National CineMedia, Inc. (NCMI) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the National CineMedia, Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Chan Park, Senior Vice President of Finance. Please go ahead.

Thank you, operator, and good afternoon. I'm joined today by our Chief Executive Officer, Tom Lesinski; and our Chief Financial Officer, Ronnie Ng. 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 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 or on the Investor Relations page of our website at ncm.com. Now I'll turn the call over to Tom.

Thank you, Chan, and good afternoon, everyone. We appreciate you joining us for today's call. Alongside our second quarter results, which we will get to shortly, I'm excited to discuss NCM's announcement that the company has entered into a definitive agreement to acquire Captivate, the leading operator of digital video elevator and lobby advertising in North America. Captivate operates over 26,000 digital video screens in more than 11,000 buildings across more than 170 designated market areas in the United States and Canada. Its core business is concentrated in over 1,600 Class A and B office buildings, where more than 12,000 screens reach a sought-after affluent professional audience. In 2023, Captivate expanded to residential, and today operates a residential network across more than 9,700 locations. Together, NCM and Captivate will create the leading premium video and digital out-of-home advertising platform with more than 48,000 digital screens across theaters, office buildings, and residential properties in 185 designated market areas, including all of the top 100 markets. The combination brings together 3 complementary premium audiences that are highly sought after by advertisers: NCM's young diverse moviegoing audience and Captivate's affluent professional audience in both office buildings and residential properties. The combined platform will provide a powerful force-multiplying solution for high-attention advertising delivery, allowing marketers to reach consumers and business decision-makers where they work, live, and play throughout the entire week, all through a single premium media partner. Captivate's workplace network also brings incremental access to business-to-business marketing budgets, enhancing our appeal to enterprise technology and financial and professional services advertisers. At the same time, NCM's network gives Captivate's advertisers greater access to consumer reach on a national scale. This acquisition marks an important milestone in NCM's evolution and represents the next step in our strategy to build a market-defining specialty advertising platform. Captivate complements and expands NCM's core expertise in providing hard-to-reach video-enabled audiences, and this acquisition builds on the capabilities, customer relationships, and expertise we've developed over more than 2 decades. Captivate also accelerates NCM's existing lobby advertising business, operating a substantially larger in-lobby network on a purpose-built digital out-of-home technology platform. We will bring those capabilities in-house, allowing us to scale NCM's lobby network more efficiently. Like NCM, Captivate connects advertisers with highly sought-after premium audiences in high-attention environments, making it an exceptionally strong strategic fit. This transaction builds directly on the strategy we've been executing over the past several years. Once closed, it will expand our national, local, and programmatic inventory and audience reach, deepen advertiser relationships, strengthen our technology platform, and create new avenues for long-term growth in complementary premium video and digital out-of-home advertising environments. The ability to reach target audiences from buildings to theaters and key DMAs will create a dynamic advertising solution that does not exist today. Captivate is also a very strong financial asset. Over the past 2 years, it has grown revenue 40% and adjusted EBITDA more than 50%, reflecting low capital intensity, high incremental margins, and strong cash generation. Captivate also brings a recurring subscription revenue component through its multiyear building agreements and 96% building retention. The business requires minimal ongoing capital investment, enabling profitable network growth. The addition of Captivate is expected to strengthen NCM's financial profile, accelerating revenue growth and margin expansion, and support deleveraging following close, which Ronnie will walk through in a moment. Now turning to NCM's second quarter results and the progress we're making across our business. The industry delivered its strongest second quarter box office performance since the pandemic, and attendance across our network increased approximately 19% year-over-year, reflecting sustained consumer demand across a broad and diverse slate of films. That strength, combined with our continued focus on execution, drove another quarter of strong financial performance. NCM delivered total revenue of $58.4 million, up 12.7% year-over-year, and adjusted OIBDA of $2.1 million, up 3x