Introduction & Market Context
National CineMedia Inc. (NASDAQ:NCMI), the largest cinema advertising network in the United States, reported its first quarter 2025 financial results on May 6, showing revenue within guidance but down year-over-year amid broader challenges in theater attendance. Following the earnings announcement, NCMI’s stock has experienced volatility, with the current price at $5.07, up 2.42% from its previous close of $4.95.
The company’s Q1 performance reflects the seasonal nature of the cinema advertising business, with first quarters typically being the weakest period. This was compounded by an industry-wide decline in the Q1 box office, which was down 11.6% compared to the same period last year.
Quarterly Performance Highlights
National CineMedia reported Q1 2025 revenue of $34.9 million, within the company’s guidance range of $34.0 million to $36.0 million, but representing a 7% year-over-year decline due to lower theater attendance. The company’s Adjusted OIBDA (Operating Income Before Depreciation and Amortization) was negative $9.0 million, also within guidance but down $3.3 million compared to the same quarter last year.
As shown in the following chart comparing actual results to guidance, the company managed to deliver within its projected ranges despite challenging market conditions:
Breaking down the revenue components, national advertising revenue reached $27.4 million, down from $29.5 million in the prior year, while local and regional advertising revenue totaled $4.9 million, a decrease from $5.3 million. Operating expenses were slightly higher (2%) compared to the same period last year, primarily due to costs associated with hosting a sales conference.
The detailed quarterly financial results reveal the company’s performance trends throughout 2024 and into early 2025:
Strategic Initiatives
A significant development highlighted in the presentation was National CineMedia’s revised agreement with AMC Theatres, extending their partnership by five years to 2042. This agreement represents a strategic win for NCMI, as it improves the advertising show structure and payment framework while terminating certain joint venture agreements.
The company’s CEO Tom Lisinski expressed confidence in NCMI’s market position during the earnings call, stating, "We are well positioned to win as the leading platform in cinema advertising." This sentiment underscores the company’s commitment to leveraging its unique position in the cinema advertising space despite near-term headwinds.
Financial Analysis
The presentation provided detailed reconciliations of non-GAAP financial measures, including Adjusted OIBDA and Unlevered Free Cash Flow, offering investors greater transparency into the company’s financial performance:
Similarly, the company presented a reconciliation of adjusted operating expenses, highlighting the various factors affecting its cost structure:
Despite the challenging quarter, National CineMedia maintained its commitment to shareholder returns. The company announced a quarterly dividend of $0.03 per share on May 6, 2025, amounting to approximately $2.8 million. Additionally, year-to-date through April 2025, NCMI repurchased 2.3 million shares at an average price of $6.06 for a total of approximately $14 million, demonstrating confidence in its long-term prospects.
The company’s key financial highlights for the quarter are summarized below:
Forward-Looking Statements
Looking ahead, National CineMedia projects Q2 2025 revenue to range between $56 million and $61 million, with adjusted OIBDA expected to be between $2.5 million and $7.5 million. The company remains optimistic about a strong movie slate in the second quarter and latter half of 2025, which could help reverse the attendance trends seen in Q1.
CFO Ronnie Ng emphasized the company’s commitment to stakeholders during the earnings call, noting, "We remain committed to delivering long-term value for our partners, clients, and shareholders." This focus on long-term value creation is reflected in the company’s strategic initiatives and capital allocation decisions.
However, investors should note potential risks, including continued uncertainty in the advertising market, competition from digital advertising platforms, and the possibility of economic downturns affecting advertising budgets. The company’s performance will likely remain closely tied to overall theater attendance trends and the broader recovery of the cinema industry.
Analysts tracked by InvestingPro maintain a positive outlook on NCMI, with price targets ranging from $7 to $8 per share and a strong buy consensus recommendation. The company’s solid balance sheet, with $63.1 million in cash and zero outstanding debt, provides financial flexibility as it navigates the current market environment.
Full presentation:
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