PR Newswire
NEW YORK, July 26, 2023
- Global entertainment technology platform delivers strong Q2 year-over-year growth across all key metrics, including Revenue (+32%), Gross Margin (+31%) and Adjusted EBITDA (+29%)(1)
- Systems signings climb to 84 to-date — significantly more than the Company delivered in all of 2022 (47) — as system installations grow to 29 through June
- Strong IMAX share of global box office across summer blockbuster season highlighted by record-breaking 20% indexing with $35 million IMAX debut of "Oppenheimer"
- Cash flow improvement continues, with cash from operations of — $25.9 million in first half of 2023 versus —$(5.3) million use of cash in the first half of 2022
NEW YORK, July 26, 2023 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX) today reported strong top and bottom-line financial results for the second quarter of 2023, demonstrating the value of its unique global entertainment technology platform and content portfolio.
"IMAX continues to be a winner in a dynamic global marketplace for entertainment, as demonstrated by our strong results in the second quarter," said Richard L. Gelfond, Chief Executive Officer of IMAX. "We again proved that IMAX can drive results in virtually any business environment thanks to our global scale, asset-lite model, and diversified revenue mix across technology licensing and Hollywood and local language global box office."
"It is increasingly clear that the future of the movie business is IMAX, as moviegoers show growing preference for the premium IMAX Experience®, our market share remains robust, and our network and content portfolio expand in the most promising international growth markets for global cinema."
"This past weekend demonstrates the paradigm shift at hand in moviegoing, as IMAX drove strong double-digit market share with a trio of Hollywood and local releases — led by the stunning performance of 'Oppenheimer' — lifting the Company to one of its best weekends of all time at the global box office."
"We remain confident we will continue to drive growth in 2023 across global box office, system signings, installations, and adjusted EBITDA. And the accelerated pace of system signings and installations we're seeing globally this year are a very positive long-term growth indicator for our business."
(1) | Non-GAAP Financial Measure. See the discussion at the end of this earnings release for a description of the non-GAAP |
Second Quarter Financial Highlights | |||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, | June 30, | ||||||||||||||||||
In millions of U.S. Dollars, except per share data | 2023 | 2022 | YoY % | 2023 | 2022 | YoY % Change | |||||||||||||
Total Revenue | $ | 98.0 | $ | 74.0 | 32 % | $ | 184.9 | $ | 134.0 | 38 % | |||||||||
Gross Margin | $ | 57.9 | $ | 44.0 | 31 % | $ | 107.9 | $ | 75.8 | 42 % | |||||||||
Gross Margin (%) | 59 % | 60 % | 58 % | 57 % | |||||||||||||||
Net Income (Loss)(2) | $ | 8.4 | $ | (2.9) | N/A | $ | 10.8 | $ | (16.5) | N/A | |||||||||
Diluted Net Income (Loss) per share(2) | $ | 0.15 | $ | (0.05) | N/A | $ | 0.20 | $ | (0.28) | N/A | |||||||||
Adjusted Net Income (Loss)(1)(2) | $ | 14.4 | $ | 3.9 | 266 % | $ | 23.4 | $ | (4.3) | N/A | |||||||||
Adjusted Net Income (Loss) per share(1)(2) | $ | 0.26 | $ | 0.07 | 271 % | $ | 0.42 | $ | (0.07) | N/A | |||||||||
Adjusted EBITDA per Credit Facility(1)(3) | $ | 32.8 | $ | 25.4 | 29 % | $ | 60.1 | $ | 40.2 | 49 % | |||||||||
Adjusted EBITDA Margin (%)(1)(2) | 35.4 % | 35.9 % | (1.3 %) | 34.9 % | 32.3 % | 8.2 % | |||||||||||||
Weighted average shares outstanding (in millions): | |||||||||||||||||||
Basic | 54.6 | 57.3 | (5 %) | 54.3 | 57.9 | (6 %) | |||||||||||||
Diluted | 55.3 | 57.9 | (4 %) | 55.1 | 57.9 | (5 %) | |||||||||||||
_______________ | |
(1) | Non-GAAP Financial Measure. See the discussion at the end of this earnings release for a description of the non-GAAP financial measures used herein, as well as reconciliations to the most comparable GAAP amounts. |
(2) | Attributable to common shareholders. |
(3) | Adjusted EBITDA per Credit facility attributable to common shareholders. |
Second Quarter and June YTD Segment Results(1) | |||||||||||||||||||||
Content Solutions | Technology Products and Services | ||||||||||||||||||||
In millions of U.S. Dollars | Revenue | Gross | Gross | Revenue | Gross | Gross | |||||||||||||||
2Q23 | $ | 31.3 | $ | 20.0 | 64 % | $ | 64.0 | $ | 36.4 | 57 % | |||||||||||
2Q22 | 29.5 | 17.4 | 59 % | 42.9 | 25.7 | 60 % | |||||||||||||||
% change | 6 % | 15 % | 49 % | 42 % | |||||||||||||||||
