National CineMedia, Inc. (NCMI) Q1 2019 Earnings Report, Transcript and Summary

Greetings. Welcome to the National CineMedia, Incorporated First Quarter 2019 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'll now turn the conference over to your host, Katie Scherping, Chief Financial Officer. Ms. Scherping you may begin.

Thanks, Omer. Good afternoon. I'm joined today here in Denver by Cliff Marks, our President and Interim CEO; and Tom Lesinski, our Chairman of the Board is joining us by phone. I'd 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 fact 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 measures. In accordance with Regulation Going, we have reconciled those 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, I'll turn the call over to Tom.

Thank you. Good afternoon and welcome everyone. Before I turn the call over to Cliff Marks to discuss our results, I would like to update you on our CEO search. As you know, our goal is to identify a leader who can capitalize on the strengths and future opportunities of our company, and our unique video advertising medium and innovate around NCM's core business to ensure that we are best positioned for sustainable profitable growth and value creation for our advertising partners and shareholders alike. With the help of a national search firm, our CEO search committee has talked to a high -- excuse me, has talked to a number of highly qualified candidates and had narrowed the field down to a very small group of seasoned executives that we feel would be a cultural fit for NCM with a strong mix of media, advertising and digital experience that would help strengthen NCM's core advertising products and accelerate our future growth. We expect to make a final decision before the end of May. I'd like to take a minute to thank Cliff, who has continued to do an excellent job leading NCM as our interim CEO, while also continuing to spearhead our media sales strategy. Cliff will continue to play an important role to ensure his seamless leadership transition, when our new CEO virtually comes on board, and of course, continue to drive advertising sales growth once the new CEO is hired. With that, I'll now turn it over to Cliff to make a few remarks on the business before Katie reviews the financial results for the first quarter and provides insight into our 2019 guidance.

