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National CineMedia Is Entering Crunch Time

Mar. 04, 2021 3:39 PM ETNational CineMedia, Inc. (NCMI)10 Comments
Anomalous Investor profile picture
Anomalous Investor


  • Covenant waivers expire next quarter.
  • The company is taking action now to broaden its revenue post COVID-19.
  • Upcoming results should tell us if cash burn is accelerating or improving.

When National CineMedia, Inc. (NASDAQ:NCMI) last reported earnings back in November the company disclosed that it had enough liquidity to reach early 2022. This disclosure followed after the company's successful negotiation with its lenders of leverage covenant waivers through July 1, 2021.

Since then, rather than hoarding its cash and waiting for the cinema business to recover, management has been busy executing on a series of operational goals and new agreements. These actions are intended to buttress NCM's core business and to advance its strategy of creating a diversity of revenue streams outside of traditional cinema theater advertising.

If NCM succeeds in integrating these complementary advertising businesses, not only will they lessen the revenue shortfall as theaters reopen over time, but will be a boost to revenue once cinema advertising resumes in full, whatever that becomes after the pandemic subsides.

When results for Q420 and FY20 (ended 12/31/20) are released after the market closes on March 8th, investors will be able to assess the company's liquidity position, rate of cash burn, and progress toward extending debt covenant waivers. These have all been critical to NCM since the onset of the pandemic and subsequent slashing of revenue.

Until then, the outlook for NCM remains unchanged and an assessment of recent transactions will provide some more data to be added to NCM's investment thesis which, when Covid-19 struck in the spring of 2020, was morphing from a pure income stock to a faster grower capable of delivering share price gains.

Recent Activity

The several transactions and agreements which NCM has entered into since the Q320 (ended 9/30/20) earnings results were announced can be divided into cinema related and diversification oriented.

The cinema related activities include an upgrade to NCM's cinema advertising management system and the signing of a cinema advertising affiliate agreement

This article was written by

Anomalous Investor profile picture
Masters of Finance Degree from Georgia State University; Individual Investor since 1994 with a professional background in corporate credit; Previous contributor to Motley Fool.com

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (10)

OverTheHorizon profile picture
Stealth reopening trade with big potential. Thanks for highlighting all the new initiatives.
Anomalous Investor profile picture
@OverTheHorizon You are welcome- thanks for taking the time to comment!
sKibi profile picture
@OverTheHorizon The key is product from the studios to drive audiences to theaters. F9 on June 25th release and Marvel’s Black Widow for July 11th release will show us the recovery of cinema going. Frankly because there’s not much competition on the screen for wide releases, the theater operators have flexibility to deploy greater screen count and seats to the tent poles to maximize audience (and popcorn and sugar water sales). That will give lots of eyeballs for NCMI to monetize and investors to have greater confidence on the recovery.
OverTheHorizon profile picture
@sKibi Great comment Kibi.
elwalle profile picture
Good article.........thanks
Anomalous Investor profile picture
@elwalle Thanks for reading the article and taking the time to leave a comment!
Thank you for amazing analysis and hopefully movie exhibition business normalizes soon. Box office for Tom and Jerry last week was pretty decent too.
Anomalous Investor profile picture
@arthurbliss Thanks for reading and commenting, I agree that the decent box office for a film generally panned by critics is a hopeful sign.
Very well written article. Thank you.
Anomalous Investor profile picture
@Gordon.G Thank you for reading and taking the time to comment!
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