Welcome to National CineMedia First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to your host, Katie Scherping, Chief Financial Officer for National CineMedia. Thank you. You may begin.

Thanks, David. Good afternoon, everyone. 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 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 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. Further, our discussion today includes some non-GAAP financial measures. In accordance with Regulation G, we have reconciled these amounts back to the closest GAAP basis measurement. These reconciliations can be found at the end of today’s earnings release, which maybe found on the investor page of our website at www.ncm.com. Now with that, I’ll turn the call over to Andy England, CEO of National CineMedia.

Thanks, Katie. Good afternoon, everyone. Welcome and thank you for joining us for our first quarter 2017 earnings call. During this call, I will spend a few minutes highlighting the Company’s first quarter 2017 results, and Katie will then provide a more detailed discussion of financial performance for Q1, as well as guidance for 2017. And then as always, we will open the line for questions. As we noted on the last call in late February we were experiencing a slow scatter market as available dollars gravitated to large established reach vehicles. This continues to play out for the full quarter and we're also seeing the softness continue into the second quarter. Total revenue for the first quarter decreased 5.6% to $71.9 million from $76.2 million in the first quarter of last year, due primarily to a decline in national sales revenue. Adjusted OIBDA also decreased 26.7% to $17.6 million for the first quarter of 2017 from $24 million for the first quarter of 2016. In addition to our national sales team experiencing a thin scatter market, there was a shift in overall ad spending, including a decrease in NCM's two largest advertizing categories automotive and entertainment which were down 15% year-over-year. As a result our national advertising revenue was down 11.6% to $44.4 million in Q1 of 2017, compared to $50.2 million in Q1 of 2016. The year-over-year decrease was driven by 13.7% decrease in national advertising CPMs, a result of the timing and mix of content partner and other upfront commitments year-over-year in conjunction with the soft scatter market, which resulted in a 1.3% decline in impressions sold partially – impressions sold partially offset by an increase in other revenue. Our local and regional advertising team felt better, however, as advertising revenue on that side of the business…

Thanks Andy. I’ll walk through the results that Andy highlighted in further detail, discuss our thoughts on the quarter and our outlook for the rest of the year and then we'll open the call for your questions. For the first quarter our total revenue decreased 5.6% versus Q1 2016, driven by 11.6% or $5.8 million decrease in national advertising revenue, partially offset by a 16.7% increase in beverage revenue and a 1.3% increase in local and regional advertising revenue. Total Q1 adjusted OIBDA decrease 26.7% or $6.4 million and adjusted OIBDA margins decreased to 24.5% from 31.5% versus Q1 2016. The margin reduction was driven by a decrease in higher margin national advertising revenue, higher theater access fees attributable to the contractual increase in 2017 of $900,000 in Q1 and $600,000 related to higher founding member attendance of 3.4%, as well a write-off of an investment of $1.4 million we obtained in prior years. Offsetting some of these expense increases was a decrease of about $800,000 in performance based bonus expense from the prior year due to the decreased financial performance in the quarter. Without the contractual increase in the theater access fees the investment write-off met with a bonus benefit, our adjusted operating expenses would have been $1.5 million lower. Recall, that in the first quarter of 2016 we incurred $2.9 million of cash administrative expenses and $2.3 million of non-cash stock compensation expense related to the departure of the former CEO which are both excluded from or adjusted OIBDA for our reporting purposes. Our Q1 2017 advertising revenue mix was 62% national, 26% local and regional, 12% beverage versus Q1 2016 that was 66%, 25% and 9% respectively. For the first quarter national ad revenue was $44.4 million a $5.8 million or 11.6% decrease versus Q1 2016, driven…

Thank you. At this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Barton Crockett from FBR Capital.

Hey guys this is Zack Silver on for Barton. Thank you for taking my question. The first question is the stock list [ph] that you’ve called out in the first three quarters is that just the kind of macro environment being soft, or do you see a shared shift from your platform to maybe Internet, digital platforms taking share. The second question if I can is if you could update us on the timing of the share sales [ph] for AMC to except [ph] that you can that would be great. Thank you very much.

Thank you Zack. Well we have as you might imagine spent a lot of time thinking about this. And I think the macro environment is certainly playing a part. It's certainly our impressions we look across other media companies that some of the outdoor world may be a little soft and so that may be part of that challenge because a lot of that media [ph] is built by outdoor bias [ph] as you may know in the major agencies. But that may also be the fact that we primarily appeal to advertisers. In the millennials we're overseeing direct competition with some major digital platforms for dollars there as well as they increasingly switch towards video that can't be discounted as a competitive element. So I think your announce is probably appropriate. I think, your second question.

I'll answer the second question. So if you look at the cadence with the DOD settlement requires for the sale of shares from AMC, I’ll just work through those with you. By the end of December, so December 20 of this year they would need sell about 15 million shares, by the end of December 20, 18 million, about another 11.5 million shares and then by June 20 of 2019 another four million shares for roughly 30.5 million shares over that period of time.

Got you. That’s helpful. Is there any way that you can you know give a number of are they – what percentage are there through 2017 or anything like that would be helpful.