Thanks Tom. Hello everyone, and thanks for joining us on today's call. I will be providing a few observations and highlights about our first quarter 2019 operating results, and Katie will then provide a detailed discussion about our financial performance and reaffirm our 2019 revenue and adjusted OIBDA guidance. As always, we will then leave time for questions. You may recall that Q1 2018 was a record for us, and while I always wanted to bore, I was pleased with our first quarter results given the tough box office comp and its impact on the timing of 2019 client spending. Our total revenue for the first quarter ending March 28, 2019 decreased 4.1% versus the comparable first quarter record that was set last year. Despite this slightly lower total revenue, we were also able to control costs and maintain our margins as adjusted OIBDA decreased 5.2% versus the first quarter of 2018. Our national advertising team experienced strong demand for marketers, as our 2019 national bookings during Q1 were at the highest levels ever for first quarter. This strong demand was driven by our upfront commitments from a good mix of existing and new advertisers in categories, including financial products and services, computer software, liquor and apparel footwear and accessories. Unfortunately, our Q1 revenue was adversely impacted by the lower attendance, as we simply did not have enough impressions to satisfy our make-good obligations combined with a few clients, who opted to move their make-good from 2018 to future quarters. This prevented us from realizing the full revenue potential from the 2018 carryover in Q1 as expected. The good news is, this is only a timing difference and a higher make-good at the end of Q1 will be recognized in future 2019 quarters. Our make-good at the end of Q1 was $4.7 million versus $1.9 million in Q1 of 2018, at four times higher than the average of the make-good balances in Q1 of the past five years. In fact, if we had realized a more normal Q1 ending make-good balance, national revenue, excluding beverage for Q1 of 2019, would have hit a new Q1 record for national team. As recorded, Q1 national revenue only decreased by $800,000 or 1.5% versus our record Q1 of 2018. Our national advertising CPMs, excluding beverage, were up 10% as there was strong demand, but impressions sold decreased 8.1% versus 2018 due to a 16% decrease in the network attendance. In addition, we experienced a bit lower scatter demand during the back half of the quarter and lower content partners spending, as clients delayed their spending due to the weak film slate in favor of the stronger slate later in the year. While Q1 faced a difficult comparison and declined against last year's record Q1 box office driven by Black Panther, we are excited for the many tentpole franchise films beyond April's Avengers that are set to release later this year, including Toy Story 4, Lion King and Star Wars Episode 9, that should drive the 2019 box office to another record. While late scatter activity was not as robust in Q1 of 2019 as it was last year, our national team was able to turn that into a positive converting many scatter clients into upfront buyers and getting them to lock in their commitments and increase their spend with us for the year. We are also aggressively participating in the 2019, 2020 upfront marketplace, taking our passion for movies directly to our clients across the country. We are holding a series of targeted upfront meetings and presentations directly with clients and agencies, including the extremely popular NCM Ad Agency Competitive movie trivia nights to celebrate our Noovie shop launch. Q1 2019 regional and local revenue decreased 6.9% versus prior year, primarily driven by a decrease in two significant regional clients, who advertised with us last year. However, it is important to note that one of those clients, an automotive client, had a shift in spending from regional to buy to an expanded national buy. The impact from these changes were partially offset by an increase in the regional contract volume and increased spending in certain categories, including apparel that are using cinema to market their spring collections. Katie will get more into that in a few minutes. NCM beverage revenue for Q1 was $6.7 million, a 16.3% or $1.3 million decrease from Q1 of 2018, primarily due to a 15.8% decrease in founding member attendance, partially offset by a slight increase in beverage CPMs compared to first quarter of 2018. We continue to execute our digital strategy through the growth of our new Noovie ecosystem. This ecosystem uses digital wireless technology to connect movie goers to brands before during and after the movie and continues to help us sell more of our core onscreen ads. It also enables us to provide deeper, valuable first-party movie audience data that enhances our Cinema Accelerator product. There are clear signs that our digital strategy is working. When looking on a trailing four quarters, nearly 45% of our national and 32% of our local and regional ad revenue had an integrated deal component in Q1 of 2019. This compares to 41% of our national and 30% of our local and regional ad revenue having an integrated digital component at the end of 2018. Given the early success of our digital strategy, we're going to continue to invest in various digital products and properties to drive a higher level of movie audience engagement with our Noovie pre-show wherever they are in the theatres, on their phones, on their computers or on social media. The more audience is engaged with Noovie throughout their overall movie-going experience, the more valuable our core theater advertising product will be to our advertising clients as they message through multiple in-theater and digital touch points. More deeply connecting our brand cinema advertising campaign to the movie audiences to both onscreen theater advertising and mobile devices, will deliver the kind of ROI that advertisers demand in today's increasingly integrated media landscape. Having a suite of NCM owned and operated website apps and games like our recently released Shuffle, Noovie ARcade and Fantasy Movie League also allows us to capture unique and valuable first-party movie audience data. We will be able to create a unique package of highly targeted digital marketing ads with our owned and operated inventory. While we have very good progress with very little investment in building our digital ecosystem, achieving a higher critical mass of users will be an important part of our future strategy for our management team. As I look ahead, I'm very optimistic about the film slate for the remainder of the year kicked off two weeks ago by another incredible chapter in the Avengers saga and leading up to the final Lucas film in the original Star Wars franchise in December. For this reason, I expect NCM's back half of the year to be stronger than the first half. Despite the competitive pressure all the new digital video offerings available to advertisers, our growth last year and a strong Q1 national demand provides further evidence that advertisers continue to view cinema as a great captive environment to reach valuable audiences. I look forward to working with our NCM management team, our exhibitor teams, our Board and of course our new CEO to continue to drive our strategic vision of leveraging our unique position in the media marketplace as we connect the brands to highly desirable movie audiences throughout their entire moviegoing experience. I will now turn the call over to Katie to give you more details about our Q1 2019 operating performance and talk about our 2019 guidance estimates. Katie?