year-over-year, with results coming in within our guidance range. Those results reflect healthy advertising demand, which continued to improve year-over-year as we lapped last year's performance and successfully navigated a competitive advertising environment as domestic advertising budgets shifted toward the FIFA World Cup. This demand was driven by key advertising categories, including insurance, retail, automotive, and pharmaceutical, and underlying advertising demand reflecting a return toward more normalized spending patterns. The mix of films released during the quarter was also an important driver of advertising performance. April and May performed largely in line with expectations, supported by a strong lineup of franchise and family releases, including the Super Mario Galaxy movie, Michael, The Devil Wears Prada 2, and Toy Story 5. Later in the quarter, breakout successes, including Horror Hits, Obsession and Backrooms, generated exceptional moviegoer demand. While those 2 films generated strong attendance and secured the #2 and #3 spots in the June box office, respectively, R-rated and horror films are typically more challenging to monetize than broad 4-quadrant franchise releases. At the same time, several mainstream studio releases, including Supergirl and Star Wars: The Mandalorian and Grogu, underperformed compared to expectations, shifting the overall composition of the quarter's box office. As a result, the strength in moviegoing did not translate into the advertising yield typically associated with this level of audience. Even against that backdrop, our strategic investments continued to deliver meaningful results. Local revenue increased 48% versus the prior period, reflecting the continued investment we've made in rebuilding our local sales organization, expanding premium inventory, and improving pricing. In addition to continuing to drive revenue for NCM, the investment in our local sales organization will drive meaningful opportunity for Captivate, which does not currently have a dedicated local sales team. NCM's local organization sells in each of Captivate's largest markets, and following close, we will leverage our local playbook to expand the combined local business and create new cross-selling and bundling offers across both platforms. Beyond local, we continue to invest in strengthening our programmatic offering and making it easier for advertisers to buy cinema alongside other premium digital media. During the past quarter, we added Magnite to our supply-side platform relationships, which now cover 90% of the programmatic digital out-of-home market. Programmatic revenue grew 45% year-over-year in the second quarter, driven by new buyers and a more diversified advertiser base, though it remains a modest share of NCM's total advertising revenue. Captivate is expected to create an opportunity to accelerate NCM's programmatic initiatives by bringing Captivate's technology platform and established supply-side partner relationships in-house. Together, we will have a larger pool of premium digital out-of-home inventory and enable buyers to transact across cinema, office and residential environments through a single platform. Alongside these growth initiatives, we completed the execution of the operational transformation plan announced earlier this year, which Ronnie will cover in additional detail. Those efforts have strengthened our operating foundation and created additional flexibility to invest in our highest return growth initiatives. Looking ahead, we remain encouraged by the broader theatrical environment and the strength of the release schedule throughout the balance of the year. July has already delivered an encouraging start to the quarter, highlighted by the strong performance of Christopher Nolan's The Odyssey, which debuted to nearly $125 million domestically, the biggest live-action opening weekend of 2026. The Odyssey also demonstrates growing consumer demand for premium moviegoing experiences. With nearly 1,000 premium large-format screens in the NCM network, representing approximately 70% of the industry's premium large-format inventory, we are well positioned as this format continues to gain popularity. While the third quarter has seen softer-than-expected performances from titles including Minions & Monsters and Moana, Spider-Man: Brand New Day delivered the highest domestic opening weekend in box office history and became the fastest film ever to surpass $400 million domestically. That performance, along with highly anticipated fourth quarter releases, including Cat in the Hat, The Hunger Games, Avengers: Doomsday and Dune: Part 3, gives us confidence in the trajectory of the quarter and the balance of the year. The second quarter reinforced what we had been building: a stronger local business, a growing programmatic offering, and a more efficient operating base. The proposed acquisition of Captivate extends all 3 into a second premium network, and we look forward to closing the transaction in the second half of the year. Now I'll turn the call over to Ronnie to provide you with more details on our operating results and outlook.

