Good day, and welcome to the National CineMedia, Inc. Second Quarter 2015 Earnings Conference Call. Today's call is being recorded. And at this time, I would like to turn the conference over to David Oddo, SVP of Finance for National CineMedia, Inc. Please go ahead, sir.

Good afternoon. I'd like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended, and Section 21-E 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 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, which may be found on the Investor page of our website at www.ncm.com. Now, I'll turn the call over to Kurt Hall, CEO of National CineMedia. Kurt C. Hall - Chairman, President & Chief Executive Officer: Good afternoon, everyone. Thank you for joining us for our 2015 second quarter earnings conference call. Before we discuss our record Q2 operating results and our outlook for the remainder of the year, I wanted to first take a few minutes to talk about the implementation of the Chairman and CEO succession plan we announced earlier today. As you've likely read by now, the company's Board of Directors has retained executive search firm Heidrick & Struggles and will initiate a search for a new CEO. Once my successor has been appointed, I will retire as Chairman, President and CEO. At that time, Scott Schneider, currently our Lead Director, will succeed me as Chairman of the Board and will continue in – and I…

Thanks, Kurt. For the second quarter, our total revenue increased 21.6% versus Q2 2014, driven by a 30.4% increase in national advertising revenue excluding beverage and a 7.4% increase in local advertising revenue, partially offset by an 8.2% or $800,000 decrease in beverage revenue. Total Q2 adjusted OIBDA increased 29.6% and adjusted OIBDA margin increased to 55.5% from 52.1%, reflecting the increase in high-margin national and local advertising revenue that was partially offset by the decrease in 100% margin beverage revenue. For the first six months of 2015, total revenue increased 16.6% and adjusted OIBDA increased 27.5%, and adjusted OIBDA margin increased to 47.9% from 43.9% versus the first six months of 2014. We also recorded $800,000 of AMC Rave and Cinemark Rave integration payments for the second quarter versus $600,000 in Q2 2014. You should note these integration payments are added to adjusted OIBDA for debt compliance purposes, but are not included in our reported revenue and adjusted OIBDA, as they're recorded as a reduction to net intangible assets on our balance sheet. We continue to expect to record approximately $2.5 million of these integration payments from our founding members during 2015. Our Q2 2015 advertising revenue mix shifted due to the higher national growth to 74% national, 19% local and 7% beverage versus Q2 2014 that was 68%, 22%, and 10% respectively. The 30.4% increase in Q2 national ad revenue excluding beverage versus Q2 2014 was driven by a 20.5% increase in impressions sold and an increase in CPMs of 10.6%. The increase in impressions sold was driven by an increase in inventory utilization to 133.3% from 122.9% in Q2 2014 due to an overall expansion of our client base related in part to the success of our strategy to compete in the national television upfront marketplace. This…

Thank you. Our first question is from Eric Handler with MKM Partners. Please go ahead, sir.

Thank you very much. Kurt, quick question for you on your upfront strategy. Last year was the first time you went right to the buying agencies and you had a big deal with Omnicom. And just wondering this year are you having – are you putting a little bit more emphasis on going right to the buying agencies? Are you going – are you sticking with the tried and true of going right to the advertisers themselves? And what's the dynamic there? And how has the Omnicom relationship worked out? Kurt C. Hall - Chairman, President & Chief Executive Officer: Yeah. The Omnicom relationship has been fantastic. So that whole structure that we set up with them and the relationship has been really, really good. So our strategy going into this year has been pretty much the same, talk to both agencies and clients. Some clients like their agency to do this. And some clients like to do it directly. So I think you can continue to expect a combination.

Okay. Thank you very much. Kurt C. Hall - Chairman, President & Chief Executive Officer: Okay. Thanks, Eric.

Our next question is from Barton Crockett with FBR Capital Markets. Please go ahead. Barton Crockett - FBR Capital Markets & Co.: Okay great. Thanks for taking the question. And Kurt, I'm sorry to hear that you'll be leaving us in a bit. And it has been great to have you on these calls for so long, and I look forward to the transition. But I wanted to ask about that transition, the search. Are you guys contemplating internal candidates? Or is the focus really more on external? Kurt C. Hall - Chairman, President & Chief Executive Officer: It's going to be open to both. And I think we're going to cast a pretty broad net. And I do think that there will be opportunities both externally and internally. Don't have any real detail to share on that. We actually haven't officially launched the search yet. We couldn't launch until we made this public. A little hard to go out and talk about our company without people knowing exactly who it is. Barton Crockett - FBR Capital Markets & Co.: Okay. All right. Now looking at the business a little bit. I was wondering if you could give us a little bit of a sense of how your message is resonating now versus even a couple of months ago when you did your upfront, given what seems to be a bit of a sea change in the attitude towards TV just very recently. As the TV kind of ad environment weakens, is your inbound call volume kind of picking up? Kurt C. Hall - Chairman, President & Chief Executive Officer: Yeah. There has clearly been a – you call it a sea change, I would actually say that this change has been happening for a while. And I think we…