Thanks, Cliff. I'll walk through the results that Cliff highlighted in further detail, discuss our thoughts on the quarter as well as our full year outlook then we'll open the call to your questions. We will be providing a supplemental presentation of these results on our website for your future reference. For the first quarter, our total revenue was $76.9 million compared to $80.2 million in Q1 2018, a reduction of 4.1%. This $3.3 million change was driven by a $1.3 million decrease in beverage revenue, a $1.2 million decrease in local and regional advertising revenue and an $800,000 decrease in national advertising revenue. Total Q1 adjusted OIBDA was $22.1 million, a decrease of $1.2 million or 5.2% versus Q1 2018. The adjusted OIBDA margin for the quarter was 28.8% compared to 29.1% during the same period last year, primarily due to a decrease in beverage revenue that flows through at 100%, which was partially offset by our continued focus on cost control. I would note that the adjusted OIBDA result include a decline in operating expenses of 3.7% or $2.1 million, primarily related to a $1.5 million decrease in theater access fees driven by a 15.8% decrease in founding member attendance. Further savings of $900,000 resulted from ongoing operating cost optimization and $500,000 of higher capitalizable labor, because of our digital initiatives ramping up, partially offset by $300,000 of higher affiliate fees due to an increase in the number of affiliate screens this year. Our Q1 2019 advertising revenue mix was 70% national, 17% local, 4% regional and 9% beverage versus Q1 2018 that was 68%, 16%, 6% and 10% respectively. For the first quarter of 2019, national ad revenue was $54 million, only an $800,000 or 1.5% decrease versus a record Q1 2018. The change was driven by an 8% decrease in impression sold and a $2.8 million increase in the quarter at make-good balance, partially offset by an increase in CPM. The record Q1 ending make-good balance of $4.7 million included $2.1 million of make-good carryover from Q4 2018. Our make-good balance ended the quarter higher than what we had anticipated due to our expectation that most advertisers that carried over make-good from Q4 would burn off their inventory in Q1. Some of these advertisers elected to receive their make-good impression later in the year. In addition, some of our advertisers that had purchased upfront inventory in Q1 also had a make-good balance from Q4 and as a result, we were not able to burn off all the inventory in first quarter due to the lower industry attendance. The good news is that these make-good shifts are only timing differences and are not expected to have any material impact on our 2019 results. The 16% network attendance decrease was responsible for the decrease in impressions partially, offset by a 9.3% increase in inventory utilization to 104.1% versus 95.2% in Q1 of 2018. The 10% increase in CPMs were driven by strong demand from certain client categories and also the heavyweight of high spent upfront clients in the quarter. We expect CPM growth to normalize moving forward resulting in low single-digit growth for 2019. We experienced strong growth in several customer categories; including insurance, restaurants, credit card services and video game hardware in Q1 2019, compared to Q1 2018. Starting this quarter and all prior comparative quarters, we will now be breaking out our regional local revenue separately to better reflect the differences between those businesses and the new structure of the sales team. Overtime, the strategic focus of these businesses has diverged as the regional business has become more focused on selling directly to national clients who are making regional buys or getting budget allocations through TV spot market selling platform like Mediaocean and FreeWheel, while the local business was primarily focused on smaller local businesses that bought theater within their local sales areas. Our regional business had some challenges in Q1, while contract volume increased to healthy 25% as Cliff previously mentioned the absence of two large 2018 accounts negatively impacted our regional business and as a result our regional Q1 2019 revenue declined $500,000 or 12.8% to $3.4 million versus $3.9 million in Q1 2018. While the dollar value was down in Q1, our recent restructuring of the regional team is allowing for more direct client focus. And as a result, we are doing more business with more clients in 2019. This should bode well for the future as we focus on increasing the spending of this growing base of clients. Furthermore, as advertisers continue to look to cinema to make up for lost GRPs due to declining TV ratings, the second half of the year is looking more promising for our regional team. Our local team experienced the opposite of our regional team as there was a decrease in contract volume of 12% versus Q1 2018, partially offset by 5% higher-average contract value. Local Q1 2019 revenue was down $700,000 or 5.2% to $12.8 million from $13.5 million in Q1 2018. Despite the weaker film slate in Q1 compared to last year, our local revenue in Q1 began to stabilize. We believe that all the changes in structure and focus we have been making by rightsizing our local sales team are starting to gel, and the team is poised to grow the business for the remainder of 2019 and beyond. Q1 2019 beverage revenue was $6.7 million a decrease of 16.3% or $1.3 million versus Q1 2018 driven by a 15.8% decrease in founding member attendance, partially offset by a slight increase in beverage revenue CPMs in the first quarter 2019, compared to the first quarter 2018. At the beginning of 2019, we adopted the new lease accounting standard ASC 842. The impact of this adoption related to both our operating leases and our accounting for amortization of the ESA and affiliate intangible balances under which the new standards are considered a form of lease expense. The balance sheet now reflects the value of the right-of-use asset, which relates to our office space leases and is reflected in other non-current assets and a corresponding liability as of December 28, 2018 is included in other current and non-current liabilities. The new standard requires us to consider an intangible asset related to our ESA and affiliate agreement as short-term leases. As a result, the intangible asset amortization is now shown separately as an operating lease expense described as, amortization of intangibles recorded for network theater screen leases on the P&L. The company adopted ASC 842 prospectively, and thus prior period amortization remains in amortization expense. For purposes of our adjusted