IMAX Corporation Reports Second Quarter 2011 Financial Results

July 28, 2011 – 11:57 am

HIGHLIGHTS , Jul 28, 2011 (GlobeNewswire via COMTEX) —

  • Company Reports Second Quarter 2011 Revenues of $57.2 million; Adjusted EBITDA of $16.2 million
  • 52 Theatre Signings in Second Quarter Leads to Record Backlog of 294 Systems
  • Q3 2011 Box Office off to a Strong Start at $88 million in Three and a Half Weeks vs. $98 million in All of Last Year’s Q3
  • Company Provides Preliminary Outlook Based on Current Backlog for 90 to 100 New Theatre Installations in 2012
  • Company Continues to Expand Global Network with Theatres Opening in Brazil, China, Spain and Italy

NEW YORK, July 28, 2011 (GLOBE NEWSWIRE) — IMAX Corporation (NYSE:IMAX) (TSX:IMX) today reported another strong quarter for theatre signings and a record number of theatres in its backlog; however, disappointing film performance coupled with investments in the growth of the business resulted in adjusted net income of $4.6 million, or $0.07 per diluted share, versus adjusted net income of $8.4 million, or $0.13 per diluted share, in the same period last year. Adjusted net income excludes any charges related to the change in the value of the Company’s variable stock compensation and the deferred tax provision. Reported net income for the second quarter of 2011 was $1.8 million, or $0.03 per diluted share, versus second quarter 2010 reported net income of $13.3 million, or $0.20 per diluted share. Second quarter 2011 adjusted EBITDA was $16.2 million, even with adjusted EBITDA of $16.3 million in the second quarter of 2010. Total revenues for the second quarter of 2011 increased 3% to $57.2 million, compared to $55.6 million in the prior-year quarter. For a reconciliation of adjusted net income to reported net income and to adjusted EBITDA, please see the tables at the end of this press release.

“While the quarter did not live up to our financial expectations, more fundamental to the long-term value of our business is the fact that we have signed 153 theatre deals year-to-date, are installing theatres at a rapid rate and are sitting on a record backlog of close to 300 IMAX(R) theatre systems,” said IMAX Chief Executive Officer, Richard L. Gelfond. “While looking back over the last six months, it appears that there were fewer blockbuster titles that are consistent with our brand than in the same period last year. However, IMAX fans around the globe have come out in record numbers to experience the latest Transformers and Harry Potter franchise installments in IMAX, and as a result, the third quarter is off to a strong start with $88 million of box office generated in the first three and a half weeks, which compares to $98 million in all of last year’s third quarter. The response to our brand and the significant progress we continue to make on expanding our global network are powerful forces that we believe will drive long-term growth.”

Theatre Signings

In the second quarter of 2011 the Company signed contracts for 52 theatre systems, compared to 57 theatre systems signed in the second quarter of 2010. The Company has signed contracts for 153 theatre systems through the first six months of 2011, which compares to 98 systems signed during the same period in 2010. For a breakdown of second quarter and year-to-date system signings by type, please see the end of this press release.

Theatre System Backlog

As of June 30, 2011, the Company’s backlog consisted of a record 294 theatre systems, including 166 systems under sales and sales-type lease arrangements, 12 of which were systems designated for digital upgrades, and 128 systems under joint revenue sharing arrangements. This compares to a theatre backlog of 187 systems as of June 30, 2010, which included 117 theatres under sales and sales-type lease arrangements, five of which were designated for digital upgrades, and 70 theatres under joint revenue sharing arrangements.

“We continue to focus on international growth, and today, nearly 70 percent of our revenue sharing theatres in backlog are international, which is particularly exciting given recent growth in international box office for IMAX and for the industry overall,” said Mr. Gelfond. “We’ve made significant progress in several key territories, including opening new theatres in Brazil, Italy and Spain, which have posted impressive early results. In China, we have established a wholly-owned foreign entity to help expand our business in the region, and we opened our first revenue sharing theatre with Wanda Cinemas, with many more to roll out in the second half of the year. Given our robust backlog and deal pipeline overall, we believe we are in the early innings of our global expansion.”

Theatre System Installations

During the second quarter of 2011, the Company installed 41 theatre systems, compared to a total of 21 system installations in the second quarter of 2010. Total installations include new IMAX theatre locations, as well as the upgrade of existing IMAX film-based theatre systems to digital. For a breakdown of system installations by type, please see the end of this press release.