And next, we have Ben Mogil with Stifel. Please go ahead sir. Benjamin E. Mogil - Stifel, Nicolaus & Co., Inc.: Hi, good morning – sorry, good afternoon, Kurt. You going to be running for the GOP tonight and that's why you're leaving us? Kurt C. Hall - Chairman, President & Chief Executive Officer: No chance. That would be the last place in the world I'd want to be. Benjamin E. Mogil - Stifel, Nicolaus & Co., Inc.: I hope you're feeling better, by the way. And like Barton said, I'm sure we'll all miss you, for sure. So just wanted to – I mean, I understand obviously the cautiousness around Q4 and not so much from an economic perceptive. But just trying to get a sense of where your advertisers are going to take the – when the upfront that they've committed to you is going to be sort of effectively spent. I wanted to drill inside a little bit more. I mean with most of the advertisers still kind of, or a decent chunk of them working off of the TV calendar because it kind of starts in September/October, any reason to think that, you know, there wouldn't be a decent slug of the upfront commitment trying to be spent in the fourth quarter just given the seasonality of the business? Kurt C. Hall - Chairman, President & Chief Executive Officer: Yeah, the only history we really have is last year. And clearly, last year, our fourth quarter was helped significantly by our upfront. And so, I don't think there's anything we've seen so far that would indicate that it's not going to be the same. Again, I think some of our cautiousness is what you talked about before. These upfront commitments are made and then you sit…

And next we have Jim Goss with Barrington Research. Please go ahead.

Okay. I was – I had a couple of things. One, you mentioned make-goods, and I was wondering in the sense that you're dealing with make-goods, what is expected? Is that – are there restrictions in terms of timing as to when the replacement ads are placed or is it just a method of delivering the CPMs you had promised?

There's an occasion when we'll go back, Jim, and the advertiser won't want the weight that we haven't delivered in the next month, which is generally what we do. And we've often made deals that those would get shifted to future months, or even future years in some cases. But generally, what happens is it just rolls over into the first couple of weeks of the next quarter. And so, it really is all about how many impressions we can deliver. And it really comes down to, quite honestly, the box office in the last two weeks to four weeks of the quarter. And you can see in our numbers, in the second quarter, you know, with Jurassic World and Inside Out being such strong June performers, that really helped us. And it brought our make-good down to a very, very low level, relatively speaking. You know, third quarter is a little bit more challenging in that respect, because September is not a big month, with a lot of big films. So, if you're running behind, going into September, it's a little hard to make up the ground, like we did, you know, maybe in June because you have big films and a lot of attendance. So – but anyway, I think it's just mathematics associated with the impressions that we can deliver.

Okay. And how much is the blockbuster slate influencing rates? And how many months do you feel you have true pricing power at this stage?

Well, I don't know if I'd refer to it as pricing power. But, and I do think that on the local side, the film mix probably helps more than it does on the national side. Although this year, the heat around Star Wars, for instance, in the fourth quarter, has got a lot of attention. The media business apparently has heard of that movie and does think it's going to be significant. I also think that we benefited from the fact that our ratings have been relatively stable, even in 2014, which was a down year, you know, our ratings were still pretty stable. And then they're going to be up in 2014. And when you compare that to what's going on in the TV business, with ratings declining at alarming rates, in the case of some networks, all of a sudden, our business looks like a pretty stable place to put your money. So, I think all those factors are important. Clearly it creates an overall tailwind for our business when the theatre business is going well. We don't have to spend the first 10, 15 minutes of each sales call, explaining to somebody why the cinema business isn't in secular decline. And that happens occasionally when we've had a bad run of film, obviously not happening right now, given the year and how it has gone. And looking out into 2016 and 2017, it looks like the film schedule is going to be every bit as strong as it was this year. So I think we're on a pretty good roll here.

Okay. And Kurt, if you were just in the process of joining the company at this point, do you think you would have any different set of priorities, given all that has taken place and you had a clean slate, than you might have at first or has evolved to this point? Kurt C. Hall - Chairman, President & Chief Executive Officer: That's a great question, Jim. It's one I've actually thought about a lot over the last few months, as you can understand. I think – look, one of the things that for me made me comfortable with starting the succession plan now, is that I'm really happy with the solid business strategy that we have in place. Most of it has been in place from the day we went public – really from the day the company was formed. And it was all about trying to steal share from other video platforms. And for most of that time period it was TV. Now it's obviously digital as well. So that strategy continues to be at the core of almost everything that we do. And some of the recent announcements we've made about technology investments, clearly is a response to what's going on in the business. I think to compete effectively with digital, you're going to have to be a more targeted operation. And you're going to have to create more campaign analytics for your clients. So our strategy of continuing to do things to improve our value proposition, which is what I just described, increase the reach and scale of our network, those two primary goals have always been in place, and they're still in place. And I think they're going to really drive the growth that we're going to show over the next few years. And as far as me individually is concerned, I've never in 15 years sold $1 of advertising revenue. So I'm not concerned about any of the changes that may be affecting me and the CEO of this company. We've got an incredible sales force, great operations and technology people and other people that help run our business on a day-to-day basis. And so that's why it just all felt right. We've got a great strategy in place. We've got great management in place. And it just seemed like the right time.