OIBDA, we have excluded the amortization of intangibles recorded for network theaters screen leases similar to the prior year amortization expense. More details on the adoption of ASC 842 are provided in our first quarter 10-Q which will be filed today with the SEC. For the first quarter we reported GAAP diluted loss per share of $0.01 versus a loss per diluted share of $0.03 in Q1, 2018. Our capital expenditures were $2.8 million for the first quarter of 2019 compared to $3.5 million for Q1, 2018. The decrease was driven by the relocation of our corporate headquarters in 2019. We estimate that our full year 2019 capital expenditures will be in the $15 million to $16 million range or a little over 3% of revenue driven primarily by the investment in our digital strategy. Digital-related capital expenditures are expected to be between $7 million and $8 million in 2019. Moving on to our balance sheet. Our total debt outstanding at NCM LLC at the end of Q1 2019 was $936 million versus $953 million at the end of Q1, 2018. Our revolver balance at the end of the first quarter 2019 was $37 million compared to $33 million at the end of Q1, 2018. Our average interest rate on all debt was approximately 5.8% at the end of Q1 compared to 5.4% in Q1 of 2018 including our $269 million floating rate term loan bank debt and revolver credit facility that had a rate of approximately 5.5%. Excluding revolver balances 68% of our total debt outstanding at the end of Q1, 2019 had a fixed interest rate. In Q1, we paid the scheduled quarterly amortization on our term loan of $675,000 and we retired $5 million of our 2026 senior unsecured bond for $4.6 million. We were able to repurchase these notes at a discount averaging 7.75%. The interest savings on this repurchase will be approximately $270,000 annually or approximately $2.1 million over the remaining life of those bonds. This repurchase is in addition to the $15 million we repurchased in the second half of last year. Total bond repurchases to date of $20 million have resulted in interest savings of approximately $1.1 million annually and $8.9 million over the remaining life of the bond. By way of reminder under our charter we can pay down up to $15 million of our debt annually without founding member and Board approval. We may opportunistically continue to pay down debt as part of our strategy to maintain financial flexibility and a sustainable dividend for our stockholders. Our consolidated cash and investment balances as of Q1, 2019 were $82 million in line with Q1, 2018 with $78 million of this balance at NCMI. We currently have enough net cash available to cover nearly five quarters of dividends at NCMI with almost a $1 per share cash on hand at the end of Q1, 2019. We announced today that the Board of Directors has authorized the company's regular quarterly cash dividend of $0.17 per share of common stock. The dividend will be paid on May 31, 2019 to stockholders of record on May 16, 2019. The dividend level was determined based on our plans to invest in the business over the next few years while providing financial flexibility. The company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors consistent with the company's intention to distribute overtime a substantial portion of its free cash flow. The declaration, payment, timing and amount of future dividends payable will be at the full discretion of the Board of Directors who will consider general economic and advertising market business conditions, the company's financial conditions, available cash, current and anticipated cash needs and any other factors that the Board of Directors considers relevant. Our annual tax deferred dividend yield is currently 9.1% based on today's closing share price of $7.46. Our total net leverage at NCM LLC as of the end of Q1, 2019 was approximately 4.3 times trailing four quarters of adjusted OIBDA plus integration payments versus 4.2 times in Q1, 2018 which is well below our consolidated net total leverage maintenance covenant of 6.25 times. Our consolidated net senior secured leverage ratio was 3.2 times versus the covenant of 4.5 times. During the first quarter, we recorded $2.5 million of AMC and Cinemark integration and other encumbered theater payment for Rave and Carmike Theatres versus $2.2 million in Q1, 2018. You should note all integration and other encumbered theater payments are added to adjusted OIBDA for debt complaint purposes, but are not included in our reported revenue and adjusted OIBDA as they are recorded as a reduction to net intangible assets on our balance sheet. We expect to record approximately $21 million to $23 million of integration and other encumbered theater payments from our founding members during 2019. Turning to guidance. We are reiterating our revenue guidance of up 1.9% to up 5.3% versus 2018 or in the range of $450 million to $465 million and adjusted OIBDA guidance of up 0.8% to up 5.6% or in the range of $207 million to $217 million. Looking at NCM LLC's available cash calculation for 2019, starting with our adjusted OIBDA guidance of $207 million to $217 million, you will add the following as a build to available cash. Integration payments of $21 million to $23 million and cash payments from the Fathom note receivable of $5.7 million. Note this is the last year we will receive payment for this note receivable. As a reduction to available cash, you will subtract the following. One, cash interest expense of approximately $53 million to $54 million; two, annual scheduled debt principal amortization of 2.7 million plus any potential additional debt repurchases up to $15 million annually of which we have already repurchased $5 million; and three, capital expenditures of $15 million to $16 million; and four, non-cash stock comp for Inc. employees of approximately $2.5 million to $3 million. These are the components that will allow you to arrive at a projection for available cash at NCM LLC at the end of 2019 which is paid to the four members of the partnership, Cineworld, Cinemark, AMC and NCMI quarterly, based on their ownership at the end of each quarter. In addition to the available cash distribution to NCMI from NCM LLC and consistent with prior years, we project approximately $5 million to be paid to NCMI from NCM LLC for management fees, plus $1 million of interest earned on NCMI cash balances, reduced by the expected payout of $15 million to $16 million for payments under the tax receivable agreement to our founding members. This will allow you to arrive at net cash available to fund dividend payments from NCMI. This concludes our prepared remarks. I will now open the line for questions. Omer?

