Good day, and welcome to the National CineMedia Third Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ronnie Ng, CFO. Please go ahead.

Thank you, Tom. Good afternoon. I'm joined today by our CEO, Tom Lesinski. 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 Exchange Act of 1934 as amended. All statements, including our discussion about 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 and 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 and in accordance with Regulation G we have reconciled these amounts back to the closest GAAP based measurement. These reconciliation can be found at the end of today's earnings release or on the Investor Relations page of our website at ncm.com. Now, I’ll turn the call over to Tom.

Thank you, Ronnie, and great to have you on the team. Good afternoon, everyone, and welcome to our third quarter 2021 earnings call. I hope that you all are having a happy and healthy fall. During the call today, I'm going to provide a high level update on the continued recovery of our advertising business and the ongoing steps that we're taking to diversify our business and drive cinema advertising revenue growth. Now that the theatre attendance is trending towards historical levels. I will also provide an update on the expansion and growth of our digital business as it continues to drive the growth of our consumer databases that provide more robust audience analytics to our clients. Ronnie will then provide more details about our financial results and how we continue to manage our overall liquidity. And then, as always, will open the line for your questions. The fall moviegoing season has delivered powerful box office results and are getting close to historical levels. With the opening of big films to October, we had three weekends in a row with box office of more than $100 million and six weekends in a row, with box office results averaging over a $100 million per weekend. This is the first time that there's been a consistent and meaningful week-to-week audience that is so important to our clients. Marvel Studios, Shang-Chi and the Legend of the Ten Rings set an all-time Labor Day opening weekend record and has grossed in over $223 million through last weekend. And with the consecutive weekend openings in October of Venom; Let There Be Carnage, the latest in the James Bond franchise No Time to Die, Halloween Kills in June. The box office in October delivered $637.9 million the best ticket sales haul domestic box office of any…

Thank you, Tom. The third quarter saw our network began to emerge from the pandemic, with attendance beginning to accelerate with a strong Labor Day weekend box office, which exceeded that of the 2019 labor day we get through the third quarter accumulative year-to-date attendance levels already surpassed full year of 2020. And for the third quarter of 2021, our attendance was nearly 15 times that of the prior year and 1.5 times of the prior quarter, and was trending back up towards pre-pandemic attendance levels. We also experience improved advertising sales fundamentals with continued improvement in CPMs and market demand. For the third quarter of 2021 our national CPMs was up low-single digits compared to the same period in 2020 and up mid-single digits compared to the second quarter of 2021. Our national utilization rates were also lucrative total quarter of 2021, up 831 basis points compared to the third quarter of 2020 and up 2.3 times compared to the second quarter of 2021. We expect these trends will improve even further in the fourth quarter. Despite these recent improvements in business activity and pricing, and as we mentioned on our last call, advertising demand tends to lag the resurgence on the box office by a few months as clients need time to reallocate their budgets back to cinema. And, as Tom mentioned, want to ensure that there is a meaningful and consistent attendance level weekend to weekend. This is analogous to the standard advertising delays during the beginning of a recessionary recovery, where advertisers exhibit a wait and see approach. In addition, since the prior upfront selling period was during a time when theater going was significantly restricted by local governments or were in some cases still closed, this also affected our ability to fully benefit from the…

[Operator Instructions] The first question comes from Eric Wold with B. Riley Securities. Please go ahead.

Thanks guys. A few questions for you, I guess one you noted that about half of year 2019 upfront advertisers and partners have closed deals for the upcoming upfront period. We understand that some of those are still probably under discussion that haven't signed, but for those that have not or past is there kind of a main reason that you've heard as to why that is the case maybe other than just monitoring more visibility. And then if we think about the next 75% of 2019 that you've locked in for 2022 what would you normally see at the start of the year booked relative to kind of the previous year's bookings?

So of the 20 or so advertisers that we referenced candidly, it's still really a moving target in terms of what of that group will actually be part of the upfront or not. I can tell you that there is no category or major brand or advertisers that, has an issue with the platform. So there is no sort of silver bullet that some people are looking for. The only exception, I would say would be in the case of the auto business if there is a chip shortage which there has been with some significant big advertisers that could compounded. But there is no trend or any particularly large group of advertisers or individuals that have an issue with the platform. The 75% is higher than we normally would be in prior up-fronts. I don't to have all of the percentages before that, but the 75% is trending much higher than it was before in 2019. And I think the most important indicator that we have for the advertising platform success is people looking, not just in the fourth quarter, but in the next four quarters of 2022. And that's where the confidence of the commitment are, being made. And it's really predicated on the fact that we've had finally six weekends in a row of really good box office with some inconsistency, a little bit earlier than that, but now that we have consistency. We're seeing the benefit from it in the upfront. And like I said before, every key category that has advertised with us before has made commitments both in scattered and the upfront. So there is, no issues right now with the advertising cinema media business as it relates to advertising interest or acceptance.