Thank you, Tom, and good afternoon, everyone. I'll cover our second quarter results first, then walk through the financial details of the Captivate transaction. As Tom discussed, our second quarter results were broadly in line with our expectations. Attendance increased 19.3% year-over-year, driven primarily by the strong performance of breakout R-rated horror films Backrooms and Obsession late in the quarter. While the June film slate and FIFA World Cup created near-term monetization headwinds and reduced advertising yield, we continued to drive healthy advertiser demand throughout the period. Combined with continued momentum in our local advertising business and disciplined expense management, we delivered second quarter results within our guidance range. Total revenue for the second quarter was $58.4 million, up 12.7% year-over-year. Total advertising revenue was $54.4 million, up 14.3% from $47.6 million in the prior year period. Advertising performance was strongest during April and May, as healthy advertiser demand and favorable attendance trends drove higher utilization. As we've discussed, June followed a different pattern as attendance shifted toward breakout R-rated films, which historically generate lower advertising yield than broad mainstream studio releases with broader audience appeal. As a result, utilization moderated during the month despite continued healthy consumer attendance. Despite this trend, we drove a year-over-year increase in CPMs in each of the 3 months of the quarter. Turning to our national business. National advertising revenue totaled approximately $45 million during the quarter, up 9% from the prior year period. While the composition of the June release slate and a temporary budget shift toward the FIFA World Cup affected some advertising campaigns during the quarter, underlying advertiser demand remained healthy across our core categories, including insurance, retail, automotive, and pharmaceutical. At the same time, our continued investments in local advertising drove standout performance in that business. Local revenue increased 48.4% year-over-year to $9.5 million, reflecting our continued investment in rebuilding the local business, expanding premium inventory, improving pricing, and increasing participation from advertisers across our markets. Average local advertising revenue per attendee increased 24% to $0.07, demonstrating our ability to generate greater value from growing attendance while continuing to broaden our local advertiser base. As Tom noted, the progress we've made in local advertising reinforces our enthusiasm for the acquisition of Captivate and the opportunity to leverage our local experience and advertiser relationships across its network. Alongside local, the transaction also meaningfully strengthens our long-term programmatic growth opportunities, as Tom shared. Turning to expenses. Operating expenses for the second quarter totaled approximately $71.2 million, reflecting higher attendance-driven exhibitor fees and $2.7 million in one-time costs related to our operational transformation. On an adjusted basis, operating expenses were $56.3 million, primarily driven by a 22% year-over-year increase in exhibitor fees related to the increase in attendance and offset by a 7% year-over-year reduction in SG&A, reflecting initial savings achieved under the operational transformation. As Tom highlighted, we completed execution of the operational transformation initiatives announced earlier this year. Year-to-date, we implemented additional cost reduction actions across the organization and realized $2.7 million of savings. We remain on track to achieve approximately $11 million in annualized run-rate cost savings, with up to $6 million by the end of 2026. These actions helped offset the lower utilization we experienced during June while creating additional capacity to invest in our highest return growth initiatives. Turning to profitability. Operating loss for the quarter was approximately $12.8 million, while adjusted OIBDA totaled approximately $2.1 million. The 200% year-over-year improvement in adjusted OIBDA primarily reflects higher attendance, continued improvement in advertising revenue, disciplined expense management, and the early benefits of our operational transformation initiatives. These factors were partially offset by lower advertising yield resulting from the composition of the June film slate. Turning to cash flow. Unlevered free cash flow was negative $2.1 million during the quarter, a 70% improvement compared with the prior year period, reflecting better working capital management and a slight improvement in profitability, partially offset by one-time costs related to the operational transformation. Year-to-date, NCM has generated total revenue of $92.4 million compared to $86.6 million in the same period last year. National and local advertising revenues increased 5% and 24%, respectively, primarily reflecting a stronger advertising environment, increased attendance across NCM's network, and a higher mix of premium inventory. Total adjusted OIBDA for the period was negative $8.5 million compared to negative $8.3 million in the prior year, driven by higher attendance-related exhibitor fees. Looking at our current balance sheet, NCM ended the quarter with approximately $46.1 million of cash, cash equivalents, restricted cash, and marketable securities, while total debt remained approximately $12 million. During the quarter, we repurchased approximately 63,000 shares for a total of approximately $200,000 at an average price of $3.10 per share. Now I'd like to discuss our announced transaction in more detail. We believe Captivate is a compelling strategic fit and an attractive financial asset. In 2025, Captivate generated approximately $64 million of revenue and $19.3 million of adjusted EBITDA, compared with approximately $45 million and $12.5 million, respectively, in 2023. Captivate operates at an adjusted EBITDA margin of 30%, with only approximately $3 million of annual capital expenditures, producing strong free cash flow with meaningful operating leverage. These characteristics complement NCM's existing business while enhancing the combined company's margin profile and long-term financial flexibility. The transaction values Captivate at an enterprise value of $275 million, representing approximately 10x Captivate's pro forma EBITDA. We expect to realize at least $3.5 million of annual run-rate cost synergies within year 1 post close. Importantly, those identified cost synergies do not include the additional commercial upside we expect to realize through cross-selling opportunities across the combined platform, leveraging NCM's local go-to-market strategy and sales organization to improve inventory utilization across Captivate's network and expanding our programmatic capabilities. The transaction will be financed through $275 million of new committed term debt, with available cash used to refinance the company's existing revolver and fund transaction expenses. Including the transaction incurrence of the new term debt, expected synergies and savings from NCM's operational transformation initiative, we expect net leverage at close to be approximately 3.9x. The combined company's high gross margins and asset-light business model are expected to support meaningful free cash flow for debt repayment, which will be our primary use of free cash flow following the close. Accordingly, we are pausing our dividend and share repurchase programs. The acquisition received unanimous Board approval but remains subject to customary closing conditions, including applicable regulatory approvals and is expected to close during the second half of 2026. Until close, NCM and Captivate will continue operating as independent companies in the ordinary course. Following closing, our primary focus will be maintaining service continuity, preserving Captivate's operating strengths and realizing the strategic and financial benefits of the combination. In connection with the pending transaction, we are not providing a forward outlook at this time. This reflects the expected timing of the transaction, not any change in our view of the underlying business. We continue to view premium video and digital out-of-home advertising as a compelling long-term growth opportunity, and we believe the combined company's scale, data, and sales infrastructure will position us well within the market while creating substantial long-term value for advertisers, partners, and shareholders. Operator, please open the line for questions.