Network Growth Outlook

The Company now expects to install between 120 and 130 new theatres this year, which implies year-over-year commercial multiplex network growth of 30 percent. Of the 120 to 130 new theatres to be installed in 2011, it is expected that between 30 and 38 (20 to 25 new joint revenue sharing systems and 10 to 13 new sales-type lease systems, excluding upgrades) will be installed in the third quarter of 2011.

The Company has provided a preliminary outlook on 2012 installation guidance for 90 to 100 new theatres (40 to 45 new joint revenue sharing systems and 50 to 55 new sales-type lease systems, excluding upgrades), based on theatres currently in backlog. Current network growth outlook does not account for any theatres that may sign after June 30, 2011. The Company cautions that installations can slip from period to period, usually for reasons beyond its control.

Second Quarter Segment Results

In the second quarter of 2011, IMAX systems revenue was $20.5 million, compared to $17.3 million in the second quarter of 2010, primarily reflecting the installation of 11 full, new theatre systems and one used system in the most recent second quarter, compared to six full, new systems in the second quarter of 2010. The Company also installed six digital upgrades in the second quarter of 2011, compared to 11 in the same year-ago period.

In the second quarter of 2011, revenue from joint revenue sharing arrangements was $8.3 million, compared to $8.5 million in the prior-year period. During the quarter, the Company installed 23 new joint revenue sharing theatres, compared to four in the year-ago period. As of June 30, 2011, there were a total of 204 IMAX theatres under joint revenue sharing arrangements, compared to 126 joint revenue sharing theatres open as of June 30, 2010.

Second quarter 2011 total film revenue was $18.7 million, compared to $20.7 million in the second quarter of 2010. Production and IMAX DMR(R) revenues were $12.4 million in the second quarter of 2011, as compared to $14.5 million in the year-ago period. Gross box office from DMR titles was $107.7 million in the second quarter of 2011, compared to $113.9 million in the second quarter of 2010, which included approximately $8.0 million of box office from Avatar: An IMAX 3D Experience. The average DMR box office per screen in the second quarter was $315,700 ($266,500 domestic, $409,000 international). For box office results on a title-by-title basis, please visit the ‘News @ IMAX’ section of www.imax.com.

Second quarter 2011 gross margin decreased to $26.3 million from $27.0 million in the second quarter of 2010. An increase in gross margin on sales and sales-type lease systems was offset by a decrease in margin on DMR and joint revenue sharing arrangements. Lower year-over-year joint revenue sharing margin primarily reflects launch costs of $1.8 million associated with the installation of 23 new revenue share theatres, as compared to four new revenue share theatres opened in the year-ago period and related launch costs of $0.7 million. Also negatively impacting gross margin in the second quarter were marketing costs associated with the IMAX original documentary, in partnership with Warner Bros. Pictures, Born to Be Wild.

Selling, general and administrative expense for the second quarter of 2011 was $19.5 million as reported, or $18.1 million excluding the negative impact of variable stock compensation in the period. This compares to last year’s reported selling, general and administrative expense of $11.1 million, or $16.0 million excluding the positive impact of variable stock compensation in the period.

Mr. Gelfond concluded, “We believe we are on track to outpace the record level of theatre installations achieved in 2010, and we are positioned to nearly double our global footprint purely from backlog as of June 30th. Given first half film performance, we expect adjusted earnings and EBITDA to be lower in 2011 as compared to 2010, although we do expect revenues to be consistent with last year, which included Avatar. We are investing and growing the global infrastructure of our Company, which we believe should create long-term value for shareholders. Except for the short-term effects of the last two quarters of box office, the response to our brand from exhibitors, studios and moviegoers across the globe is the best reminder of the growth opportunities in front of us, and as a result, we remain optimistic about our business.”

Conference Call

The Company will host a conference call today at 8:30 AM ET to discuss its second quarter 2011 financial results. To access the call via telephone, interested parties should dial (866) 321-6651 approximately 5 to 10 minutes before it begins. International callers should dial (416) 642-5212. The participant passcode for the call is 3630041. This call is also being webcast by Thomson Financial and can be accessed on the ‘Investor Relations’ section of www.imax.com. A replay of the call will be available via webcast on the ‘Investor Relations’ section of www.imax.com or via telephone by dialing (888) 203-1112, or (647) 436-0148 for international callers. The participant passcode for the telephone replay is 3630041.