YTD 2Q23 | $ | 63.4 | $ | 38.0 | 60 % | $ | 115.6 | $ | 66.3 | 57 % | |||||||||||
YTD 2Q22 | 50.5 | 30.0 | 59 % | $ | 80.7 | 44.1 | 55 % | ||||||||||||||
% change | 26 % | 27 % | 43 % | 50 % | |||||||||||||||||
_______________ | |
(1) | Please refer to the Company's Form 10-Q for the period ended June 30, 2023, for additional segment information. |
Content Solutions Segment
- Content Solutions revenues of $31.3 million increased 6% year-over-year. Gross box office from IMAX locations in Q2 2023 of $268.3 million; was up 8% from Q2 2022. Key contributors to second quarter box office performance included:
- Hollywood titles led by Super Mario Bros. with $50 million in IMAX GBO with strong contributions coming from Guardians of the Galaxy Vol. 3, Fast X and Spider-Man: Across the Spider-Verse ($30M+ IMAX GBO per title).
- Local language titles Born to Fly, The First Slam Dunk, Detective Conan: Black Iron Submarine, and Lost in the Stars contributed on average $6.4 million in IMAX GBO locally.
- Gross margin for Content Solutions was $20.0 million, at a 64% margin, an increase of 15% compared to the second quarter of the prior year period, driven by strong profit flow-through of box office and lower marketing expense reflecting the mix of films year-over-year.
Technology Products and Services Segment
- Technology Products and Services revenues and gross margin increased 49% to $64.0 million and 42% to $36.4 million, respectively, which reflects growth in box office tied rental revenues as well as a higher number of sale/hybrid installations, as well as amendments and renewals.
- During the second quarter the Company installed 20 systems compared to 9 systems in the second quarter of 2022. Of those, 13 systems were under sales and hybrid JRSA arrangements compared to 5 systems in the prior year.
Operating Cash Flow and Liquidity
Net cash provided by operating activities was $25.9 million for the first half of 2023 compared to net cash used of ($5.3) million in the prior year period.
As of June 30, 2023, the Company's available liquidity was $420.0 million, including cash and cash equivalents of $95.3 million, $280.0 million in available borrowing capacity under the Credit Facility and $44.7 million in available borrowing capacity under IMAX China's revolving facilities. Total debt, excluding deferred financing costs was $262.4 million as of June 30, 2023.
Share Count and Capital Return
The weighted average basic and diluted shares outstanding in the second quarter of 2023 were 54.6 million and 55.3 million, respectively, compared to 57.3 million in the second quarter of 2022, a decrease of 5% and 3%, respectively.
The Company repurchased 130,501 common shares at an average price of $15.20 per share, for a total of $2.0 million, excluding commission, year-to-date.
In 2021, the Company issued $230.0 million of 0.500% Convertible Senior Notes due 2026 ("Convertible Notes"). In connection with the pricing of the Convertible Notes, the Company entered into privately negotiated capped call transactions with an initial cap price of $37.2750 per share of the Company's common shares.
On June 14, 2023, the Company announced a 3-year extension to its share-repurchase program through June 30, 2026. The current share-repurchase program authorizes the Company to repurchase up to $400 million of its common shares, of which approximately $191.5 million remains available.
Supplemental Materials
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 investors.imax.com. The Company expects to provide such updates on Tuesday of each week, although the Company may change this timing without notice. Results will be displayed with a few days lag.
The Company may post additional information on the Company's corporate and Investor Relations website which may be material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website in addition to the Company's press releases, SEC filings and public conference calls and webcasts, for additional information about the Company.
Conference Call
The Company will host a conference call today at 4:30 PM ET to discuss its second quarter 2023 financial results. This call is being webcast and can be accessed at investors.imax.com. To access the call via telephone, interested parties please pre-register here: https://register.vevent.com/register/BIebeab49b8c1d418589a6683e1accbccf and you will be provided with a dial-in number and unique pin. To avoid delays, we encourage participants to dial into the conference call ten minutes ahead of the scheduled start time. A replay of the call will be available via webcast at investors.imax.com.
