Greetings and welcome to the National CineMedia, Inc., Q3 2020 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Mr. Ted Watson, Senior Vice President of Finance. Thank you, sir. You may begin.

Thank you, Deigo. Good afternoon, everyone. I am joined today by our CEO, Tom Lesinski. Before we get started, I would like to remind our listeners that this conference call contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. All statements, including our discussion about the future impacts of COVID-19 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 or on the Investor Relations page of our website at ncm.com. And now, I'll turn the call over to Tom.

Thank you, Ted, and good afternoon, everyone. Welcome to our third quarter earnings call. It continues to be a challenging time for the out of home entertainment and advertising businesses, our country in the world. And I'd like to once again thank everyone for their ongoing support of NCM as we work hard to stay safe and help protect our loved ones, our colleagues in our community. Today, I'll provide a high level update on what we've continued to do in response to the ongoing challenges presented by the COVID-19 pandemic, theater closures and the shifting movie release schedule. Ted will then provide detail and how we're managing our expenses and overall liquidity to navigate these extraordinary times, and to position the company to benefit when movie audiences returned in larger numbers to our center partner theaters. And then we'll open up the line for questions. As we experienced this past quarter, unfortunately, we do not control the timing of our film releases or theater reopenings. While we had an initial positive step forward with the release of the film Tenet in early September, the first tent-pole film released after the start of the COVID-19 pandemic. When that film performed below expectations, studios shifted other big titles into 2021. When Tenet open some theaters had not yet reopened due to the local or state mandates. Certain theaters also closed again after other films were delayed, including regal theaters in the US and other countries. At of date of this call 53% of theaters within our network are open, many with restricted operating schedules. While we have limited control over some of the factors impacting the cinema business, we do have control over our spending levels in our place as one of the leaders in the video advertising marketplace. This is…

Thanks, Tom. As Tom mentioned, while the impact of the COVID-19 pandemic on our businesses lasted longer than we had initially anticipated, our liquidity position remains strong, and we continue to actively participate in the advertising marketplace. With our network theaters closed for most of the third quarter, and in fact, 47% still closed, we only recorded $6 million of revenue in Q3. Given the significant impact of the COVID-19 pandemic on our business, an analysis of our revenue and adjusted OIBDA versus prior periods is not meaningful, as the current results do not accurately represent our ongoing business. Therefore, I will focus most of my comments today on our current liquidity position, and monthly cash flow burn rate and related efforts to reduce monthly operating expense and capital expenditures without negatively impacting the longer term prospects of our business. Due to a lack of any meaningful in theater advertising revenue, total Q3 adjusted OIBDA was a negative $11.2 million. The combination of our highly variable operating cost structure and our proactive overhead cost reductions allowed us to limit or adjust with OIBDA losses during a period where our network attendance was very low. In fact, during Q3, our average monthly pro forma cash burn rate was approximately $11 million per month. As theaters began to reopen in August in anticipation of Tenet, we began to bring essential employees back from furlough so that we could begin to schedule ads and distribute our movie advertising pre show. And then when subsequent movie releases began to be further delayed into 2021 and theaters began to re-close, we decided to furlough additional personnel, or in some cases reduce work schedules and salaries by up to 50%. These additional cost reduction majors that reduced our core operating expense in Q4 to approximately $5.3…

[Operator Instructions] Our first question comes from Matt Swope with Baird.

Yes. Hi, guys. Could you talk a little bit about how you're thinking about the rest of your capital structure as things go forward? Ted, is there any ability to talk to your bondholders about exchanges or other ways to reduce the total amount of debt outstanding?

Yes, there are certain options that we can consider. I don't want to get into details at the moment. I would tell you that we feel good about our liquidity situation as it is today. Probably more focused on the technical covenants of the leverage ratio. But I'll just leave it there. I won't rule anything out. But I also don't want to get into any details.

Now, that's fair. Could you talk -- you mentioned talking to your bank lenders potentially about further amending your facility there? Would you go out for another couple quarters, another year? How long are you thinking about?

Yes, again, Matt, to be determined. We'll work with our banks and determine an appropriate level of what an extension might look like. This is again too early to get into details.

Yes, no, I completely understand. And then just on the cash and AR balance you gave, what is that? Is that as of the end of October or what was that date, 137.5 and the 7.5?

That was as of last Friday.

Got you. And the burn is -- and October is the month you pay your bigger coupon, Right? So that's why the burn for October is a little bit higher.

That's correct. Yes.

Got you. And then the number you give us is just the blended rate if you were to burn at this rate over 12 months.

Yes, that's correct. Yes. So the debt obviously fluctuates up or down based on the bond payments. I am smoothing that out to give you kind of a per month run rate if you looked at it over a year.

Right. No. You guys have been very clear and look like you're in as good shape as you could be given these incredibly difficult circumstances. Good luck with everything.

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks. Thank you.

Okay. Thank you. Just to reiterate, we continue to be laser focused on effectively navigating the impact of the pandemic by preserving cash. To ensure we maintain our strong liquidity position while at the same time actively working with brands in the 2021 upfront marketplace. While we cannot control the timing of movie releases or theater openings, we can and will continue to position our business to cap additional market share and work to emerge as an even stronger and more diverse media company. The bottom line is that audiences want to go to the movies and advertisers want to reach them in a unique, highly engaging captive environment that simply cannot be replicated at home. Once studio release new tent-pole films and theaters are open, NCM will be there to unite brands with the power of movies and engage movie fans anytime anywhere. Once attendance levels begin to return to more normal levels, we believe that we'll be well positioned to deliver on the pillars of our growth that we launched last year and once again, generate free cash flow growth, dividend appreciation for our shareholders, as we did prior to the start of the COVID crisis. Thanks again for joining our call. And I hope that everyone continues to stay safe and healthy. And I look forward to seeing you again soon at the movies. Thank you.

Thank you. This concludes today's conference. All parties may disconnect. Have a great evening.