On March 18, 2024, National CineMedia Inc (NCMI, Financial) released its 8-K filing, disclosing its financial results for the fourth quarter and full year of 2023. The company, which operates the largest cinema advertising platform in the U.S., experienced a year of mixed financial performance, with flat year-over-year quarterly revenue but a notable increase in net income for the fourth quarter.
Company Overview
National CineMedia Inc is a leading name in the digital in-theatre media network across North America. The company's primary operation, First Look, is a prefeature programming that plays before movies and related trailers. Alongside its cinema advertising, National CineMedia also operates an online and mobile network that includes movie content, trailers, showtimes, and other features. The company's revenue is derived from the sale of advertising to national, regional, and local businesses.
Financial Highlights and Challenges
NCMI's fourth quarter saw a record high in revenue per attendee, although total operating revenue remained flat at $90.9 million compared to the same period in the previous year. The company's national advertising revenue saw a modest increase, driven by a 14.1% rise in utilization, which was partially offset by a 6% decrease in attendance. On the other hand, local and regional advertising revenue saw a decline due to decreased contract size and activity in certain sectors.
The company's operating income for Q4 2023 was $21.3 million, a decrease from $28.1 million in Q4 2022. This was primarily due to an increase in amortization expenses and costs related to NCM LLC’s Chapter 11 Case and related appeals. Adjusted OIBDA for the quarter was $39.8 million, down from $42.1 million in the prior year, with the adjusted OIBDA margin contracting by 210 basis points to 43.8%.
For the full year 2023, NCM LLC reported a total revenue of $259.8 million, marking a 4% increase from the previous year. However, the company faced an operating loss of $180.9 million, primarily related to the disposal of an intangible asset. The adjusted OIBDA for the year was $52.7 million, a decrease from $57.3 million in 2022, with the adjusted OIBDA margin contracting by 270 basis points to 20.3%.
Strategic Moves and Outlook
In a strategic move to enhance shareholder value, NCMI announced a new share repurchase program, authorizing the company to repurchase up to $100 million of its common stock through April 1, 2027. The repurchases will be funded through operating cash flow distributions from NCM LLC and will be made opportunistically at prevailing market prices.
Looking ahead to the first quarter of 2024, NCMI expects total revenue to be between $34.5 million and $35.5 million, with adjusted OIBDA ranging from negative $7.5 million to $6.5 million. This outlook suggests a cautious approach in the face of ongoing market challenges and strategic investments.
Investor and Analyst Information
NCMI will host a conference call and audio webcast for investors and analysts on March 18, 2024, to discuss the earnings report in detail. The call will provide an opportunity for stakeholders to gain further insights into the company's financials and strategic direction.
The company's performance reflects the dynamic nature of the cinema advertising industry, which is influenced by factors such as movie attendance, the slate of films released, and the broader economic environment. As NCMI navigates these challenges, the announcement of the share repurchase program underscores management's confidence in the company's business model and cash flow generation capabilities.
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Explore the complete 8-K earnings release (here) from National CineMedia Inc for further details.