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 systems 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. Streaming technology company SSIMWAVE, an IMAX subsidiary, is a leader in AI-driven video quality solutions for media and entertainment companies.
IMAX is headquartered in New York, Toronto, and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2023, there were 1,718 IMAX systems (1,638 commercial multiplexes, 12 commercial destinations, 68 institutional) operating in 87 countries and territories. Shares of IMAX China Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong Kong Stock Exchange under the stock code "1970."
IMAX®, IMAX® 3D, Experience It In IMAX®, The IMAX Experience®, DMR®, Filmed For IMAXTM, IMAX LiveTM, IMAX Enhanced®, and SSIMWAVE® are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Instagram (https://www.instagram.com/imax), Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).
For additional information please contact:
Investors: IMAX Corporation, New York Jennifer Horsley 212-821-0154 | Media: IMAX Corporation, |
Forward-Looking Statements
This earnings release contains forward looking statements that are based on IMAX management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. These forward-looking statements include, but are not limited to, business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, statements regarding the closing and expected benefits of the acquisition of IMAX China and the emergence of Cineworld from bankruptcy, as well as plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks related to the adverse impact of the COVID-19 pandemic; risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada, as well as geopolitical conflicts, such as the conflict between Russia and Ukraine; risks related to the Company's growth and operations in China; the performance of IMAX DMR® films and other films released to the IMAX network; the signing of IMAX System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to consolidation among commercial exhibitors and studios; risks related to brand extensions and new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company's inability to protect the Company's intellectual property; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company's business; risks related to the Company's indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to political, economic and social instability, including with respect to the Russia-Ukraine conflict; the failure to convert system backlog into revenue; changes in laws or regulations; any statements of belief and any statements of assumptions underlying any of the foregoing; other factors and risks outlined in the Company's periodic filings with the SEC; and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company. These factors, other risks and uncertainties and financial details are discussed in the Company's most recent Annual Report on Form 10-K. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Primary Reporting Groups
The Company's Chief Executive Officer ("CEO") is its Chief Operating Decision Maker ("CODM"), as such term is defined under U.S. GAAP. The CODM assesses segment performance based on segment revenues and segment gross margins. Selling, general and administrative expenses, research and development costs, the amortization of intangible assets, provision for (reversal of) current expected credit losses, certain write-downs, interest income, interest expense, and income tax (expense) benefit are not allocated to the Company's segments.
In the first quarter of 2023, the Company revised its internal segment reporting, including the information provided to the CODM to assess segment performance and allocate resources. Accordingly, the Company has two reportable segments: (i) Content Solutions, which principally includes content enhancement and distribution services, previously included within the IMAX DMR, Film Distribution and Film Post-Production segments, and (ii) Technology Products and Services, which principally includes the sale, lease, and maintenance of IMAX Systems, previously included within the JRSA, IMAX Systems, IMAX Maintenance, and Other Theater Business segments. The Company's activities that do not meet the criteria to be considered a reportable segment are reported within All Other. Prior period comparatives have been revised to conform with the current period presentation.
The Company has the following reportable segments:
(i) | Content Solutions, which principally includes the digital remastering of films and other content into IMAX formats for distribution to the IMAX network. To a lesser extent, the Content Solutions segment also earns revenue from the distribution of large-format documentary films and exclusive experiences ranging from live performances to interactive events with leading artists and creators, as well as film post-production services. |
(ii) | Technology Products and Services, which includes results from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems. To a lesser extent, the Technology Product and Services segment also earns revenue from certain ancillary theater business activities, including after-market sales of IMAX System parts and 3D glasses. |
Transactions between segments are valued at exchange value. Inter-segment profits are eliminated upon consolidation, as well as for the disclosures below.
IMAX Network and Backlog | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
System Signings: | 2023 | 2022 | 2023 | 2022 | |||||||||||||
New IMAX Systems | |||||||||||||||||
Sales and sales-type lease arrangements | 23 | 2 | 37 | 6 | |||||||||||||
Hybrid JRSA | — | 1 | — | 2 | |||||||||||||
Traditional JRSA | 12 | — | 25 | 2 | |||||||||||||
Total new IMAX Systems | 35 | 3 | 62 | 10 | |||||||||||||
Upgrades of IMAX systems | 11 | 10 | 12 | 10 | |||||||||||||
Total IMAX System signings | 46 | 13 | 74 | 20 | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
System Installations: | 2023 | 2022 | < | ||||||||||||||