[Operator Instructions] The first question today comes from Mike Hickey with StoneX. Please go ahead.

I guess, Tom, first question on the deal here. Obviously, congratulations. But curious, why are you thinking diversifying now? Cinema attendance and gross box office are probably the strongest we've seen since prepandemic. Why is now the right time to deploy, I guess, capital outside of your core cinema business rather than leaning harder into the recovery that you're seeing today?

So let me answer that in a couple of different ways, and I appreciate the question. First of all, this acquisition represents really the next step in our strategy to build a market-defining premium video and digital out-of-home platform. And it's actually a very highly complementary extension of our core business in that it delivers really a sought-after audience in the same premium type of high-attention environment. So we expect Captivate to add a second layer of growth to NCM's national and local sales organization and grow our advertising relationships and our programmatic capabilities. So we see the combination creating a much more scaled platform that really better serves advertisers and while really positioning NCM for longer-term growth. So we're taking this as a step from a position of strength in cinema. This quarter, obviously, was a good quarter domestically at the box office. And cinema certainly remains our core business, and we continue to invest in it through initiatives, including just recently the AMC lobby initiative. But Captivate is an extension of what we already do best, and reaching hard-to-reach, video-enabled audiences in a premium environment is very much our business model. So we really see this combination making our cinema inventory more valuable as Captivate's footprint overlaps with our existing exhibitor markets and really enables us to reach the same consumer throughout the week. Just to give you an example, picture in New York City, someone leaving their condominium, seeing an ad for a movie at a local theater, again seeing the ad when they enter their office, again seeing an ad when they leave their office and then ultimately being directed to a theater right around the corner from their building. Another key factor, which is really worth noting, is, for example, in New York, 80% of the buildings that we're buying into with Captivate are within 1 mile or less of a cinema. So we look at that closed loop, and we look at we're creating this high-value consumer relationship where they live, work and play. So we look at it really as a complementary opportunity for our business.

