly successful upfront sales cycle, and with the growing network of theaters bringing in a higher attendance, we are well-positioned for future revenue growth.

Despite the prospect of a recession, we are benefiting from a favorable macro advertising environment that is being driven by the recovery of several significant client categories, most notably automotive, and the recovery of local smaller businesses that at one time represented over 20% of our total revenue. We also see benefits as digital advertising spend slows and our marketers look to allocate and reallocate a portion of their digital budgets to more effective platforms that allow them to escape the clutter and differentiate their brands. While the last couple of years have been very challenging, I'm looking forward to what lies ahead. I'd like to thank all of our management and staff for their hard work and commitment to National CineMedia. We would not be on this road to recovery without their dedication.

With that, I will turn the call over to Ronnie to provide you with more detail on our operating results and financial condition and future outlook.

Ronnie Ng (CFO)

Thank you, Tom, and good afternoon, everyone. For the Q3, our revenue was near the midpoint of our guidance range provided during the last earnings call, while our Adjusted OIBDA was at the top end of the guidance, resulting in a slightly higher margin than we have projected. The results for the quarter reflect our strong execution to achieve operational efficiency while navigating through the recovery of the exhibition industry. In addition, our successful upfront advertising results that Tom mentioned of 85% of our historical average demonstrate the importance of our value proposition to advertisers. These upfront commitments, combined with a stronger film release schedule and higher movie attendance, will set the stage for meaningful growth in the Q4 and 2023.

As we mentioned on our last call, for the Q3, we experienced a lighter film release schedule during the late summer and early fall than we anticipated. This was simply a matter of timing related to film production and post-production bottleneck during the COVID lockdowns. With the holiday season on the horizon, we expect the number of films to again increase, partly during the Q4 2022 and into 2023. Total revenue for the Q3 was $54 and a half million, up roughly 72% compared to the same quarter last year. National revenue for the Q3 of $39.7 million was up over 75% compared to the prior year, while local and regional revenue for the Q3 of $9.8 million was up 72% compared to the same period last year.

Looking at the operating metrics, we continue to deliver a large, high quality, captive young audience to our advertiser partners. This large scale and broad geographic coverage is critical to advertisers as we compete against large, national and local and TV networks in various online social, search, and entertainment platforms for advertising budgets. Even with the less substantial film release schedule, Q3 network theater attendance remained over 100 million at nearly 107 million. This represents the Q3 in the last four where attendance exceeded 100 million. In addition, overall attendance levels was roughly 65% of the pre-pandemic levels, which we experienced in the Q3 of 2019. The 65% was consistent with what we saw during the Q2.

Looking at our pricing, during the quarter, we continued to see improved year-over-year trends driven by a favorable client mix and higher Platinum sales, similar to what we saw earlier in the year. We continue to see the client mix evolve with large-cap tech, media, and travel making up a large portion of our top 10 accounts for the quarter. As a result of this favorable mix, our Q3 national CPMs exceeded that of the Q3 of 2019 by 26%, making this the fourth consecutive quarter in which pricing exceeded 2019 levels. This CPM trend has been accelerating with the Q2 of 2022 up 19% versus the Q2 of 2019, and the Q1 of 2022 up 2% over 2019 levels.

With a much higher percentage of our Q4 and 2023 revenue coming from our upfront commitment, we do not expect this accelerating CPM trend versus 2019 to continue as our revenue growth will begin to be driven more by an increase in inventory utilization, resulting in an overall increase in revenue per attendee. In fact, our Q3 revenue per attendee was up 22% versus the Q3 of 2021. Advertisers also continued to embrace and purchase our Platinum inventory spots. Despite the softer movie slate in August and September, we successfully sold Platinum advertising in each month of the quarter. We continue to expect Platinum spots to be in high demand for the Q4 with sales in each month of the quarter. As you can see, there are some very encouraging underlying market signals in our KPIs.

Those favorable underlying trends continue to tell us that as movie attendance improves, we are well positioned for revenue growth in the future. Turning to our expenses. The Q3 operating expenses excluding depreciation and amortization, non-cash charges, and one-time items were $47.5 million. Overall, a 9% decrease compared to the Q2, while representing 19% increase over the same quarter last year. These variances primarily reflect the seasonality of the business and variances in the theater access fees and affiliate expenses related to increases in industry attendance. Our selling and marketing costs remaining generally flat compared to the Q2, while it increased 27% over the same quarter last year.

