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National CineMedia, Inc. (NCMI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $86.3M, slightly above the $82–$86M guidance range; Adjusted OIBDA was $35.0M, a material beat versus the $28–$30M guide, while diluted EPS came in at $0.26, and net income was $24.7M .
  • National advertising revenue declined year over year due to a harder-to-monetize G/PG mix and tough comps (Taylor Swift 2023), but scatter demand was robust with approximately 51% of national on‑screen revenue from scatter in Q4; Platinum premium inventory grew 28% YoY .
  • Management guided Q1 2025 revenue of $34–$36M and Adjusted OIBDA of −$9.5M to −$7.5M, citing lower impressions and temporary ad spend delays tied to government spending reductions and tariff uncertainty; they noted Q2 pacing is outperforming the prior year .
  • Balance sheet catalysts: new U.S. Bank revolver reduced cost of debt by >200 bps and cut annual interest expense by ~$1M; the company has no outstanding long‑term debt and has repurchased ~2.5M shares for $13.4M under its $100M authorization .

What Went Well and What Went Wrong

What Went Well

  • Fifth consecutive quarter exceeding guidance: “The fourth quarter marked the fifth consecutive quarter where our results surpassed our expectations,” with revenue at $86.3M (above the $82–$86M guide) and Adjusted OIBDA of $35.0M (above the $28–$30M guide) .
  • Premium inventory momentum: Platinum revenue was up 28% YoY in Q4; 84 unique advertisers participated in Q4 with strong contributions from retail, wireless, insurance, travel and leisure .
  • NCMx outcomes and data: Nearly half of sales revenue supported by NCMx initiatives; average 47% lift in retail foot traffic from cinema campaigns; management emphasized growing attribution and KPI‑based commitments .

What Went Wrong

  • Mix headwinds: A higher mix of G/PG content constrained monetization in December; national advertising revenue fell to $69.2M (from $71.9M in Q4 2023) and local/regional to $13.5M (from $16.2M), with utilization down 22% YoY in national .
  • Tough comps and shortened window: Prior year’s Taylor Swift: The Eras Tour created a difficult comparison; a shorter Thanksgiving‑to‑Christmas window and election‑related delays impacted top line .
  • Near‑term guide softness: Q1 2025 guidance implies a seasonal and macro‑affected trough (revenue $34–$36M; Adjusted OIBDA −$9.5M to −$7.5M), reflecting tariff uncertainty and reduced government advertising; SG&A planned to rise high single‑digits in 2025 to support growth .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$54.7 $62.4 $86.3
Operating Income (Loss) ($USD Millions)$(9.3) $(7.5) $20.0
Net Income (Loss) ($USD Millions)$(8.7) $(3.6) $24.7
Diluted EPS ($USD)$(0.09) $(0.04) $0.26
Adjusted OIBDA ($USD Millions)$7.6 $8.8 $35.0
Adjusted OIBDA Margin (%)13.9% 14.1% 40.6%

Segment revenue breakdown:

SegmentQ2 2024Q3 2024Q4 2024
National Advertising ($USD Millions)$41.7 $46.8 $69.2
Local & Regional ($USD Millions)$9.8 $11.4 $13.5
Beverage (ESA Parties) ($USD Millions)$3.2 $4.2 $3.6
Total Revenue ($USD Millions)$54.7 $62.4 $86.3

KPIs and operating metrics:

KPIQ2 2024Q3 2024Q4 2024
Attendance (Millions)92.8 121.6 100.6
ESA Party Attendance (Millions)57.6 74.3 63.1
Total Screens (Period End)18,279 18,141 18,028
ESA Party Screens (Period End)9,552 9,492 9,455
Capital Expenditures ($USD Millions)$1.0 $1.0 $2.3
Upfront % of National Revenue78% 59% —
Scatter % of National Revenue—41% ~51%
Free Cash Flow ($USD Millions)$6.7 $(2.4) $28.1

Notes:

  • Adjusted OIBDA excludes items including D&A, share‑based comp, impairments, workforce reorg, satellite transition, system optimization, Regal ESA termination impacts, and advisor/legal fees related to Cineworld/Chapter 11; see reconciliations in the press release .
  • Q4 attendance benefited from titles like Wicked, Moana 2, The Wild Robot, though December’s G/PG mix weighed on monetization .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q1 2025N/A$34–$36 New
Adjusted OIBDA ($USD Millions)Q1 2025N/A−$9.5 to −$7.5 New
SG&A (% YoY)FY 2025N/AHigh single‑digit increase Increased spending (growth investments)
Capital Expenditures ($USD Millions)FY 2025N/AIncrease by $2–$3 (mostly one‑time) Increased

Reference (prior quarter guidance for Q4 2024, achieved in Q4 actuals):

  • Q4 2024 revenue guidance $82–$86; Adjusted OIBDA $28–$30 (issued 11/05/2024) .
  • Q4 2024 actuals: revenue $86.3; Adjusted OIBDA $35.0 (beat) .

