National CineMedia, Inc.

Greetings, and welcome to National Seminar Incorporated Q1 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Doerenkamp, Finance Director. Please proceed, sir. Good afternoon.

Good afternoon. I'm joined today by our CEO, Tom Lazinski, and our CFO, Ronnie Ng. I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of 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 gap 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.

Thank you, Dan, and good afternoon, everyone. Welcome to our first quarter 2022 earnings call. Q1 was our fourth straight quarter of strong year-over-year revenue growth, with a significant upswing in advertising sales as millions of Americans once again returned to the movies. Advertisers are taking note of the Q421 and the Q122 blockbuster success of Spider-Man and the Batman. In addition, this weekend's smash opening of Disney and Marvel's Doctor Strange and the Multiverse of Madness opened with an explosive $187 million and NCM had 24 of the top 25 theaters in our network. The success of these films clearly demonstrates the continued strong demand for the out-of-home communal experience that cinema uniquely provides. Our first quarter revenue exceeded NCM guidance, and we are gaining momentum as we move into the second quarter with the expectation of a strong summer film slate. We're also seeing increased cinema advertising demand stemming from continued linear TV ratings declines and changes to privacy controls online and on cell phones that are raising questions about the future effectiveness of digital advertising. All of this makes us even more optimistic about the future of national cinemedia. During today's call, we will provide a high-level update on our company's successes and continued momentum in the advertising marketplace. I will also speak to how we're moving ahead to expand, diversify, and strengthen our business with new products, services, and offerings, enabling us to capitalize on a strong 2022 theatrical film slate. We'll also discuss the success of our in-person upfront events held in Chicago and New York in March and Los Angeles in early April, where we presented four key messages to hundreds of media buyers and brands. was the return of the mass audience to the cinema, two, the benefits of our new data intelligence platform, three, the marketing power of our refreshed newbie pre-show, and most importantly, four, cinema's unique ability to reach a young, diverse audience at scale. Then we'll open up the line for your questions. So, cinema truly is back. The box office momentum throughout the second half of 2021 saw moviegoers returning in droves, and has continued into 22. The success of Spider-Man No Way Home continued to reverberate well into January of 22. Spider-Man reached the rare domestic box office milestone of $800 million on its 100th day of release, becoming only one of three movies to do so in Hollywood history. Followed by the first quarter blockbuster hit The Batman, which exceeded industry expectations, we saw cinema once again deliver at scale, specifically against that coveted, diverse, 18 to 34-year-old demo. Notably, the Batman opening weekend had higher ratings than the top 16 broadcast and cable telecast combined and has generated over $369 million domestically. Uncharted also exceeded box office expectations driven by men under age 35 and strong diversity demos. But it's not just the younger audience who have returned to the movies. as films across all age and gender demos have performed above expectation. The Lost City, starring Sandra Bullock and Channing Tatum, demonstrated that romantic comedies are still a popular genre, driving women back to the theater. Females accounted for nearly 60% of the opening week in audience overall, with women aged 35 plus compromising close to 50%, and the film has generated over $94 million to date. Most recently, Sonic the Hedgehog 2 demonstrated that families are also back at the movies. The kid-friendly film earned an impressive $72 million its first weekend, with 32% of attendees under the age of 17 and a massive 70% in diversity numbers. To date, Sonic has earned $159.9 million at the box office. We anticipate continued moviegoer demand with a strong spring and summer slate of releases ahead. We expect to see a reverse in impact of the pandemic on production and post-production schedules as the number of releases increase, and more importantly, exclusive theatrical window policies of film producers and distributors stabilize. In this respect, the recent decline in streaming subscription growth is expected to enhance cinema's position as a primary release and marketing platform for feature films. We saw a significant uptick in ad contract deal flow in Q1, across all areas of our business, including on-screen, digital, digital out-of-home, and across both local and national advertisers. We are seeing more clients in categories returning to cinema advertising, including automotive, travel, dining, gaming, wireless, entertainment, and consumer packaged goods. Just a few weeks ago at the industry's annual convention, CinemaCon, we saw firsthand an incredibly compelling and diverse slate of films for the remaining 22 and 2023 from all the major studios with a significant emphasis on exclusive theatrical windows, as well as the importance and impact of the immersive shared experience of the cinema. All the studios and movie stars, directors, and producers echoed over and over again that not only are movie theaters back, but that theatrical releases are the cornerstone of the entertainment business, and nothing can compare to the unique impact of viewing a movie on the big screen and its ability to transcend moviegoers into other magical worlds. Based on the