Well 30 million shares I’m not sure if I understand you question…

If they sold any of the point?

Well 30 million shares represents about 20% of LLC if you like. And so half of that will be sold this year. And I can assure you will be working closely with AMC to make sure there's an orderly sell down of those shares and strategizing to end.

Okay thank you very much.

Numbers – okay.

Yes very helpful thank you.

Our next question is from Alexia Quadrani with J.P. Morgan.

Hi thank you it’s [Julia Yue] on for Alexia. So staying on the ad market I was wondering how is the softness that you're seeing to start this quarter compared to what you saw on first quarter, is it still auto and entertainment that are the weaker category there is the kind of more broad based at this point? And then when you think about the fourth quarter I was wondering how much of the restrains [ph] that you expected driven by a shift in content partners pending commitment.

You want to do this?

So we’re still continuing to see some challenges of a scatter. Certainly last year and prior years, the last few years autos have been really strong for us. And I think you know there's a lot of research out there that says 2017 autos are going to be spending a lot less and we're seeing that as well. So it's combination of scatter generally across the board and then being hit by a couple of industry players this year. And as far as shifting content partner up front we're expecting to see that push to the second half of the year not a strong in the first half of the year that was last year.

Okay that’s shows that’s both [ph] in the third and fourth quarter,.

Yes.

Okay great thank you.

Thanks.

[Operator Instructions] Our next question is from Eric Wold from B. Riley.

Thank you. Good afternoon. Couple questions I guess first off, kind of thinking about the weakness in kind of [ph] ad outlook near term obvious you're competing against other channels where these ad dollars are going. I guess for the buyer that you’ve typically spoken to that have been spending in theater have you see any kind of change in the tone around the value of in theater eyeballs given what's been kind of I guess an increasing level concern around the impact a recliner seats, and reserve seating and whether or not people get their seats 20 minutes or 30 [indiscernible] starts. I have a follow-up question after that.

Certainly that’s a discussion happens on a regular basis Eric. As you know we discuss it with AMS [ph], we certainly discuss it with advertisers, as well. People assume that there is a correlation between reclining seats and audience build. According to Nielsen, which is the only credible third-part source on the matter, the Nielsen data does not support that correlation but nonetheless it is the discussion that we have with advertisers as well as investors and analysts. I think we continue to have, I think, good conversations with our major customers. I think our business as a high tune [ph] business. Relative to other media companies there are larger cable and broadcast TV companies, for example typically have an assumption that they are going to get business with each of the clients they did last year. The question is how much. Our business is such that advertisers regularly come in and come out in a way that suits their needs for good reason and doesn't necessarily suit our P&L. So for example, they tend to – we have a number of advertisers come to us in the summer because TV tends to under deliver in the summer and if they are looking for high quality premium video impressions in the summer we have a great place to get them. And the same goes with the holiday where there is demand typically outstrip supply across the media world. So there are many pieces to play I couldn't tell you that this is a result of any particular conversations we've had with advertisers but we have as you might imagine ongoing discussions and we are competitive with many other media players. And different decisions happen based on I think clients’ needs on a quarter-to-quarter basis.

No that’s helpful Andy. I guess follow-up there another question for Katie. I guess when mentioning the yield on these calls I think it's always been somewhat of an elevated yield an attractive 7% yield. I think some of that has to play some concerns around safety of that. So I'd love if you could maybe take a couple minutes to kind of walk us through connect the dots between the adjusted OIBDA guidance for this year, projected cash flows that will generate to the company, dividend payments to shareholders and to the value members, kind of how that all flows, just kind of give comfort to that dividend payment at the current 2017 guidance, not assume any improvements in the next year?

Yes I mean I think when you look at the 2017 guided adjusted OIBDA there may be a small deficit spending when you look at how AMC shares will lead [ph] in the market and the timing of those depending on when those shares end up in the public shareholders hands and we have to pay dividends on those, a lot of those quarter-to-quarter shift in seasonality reality, certainly cause us to in some quarters have to use some of that cash reserves. But we believe we have plenty of cash in the bank right now that covers at least three to four quarters of dividends depending on which end of the guidance we’re using. So we're very confident that's certainly a sacred number that we're going to use. Keep in mind that there's $21 million of integration payments coming our way this year, as well. So even the impact of those, the timing of the AMC shares will be offset using those integration payments for the rest of the year.

That's helpful thank you.

Thank you Eric.

[Operator Instructions] There are no more questions at this time. I’d like to turn the call back to Andy England for closing remarks.

Very good, well thank you David and thank you folks for your questions. Obviously a difficult quarter for us and disappointing to be taken down at guidance. But we are very encouraged by some of the progress we’re making against the projects we talked about whether it's signing-up Media Ocean, whether it’s our commitment to CRM, whether it's signing-up new affiliates, whether it's the re-organization that we've done and that gets us moving in the right direction and puts the right people in the right seats. We think all of this sets up well and we’ve very much looking forward to a up front meeting in a couple of weeks, where we will have as I said significant users we've got by that pre-show and our approach to the digital. So thank you for joining us on the call and good luck for rest of the day. Thank you.

This concludes today's conference. Thank you for your participation. You may disconnect your lines.