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National CineMedia, Inc. Reports Results for Fiscal Second Quarter 2018

August 6, 2018

CENTENNIAL, Colo.--(BUSINESS WIRE)--Aug 6, 2018--National CineMedia, Inc. (NASDAQ: NCMI) (the Company), the managing member and owner of 48.8% of National CineMedia, LLC (NCM LLC), the operator of the largest in-theater digital media network in North America, announced today consolidated results for the fiscal second quarter and first six months ended June 28, 2018.

Total revenue for the second quarter ended June 28, 2018 increased 17.1% to $113.7 million from $97.1 million for the comparable quarter last year. Operating income increased 42.0% to $40.2 million for the second quarter of 2018 from $28.3 million for the second quarter of 2017. Adjusted OIBDA increased 23.6% to $52.3 million for the second quarter of 2018 from $42.3 million for the second quarter of 2017. Included in Adjusted OIBDA and operating income were $0.0 million and $1.7 million of non-cash impairment charges during the second quarter of 2018 and 2017, respectively, on investments obtained in prior years in exchange for advertising services. Net income for the second quarter of 2018 was $4.2 million, or net income of $0.05 per diluted share, compared to net income of $5.2 million, or net income of $0.09 per diluted share, for the second quarter of 2017. As adjusted to exclude CEO transition-related costs and early lease termination expense, net income per diluted share for the second quarter of 2017 and 2018 would have remained the same.

Total revenue for the first six months ended June 28, 2018 increased 14.7% to $193.9 million from $169.0 million for the comparable period last year. Operating income increased 53.3% to $51.2 million for the first six months of 2018 from $33.4 million for the first six months of 2017. Adjusted OIBDA increased 26.2% to $75.6 million for the first six months of 2018 from $59.9 million for the first six months of 2017. Included in Adjusted OIBDA and operating income were $0.4 million and $3.1 million of non-cash impairment charges during the first six months of 2018 and 2017, respectively, on investments obtained in prior years in exchange for advertising services. Net income for the first six months of 2018 was $2.3 million, or net income of $0.03 per diluted share, compared to net income of $3.9 million, or net income of $0.06 per diluted share, for the first six months of 2017. As adjusted to exclude CEO transition-related costs and early lease termination expense, net income for the first six months of 2018 would have remained the same and net income for the first six months of 2017 would have increased to $0.07 per diluted share. See the tables at the end of this release for the reconciliations to the closest GAAP basis measurement.

The Company announced today that its Board of Directors has authorized the Company’s regular quarterly cash dividend of $0.17 per share of common stock. The dividend will be paid on August 31, 2018 to stockholders of record on August 16, 2018. The declaration, payment, timing and amount of any future dividends payable will be at the sole discretion of the Board of Directors who will take into account general economic and advertising market business conditions, the Company’s financial condition, available cash, current and anticipated cash needs, and any other factors that the Board of Directors considers relevant. While it is the intention of the Company to continue its practice of distributing a substantial proportion of its free cash flow, the Board of Directors continues to review the factors listed above and others as deemed relevant to determine a sustainable distribution rate which balances the operating and strategic needs of the Company with those of its lenders and stockholders.

Commenting on the Company’s first six months of 2018 operating results and second half of 2018 positioning, NCM CEO Andy England said, “It has been a very productive second quarter, and a great first half of 2018. We achieved strong revenue and Adjusted OIBDA growth and continued to attract new and returning advertisers to cinema and to our new Noovie digital ecosystem, all while successfully launching Noovie ARcade, reaching an agreement with Standard General, refinancing our senior secured credit facility, eliminating the AMC stock overhang, and moving our corporate headquarters to a great new modern facility.”

2018 Outlook

For the full year 2018, the Company updates its outlook of total revenue to be up 1.0% to 5.6% and Adjusted OIBDA to be flat to up 4.8% from the full year 2017. The Company expects total revenue in the range of $430.0 million to $450.0 million for the full year 2018, compared to total revenue for the full year 2017 of $426.1 million and Adjusted OIBDA in the range of $205.0 million to $215.0 million for the full year 2018 compared to Adjusted OIBDA for the full year 2017 of $205.1 million. During 2018, the Company expects to record approximately $21.0 to $23.0 million in integration and other encumbered theater payments from Cinemark and AMC associated with the Rave Theatres and Carmike Theatres acquisitions, which are recorded as a reduction of an intangible asset.

