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National CineMedia, Inc. (NCMI)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $37.4M (+7.2% YoY), the highest first quarter since the pandemic, with total revenue per attendee up 26% YoY; Adjusted OIBDA improved to -$5.7M from -$10.9M, signaling monetization and cost discipline .
  • Mix shift continued toward national: national advertising revenue rose 31% YoY, while scatter revenue doubled; upfront commitments were up ~16% YoY, underpinning resilience despite a softer box office backdrop .
  • Q2 2024 guidance: revenue $49.5–$51.5M and Adjusted OIBDA $3.5–$4.5M; management attributes the YoY revenue decline to a meaningfully weaker film slate and lower attendance vs Q2 2023 ($64.4M) .
  • Capital allocation catalyst: highest free cash flow in 15 quarters ($22.6M); $100M share repurchase program initiated with 649,164 shares repurchased for $3.2M at ~$5 average, supporting shareholder value creation .

What Went Well and What Went Wrong

What Went Well

  • Strong national and scatter performance: national advertising +31% YoY; scatter revenue +$8.8M, doubled YoY. CEO: “strong performance across both the upfront and scatter marketplaces.”
  • Product and inventory innovation: Platinum commitments >$2.5M (best first quarter since 2019, +130% YoY) and official launch of on‑screen programmatic in Feb 2024 with 15 advertisers, expanding access to new budgets/buyers .
  • Monetization metrics: utilized impressions per attendee +62% YoY; attention- and outcome‑based deals driving category expansion (travel, pharma +142% YoY, CPG +165% YoY) .

What Went Wrong

  • Attendance down 16% YoY to 75.8M due to strike‑related title postponements; management estimates attendance would have been on par with 2023 absent delays .
  • Local/regional softness: revenue fell 34% YoY to $5.3M, driven by lower attendance and non‑return of some government/travel contracts; beverage revenue fell 41% YoY to $2.6M due to Regal termination and lower ESA attendance .
  • GAAP losses persist: operating loss of $22.7M; non‑operating loss includes $12.3M from re‑measurement of the tax receivable agreement payable, keeping net loss at -$34.7M (diluted EPS -$0.36) .

Financial Results

MetricQ1 2023Q4 2023Q1 2024
Revenue ($USD Millions)$34.9 $90.9 $37.4
Diluted EPS ($USD)-$3.13 $0.24 -$0.36
Adjusted OIBDA ($USD Millions)-$10.9 $39.8 -$5.7
Adjusted OIBDA Margin (%)-31.2% 43.8% -15.2%
Total Revenue per Attendee ($USD)$0.388 —$0.493
Attendance (Millions)90.0 82.0 75.8

Segment breakdown:

SegmentQ1 2023 ($M)Q1 2024 ($M)
National Advertising Revenue$22.5 $29.5
Local & Regional Advertising Revenue$8.0 $5.3
Beverage Revenue (ESA)$4.4 (implied) $2.6
Total Advertising (excl. beverage)$30.5 $34.8
Total Revenue$34.9 $37.4

KPIs:

KPIQ1 2023Q1 2024
Total Screens (100% Digital)19,642 18,297
ESA Party Screens9,575 9,552
Total Attendance (Millions)90.0 75.8
National Ad Revenue per Attendee ($)$0.250 $0.389
Local/Regional Revenue per Attendee ($)$0.089 $0.070
Total Advertising per Attendee ($)$0.339 $0.459
Total Revenue per Attendee ($)$0.388 $0.493
Capital Expenditures ($M)$0.8 $1.3
Cash, Cash Equivalents & Restricted Cash ($M)$37.6 (12/28/23) $60.1 (3/28/24)
Total Equity ($M)$434.5 (12/28/23) $402.3 (3/28/24)

Note: Q4 2023 attendance 82M from transcript context .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q1 2024$34.5–$35.5 Actual: $37.4 Raised vs prior guide (beat)
Adjusted OIBDA ($M)Q1 2024-$7.5 to -$6.5 Actual: -$5.7 Raised vs prior guide (beat)
Revenue ($M)Q2 2024N/A$49.5–$51.5 New
Adjusted OIBDA ($M)Q2 2024N/A$3.5–$4.5 New

Management noted Q2 YoY decline vs NCM LLC’s Q2 2023 revenue ($64.4M) due to a meaningfully weaker slate and lower expected attendance .

