National CineMedia, Inc.

Good day and welcome to the National Cinemedia Incorporated Fourth Quarter 2024 Earnings Conference Call. All participants will be in a 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 touchtone phone. And 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.

Thank you, Operator. Good afternoon. I'm joined today by our Chief Executive Officer, Tom Lusinski, and our Chief Financial Officer, Ronnie Ng. I would like to remind our listeners that this conference call contains four looking statements within the meaning of 27A, 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 uncertainty. 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 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. Today, we will be discussing NCM LLC's operating results as they relate to the fourth quarter and full year of 2024. which are largely similar to NCM Inc.' 's results. We're reporting NCM LLC's operating results to provide an accurate comparison to the fourth quarter and full year of 2023, when we also reported NCM LLC's results, given fiscal year 2023 results were unconsolidated. Now, I'll turn the call over to Tom.

Thank you, Chan, and good afternoon, everyone. Welcome to our fourth quarter and full year 2020 for earnings call. Before we begin, I want to take a moment to address the devastating wildfires that have swept through Southern California. Our hearts go out to all those impacted by this tragedy. Families who have lost their homes, communities facing unimaginable hardship, and the brave first responders who risked their lives to protect others. For many of us, including myself, this isn't just a news story, it's personal. Southern California is my home and home to many of our employees, partners, friends, and loved ones. We stand in solidarity with everyone affected, and we're committed to supporting recovery efforts in every way we can. While the fires have been contained, we know the road to recovery will be long. Our thoughts remain with those who are grieving, rebuilding, and finding the strength to move forward. We are here with you today and for the journey ahead. Moving on to our earnings. We're excited to share the highlights of what has been another landmark year for an NCM and the cinema industry as a whole. This year's performance demonstrated the resilience of cinema advertising and the ongoing appeal of theatrical experiences for moviegoers. Let's dive into the details. The fourth quarter of 24 was a great success for the box office, exceeding most industry expectations. The total box office for the quarter generated approximately $2.4 billion, marking a 26% increase year over year. This success was driven by a diverse slate of films, from massive tentpole releases to breakout hits. Wicked, part one, generated $433 million in the quarter and shattered records for a November release. Disney's Moana 2 followed closely behind with $404 million and cemented itself as a key player in the studio's animated film library, appealing to audiences both young and old. Other highlights included Gladiator 2, Sonic the Hedgehog 3, and Mufasa the Lion King, which brought in nearly $450 million combined. Thanksgiving weekend 24 was an especially historic moment for the domestic box office. The industry brought in $420 million over the Thanksgiving weekend, breaking the previous all-time record of $315 million set in 2018. December 24 was also exceptionally strong, featuring a wave of highly anticipated films, driving the fifth-highest grossing month since 2019. Looking at the year as a whole, the total domestic box office for 2024 reached $8.6 billion, driven by a robust second half. While the first half of 24 was impacted by the residual effects of the 2023 industry strikes, the second half recovery underscored moviegoers' enduring passion for the cinema, culminating in the fourth quarter. Notably, approximately 80 additional movies were released that drew meaningful attendance on top of the planned slate, keeping theaters buzzing with a diverse range of content. Inside Out 2 was the highest grossing movie of 2024, marking the first time that an animated movie has been crowned the highest grossing film of the year since Finding Dory became the highest grossing movie of 2016. Additionally, Deadpool and Wolverine, the second highest grossing film of 24, had the sixth biggest domestic opening of all time, among any film, and broke the record for the highest grossing R-rated film domestically. The strength of our core audience, which is predominantly made of Gen Z and millennials, continues to be a key driver of our success. These groups accounted for 69% of our total viewership in the fourth quarter, cumulatively reaching over 43 million moviegoers. Gen Z in particular represents 38% of our audience, maintaining a strong 6.6 weekly rating throughout the quarter. Our reach with this young, highly sought-after audience compares favorably to sports programming. For example, the recent Super Bowl drew an audience with a median age of 48, with Gen Z comprising just 12% of viewers. Meanwhile, NCM's audience has a median age of 30, and among the coveted 18- to 34-year-old demographic, 57 million individuals attended NCM theaters. averaging a 6.1 weekly rating in the fourth quarter. This demographic remains critical for advertisers, and we're proud to have captured such a significant share of their attention. In fact, seven of the top 10 event programs among 18 to 34-year-olds in 2024 were theatrical releases within the NCM network. The other three were