Perfect. And then just final question - there is a common towards the end. Obviously, we still expect 60% of Q4 national revenue to come from scatter. And then kind of the beginning you noted that you're seeing paused momentum in the scatter market. I heard you correctly, that scatter also including Platinum Spots commitments for November/December? Have you always thought as I have heard correctly we always thought that platinum would be in scanner given kind of budget commitment you said would expect for that size of a deal. And then how should we think about platinum kind of demand in general heading the next year and how is pricing holding up for that?

Well platinum will be definitely part of the upfront package that we're currently selling. We were quite happy with bringing in a new advertiser in the scatter market and the pricing on that Platinum Spot was in fact higher than we had priced in the past, going back to the pre-pandemic level. So platinum pricing is alive and well and actually higher than we had expected. It's currently - was recently part of a scatter buy given the opportunistic nature of this advertiser and the availability. But going forward, it will continue to be both a mix of scatter and in the upfront part of our world.

Perfect, thank you.

You're welcome.

The next question comes from Terran Miller with Cantor Fitzgerald. Please go ahead.

Hi, this is actually Joe Farricielli. Question on the theater access fees, since we're seeing a cadence to your business that we wouldn't have seen before, the third quarter is up materially from second, which was obviously up from first. What is the delay there to realizing revenue so I'm assuming you're buying your access ahead of showing your ads?

I'm not sure I understand your question, you're asking about theater access fees or are you asking about ad revenue?

Well, they should be related and I'm seeing an increase in your theater access fees and how far in advance, do you pay for your access before you realize the revenue?

Well we pay monthly theater access fees. So, they're paid 30 days after the attendance level runs.

So would the - so then there should be a correlation between the access fees and the growth and rev in your national and regional ad revenue, right?

No, not necessarily, you got to remember that the theater access fees are correlated to attendance and a consumer can choose to go into a theater, the day of the movie or week before or the day before. Advertising commitments are made often months ahead of time if not multiple quarters ahead of time. So, there isn't a direct correlation always between theater attendance and advertising. Particularly during this COVID recovery period that we're just getting really finally through, it's only been over the last several months, we're attendance has gotten consistent that advertisers have gotten particularly comfortable making commitments upfront. Prior to COVID there was a higher correlation, but until we really gotten through this COVID period which is finally ending we’ll eventually start seeing more of a true up between actual attendance theater access fees and ad revenue.

Okay. And then question -- thank you for explaining that then on your liquidity won’t you take away the $55 million reserve on the revolver. It leaves you with $18.7 million and wondering what's left on the $20 million unsecured revolver and if the expectation is to get the financing done during the fourth quarter?

Yes - so like we said earlier, the expectation is to get our financing done here in the very near term. And one of the things that we are working through is amendment for the credit facilities, and then also the Inc loan to LLC has been approved by the Board. And so, but in addition, we've been given also permission to seek additional liquidity for the company as well. So we expect to move towards completing that before the - year-end holiday season.

Okay. And I'm sorry so the $20 million from Inc is it available or hasn't been fully documented yet?

So the documentation for that is nearly completed. So we haven't executed just yet as again as we are also working through few alternatives as well.

Okay, got it. I appreciate the explanation. Thank you.

[Operator Instructions] The next question comes from Jim Goss with Barrington Research. Please go ahead.

Thanks I have got a couple also. First, I was wondering how do you position your upfront ad sales right now are you looking at an assumption of total market size you expect versus 2019 or are you also trying to put in place the successful approach of broadcast reserve been able to stress the available concentration of high value demoing maybe not to have and a sort of to finance that variance?

[Technical difficulty] for the marketplace over the next 12 months and obviously, we've been doing this for a long time and with the slate is and there's much more of a reliable forecast available for that. Maybe to that of course, is the high demand there is for reaching 18 to 34 year olds that a millennial Gen Z audience is very valuable and with the lack of availability of those GRPs and television We see a lot of interest in reaching that demo in the upfront market over the next 12 months and currently what we're booking right now. So I hope that answers your question.

Yes. Also, are you, I think you might have talked about this in the past, but is there a granular linking of pricing and ad mix to the nature of films, or is that a pretty tough one to predict ahead of time and also the new ad categories like gaming that might be coming in are they creating any pressure, any demand that is helping your pricing as well?

We can directly link pricing to particular movie. As you know, Jim, we sell in flights, and across those flights are multiple movies. There are certain individual movies that attract advertisers, particularly the Marvel movies, for example, that are highly correlated to that 18 to 34-year-old demo. But basically we sell more correlated to it an advertising schedule looks like for our client or for an agency for their brand. And this usually across flights which includes typically multiple movies, not just one. And I didn't hear the second half of your question, Jim, can you repeat the second half?