The next question, maybe just a bridge on the 10x multiple. I think you described the $275 million purchase price, about 10x pro forma EBITDA. But you look at Captivate's 2025 EBITDA, I think it's about $19 million, which implies about a 14.5 multiple. Can you just walk us through the bridge from $19 million to the EBITDA number underlying the 10x multiple?

Yes, sure. So the multiple actually also is inclusive of the $3.5 million of cost savings that we expect to achieve within the first year of closing the transaction. And then it is also what's underlying in that multiple is the outlook for the full year of '26.

The last question on leverage tolerance. You guided to about sub-4x, 3.9x net leverage at close, postdeal synergies, structuring savings at NCM, which I think you've realized now. I guess before those benefits, it looks like leverage is 5x here. Is that the right way to think about the starting point? And how quickly do you expect to realize those savings and see them flow through the P&L and then cash flow?

Yes. So I think in terms of your comments about what leverage looks like presynergies, I will tell you, it's definitely sub 5x. And that our expectation is that we are -- very similar to our business, Captivate is not very capital-intensive. In fact, it only has capital expenditures about $3 million per year. So their CapEx requirements are even lower than ours. And that their working capital -- usage of working capital is also much more friendly than ours. So there is actually an expectation that we're going to generate quite a bit of meaningful free cash flow going forward and that we expect the capital structure to meaningfully delever over the next 2 to 3 years.

[Operator Instructions] The next question comes from Patrick Sholl with Barrington Research.

Maybe just a couple of questions on Captivate. Just given the multiple that you're paying for that, just can you maybe just talk a little bit about your expectations around revenue and EBITDA growth? Maybe with some of the return-to-office areas, where that business stands relative to prepandemic?

So Ronnie can talk specifically to the financial part of it. But all of the data that we have is that the return-to-work in the Class A buildings that Captivate focuses on has normalized to pre-COVID levels. And that's verified and supported by the impressions measurements that we're using. So much like the recovery that's happened in theaters, the actual return-to-work recovery has actually been even stronger in those buildings. I would also say before Ronnie gets into the specifics, that if you look at the growth potential, there's a significant amount of buildings, both on the residential side and on the commercial side, that can be part of this growth story. We've identified 11,000 potential new Class A buildings that could be added to Captivate's platform and another 10,000 buildings that could also be added to their residential platform. The other pieces of upside are really on the CPM side. We do believe there's a potential to increase CPMs on B2B as well as improve utilization, especially based on the fact that we have obviously a very large, both national and local, sales force that we believe will help supplement that. To give you an example, NCM today has around 330 or so advertisers. And when you look at how many overlap actually with Captivate, there's only around 30. So there's a tremendous potential for our existing advertising relationships to grow the Captivate network. And to be fair, they've got a significant number of advertisers that also will help migrate to the NCM platform. So those are what I would call some of the growth engines that we see with Captivate. Ronnie, you can talk a little bit more about the financial growth if you want.

Yes. So I think if you look over the past 2 years, Captivate actually has grown their platform pretty significantly. The top line has grown approximately 40% over the last 2 years with EBITDA growing almost over 50%. So obviously, a lot of that is due to the return-to-office environment. But there's also the -- there's actually a lot of room for expansion, just growing outside of their network, so to speak. They really started the residential business about 2 years ago. And so, that is still a small business for them. And there's a lot of meaningful upside to that business, especially when we're able to plug in our local sales force into their residential business. Right now, Captivate does not have a local sales team. So the good news is none of the, call it, revenue synergies is really modeled into our thinking in terms of numbers, but there's definitely a lot of upside in terms of expanding their residential business, expanding their existing commercial business, which if you look at their footprint within the major DMAs, their own footprint isn't fully penetrated as well. For example, Los Angeles, it's only about 17% penetration. So there's plenty of room to grow despite I think everybody when they go into an elevator feels like they see Captivate on the elevator screens. It also just goes to show that there's still a lot more to do.