NFL football games. As we've discussed in prior quarters, We see a continued shift in how advertisers allocate their spending. Increasingly, brands are moving away from saturated streaming and video platforms and turning to cinema, which offers broader reach and greater engagement. Advertisers realize that platforms like NCM deliver a unique and powerful opportunity to connect with audiences. In the fourth quarter, we welcomed 25 new advertisers, who launched major cinema campaigns for the first time since the pandemic. These brands are drawn to NCM for our ability to deliver unmatched audience engagement tied to culturally relevant content, and for our proven track record of driving measurable results, including in-store traffic and online sales. Now, on to our results. The fourth quarter marked the fifth consecutive quarter where our results surpassed our expectations, reflecting our strategic focus on advertising growth as the box office continues its momentum. For the fourth quarter of 2024, NCM reported revenue of $86.3 million, which slightly exceeded our revenue guide of $82 to $86 million. Adjusted OIBIDO was $35 million, well surpassing our guidance range of $28 to $30 million. Approximately 51% of the fourth quarter's national on-screen revenue was attributed to the scatter market as advertisers continued to demonstrate interest in closer-to-campaign real-time solutions. During the fourth quarter, NCM partnered with 84 unique advertisers with retail emerging as the top advertising category for the quarter. We also saw significant growth from wireless and insurance advertisers, as well as strong performance in the travel and leisure sectors. Our fourth quarter attendance of 101 million attendees was buoyed by new titles in the movie slate, led by Wicked Part 1, Moana 2, and The Wild Robot. For the full year, NCM results were approximately in line with the domestic box office. Specifically, NCM reported full year 2024 revenue of $240.8 million, compared to $259.8 million in 2023, and adjusted OIBIT up of $45.7 million, compared to $52.7 million. Despite the industry-wide headwinds in the first half of the year, our total 24 attendance was $390.7 million, primarily driven by the open performance of key titles, including Inside Out 2, Wicked Part 1, and Deadpool and Wolverine. Our platinum advertising product continues to be a key growth driver for NCM. Sales have increased significantly for this top tier inventory, with revenue more than doubling year over year. This growth was driven primarily by strength across the government, wireless, entertainment, and dining categories. Fourth quarter platinum revenue was up 28% over the prior year period, and we're encouraged by continued demand for this premium offering by category-leading advertisers. Additionally, our standard attention ratings enable brands to push the boundaries of traditional advertising. NCM brought Xfinity's campaign for Universal's Wicked Part 1 to life in the first-ever U.S. 4DX ad running via Platinum. combining dynamic on-screen visuals with synchronized movie seats and hyper-realistic environmental effects. We ran another unique campaign with U.S. Cellular, who was looking for an out-of-the-box opportunity to help increase local awareness and sales. NCM set up U.S. Cellular-branded activation in select theaters, connecting the brand with current and prospective customers on a one-on-one basis. These campaigns highlight how advertisers can creatively engage NCM's audience through immersive and experiential solutions. Our industry-leading data intelligence platform, NCMX, is playing an increasing role in our success. We continue to leverage NCMX to create measurable impact and value for our advertising partners, offering strategic audience insights, performance attribution, continued engagement, and cross-channel reach. In the fourth quarter, NCM successfully delivered on key performance indicators for major retail advertisers, driving thousands of incremental visits to brands featured on our screens. On average, these brands saw a 47% lift in retail foot traffic thanks to the power of NCM moviegoers. Nearly half of our sales revenue is now supported by NCMX initiatives as advertisers continue to leverage these advanced measurement tools to optimize their campaigns and maximize ROI. As we look to 2025 as a whole, we're encouraged by the continuation of the momentum we saw in the fourth quarter, both within our business and across the cinema industry. This said, we expect some near-term variability in the first half of 2025. For the first quarter, we're expecting softer performance compared with the prior year, driven by a weaker slate, and consequently, a slight decline in attendance year over year. While the advertising market is seasonally slower in the first quarter, we're also seeing headwinds from reductions in government spending and ongoing tariff uncertainty, leading advertisers in certain categories to delay spending till later in the year. Ronnie will provide further detail on these factors. Despite these near-term headwinds, we are encouraged by the strong sales pacing we're already seeing for the second quarter, signaling positive momentum for the remainder of the year. Our focus remains on innovation and growth as we continue to invest in our client solutions, including programmatic and self-serve, which we expect to continue to grow in revenue in the coming years. With that, I will turn the call over to Ronnie to provide you with more details on our operating results and future outlook.