Strong financial results driven by compelling blockbuster content worldwide, global network expansion and ongoing cost discipline – three factors the Company anticipates will continue to drive earnings in the future.
IMAX Corporation today reported second quarter 2018 revenues of $98.3 million, gross profit of $60.4 million and net income attributable to common shareholders of $7.6 million, which calculates to $0.12 per diluted share. Adjusted net income attributable to common shareholders for the second quarter was $19.0 million, which calculates to $0.30 per diluted share. Adjusted EBITDA per Credit Facility was $39.5 million. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA per Credit Facility, please see the end of this press release.
“Building on our first quarter momentum, we continued to demonstrate the value of our differentiated consumer experience, expanding global footprint and focus on blockbuster content from around the world. These factors, coupled with our continued focus on controlling costs, helped drive second quarter adjusted EBITDA of $39.5 million, a 35% increase compared to the second quarter last year. Through the first six months of 2018, adjusted EBITDA is up 49% compared to the same period last year,” said IMAX CEO Richard L. Gelfond. “Not only are studios emphasizing blockbuster-type content, consumers are increasingly seeking differentiated ways to experience that content. We believe IMAX is uniquely positioned to benefit from these trends, especially with the roll out of our new IMAX® with Laser experience, which we expect will further increase the differentiation of The IMAX Experience.”
Second Quarter 2018 Results
During the quarter, the Company installed 31 theater systems, 30 of which were for new theater locations. The total IMAX theater network consisted of 1,410 systems as of June 30, 2018, of which 1,314 were in commercial multiplexes. There were 635 theaters in backlog as of June 30, 2018, compared to the 580 in backlog as of June 30, 2017.
IMAX also signed contracts for 40 new theaters and 98 upgrades in the second quarter of 2018. For a breakdown of theater system signings, installations, network and backlog by type for the second quarter of 2018, please see the end of this press release.
Box Office Update
Gross box office from IMAX DMR films increased 27.4% to $342.6 million in the second quarter of 2018 from $268.9 million in the second quarter of 2017. Gross box office was generated primarily by the exhibition of 14 films (10 new and 4 carryovers), as compared to 16 films (11 new and 5 carryovers) exhibited in the second quarter of 2017.
Second Quarter Consolidated Results
The gross margin across all segments in the second quarter of 2018 was $60.4 million, or 61.4% of total revenues, compared to $49.5 million, or 56.4% of total revenues, in the second quarter of 2017. Operating expenses (which includes SG&A, excluding stock-based compensation, plus R&D) were $30.3 million in the quarter.
Gelfond continued, “Blockbuster content from Hollywood, China, India and South Korea will hit IMAX screens across the globe this year. Expanding our content offering by including more local-language titles is a key initiative of the Company, given our 1,300-plus screens span nearly 80 countries. We believe that tailoring our slate to the varying consumer preferences in diverse markets such as China will increase the box office productivity of our network. In addition to the compelling mix of global blockbusters, we are also confident that the launch of our new global brand campaign will more effectively communicate to consumers the benefits of the premium IMAX experience. We expect the new brand campaign, combined with the launch of IMAX with Laser and our growing global footprint, to drive incremental attendance at IMAXscreens around the world.”
Second Quarter Segment Results
- Network business revenues were $60.9 million in the quarter, compared with $47.4 million in the prior-year period. Gross margin for the network business were 70.5% in the most recent quarter, compared to 66.3% in the prior-year period. The increase in revenue and gross margin was primarily driven by a 27.4% increase in box office.
- IMAX DMR revenues were $36.2 million in the second quarter of 2018, compared to $27.8 million in the second quarter of 2017. Gross margin for the IMAX DMR segment was 67.1%, compared to 61.2% in the prior-year comparative period.
- Revenue from joint revenue-sharing arrangements were $24.7 million in the quarter, compared with $18.9 million in the prior-year period. Gross margin for joint revenue-sharing arrangements was 75.3%, compared to 72.3% in the prior-year comparative period.
- Theater business segment revenues were $30.9 million in the quarter, compared with $32.7 million in the prior-year period, primarily reflecting the installation of 3 fewer sales-type theaters.
- Gross margin on sales and sales-type leases was 57.6% compared with 60.3% in the year-ago period. The decrease in the recent period is primarily the result of three fewer system installations compared to the prior year period.
For more information about the Company’s results, please refer to the IMAX Investor Relations website located at investors.imax.com.
Investor Relations Website and Social Media
On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at www.imax.com/content/investor-relations. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week lag. In addition, the Company maintains a Twitter account: @IMAX_Investors. The Company intends to use Twitter to disclose the box office information, as well as other information that may be of interest to the Company’s investor community.
The information posted on the Company’s website and/or via its Twitter account may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company’s website and its Twitter account in addition to the Company’s press releases, SEC filings and public conference calls and webcasts.
The Company will host a conference call today at 4:30PM ET to discuss its second quarter 2018 financial results. This call is being webcast by Nasdaq and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800) 263-0877 approximately 5 to 10 minutes before the call begins. Other international callers should dial (438) 968-3557. The conference ID for the call is 5362019. A replay of the call will be available via webcast at investors.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 5362019.
About IMAX Corporation
IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you’ve never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX’s network is among the most important and successful theatrical distribution platforms for major event films around the globe.
IMAX is headquartered in New York, Toronto and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2018, there were 1,410 IMAX theater systems (1,314 commercial multiplexes, 12 commercial destinations, 84 institutional) operating in 79 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchange under the stock code “HK.1970.”
IMAX®, IMAX 3D, IMAX DMR, Experience It In IMAX, An IMAX 3D Experience, The IMAX Experience, IMAX Is Believing and IMAX nXos are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).