Yes, I was thinking there were some new ad categories you're mentioning like gaming, which has been coming up in a number of media company conference calls. I'm wondering if some of these new categories such as that are adding to the ad demand then if that's affecting pricing as well?

There are definitely new categories that are coming into our business everything from gaming to potentially sports and e-Gaming to even some of the crypto-currency types of companies. So, we have some very large categories that we'll be adding to our platform and that we already our part of the upfront. We know that there has been a high correlation between the gaming demo and moviegoers. So, we've always had big publicly-traded gaming companies, and now we're getting what I would call more mobile gaming and even gaming along sort of sports and e-gaming. So those are important categories for us. As you know, you can't really watch television days without seeing a lot of gaming advertising happening online and on television. So those are categories that we're excited about. But I think more importantly the fact that every category that's been with us for the past 20 years is with us right now on the national front is really encouraging. And it's a real testament to the strength of our national ad sales company that the relationships we've built over time are still really well developed and we're taking advantage of that and we've proven to the ad market for a long time that cinema advertising is unique and impactful and powerful. And we just had a little bit of a period where the COVID part of it hurt our ability to actually deliver those audiences, but now that we've see the recovery of the marketplace, particularly in the last six to eight weeks and the upfront, we're really confident about our recovery as well as the pricing of the inventory.

Okay and one last small one cinema mentioned alternative content the other day in its call I was wondering if that's any opportunity of any sort for NCMI?

Well, it's kind of a simple question, but it's complicated based on what rights we have or don't have. I don't really want to get ahead of myself on that, Jim. But I think over the next couple of quarters, we will give you some more visibility on what we might be able to do to help our theater partners.

Okay, thanks very much.

Thanks, Jim.

The next question comes from Alex Graf with Cowen and Co. Please go ahead.

Thank you, guys for taking my question. Just want to get some clarification here given the lag time between advertising demand and what we're seeing in the box office attendance. Can you perhaps comment a little bit more on what you're seeing in the scatter market, specifically as it relates to discounting? How we kind of tracking versus historical levels versus 2019 I know in the second quarter, I think we were discounting a little bit to draw advertisers. And so just looking for some insight, an update on that front please?

On the scatter market, obviously it's very competition and there is a more pricing optionality and there is more pricing opportunities for brands to take advantage of the marketplace. It not as critical part of our future going forward from a pricing point of view, we're seeing a lot of stability on our pricing on the upfront side of things. So candidly, we have a really premium priced product and we're doing everything we can to keep it that way. So while there may be some flexibility that we have in scatter. It's not a long-term strategy our plan is to continue to drive a high price for this young demo. So that's our plan. As we go forward into Q4 scatter as well as into the whole upfront for next year.

Understood, thank you. And then in terms of how we should think about how that kind of translate into ad revenue per attendee. I would suspect that it's likely to remain depressed relative to the fourth quarter of 2019 in the upcoming fourth quarter. How should we kind of think about that line in the fourth quarter and into and on a go-forward basis, more like a run rate sort of figure?

I don't think we can provide guidance right now on Q4 or on next year as it relates to that specific question at a point where we're going to go back to providing guidance. We'd be able to do that. So I can't I can't give you any specifics on that - and I don’t know if you have anything Ronnie to add.

No, I think, I think that - that's right. I mean, if you just in general, if you look at the revenue per attendee for this year, it's a - and it's been lagging, obviously compared to 2019. We do see again a lot of improvement exiting the third quarter and during - the fourth quarter. And so, we expect that again like third to fourth quarter to be much improved. So you would have to kind of working the map based on other estimates around attendance levels around that.

Great, appreciate your comments, and thanks again for taking my questions?

You’re welcome.

This concludes our question-and-answer session. I'll now turn the conference back over to Tom Lesinski for closing remarks.

Okay, thank you for your questions. As we mentioned previously, we're very well positioned for the future, as our audiences and advertisers return to the movies. The strengthening box office indicates pent up consumer demand to see films on the big screen once again, especially among the highly coveted hard to reach 18 to 34 year old diverse audience that we own. We remain optimistic about capturing additional video advertising market share as declining TV TRPs make our young audience even more attractive to media buyers. The progress we’re making to execute all of our business strategies, combined with an incredibly strong film slate for the remainder of 2021 into 2022, including a concerted shift back to exclusive theatrical windows should ensure a continued recovery and growth of our business. I once again would like to thank all of NCM's teams’ hard work to reunite brands with the power of cinema, expand our cinema network, strengthen our digital offerings and diversify our advertising inventory beyond the big screen. I also want to thank our cinema operating partners, our advertising clients and our shareholders and lenders for their continued support and patience in addition to the hundreds of NCM employees. We truly appreciate you joining us on this call and hope that everyone continues to stay safe and healthy and look forward to seeing you again soon at the movies. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.