National CineMedia, Inc.

Good afternoon and welcome to the National Cinemedia Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chan Park, Vice President of Finance. Please go ahead.

Good afternoon. I'm joined today by our Chief Executive Officer, Tom Lisinski, and our Chief Financial Officer, Ronny 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 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 four 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.

Thank you, Chan, and good afternoon, everyone. Welcome to our fourth quarter and full year 2023 earnings call. This year reestablished the relevance of cinema to audiences and brands with box office hits like Barbenheimer, Taylor Swift's The Heiress Tour and Super Mario Brothers, all demonstrating the cultural power of cinema. By comparison, more moviegoers aged 18 and up went to the opening weekend of Barbenheimer than attended all four major league sporting events over 12 months. For example, Taylor Swift's concert film also drove significant demand, drawing in over 4 million attendees. That's five times more than her entire U.S. live concert tour. Additionally, the success of films like Super Mario Brothers the movie became the number two grossing PG rated film of all time with over 52 million attendees and continues to remind us of cinema's uniquely great ability to reach families. So turning to fourth quarter, NCM attendance exceeded 82 million, reaching 94% of 2002 levels. Fourth quarter attendance levels were largely impacted by strike-related delays that pushed a number of strong releases into 2024 and beyond, including Dune Part II, Ghostbusters Frozen Empire, and Kraven the Hunters. These changes to the slate negatively impacted attendance by approximately 20 million. If these films were not pushed due to the strike, we estimated that our total fourth quarter attendance would have been likely crossing 100 million. surpassing fourth quarter 2022 levels. It is clear to us that consumer demand for the cinema remains strong, and audiences are excited to see the latest movies on the big screen first. For the fourth quarter of 2023, underscore the enduring appeal of the cinematic experience for American consumers. Our core demographic, Gen Z and millennials, remains the cornerstone of the cinema audience. representing 70% of our viewership, with a cumulative reach of 32 million individuals for the quarter. Notably, during this period, Gen Z made up 41% of our audience, demonstrating a strong average weekly rating of 5.5. This rating significantly surpasses other premium video offerings, including NBC Sunday Night Football, which had an average rating of 2.2. This kind of robust engagement underscores the considerable enthusiasm that this influential demographic holds for the in-theater cinema experience. The biggest brands continue to turn to NCM as they realize the power of being united with millions of young diverse consumers who are at the movies each and every week. The fourth quarter of 23 also proved that consumers are going to the movie theaters to see more than just traditional Hollywood films. with brands quickly following to get in front of these highly engaged audiences. We saw this with Taylor Swift's The Arrow Store, where NCM sold out all of our available inventory for the initial four weeks. Specifically, NCM facilitated 32 new ad deals for this film, including 12 with previously unassociated brands. More than half of these brands were our industry leaders holding in either number one or number two position in the marketplace. This trend extended even to non-Hollywood productions such as Godzilla Minus One and The Boy and the Heron, which also attracted sizable, diverse audiences. Turning to our results. NCM's fourth quarter 23 revenue was $90.9 million, comparable to the fourth quarter of 2022. These results were driven primarily by national sales and slightly offset by local sales. We are very pleased that NCM kept pace on revenue in the fourth quarter, despite a 6% drop in audience related to the impact of the actor strike on the release schedule. This is largely due to the resilience of our business model and strong performance across our organization. In fact, NCM set a record in the fourth quarter of 2023 for its highest revenue per attendee in the company's history. National revenue for the fourth quarter was up 2% compared to the same period in the prior period. Approximately 71% of the fourth quarter's national revenue was attributable to longer-term upfront commitments, and the fourth quarter saw much better scattered marketplace participation than in the same quarter the prior year, with 83 active national advertisers compared to 58 in the fourth quarter of 2022, representing a 43% increase. Local demand continued to be led by government marketing initiatives, but also saw much greater category diversity than in past years, as cyclical industries such as restaurants, non-alcoholic beverages, arts, and entertainment contributed a greater percentage of local revenue than the same period in the prior year. Turning to the full year and quarterly box office results, 2023 box office levels were at their highest point since 2019, proving the resilience of the cinema industry. For the full year 23, the domestic box office was $8.9 billion, up 21% versus the prior year, and at 78% of 2019 levels, driven by films like Barbie's Super Mario Brothers, Spider-Man Across the Universe, Guardians of the Galaxy, and Oppenheimer. Fourth quarter box office came in at $1.9 billion, approximately up 5% year over year, and at 64% of 2019 levels, led by, of course, Taylor Swift and The Hunger Games. which brought in 179 and 159 million, respectively. Over the past 18 months, a slower ad market has