And then maybe just on the advertiser overlap and some of the revenue benefits. So you've historically talked about your key cinema market of being the 18 to 44 range of Gen Z and millennial area. Can you maybe just talk about the audience characteristics because certainly the office market is probably going to skew a little bit older than that. And then lastly, since we're about past the peak period of -- well, maybe not through, but we're still going through some pretty strong box office in August. But just given where we are in the quarter, and I realize there's uncertainty on the timing of closing, but just why not provide some Q3 expectations?

Well, Ronnie can handle the guidance question. But I think what you're getting at is the demographic difference is also a real benefit. Their core audience is very affluent high-income earners who are very attractive to advertisers. Their B2C business is very similar to our core business today. The buildings that they've selected from a residential side are obviously in major markets, higher-income, really luxury buildings, which correlates nicely to our [ B2C ] business. So we think we'll be able to unlock business for them, and they'll also unlock some business for us. The most important thing is both of these demographics are hard to reach and valuable. And that was one of the most important criteria that we looked at is we have these 2 businesses that are very hard to reach. And we know that the combination of what Captivate brings to and NCM does will make for a great platform.

Yes. So in terms of the -- not providing a forward guide at this moment, obviously, by the time we report third quarter, there's a chance that we would have this deal also closed. So there could be, call it, some periods in there in the reported third quarter where you have, call it, partial periods of -- at the time when we close to the end of the quarter. So it makes providing a guide a little bit more difficult today, and that's why we're pausing that for the moment.

The next question comes from Alicia Reese with Wedbush.

I'm curious if you could go into a couple of things. First, on local, I wondered if you could dig in a little bit on what were the driving factors for the local growth for theaters in the second quarter. How much of that was just expanding the sales force to get new clients versus existing clientele spending more and perhaps getting better returns in that? And then a second part, to what extent does Captivate already have local advertising? You had mentioned that they don't have a local sales force team. But if you could dig in on that opportunity a little bit deeper. And then I have a follow-up.

So let me take the second one first and then we'll do the first one. Yes. So right now, it's one sales team at Captivate, and they sell more of a national, regional type of advertiser into their platform. As you know, we've got one of the better specialty local ad sales companies in the United States. We changed leadership in that group out this past year. We're now seeing the dividends and benefit of that team with new leadership, also with a lot of new salespeople. So it's a mixture of both reaching new advertisers that came from prior relationships and then also building off our current base of advertisers. And remind me again, your first question, Alicia?

I was just trying to dig in on whether it was a factor of just building the sales force for local and building the clientele around that, just adding new advertisers versus extracting more per advertiser on maybe higher ROI opportunities since you've got a lot of capabilities within that.

Yes. So Alicia, the 3 points you summarized actually encapsulate really the whole entire driver of local actually in year-to-date. That's actually pretty good. But yes, you're right. It is actually a function of we did increase a little bit of the local sales team. But more importantly, even though the total number of people selling in local is not meaningfully up, but it is up. But more importantly, that we did do some swaps in certain areas or coverages to, I would say, improve in talent is also a beneficiary of that. The other piece of it is that the local team was also because we actually do have more premium inventory because of the new AMC deal last year was able to monetize some of that at much more attractive pricing was also another beneficiary. We also saw -- because of all of those 2 things, we saw -- as a result, we actually saw improvements in certain categories that we saw versus the prior year. So for example, retail was a big beneficiary of that. Actually, retail was up substantially in the second quarter. And then also, entertainment was another piece of category that was up quite a bit along with gaming and travel. So all of those things put together actually drove locals' performance not only in the second quarter but year-to-date.