[Operator Instructions] Our first question comes from Eric Handler, MKM Partners. Please proceed with your question. Q – Eric Handler: Good afternoon. Thank you for the question. Katie, just curious with Avengers being as strong as it is, did you put a lot of inventory into the film already or did you -- were you able to soak up the make-goods that weren't pushed out to the back half of the year? Were you able to soak up those make-goods with excess Avengers' impressions? And then secondly, I wonder you guys have always done best with PG-13 movies or R movies, Lion King does it make a difference if it's PG or PG-13, given how strong it's expected to be? A – Katie Scherping: Yes I'll answer the second one first. So the upcoming slate is pretty heavily weighted to G and PG. So Aladdin, Lion King, Toy Story, so that may prove a rating mix challenge for us to actually get the inventory in the right spots for the advertisers who're wanting to place it. So that could create an end of quarter make-good or continue to have make-good challenging us using inventory throughout the balance of the year. But we're hopeful that we can manage through that inventory. As far as the Avenger strength, yes I mean going well above the projected box office was a good thing for us. And what did allow us to soak up some of that quarter end make-good and actually it was our beyond the April -- our May-month end. So that's hopefully going to bode well for coming out of May. Now June is another very strong month with a lot of late-breaking slate. So we'll see where June make-goods plan.

Okay. Thank you.

Our next question comes from Eric Wold, B. Riley FBR. Please proceed with your question.

Thank you. Got couple questions. If one on the digital offering -- maybe update us where you're on the spending behind getting that to where you want to be both on operating basis and CapEx basis? Kind of when do you expect that to level out or possibly decline from here? And then how impactful has that been in terms of being a corporate and various advertising campaigns. Is there a way to think about digital being net contributory to adjusted OIBDA at some point on its own? And when that might be? And I have a follow-up.

Yes. So our CapEx last year for digital spend was about $7 million. We expect between $7 million and $8 million again this year. Last year our OpEx was somewhere close to $9 million. We expect that will increase probably in the $12 million to $13 million range for this 2019 from the OpEx side. So that gives you kind of a sense for the investment we are making, and then Cliff can speak to the integration.

Yes. The integration part's really important to us. We see more brands who want multiple touch points. And if you look at the new reshuffle that we just launched last week in Avengers, you will note that State Farm was our partner to launch that. You'll note that they're taking a position with us not only on-screen, but on mobile and other areas and they want to be able to touch consumer throughout the experience. So I think you will continue to see a lot of brands integrate on-screen, online, on mobile. And I think that's an important part of our strategy going forward.