Earnings Call Themes & Trends

TopicQ3 2023 (Prev. Mentions)Q4 2023 (Prev. Mentions)Q1 2024 (Current)Trend
Programmatic & Self‑ServeCompleted programmatic beta; tested self‑serve Expanding ways to buy; expect higher utilization over time Official programmatic launch Feb’24; 15 advertisers; pipeline building Accelerating adoption
Attention & Outcome GuaranteesLumen study; Adelaide attention guarantees First‑time business outcome guarantees announced Outcome‑based deals delivering measurable lifts (e.g., auto foot traffic +22%) Expanding commercialization
Share Repurchase / Capital AllocationPost‑restructuring; reverse split; reconsolidation $100M buyback announced through 2027 Repurchases initiated ($3.2M; 649k shares); FCF $22.6M (15‑quarter high) Executing
Box Office/Supply (Strikes impact)Strike delays impacted Q4 attendance by ~20M Expect 2024 slate softness; better in 2025 Q1 attendance -16% YoY; Q2 guide reflects weaker slate Near‑term headwinds; medium‑term tailwinds
National vs Local MixLocal strength YoY at LLC level Local down 5% YoY; national up 2% National +31% YoY; local -34% YoY; expect more national mix Shift toward national
AI/Technology Initiatives——“Business guarantees, programmatic, AI” noted among offerings Emerging focus

Management Commentary

  • CEO: “Our revenue increased 7.2% compared to the prior period, representing the highest first quarter since the pandemic… We generated our highest free cash flow in the last 15 quarters.”
  • CEO on demand/box office: “The domestic box office brought in $1.6 billion this quarter… ending with great momentum.”
  • CFO: “Utilized impressions per attendee increased 62%… National advertising being up 31% and advertising revenue per attendee up 35% YoY… exceeding our revenue guidance of $34.5M to $35.5M.”
  • CEO on scatter/upfront: “The scatter market has definitely been picking up… the upfront is really just starting to take off… we’re optimistic.”
  • CFO on capital: “We have repurchased 649,164 shares for $3.2M at an average share price of $5… plan to continue to opportunistically repurchase.”

Q&A Highlights

  • Visibility and booking cadence: Scatter improving with near‑term visibility; upfront ramping over coming weeks will signal long‑term commitments; Q2 guide largely booked with momentum in scatter .
  • Guidance construction: Quarterly guidance maintained due to slate uncertainty; path to annual guidance likely in 2025 when slate stabilizes .
  • Mix dynamics: National strength and local weakness tied to attendance and specific government contract non‑renewals; beverage revenue separate from ad mix and down due to Regal termination .
  • Expansion beyond cinema: Active in DOOH (convenience stores, campuses) but core focus remains cinema; potential diversification after upfront season .
  • Political cycle: No political ads; potential benefit from sellouts in swing state local inventory as brands reallocate to cinema .

Estimates Context

  • Wall Street consensus estimates from S&P Global were unavailable at this time due to access limitations; as a proxy, results exceeded company’s prior Q1 guidance for revenue ($37.4M vs. $34.5–$35.5M) and Adjusted OIBDA (-$5.7M vs. -$7.5 to -$6.5M) .
  • With Q2 guidance below the prior year on revenue, Street estimates may need to reflect weaker slate dynamics and attendance assumptions in the near term .

Key Takeaways for Investors

  • Strong monetization despite lower attendance: national +31% YoY, scatter doubled; revenue and Adjusted OIBDA beat company guidance, underscoring pricing/utilization resilience .
  • Near‑term caution: Q2 guide below prior year ($49.5–$51.5M vs. $64.4M) on slate weakness; trading setups should account for attendance‑sensitive leverage to box office .
  • Buyback‑supported upside: $100M repurchase program underway; highest FCF in 15 quarters provides dry powder for capital returns over 2024–2027 .
  • Balance sheet: Cash $60.1M, debt $10.0M at 3/28/24; enhanced post‑restructuring profile supports investment in programmatic/self‑serve and opportunistic buybacks .
  • Product differentiation: Attention/outcome guarantees, Platinum units, and programmatic broaden demand and should drive utilization and category expansion (e.g., pharma/CPG) .
  • Mix shift: National remains the growth engine; local/regional recovery hinges on attendance and contract activity—monitor government/travel categories and political season spillover into cinema .
  • Medium‑term thesis: As 2025 slate normalizes (Avatar 3, Superman, MI8, etc.), attendance recovery plus monetization initiatives can reset revenue trajectory and OIBDA leverage .