00:05 Good day, and welcome to the National CineMedia, Inc. Q4 and Full-Year 2021 Earnings Conference Call. Today's conference is being recorded. 00:13 At this time, I'd like to turn the conference over to Mr. Ronnie Ng, CFO. Please go ahead, sir.

00:18 Thank you. Good afternoon, I'm joined today by our CEO, Tom Lesinski. 00:24 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 the future impacts of COVID-19 other than statements of historical facts communicated through during this conference call may constitute forward-looking statements. These forward-looking statements involve risks and uncertainties, important factors that could 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. 01:13 Further, our discussion today includes some non-GAAP measures in accordance with Regulation G, we have reconciled these amounts back to the closest GAAP based 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. 01:33 Now, I will turn the call over to Tom.

01:36 Thank you, Ronnie, and good afternoon everyone. Welcome to our fourth quarter and full-year '21 earnings call. It has been a very active and productive quarter for National CineMedia as we successfully navigated through the unique marketplace challenges that have impacted our business for nearly 2 years. 01:53 I'm pleased to report that we've generated positive adjusted OIBDA for the first time in 6 quarters. In addition, we've strengthened our liquidity position and have begun to turn the corner operationally and once again are positioned for growth. With the strong box office performance since Labor Day weekend, cinema is back into the planning cycle of advertisers and their agencies. With this more consistent film release schedule and the record-breaking box office results of Spider-Man, cinema is once again providing the broad reach our clients have been accustomed to. 02:27 In fact Spider-Man's opening weekend had higher ratings than even with the Super Bowl now delivers. Given this cinema recovery we are very optimistic for 2022. For the first time since the start of the pandemic we're starting the year with meaningful upfront bookings, a packed and attractive film release slate and growing consumer demand to return to the theaters as COVID infections levels plummet and mask mandates come to an end. 02:56 During today's call, Ronnie and I will provide a high-level update on our company's enhance liquidity position and our progress to rebuild our cash flow and working capital back to normalized levels. I will also address how we've taken steps to expand, diversify and improve our business to enable us to capitalize on a strong '22 theatrical film slate with the return to exclusive release windows. 03:18 The effectiveness of our cinema network combined with our digital advertising platforms and exciting new audience driven data solutions have…

17:27 Thank you, Tom, and good afternoon everyone. National CineMedia finished the year on a strong note as we continue to accelerate the momentum from the third quarter into the fourth quarter. We experienced significant quarter-over-quarter and monthly sequential attendance growth during the fourth quarter. In addition, despite not having meaningful upfront sales, advertising demand increased throughout the fourth quarter as evidenced by our strong monthly sequential advertising sales growth. 18:01 Our sales fundamentals also continue to improve, with a higher average CPM and revenue per attendee compared to the prior quarter. The combination of our meaningful improvement in revenue and our continued strict expense management resulted in our first positive adjusted OIBDA and positive interest coverage quarter since the start of the pandemic. 18:31 Along with increased focus on better working capital management and capital allocation, our cash burn for the quarter was well below our guidance back in November. In addition, we also bolstered our liquidity position at the start of -- start of 2022, with the funding of a new $50 million revolving credit facility. Which when combined with our improved operating performance resulted in a ratings upgrade from S&P. 19:05 For the fourth quarter total revenue was $63.5 million, which increased 305% compared to the same period of the prior year and was more than double the revenue for the third quarter. In addition, our monthly revenue during the quarter strongly grew sequentially each month. This growth in revenue was achieved despite not having meaningful upfront sales for the period which limited our ability to fully monetize the record-breaking success of Spider-Man No Way Home. 19:41 In addition, for the first half of the quarter we continue to work through the typical lag between the return in theater attendance and increases in ad revenue as media…

35:55 Thank you. [Operator Instructions]. We will take our first question from Eric Wold with B. Riley Securities. Please go ahead.

36:16 Thank you. Good afternoon. A couple of question, I guess, 1, thinking back to the Q3 conference call, you noted at the time that the '22 calendar upfront was running or tracking about 75% of 2019 levels. Can you just us an update of where that shaped out and kind of your thoughts on that relative direction?

36:44 Let me just sort of sort of find a way to frame this. The most important thing is, the upfront is still very much strong than where we had originally forecasted it to be. And the most important thing is, how it's correlating to the box office. If you look at the box office estimates for this year, the 75% tracking is very consistent with where we are from a box office point of view. 37:12 And importantly, we're doing a very, very good job of maintaining the premium pricing that we're known for as a company. So we're very pleased with how the upfront is going. As you know, we have another upfront starting literally this month, which is the broadcast and calendar upfronts really beginning for the fourth quarter of this year going into next year. So all things being said, every major advertiser who has been with us in the past is pretty much back in the upfront, more than 50 different brands are participating in the upfront or [indiscernible]. So we're very happy with the upfront, especially acknowledging that a lot of that upfront negotiating was happened whilst the Omicron variant and COVID was still running pretty rapidly in the country. 38:09 So we're pleased with where we are and we're pleased with the continued interest in our company from an upfront point of view.

38:18 Yeah. That's helpful. Maybe you could drill down a bit. So kind of beyond kind of an absolute number of an upfront maybe going to dive down into kind of the components that I would sort of speak in terms of how far in advance advertisers are kind of willing to commit or [indiscernible] how far in advance you are looking for their placements relative to pre-pandemic size of campaigns, CPMs. May be give a sense of just kind of the drivers of that versus just the overall size of the upfront itself?