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Mentions)Q3 2024 (Previous Mentions)Q4 2024 (Current Period)Trend
NCMx data & outcomes43% of sales tied to NCMx; QSR case 27% lift; Boomerang QR enhancement launched; Nielsen AMRLD integration 47% of sales tied to NCMx; Boomerang/Boost retargeting; 20%+ engagement uplift; 50% sales lift claims Nearly half of sales supported by NCMx; average 47% lift in retail foot traffic; KPI/outcome commitments growing Strengthening adoption
Programmatic & self‑serveOn‑screen programmatic launched; 44 unique advertisers; highest programmatic month in June; pipeline building Self‑serve advertisers 59; sales up 96% q/q; continued build Continued investment; expected growth; innovation focus Building
Premium inventory (Platinum, premium screens)Second‑best quarter ever; sales up >15x YoY Sales up 2.4x YoY Platinum revenue +28% YoY; advertiser focus on premium formats (IMAX/PLFs) Sustained growth
Upfront vs scatter mix~78% of national revenue from upfront commitments ~59% upfront; scatter strong ~51% of national on‑screen revenue from scatter Shift toward scatter
Macro (tariffs, gov’t)Gov’t category strong; courtesy ads up 88% YoY —Headwinds: gov’t spending reductions and tariff uncertainty delaying Q1 ad spend Emerging headwinds
Balance sheet & capital allocation$100M buyback; ~2.1M shares repurchased by Q2 2.5M shares repurchased; $12.8M New revolver (−200 bps); −$1M annual interest; no LT debt; 2.5M shares, $13.4M Strengthening

Management Commentary

  • “The fourth quarter marked the fifth consecutive quarter where our results surpassed our expectations,” driven by advertising growth momentum and scatter strength .
  • “Nearly half of our sales revenue is now supported by NCMx initiatives,” with average 47% lift in retail foot traffic and thousands of incremental visits attributed to campaigns .
  • “We expect first quarter revenue… to be between $34 million and $36 million… [reflecting] recent policy shifts relating to Federal Government spending and tariffs that have… delayed advertising spend,” but “we are encouraged by the strength of our second quarter pipeline” .
  • “Attendance is always the #1 driver… the more [the demographic] is geared towards PG‑13, the more we can monetize it,” aligning with planned slate recovery in 2025–2026 .
  • “Everybody wants to be on those premium screens… married to our Platinum inventory,” reinforcing pricing power and advertiser preference for premium formats .

Q&A Highlights

  • Advertising headwinds seen as temporary; strong Q2 pacing vs prior year; uncertainty in Q1 tied to tariffs and policy shifts .
  • KPI/outcome‑based advertising is becoming central, with roughly half of business supported by NCMx; management emphasized retention and expanding the client base .
  • Upfront outlook improving versus prior year, but buyers increasingly favor closer‑to‑air scatter; management expects a cleaner 2025 upfront vs post‑strike 2024 .
  • Premium screen demand rising; Platinum prioritized by big advertisers; opportunity to differentiate cinema vs TV/streaming .
  • Local/regional rebuild in progress after COVID‑era cuts; reinvestment in sales resources to drive a comeback in 2025–2026 .

Estimates Context

  • S&P Global consensus data for Q4 2024 and Q1 2025 was unavailable at time of analysis due to API limits; therefore, comparisons to Wall Street consensus cannot be provided. We benchmarked actuals vs company guidance: revenue $86.3M vs $82–$86M and Adjusted OIBDA $35.0M vs $28–$30M, both above guidance .
  • Where estimates are needed for trading models, revisit S&P Global once access is restored to assess consensus revenue/EPS/EBITDA and potential revisions.

Key Takeaways for Investors

  • Quality beat on profitability: Adjusted OIBDA of $35.0M significantly exceeded guidance amid a challenging content mix; pricing power and premium inventory continue to underpin monetization .
  • Near‑term caution, improving mid‑year setup: Q1 guide is soft on macro and mix, but management points to strong Q2 pacing, suggesting intra‑year inflection potential .
  • Structural demand drivers: NCMx attribution and KPI‑based buys, programmatic/self‑serve, and Platinum inventory are expanding advertiser engagement and yield .
  • Mix matters: Monetization is highly sensitive to demographic tilt (PG‑13 vs G/PG); watch the 2025 slate for a more favorable mix to drive revenue per attendee .
  • Capital allocation and balance sheet: Lower cost of capital and no long‑term debt improve flexibility; buyback remains an incremental EPS lever .
  • Trading lens: Expect estimate and sentiment volatility around Q1 macro headwinds; positioning into Q2 may benefit from improving pacing and premium slate catalysts.
  • Medium‑term thesis: As box office/attendance normalize and NCM’s data/programmatic stack scales, operating leverage and revenue per attendee should trend higher, supporting margin expansion and FCF generation .

Appendix: Additional Notes

  • Non‑GAAP: Adjusted OIBDA excludes D&A, share‑based comp, impairments, workforce reorg, satellite transition, system optimization, Regal ESA termination impacts, and advisor/legal fees; see press release reconciliations .
  • Other relevant Q4 press: First U.S. 4DX brand spot with Xfinity for Wicked, underscoring experiential ad innovations tied to premium content .