Okay. Well I'll echo the thoughts others have expressed, I'll miss having you on these calls. So thanks. Thanks a lot. Kurt C. Hall - Chairman, President & Chief Executive Officer: Well thank you very much, Jim. I appreciate it.

And we'll take our next question from James Dix with Wedbush Securities. Please go ahead.

Thanks very much. Kurt, all my best in the transition. I, like others, will miss your presence on the calls when that happens. I guess my question is kind of about how you're thinking about pricing going forward. Because when I think about the television network market, it seems like sports and some of the event programming is seeing stronger demand. And I think you've talked in the past about seeing cinema somewhat as a comparison or as an event-type program that ads can be associated with. So over the next few years, should we be thinking about return to CPM growth, because you're going to start benchmarking against a market which is somewhat diverging maybe from the primetime entertainment market? Kurt C. Hall - Chairman, President & Chief Executive Officer: Yeah. I think I mentioned this before. I do think there is going to be a bifurcation of the video marketplace into sort of high-quality, scarce event-like programming, sports probably the best example of that. There is some other event shows like the Academy Awards and others that demand high CPMs. I think we fall into that category clearly. And then you're going to have an awful lot of video impressions that are of the lower quality version. Lots and lots of YouTube inventory I think falls into that category. And so I do think that over time as premium inventory and non-premium inventory sort of bifurcate, I do think there will be, you know, the opportunity for increased pricing. I think from our standpoint, pricing is really all about creating demand and getting our inventory utilizations up. And I think, you know, clearly the success of our upfront strategy has helped in that respect, going into any year, 70% to 75% sold I think is a really good place to be to create the right kind of inventory pressure in the marketplace. And all the bundling that I talked about, I think has done a good job of getting our utilizations up, in some of the lower demand or traditionally lower demand periods because we're able to leverage some of the more high-demand inventory in that packaging. So, all these things I think are going to help continue to get CPMs up. We're still in the process of figuring out the trade-off between what we should price upfront inventory at versus the scatter markets. As I mentioned, we're getting scatter CPMs now that are 30% higher than what we priced the inventory during the same time period in our upfront last year. So, that obviously tends to push you back to maybe not doing as much in the upfront. Having said that, I really do like the 70% to 75% range. I do think that creates that pricing equilibrium where we'd really like to be.

But do you see the upfront as kind of the benchmark as to where you're going to be pushing the CPMs? As you sell more of your inventory, does that really become more the centerpiece of what your pricing strategy is going to be for any given year? Kurt C. Hall - Chairman, President & Chief Executive Officer: I don't know if it will be or not. It's a little harder with our business, especially in that we don't have as much history on this as say TV networks. We also don't have anywhere near the amount of inventory. So, what we've seen is, you know, this 30% increase I just alluded to, is – we don't – when we go into the year and we get to any given month, we don't have a lot of inventory left to sell. So – if we've done a good job in the upfront. So, with the lack of inventory, if you will, you obviously have more pricing pressure can be applied to it and you can see what you've – you can see the results in that 30% number I talked about. The other thing that we're doing, and this is some of the systems – new systems that we're developing and that it's able to do is being able to price our inventory week-to-week is really interesting and it's actually been part of the reason you're seeing some of the numbers because from one week to the next, based on film schedule, you could have very significant swings, 30%, 40%, 50% even in differences in pricing for that inventory week-to-week. And so, the ability to do that and really start to zero in on what the real demand is at that point in time, has been a real big deal for us. And again, I think it's resulted in some of the CPM increases that you're seeing.

Great. Thanks very much. Kurt C. Hall - Chairman, President & Chief Executive Officer: Thank you.

There are no further questions in our queue. I'd like to turn the call back to Kurt Hall for closing and additional remarks. Kurt C. Hall - Chairman, President & Chief Executive Officer: All right. Thanks very much. I just want to echo some of the things you guys said to me and I just want to go right back at you. It's been great having the relationships and hopefully they won't just completely go away. I'm not going away for a while anyway. But it's been a real pleasure working with you. I didn't always agree with your price targets or your recommendations on whether to buy or sell or hold our stock. But you always were really, really fair with us. You always listened. And I really do appreciate that. So, I'm sure we'll be talking over the next few months and maybe even on the next call. So, thanks very much.