impacted demand across both linear and traditional media. However, as a result of NCM's differentiated offerings and high ROI for advertisers, our revenue has been resilient in the face of tighter ad budgets. This said, in the fourth quarter, we began to see an ad spending bounce back across all channels, and expect a more significant rebound as the consumer environment improves and inflation continues to normalize over the coming quarters. This quarter, we released key findings from our second attention study, which was completed by Lumen Research, a leading attention technology company, in October of 23. The study measures attention across 14 categories, covering a variety of ad links and an expanded list of competitors and mediums. This study proved yet again that cinema continues to rank number one in terms of attention. Cinema's attention advantage is two to three times that of live sports, Fastnets, Premium Avon, and digital premium and podcasts. And it's seven to 16 times higher than that of social or digital media. Cinema saw year-over-year growth in average seconds viewed, up 17% for a 30-second spot compared to our previous study conducted in November of 22. Attention scores remain high across key demographics, including the hard-to-reach Gen Z audiences. The study also demonstrated that attention proves to be consistent across all ad links and both blockbusters and smaller indie movies. NCM's work with Lumen once again showcases cinema advertising's unique ability to create captive audience and high ROI for brands. Building off this new study, NCM also partnered with Adelaide, a leading company in attention measurement, to provide attention rating guarantees for our cinema advertising clients. This is the first time this innovative solution has been offered by a premium video platform. These new guarantees enable NCM and Adelaide clients to transact against the attention metric, allowing for an apples-to-apples quality comparison across sites, placements, platforms, channels, and more. With attention rating guarantees, NCM's offerings are even more attractive, as brands who choose to advertise with us are assured of results in an otherwise opaque environment. NCM is redefining the movie experience for brands by offering advertisers the opportunity to make cinema advertising part of their multi-channel marketing experience. As we continue to work to transform cinema advertising, NCM is providing advertisers with a wide range of custom content solutions that drive scalable impact, including turnkey editorial sponsorships in our category-leading pre-show, show takeovers with long-form branded films, immersive experiential activations in theater lobbies, and much more to drive a connection between brands and consumers, creating shareable social media moments that reach far beyond the individual moviegoer. Take, for example, a new 15-minute short film from the leading cosmetic company, ELF, that debuted ahead of the Mean Girls movie on January 12th. This is the longest brand content film NCM has ever aired on a big screen to date, with an unprecedented 167% lift in awareness and 94% ad recall. NCM's industry-leading reach ensures that it can take advantage of these trends. We're also looking for new ways to offer brands more opportunities to advertise on screen. We're continuing to enhance NCMX, the most powerful data platform in cinema, with new research capabilities and heightened data intelligence to drive business outcomes. After extensive testing over the past year, we are rolling our business guarantees for relevant ad campaign KPIs, such as web traffic, app downloads, foot traffic, and sales lists, another first in the cinema advertising business. These new initiatives will leverage our industry-leading deterministic data on the movie-going audiences to help brands optimize their spending. Additionally, this quarter, we completed our programmatic ad platform beta launch and conducted testing of self-serve buying of cinema ads. These programs will broaden the potential NCM advertising pool by expanding the ways in which current and new advertisers can tap into the company's highly valued big screen inventory. Through programmatic, brands can access real-time, data-driven trading of cinema ad inventory, and through self-serve, brands can plan, buy, schedule, and create their own cinema ads thrown on the big screen, from a single auditorium to 18,000 screens. Over time, we expect these initiatives to lead to high commercial utilization across the NCM network. As we look ahead into the first quarter of 24, NCM expects to earn total revenue of $34.5 million to $35.5 million. The first quarter started off with great films with the release of Doom II, Mean Girls, The Beekeeper, And we look forward to the release of Ghostbusters Frozen Empire coming this weekend. Importantly today, we also announced that our board has approved a new $100 million share repurchase program, which runs through the year 2027, representing our confidence in our business and into the future. Our intent is to use this program opportunistically to repurchase shares at prevailing market prices. Ronnie will discuss the news in greater detail later in the call. The future of cinema advertising is bright, and we're continuing to take steps to prove our value proposition and optimize long-term box office momentum. NCM has an unparalleled premium video advertising platform, and with innovations underway, we are set up to deliver impactful brand campaigns and continue to drive ROI on cinema advertising spend, positioning our great business for growth and continued success. With that, I'll turn the call over to Ronnie to provide you with more details on our operating results and future outlook.