While we continue to make great efforts to contain costs, we did increase certain costs over the prior year where it was strategically necessary to support our growth and ongoing recovery in our business. Q3 Adjusted OIBDA was $7 million, for a margin of approximately 13% compared to -$8.2 million last year. As mentioned, this was at the high end of our guidance range provided in August, which was a result of higher CPMs and focused expense management. Given our recent performance, we continue to be reinforced in our view that as theater traffic builds back towards normal historical patterns and our inventory utilization increase due in part to our successful upfront campaign, including the sale of more of our high-margin Platinum units, we are well-positioned to continue to improve our Adjusted OIBDA margins.

Integration and other encumbered theater payments due from AMC for the Q3 were $1.2 million, compared to $0.2 million for the same period during 2021. As a reminder, integration payments are based on what NCM could have earned had advertising been sold in those theaters by our sales teams. These integration and other encumbered theater payments are added to adjusted OIBDA for debt compliance and partnership cash distribution purposes, but are not included in GAAP reported or adjusted OIBDA, as they are recorded as a reduction to net intangible assets on the balance sheet. As our overall revenue increases, these payments will also increase. Q3 GAAP loss per diluted share was $0.11 versus a loss per diluted share of $0.19 during the Q3 of 2021. Turning to our consolidated balance sheet.

Total debt net of cash at NCM LLC at the end of the Q3 was $1.1 billion, approximately the same as at the end of 2021. Changes in debt related primarily to the $50 million revolver funded in January 2022, net of the approximately $25.8 million of NCM LLC's 5.875% senior secured notes, which NCM Inc. acquired for an average price in the mid-seventies during the Q2. Our average interest rate on all debt was approximately 6.5% for the quarter, compared to 5.6% for the Q3 of 2021.

This increase was primarily due to the higher rate of the new $50 million revolver that was funded in January 2022. Excluding NCM LLC's revolver balances, approximately 53% of our total debt outstanding at quarter end had a fixed interest rate. NCM LLC's cash balance at the end of the Q3 was $60.9 million, and including the $7.2 million of availability under the revolver, NCM LLC's total liquidity at quarter end was approximately $68.1 million, which was in excess of our liquidity covenant that requires a minimum liquidity of $55 million. Last week, our board of directors voted to pause the NCM Inc. regular quarterly cash dividend as we continue to prioritize financial flexibility and liquidity.

As always, the declaration, payment, timing, and amount of any future dividends will be at the sole discretion of the board of directors, who will also consider general economic and advertising market business conditions and the company's financial condition. With respect to the broader economy and its impact on our business, we have not experienced significant client marketing budget contraction, as consumer spending has remained strong despite the recent significant increases in market interest rates and the fear of a future recession. We have also not noticed any impact on our theater partners' business, as the cinema business has historically done very well during periods of economic slowdowns. As cinema continues to be one of the lowest priced forms of out-of-home entertainment, we expect that trend to continue.

While certain client categories may cut short-term marketing expenditures in fear of a future recession, many important categories to us, such as auto, have already been depressed over the last couple of years due to supply chain issues. As those issues abate and more of their products become available, we have actually begun to see an increase in their marketing budgets. This is also true in certain consumer product categories such as telecom and insurance, as these companies compete for consumers during recessionary times. We will also benefit should the economy begin to slow from our successful upfront campaigns that will help offset any contraction in the scatter market that usually accompanies an economic slowdown. Turning to guidance. We expect revenue for Q4 2022 will be between $85 million and $95 million.

We expect Q4 2022 adjusted OIBDA to range between $32 million and $42 million, which compares to $18.4 million in the Q4 of 2021. In addition, we expect cash interest expense for the Q4 to be $18 million-$19 million, and capital expenditures to be $1 million. While we remain optimistic about the recovery of our business over the medium to long term, our large Q4 guidance range reflects some level of prudent conservatism with respect to the headwinds of a slowing economy and its impact on advertising spending. Having said that, it is important to note that due to our successful upfront campaign, 70% of our national revenue guidance for the Q4 of 2022 is already contracted versus 41% in the Q4 of 2021.