sneak film previews and footage, we could very well see some major movie blockbusters in the year ahead. As I mentioned previously, we recently completed three major in-person upfront events in New York, Chicago, and Los Angeles, targeting the entire advertising and media planning and buying community. Our goal was to generate excitement and interest about the return of movies and NCM's unique marketplace position in advance of the TV and digital 2022-2023 upfront selling season. During these presentations, we made several important announcements. First, we officially launched our new data intelligence platform, NCMX, which connects brands with custom audiences in theaters as well as on digital screens before and after attending movies. With NCMX, cinema is now more targetable, measurable, and accountable than ever before, offering brands highly customized, hard to reach audience segments with the enhanced ability to measure clear business outcomes and return on marketing investment. Marketers can leverage NCM to execute advanced audience matching against key demographic, geographic, behavioral, and contextual targets on the big screen, as well as use NCMX capabilities to retarget moviegoers with digital ads and mobile offers. With nearly 300 million data records, NCM provides marketers access to the benefits of one of the largest collections of deterministic moviegoer data, giving brands a 360-degree view of recent consumer behavior with performance metrics to refine campaign plans and generate a better return on their advertising investment. Response to this powerful new data-driven offering has been extremely strong, with healthcare, QSR, and CPG brands already taking advantage of our new capabilities. At our upcoming events, we also focused on how advertisers can target our coveted Gen Z and millennial moviegoer audience. Nearly one out of every two adults who visited a movie theater in the fourth quarter of 21 and the first quarter of 22 were 18 to 34-year-olds, and 79% of moviegoers attended an NCM theater are under the age of 39. Declining viewership on linear TV and extensive cord cutting, especially among ad skippers, younger audiences, has forced marketers to look for more compelling alternatives to reach these consumers. Movie theaters continue to attract and capture the undivided attention of this valuable and highly desirable demographic. Not only do we deliver a hard-to-reach young audience at this scale each weekend, but they're also 59% multicultural, with Hispanics accounting for 22% of our audiences. We also launched our reimagined newbie pre-show, featuring an array of new content series, strategic partnerships, and a diverse cross-section of TikTok, Instagram, and YouTube stars and celebrity talent. These programs embrace broader cultural themes, causes, and consumer passions, engaging Gen Z and younger millennials while offering relevant ways for advertisers to forge stronger connections with NCM's hard-to-reach audiences. Our new original series launched in second quarter is the Newbie Trivia Show, inspired by our proprietary Newbie Trivia app and starring entertainment host Maria Menounos, who engages film and online social celebrities with movie trivia. Marketers can also enlist Newbie Studios, NCM's in-house creative team, as a partner to develop and produce original branded content, cinematic stories, experiential programs, and influencer activations that best resonate with moviegoers. This service is especially valuable to local and regional clients who may not have access to high-quality creative and production capabilities. The buzz coming out of these three events was strong, with significant media coverage in the major trade marketing platforms. These newly launched offerings are also beginning to generate increased demand as we move into upcoming Upfront negotiations. With hundreds of clients in attendance, the events that accomplished our goals are generating early interest and consideration in the TV and digital Upfront seasons. We're already seeing renewed activity from key categories such as travel, wireless, restaurants, gaming, entertainment, and packaged goods across our national, local, and digital out-of-home businesses. We're also seeing a rebound in the automotive category as the supply chain issues begin to abate and car dealers begin to receive car deliveries. During our next earnings call in early August, we'll be able to update you on our upfront marketplace success. In our local markets, government healthcare and education continue to hold as the top three categories. In first quarter, we also saw growth in regional automotive and in travel and tourism. We also successfully completed a reorganization of local and regional teams to focus on higher contract value from larger clients and agencies in addition to generating significant operating efficiencies. We're very optimistic that the box office momentum will continue given the packed release schedule. One of the most anticipated movies of 22, Doctor Strange, just reported the biggest weekend box office of the year today with 187 million in ticket sales, surpassing the Batman's 134 million. Following Doctor Strange comes the return of Tom Cruise in Top Gun Maverick, then Jurassic World, Dominion, and Lightyear. This strong film slate for the spring and early summer is expected to draw large audiences across all demos, most notably younger families. The improving cinema business outlook combined with the stronger marketer demand for our network, after a great series of upfront sales meetings, sets us up well to continue to grow our revenue and cash flow and begin the process of de-levering the company. I'll now turn the call over to Ronnie to discuss our Q1 financial results in more detail.