And I have a couple of other questions on Captivate. Is there any seasonality that you could help us with for Captivate? Would you just expect just typical advertising seasonality? Or is there anything in there that we should be aware of?

I think it's different than the cinema advertising market in that it's not as seasonal in the summer and in the fourth quarter. The overall ad market as you know has its own cadence. But I think one thing that's attractive about Captivate, it'll help smooth out our ad revenue across the months. But generally speaking, they follow the ad calendar, whereas cinema advertising is much more weighted to the ad calendar plus the heavy box office draws typically in the summer and in November and December.

What I would add to that is during diligence, what we found out is it's actually the mixture of advertisers are really sticky. If you really think about who they primarily cater to in those office buildings, it's a lot of what we call B2B advertisers. And they tend to really spend on a more predictable cadence, I would say, than your typical B2C advertiser.

And last one for me. I don't actually have a good sense at this point for whether or not office or residential buildings do political advertising. Could you answer that?

I think it's based typically on what the landlord or the owner of the building decides is appropriate. It's not banned. But obviously, every agreement has the ability for the owner of that building to make a discretionary judgment on content. But it certainly would be an opportunity that we could look at.

And you had said, I think, last quarter -- correct me if I'm wrong -- that theater owners were beginning to be a little bit more open to political advertising in some parts of their circuits. Is that right?

That's correct. That's correct. Obviously, it's a new ad opportunity and everyone wants to make sure that it's presented in the right way and that it's part of the experience and it's not upsetting anyone in any way. So there's a review process of what's appropriate and what isn't. And obviously, there's quite a spectrum of political advertising from getting out the vote to other types of ads. So it's an area we're highly focused on, and we think it's going to create a lot of upside for our company going forward.

We now have a follow-up from Mike Hickey with StoneX.

Tom, I'm just curious on Captivate. Can you give us a better sense of the overall TAM for elevator advertising or their core business and what the competitive profile of that business is in the U.S. and their respective market share?

I don't have that at my fingertips, but when we get on our follow-ups, we can get that pulled together for you.

And one more on dirty math here, Ronnie, but it looks like to get to the multiple ex cost synergies implies getting close to about 30% EBITDA growth. Just wanted to clarify if you would expect that growth over -- I think you said '26. I just want to make sure I heard that right or if that's '27. And then what's the situation, Tom, with the management team, basically, who's going to run this piece of your business now? And given the growth that's needed from Captivate to earn that pro forma multiple, why did you decide against an earn-out?

Obviously, when you're doing an acquisition, Mike, it can be competitive. And the way the deal was structured and the price, that was the opportunity that was put before us and allowed us to compete for it in a competitive situation. So I guess I'll leave it at that for now. But in terms of the management structure, there's really single-digit numbers of people that are part of the synergy. The core skill set of Captivate and its sales team and the support of it will remain. Some of it will obviously get integrated into NCM in terms of the back office and other areas. But they have a very specialized business, particularly on the B2B side. On the B2C side, there's obviously a lot more overlap. But we'll be updating you guys more after close on what the real integration looks like. And we'll be happy to share that with you.

This concludes our question-and-answer session. I would like to turn the conference back over to Tom Lesinski for any closing remarks.

Okay. I just want to thank everybody for participating in the call. Thank you for your support of National CineMedia. This quarter demonstrates again our ability to execute against our priorities strategically despite a less than favorable advertising environment and film mix. And I really want to thank NCM's team, in particular, for their continued hard work. Finally, Captivate, just to reiterate, is a very exciting extension of our core and a transformative next step in our growth strategy. So together, we expect to create a more diversified and comprehensive premium video and digital out-of-home advertising platform that expands our reach, strengthens our technology and programmatic capabilities, and creates new opportunities to better serve our advertisers. So looking ahead, we remain encouraged by the strong end-of-the-year slate, excited about the pending acquisition of Captivate, and we look forward to continuing to deliver value for our advertisers, our exhibitor partners and our shareholders. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.