As many of you are aware, during the early part of September, Regal and its parent, Cineworld, commenced a Chapter 11 reorganization. The process is in the early stages, and as Tom mentioned, there is not much we are able to add beyond what you already know. From our perspective, nothing has changed on a day-to-day basis with Regal. We are advertising in all of their theaters without disruption, and our business remains unaffected while the process related to their agreement with us that have been in place for almost 20 years plays out. We continue to be the cinema advertising leader with 75% market share of the opening domestic box office each week. Coupled with superior sales, marketing, research, and operations teams, along with one of the largest moviegoer databases with the most robust campaign and analytics platform in the business.

All of this allows us to deliver industry-leading revenue per attendee to our theater circuit partners. As disclosed last week, we received a standard notice from the Nasdaq regarding our listing due to our current stock price. In addition to the recovery of our business, we have several other alternative measures which we may pursue to maintain long-term compliance with Nasdaq standards, including a reverse stock split. We remain focused on building back our business to pre-pandemic levels and consider our Nasdaq listing to be an important component of that effort. As you can see, while we are being somewhat cautious about the current general economic conditions, our business is well-positioned to benefit from our successful upfront campaign. Improving film release schedule and higher theater attendance, which will help generate improved margins and start the process of deleveraging. Operator, please open the line for questions.

Operator (participant)

Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. Once again, if you would like to ask a question at this time, please press star one. We will take our first question from Eric Wold with B. Riley. Please go ahead.

Eric Wold (Managing Director and Senior Equity Analyst)

Thank you. Good afternoon, Tom and Ronnie. A couple questions. I guess first off, in the commentary around the 85% upfront commitments versus the 2017, 2019 period, can you kind of remind us where we are CPM wise versus those periods right now within the increase?

Ronnie Ng (CFO)

Yeah. I guess for clarification, are you talking about the Q4, or are you referring back to the prior Q3?

Eric Wold (Managing Director and Senior Equity Analyst)

No, sorry. The upfronts that you're completing right now are about 85% of kind of the revenue it'll generate between the 2017-2019 period. Just trying to compare what the CPMs are embedded in that, the upfronts you just completed or are completing versus back then.

Tom Lesinski (CEO)

Okay. Fair question, Eric. The CPMs in the current upfront are comparable to where they were on an average basis from 2017 to 2019. There hasn't been an erosion in CPMs, which we're quite happy about. As you know, we've never been a discounter in this category. The pricing levels in the upfront are, in fact, the good news is basically flat to where they were from 2017 to 2019.

Eric Wold (Managing Director and Senior Equity Analyst)

Got it. Okay. Just want to try to connect the dots on something, kind of the commentary around. It's obviously flat CPMs right there. Comments around revenue per attendee. If I look at the revenue per attendee in the first two quarters, it was down about, you know, 9%-ish versus the same quarters in 2019. The revenue per attendee in Q3 was down 24% versus Q3 2019. The overall revenue for national and local, regional, the declines versus 2019 for the total revenues have been comparable through all 3 quarters. What happened in Q3? Is that a blip? Is there something else there that I'm missing that should be included?

Ronnie Ng (CFO)

No, I think the numbers you're citing is correct, where we saw, I think, in the H1 of the year, we're closer on a to 2019 on a revenue per attendee basis versus in the Q3. I think the quarter was really just a reflection of, one, obviously lower activity level in terms of the movie slate. And two, I think you really saw, you know, a weaker scatter market than we all anticipated. I think those two things combined together kind of led to what we saw in the Q3. I think the most important thing to remember is that the weak slate is important in terms of, you know, generating volume and activity with advertisers.

Tom Lesinski (CEO)

Also, as it relates to the CPM comment from before, that's a forward look, Eric, for really Q4 through next year. It's not an explanation of, you know, the softer scatter market that we saw in the Q3 correlated as well to lower box office estimates that we had in September.

Eric Wold (Managing Director and Senior Equity Analyst)

Got it. Okay, just final question for me then. If CPMs forward are flattish versus 2019 and we get back to a you know healthier film slates and activity next year, any thoughts on. Obviously scatter is still a question mark. Any thoughts on where you think revenues per attendee could start trending into 2023 versus 2019?

Tom Lesinski (CEO)

We're not going to give guidance on 2023 yet. Hopefully over the next quarter we'll be in positions to start talking about that. I'd like to get this year wrapped up and then hopefully we can provide more specificity on 2023 on the next call.

Eric Wold (Managing Director and Senior Equity Analyst)

Fair enough. Thank you both.

Tom Lesinski (CEO)

You're welcome.

