National CineMedia (NASDAQ: NCMI) reported Q1 EPS of ($0.05), $0.02 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $64.7 million versus the consensus estimate of $70.52 million.

Beginning in mid-March 2020, all of the theater circuits in the Company's network announced that their theaters would be temporarily closed to address the COVID-19 pandemic. Several major motion picture releases were delayed until later in 2020 or 2021 and some other studios shortened the “release window” between the release of motion pictures in theaters and an alternative delivery method or released motion pictures directly to alternative delivery methods bypassing the theater entirely. The results of the first quarter of 2020 were significantly impacted by these temporary closures as theater attendance was less than expected beginning in March, initially as the public was told to practice social distancing, and then further when theaters were closed following stay at home orders issued by state and local governments. As of the date of this press release, almost all theaters remain closed across the United States.

Q1 2020 Results

Total revenue for the first quarter ended March 26, 2020 decreased 15.9% to $64.7 million as compared to $76.9 million for the comparable quarter last year. Operating income decreased 55.0% to $4.9 million for the first quarter of 2020 from $10.9 million for the first quarter of 2019. Adjusted OIBDA decreased 34.8% to $14.4 million for the first quarter of 2020 from $22.1 million for the first quarter of 2019. Net loss for the first quarter of 2020 was $3.7 million, or $0.05 per diluted share, compared to net loss of $1.1 million, or $0.01 per diluted share, for the first quarter of 2019. See the tables at the end of this release for the reconciliations to the closest GAAP basis measurement.

From the CEO

Commenting on the Company’s first quarter 2020 operating results and response to the COVID-19 pandemic, NCM CEO Tom Lesinski said, “While 2020 was off to a strong start, the COVID-19 pandemic and resulting temporary theater closures have placed unprecedented challenges on our business, and our cinema partners. The crisis has required us to adjust our business focus to both building liquidity and continuing to aggressively compete in the video advertising marketplace so we can hit the ground running when theaters reopen. Fortunately, we believe, our cash on hand, combined with outstanding receivables and the highly variable nature of our operating costs, we are well positioned to be able to weather this disruption to our business.”

Tom Lesinski also added, “Since the theaters closed, our sales teams have been busy rescheduling existing ad commitments and seeking to increase our video advertising market share by filling a void left by the cancellation of sports and other premium video programming. Our sales, operating and financial teams have been working tirelessly to preserve the valuable relationships we have with our exhibitor partners, advertising clients and their agencies, our lenders and our stockholders. I want to thank all of our NCM team, including those that have been temporarily furloughed, as none of this would have been possible without their hard work and resilience during this unprecedented time. Due to everyone's effort and support, I am confident that NCM will not only make it through this crisis together, but come out on the other side stronger than ever.”

2020 Outlook

Due to the current unprecedented market conditions related to the coronavirus (COVID-19) and the resulting uncertainty regarding the duration and ultimate impact of governmental regulations, including shelter-in-place orders and mandated business closures including our network theaters and clients, as well as the impact of changes in consumer behavior (such as social distancing) on attendance following the reopening of the theaters, the Company is withdrawing its previously published financial guidance related to revenue, Adjusted OIBDA and integration payments for the fiscal year ending December 31, 2020.

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