Okay. Just quick back Katie on the spend for this year. Does that -- you know we have guided next year but that OpEx spend need to go up next year other than normal inflationary increases? And what about CapEx as well?

We're probably going to be fully staffed by the end of this year so you will have a full year in 2020. You will have to bake that in. So it will be a little bit higher on the run rate OpEx side. CapEx will probably begin to wind down a bit in 2020. So I'm not going to be specific about that, but I would guess it will start to wind down in 2020 as we build out a lot of the digital platform and the base product that we're using and then just continue to refresh those products as we move forward.

Okay. And then just last question, sort of capital allocation question -- dividend was obviously reduced a year and change ago to fund the launch of the digital offering. Now that's becoming kind of peak spending level. I'm not arguing for the dividend to go back up, but clearly you're not giving credit to the dividend where it is now still yielding 9%. Why not try to get more authorization to repurchase more of the senior notes which clearly would have much more of a benefit operationally than our -- kind of earnings-wise than a dividend which is not getting a lot of credit out there?

No, I think those are all good questions. But certainly definitely use of our capital allocation and it comes from the capital allocation at LLC first, and then as the byproduct at NCMI of what happens to the dividend. So as we increase -- or wind down advancements in digital if you will that gives us more room to potentially pay down debt. There is lot of things that are alternatives to that use of capital. So we'll be evaluating that continually as we always do.

Yes. Thank you.

[Operator Instructions] Our next question comes from Jim Goss, Barrington Research. Please proceed with your question.

All right. Thanks. The regional ads sound a lot like National Spot. And I'm wondering if they are -- if this is effectively a newer category that increases your ad demand and helps in pricing? And sort of in a related vein, how many do you have on the sales staff right now? And are you, sort of, poaching some of the TV ad sales staff to fill those roles since they would be dealing with those sort of opportunities?

Are you specifically asking how many are on the regional sales staff or in total?

Yeah, yeah, yes, more on the regional, yeah.

Yeah. You know listen I'm glad you kitted [ph] on regional. We really see regional as an interesting kind of middle ground of upside for us. It is completely synonymous with National Spot take the way you said that is exactly correct. We're going to build our National Spot sales organization that allows us to get that money in the middle. We do a great job at national. We do a really strong job at local. But there is a whole business out there, especially with FreeWheel and Mediaocean. There is a whole business of money out there that we think we can capitalize more on, by having a strong regional presence to compete in the National Spot marketplace. If you look at NCM's ratings in any National Spot market, New York, L.A., Chicago, San Francisco we actually out rate most of the strongest stations in the market. We believe there is a great opportunity there. We have -- we currently have six people on that team, and looking to grow it. So you will see regional, while still a small portion of our total business 4% or 5%, become a more important part of our business going forward.

Okay. And separately, you discussed the potential naming of a new CEO, over the next month. I'm wondering if there is any preview of the degree of change we might expect? Are you looking to evolve? Or have someone with a lot of free reign that might shake up certain things more? What is there to expect with this change?

So this is Tom. Let me answer that question. I think it would be premature to talk about what the CEO is or isn't going to do. Clearly, we've been looking for somebody with a diverse background that can really help grow the business in a lot of different areas. But I think until that person comes onboard, it would be premature for us to talk about change and/or any movements in our strategy. But soon enough, towards the end of May we will have identified this person. So, come soon possibly as early as June. We will be able to communicate to you a little bit about, who that person is? And what the plans are for the company?

All right, thanks Tom. I appreciate it.

We have reached the end of the question-and-answer session. I'll now turn the call back over to, Cliff Marks for closing remarks.

Thank you, Omer. I remain very optimistic about NCM's business. Demand from national advertisers remain strong and the excitement around the movie slate for the remainder of the year is absolutely amazing. As digital becomes increasingly cluttered and considers a lot of privacy spread and TV audiences, increasingly age up and fragment, and while our ratings continue to decline, cinema continues to be an uncluttered haven for advertisers, looking to supplement their reach, and target valuable young post cutters with a passion for entertainment, brands and a full movie experience. Thank you for participating in our Q1 2019 earnings call. And I'll see you at the movies.

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