National CineMedia (NASDAQ: NCMI) reported Q1 EPS of ($0.25), $0.07 worse than the analyst estimate of ($0.18). Revenue for the quarter came in at $5.4 million versus the consensus estimate of $13.12 million.

From the CEO

Commenting on the Company’s first quarter 2021 operating results and liquidity preservation measures in response to the COVID-19 pandemic, NCM CEO Tom Lesinski said, “Our Company and our world are continuing to slowly but steadily recovery from the effects of the COVID-19 pandemic, and there are many positive signs that we’re on our way to a revival of the cinema industry and our business. More than half of all adults in the U.S. have had their first vaccine shot, movie theaters and audience capacities continue to open up across the country, and Godzilla vs. Kong, Mortal Kombat, and Demon Slayer have proven what we’ve been saying all along — that there is strong pent-up audience demand to get back to the unique experience of the big screen, even when that same film is available to watch at home.”

Lesinski concluded, “We are excited for a strong summer movie season and second half of 2021 as there is an incredible film slate in store for cinema audiences, and for our advertising clients that want to reach them at a time when ad-supported television audiences are declining. This provides a great opportunity for our Company over the near and long term. While there are still many challenges ahead, the steps we have taken to expand, diversify and improve our business give me increased confidence for the remainder of 2021 and beyond.”

2021 Outlook

Due to the continued uncertainties related to the COVID-19 pandemic over the near term and the impact of changes in consumer behavior on attendance following the reopening of the theaters, the Company is not providing revenue and Adjusted OIBDA guidance for the fiscal year ending December 30, 2021. The Company anticipates reviewing this guidance policy when it better understands theater attendance trends and the level of commitments received in the national scatter market and as a result of our participation in the upcoming television upfront selling process. The Company expects its revenue to begin to meaningfully increase in the month of June 2021, but it is expected to remain well below pre-COVID-19 pandemic levels. With network attendance levels expected to begin to pick up in the second quarter of 2021 and theatrical release schedules firming-up for the remainder of 2021, the Company expects to recognize more meaningful in-theater revenue in the third quarter of 2021 with a continued build into the fourth quarter of 2021 that will benefit from our participation in the 2021 television upfront. Based on this it is our expectation that late in the third quarter of 2021 we will achieve breakeven cash flow after debt service on an accrual basis and by the end of 2021 we expect to be trending back towards 2019 revenue levels, assuming that the theatrical release schedule remains firm, COVID-19 cases further decline allowing government restrictions to continue to decrease and an upfront consistent with the Company's expectations.

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