Operator (participant)

We will take our next question from Jim Goss with Barrington Research. Please go ahead.

Jim Goss (Managing Director and Senior Investment Analyst)

Okay, thanks. A couple of them. First, I was wondering about your approach and attitude toward the Platinum spots in terms of the context or the share of growth that you might achieve in the national advertising segment. Like, will this be a bigger portion, and will it really be the only place really growing within national for the time being in terms of total dollars?

Tom Lesinski (CEO)

I think actually Platinum is a growth story, but I think the post-show, that incremental five minutes on top of Platinum that we negotiated right before COVID hit is also a growth part of our business. You know, we've got seven advertisers committed Platinum this year, which is, you know, a lot more obviously than we had last year. Platinum is a growth story, but so is the post-show. You know, without the combination of those two things, we wouldn't be able to commit to a growth story. That's why we tried to future-proof the company in the Q4 of 2019. Now we're finally at a point where we can sell the upfront again against post-show and Platinum.

I think the upfront's a real testament to the strength of and the growth opportunity associated with Platinum and post-show.

Jim Goss (Managing Director and Senior Investment Analyst)

Okay. With the return of a greater share of local that you mentioned, would it be complementary or would it be, you know, sort of just taking some of the share that might have been with national?

Tom Lesinski (CEO)

I don't think there's a correlation. You know, I would say it's incremental. It's not really substituting, it's different advertisers.

Jim Goss (Managing Director and Senior Investment Analyst)

Mm-hmm.

Tom Lesinski (CEO)

It's a lot of it's been in scatter lately. I don't look at local as being contributing, you know, a cannibalistic piece to our business at all. It's different advertisers in different municipalities. We're hoping that local can continue its momentum and get back to where it was, which was a really significant part of our business in 2019. Many of the key categories in local are recovering, including local automotive. I think local has been the last sort of segment to come back in our portfolio, largely related to smaller companies still, you know, grappling with budgets coming out of COVID. The recent indications are the local's coming back, and we're really optimistic that trend will continue over the next several quarters.

Jim Goss (Managing Director and Senior Investment Analyst)

Okay, Tom. The last one for now. Obviously, there with the preference of premium box office has been growing more rapidly or returning more rapidly than the number of attendees. I'm wondering if whatever CPM increases you are getting are attempting and helping to offset maybe that erosion that you'd experienced, and if there's an opportunity because of the demographics and because of the appeal of your ad spots to maybe stay ahead of that erosion.

Tom Lesinski (CEO)

Well, I think it's critical that we focus on our most premium inventory in light of what you just said. Obviously, nothing can substitute for attendance. As you know, the attendance is still, you know, significantly down from 2019. It's going to take both a combination of selling more premium inventory combined with what we believe will be a very healthy 2023 and 2024. We need both, you know. Thankfully, we have some of the most premium high CPM inventory available of any kind. We do need the attendance to continue to recover. No one knows what the actual attendance is gonna be in 2023 and 2024, but the release schedule, you know, which our clients bought into in the upfront, would suggest that there's a lot of optimism for premium inventory.

The fact that we sold 7x more Platinum spots this year than last is a good indication of that. Obviously, we have a little ways to go, but we're really happy with the momentum that we've achieved just in the last six months or so.

Jim Goss (Managing Director and Senior Investment Analyst)

Okay. Thanks, Tom.

Tom Lesinski (CEO)

Sure.

Operator (participant)

That will conclude today's question and answer session. Mr. Lesinski, I will turn the conference back to you for any additional or closing remarks.

Tom Lesinski (CEO)

Okay. Well, thank you everyone for your questions, and thank you for your support. With a robust slate of scheduled content in Q4 and our advertisers back on screen with us, we look forward to a really strong finish to 2022. We know that the content is there, the audiences will show up, especially that hard-to-reach young audience that are not available in the TV marketplace anymore. We can now easily prove out to our advertisers that cinema outperforms linear TV, delivering better engagement than social and ad-supported streaming apps. As we look ahead, we anticipate even more people will be coming into the theater to enjoy their favorite new movie on the big screen. I wanna thank our entire team at NCM for their hard work, and thank our shareholders, our lenders, and our advisors for their support and patience.

We truly appreciate you joining us on our call, and look forward to seeing all of you at the movies. Thank you.

Operator (participant)

This concludes today's call. Thank you for your participation, and you may now disconnect.