Supplemental Information

Integration and other encumbered theater payments due from Cinemark and AMC associated primarily with Rave Theaters and Carmike Theaters for the quarter ended June 28, 2018 and June 29, 2017 and six months ended June 28, 2018 and June 29, 2017 were $5.6 million, $4.3 million, $7.8 million, and $4.7 million respectively. These payments were recorded as a reduction of an intangible asset.

Conference Call

The Company will host a conference call and audio webcast with investors, analysts and other interested parties August 6, 2018 at 5:00 P.M. Eastern Time. The live call can be accessed by dialing 1-877-407-9716 or for international participants 1-201-493-6779. Participants should register at least 15 minutes prior to the commencement of the call. Additionally, a live audio webcast will be available to interested parties at www.ncm.com under the Investor Relations section. Participants should allow at least 15 minutes prior to the commencement of the call to register, download and install necessary audio software.

The replay of the conference call will be available until midnight Eastern time, August 20, 2018, by dialing 1-844-512-2921 or for international participants 1-412-317-6671, and entering conference ID 13681799.

About National CineMedia, Inc.

National CineMedia (NCM) is America’s Movie Network. As the #1 Millennial weekend network in the U.S., NCM is the connector between brands and movie audiences. According to Nielsen, more than 700 million moviegoers annually attend theaters that are currently under contract to present NCM’s Noovie pre-show in 55 leading national and regional theater circuits including AMC Entertainment Inc. (NYSE:AMC), Cinemark Holdings, Inc. (NYSE:CNK) and Regal Entertainment Group. NCM’s cinema advertising network offers broad reach and unparalleled audience engagement with over 21,100 screens in over 1,700 theaters in 188 Designated Market Areas® (49 of the top 50). NCM Digital goes beyond the big screen, extending in-theater campaigns into online and mobile marketing programs to reach entertainment audiences. National CineMedia, Inc. (NASDAQ:NCMI) owns a 48.8% interest in, and is the managing member of, National CineMedia, LLC. For more information, visit www.ncm.com.

Forward-Looking Statements

This press release contains various forward-looking statements that reflect management’s current expectations or beliefs regarding future events, including statements providing guidance and projections for the full year 2018. Investors are cautioned that reliance on these forward-looking statements involves risks and uncertainties. Although the Company believes that the assumptions used in the forward-looking statements are reasonable, any of these assumptions could prove to be inaccurate and, as a result, actual results could differ materially from those expressed or implied in the forward-looking statements. The factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are, among others, 1) level of theater attendance or viewership of the Noovie pre-show; 2) increased competition for advertising expenditures; 3) changes to relationships with NCM LLC’s founding members; 4) inability to implement or achieve new revenue opportunities; 5) technological changes and innovations; 6) economic conditions, including the level of expenditures on cinema advertising; 7) our ability to renew or replace expiring advertising and content contracts; 8) our need for additional funding, risks and uncertainties relating to our significant indebtedness; 9) reinvestment in our network and product offerings may require significant funding and resulting reallocation of resources; 10) fluctuations in operating costs; and 11) changes in interest rates. In addition, the outlook provided does not include the impact of any future unusual or infrequent transactions; sales and acquisitions of operating assets and investments; any future non-cash impairments of intangible and fixed assets; amounts related to litigation or the related impact of taxes that may occur from time to time due to management decisions and changing business circumstances. The Company is currently unable to forecast precisely the timing and/or magnitude of any such amounts or events. Please refer to the Company’s Securities and Exchange Commission filings, including the “Risk Factor” section of the Company’s Annual Report on Form 10-K for the year ended December 28, 2017, for further information about these and other risks. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result, of new information, future events or otherwise, except as required by law.

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