38:50 As I mentioned on the prior quarter call, the most important metric we have as an advertising company is commitments people are making over multiple periods of time. So, as you know, the upfront is a year-long commitment. We believe it's a far better indication of consumer or advertiser interest in our platform. So in the case of this most current upfront basically people were committing a year ahead of time. And when you think about that, they were making a lot of those decisions while the mask mandates were largely in place and largely while COVID was still a big unknown compared to how much it's changed just in the last month. 39:35 It's really a pretty impressive indication that people are willing to make money or to put money down on the upfront. In terms of pricing, we've been able to maintain our premium position in the pricing category. As you know, Eric, we are next to the Super Bowl and the Academy Awards and probably the NBA finals is the most expensive CPM medium out there. So we're happy to be maintaining those kinds of levels on the upfront basis which you can imagine has been fairly difficult to do given the uncertainty of the box office. 40:11 In terms of the dollar amounts, we aren't providing that specific information on the upfront. But I think you can calculate based on the percentages we've given kind of where that lines up to 2019 levels.

40:26 Got it. And then just final question, obviously you've got good visibility into the upfront. You starting to see scatter demand loosen up so to speak and they've got to kind of reconfigured sales force on that. The main hold that from kind of providing even just the baseline annual guidance really just uncertainty around slate movement and some of that could pop up around COVID or is there is some uncertainty around at all around the safety net, so to speak of that upfront?

41:03 There is nothing COVID related right now that's really, I would say, affecting the scatter market. I think what's affecting the scatter market more than anything right now is the economy in general, supply chain, certain big advertisers like the car companies that have inventory issues and even as recently as the impact of things like the war. So we're not getting any real direct impact on scatter today related to COVID or attendance. 41:36 Having said that, the scatter market historically in the first quarter is always a little slow coming out of the holidays. And again it's by far the latest month that not only we have, but also that the advertising industry has. So I think come next quarter when we've got another quarter behind us and we've got outlook into Q2 will be a far better indication of how the scatter market looks for everybody, but we're pleased so far with how it's gone in Q4 and Q1.

42:08 Got it. Thank you.

42:10 Sure.

42:13 Thank you. We'll take our next question from Jim Goss with Barrington Research.

42:18 Hi, this is [Pat] (ph) on for Jim. I was wondering if you could talk about, I guess, any [indiscernible] made in terms of attracting new advertisers to the platform. I know you mentioned crypto. And then just other categories might be performing less well versus where they were pre-pandemic [indiscernible] is going through supply challenges any others that are kind of maybe still struggling?

42:47 Yeah. Honestly besides crypto -- besides crypto of which there many, many crypto companies out there now that weren't around really even 6 months ago. We believe that the sports gambling gaming business is another new opportunity for us. And we believe sort of given the pervasive nature of that industry growing, that could be a big opportunity. 43:16 In terms of other areas that have not been productive. The only softness, honestly is the supply chain related car business. And that's not affecting just NCM, it's affecting the network business and the television business including these digital businesses. Having said that, we do have a very good business with some of the non-impacted chip companies, including the Korean brands. So you'll see advertising for example from Kia’s electric car on our platform today, and we recently did do a fairly good deal with a large US auto company. 43:51 So we believe the second half of the year is going to be a significant recovery for the car part of our business, but I can tell you that no individual category is any different than it was in 2019. And actually, we're quite happy with everything from the insurance companies, to electronics, consumer packaged goods, insurance, retail, I mean, every major category that has been with us in the prior upfront going back to 2019, all those categories are with us today, which is really -- I'm a little surprised by honestly. But I'm really encouraged by the support we're getting from those industries that have always been big fans of cinema advertising.

44:37 Okay, thanks. And then just lastly, I guess is still there is an opportunity to benefit from I guess political displacement. In general, broadcast?

44:52 I do think it's an opportunity, obviously, it's something that requires a lot of -- increment in terms of looking at the type of political advertising that exist, there is certainly advocacy advertising that is potentially less problematic. We want to make sure if we have political advertising which we historically haven't done that is not going to be anything that's going to upset anyone in the crowd. So it's another category that we hope to mine, especially going into the fourth quarter, but we want to be mindful that it's all about the movie experience in making sure that certain kinds of political advertising that being the more controversial it's just not a problematic situation for theater visitors.

45:41 Right. And Jim, your question on displacement, we certainly expect there to be some positive upside from that, in particular, in the third and the beginning of the fourth quarter.

45:58 Okay, thank you.

46:02 Thank you. And that does conclude today's question-and-answer session. I would now turn the conference back over to management for any additional or closing remarks.

46:12 Okay. So as I’ve mentioned previously, we are very well positioned for the future as we leave this pandemic behind us, hopefully for good, and as we focus on the road ahead. Again, this last 6 months have proven out there is ample demand for the theater going experience and as such advertising demand for our hard to reach diverse 18 to 34 year-old demographics is very, very high. 46:35 With the progress we've made today with the execution of our business strategies and additional financings and amendments have positioned us very, very well in 2022 and beyond. In addition, the strong film slate in 2022 and the commitments by major studios to an exclusive window will ensure the growth of movie attendance. 46:53 I'd like to once again thank our senior management team and our whole staff for their hard work during these past couple of challenging years. And I particularly thank our shareholders and lenders for their support and patience. We truly appreciate you joining us on the call and hope that everyone continues to stay safe and healthy. See you at the movies. Look forward to it. Thank you very much.

47:14 Thank you. And that does conclude today's conference. We thank you all for your participation and you may now disconnect.