About IMAX Corporation

IMAX Corporation is one of the world’s leading entertainment and technology companies, specializing in the creation and delivery of premium, awe-inspiring entertainment experiences. With a growing suite of cutting-edge motion picture and sound technologies, and a globally recognized entertainment brand, IMAX is singularly situated at the convergence of the entertainment industry, innovation and the digital media world. The industry’s top filmmakers and studios are utilizing IMAX theatres to connect with audiences in extraordinary ways, and as such, the IMAX network is among the most important and successful theatrical distribution platforms for major event films around the globe. The Company’s new digital projection and sound systems – combined with a growing blockbuster film slate – are fueling the rapid expansion of the IMAX network in established markets such as North America, Western Europe, and Japan, as well as emerging markets such as China and Russia. IMAX theaters deliver the world’s best cinematic presentations using proprietary IMAX(R), IMAX 3D(R), and IMAX DMR(R) (Digital Re-Mastering) technologies. IMAX DMR enables virtually any motion picture to be transformed into the unparalleled image and sound quality of The IMAX Experience(R).

IMAX is headquartered in New York, Toronto and Los Angeles, with offices in London, Tokyo and Shanghai. As of June 30, 2011, there were 560 IMAX theatres (417 commercial multiplex, 25 commercial destination and 118 institutional) operating in 46 countries.

IMAX(R), IMAX(R) 3D, IMAX DMR(R), Experience It In IMAX(R), An IMAX 3D Experience(R) and The IMAX Experience(R) 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).

Press Release >>

UPDATE: More on IMAX’s Q2 2011 financial results and stock updates:

The Wall Street Journal: Imax 2Q Profit Below Expectations On Disappointing Film Slate

Reuters: IMAX Earnings Fall in Q2 After Expansion, Weak Box Office

The Canadian Press: Imax second-quarter profits drop to US$1.8 million, revenues slip three per cent

Contactmusic: Imax’s Not-So-Big Quarter

Bloomberg: Imax Falls After Saying ‘Disappointing’ Film Lineup Cuts Quarterly Profit

Los Angeles Times: Imax, RealD earnings disappoint, stocks plummet

The Globe and Mail: ‘Horrible, horrible movies’ hammer Imax profit

msnbc: Imax shares tumble on 2Q results | The Downgrade Created These 5 Tech Traps

The Motley Fool: Lights Go Dark at IMAX

Seeking Alpha: IMAX’s Q2 Results Support the Short Case | IMAX: Where’s the Love? | IMAX Has the Movie Industry by the Throat | Taking Another Look at IMAX for the Current Quarter

Financial Post: IMAX sell-off overdone

Chicago Tribune: Weak box office hits Imax hard in 2Q

DailyFinance: IMAX by the Numbers

Zacks Investment Research: IMAX IS AMONG THE COMPANIES IN THE MOVIES & ENTERTAINMENT INDUSTRY WITH THE BEST RELATIVE PERFORMANCE (IMAX, VIA.B, NWSA, RGC, LGF)

TradersHuddle.com: Approaching Support- IMAX

China Analyst: Top 10 Small Cap Stocks with Most Analyst Upgrades: KOG, IMAX, NUVA, WBS, SYNA, WXS, DF, DGI, PETD, HERO (Aug 08, 2011) | Top 10 Media Stocks with Highest Return on Equity: IMAX, MHP, ENL, RUK, GCI, VIA.B, JW.A, DLB, GSOL, MDP (Aug 08, 2011) | Top 10 Small Cap Stocks with Most Analyst Upgrades: KOG, IMAX, NUVA, WBS, CHH, MNKD, ARO, WXS, DF, CATY (Aug 18, 2011) | Top 10 Fastest-Growing Media Stocks: BONA, IMAX, ROVI, VIA.B, DLB, NWSA, DIS, TWX, MHP, WWE (Aug 22, 2011)

Market News Video: Thursday Sector Leaders: Entertainment, Apparel Stores

San Francisco Chronicle: Canadian Stocks Rise After U.S. Reports Drop in Jobless Claims

Market Intelligence Center: IMAX (IMAX) Showing Bearish Technicals With Resistance At $19.27

Financial News Network Online: Top 5 Companies in the Movies & Entertainment Industry with the Best Relative Performance (NWSA, NWS, IMAX, VIA.B, DWA) | Relatively Good Performance Detected in Shares of Imax in the Movies & Entertainment Industry (IMAX, LCAPA, NWSA, NWS, LYV) | IMAX Reiterated Overweight at Piper Jaffray

MarketWatch: Equity Research on IMAX Corporation and Eastman Kodak Co. – Desperate Times, Desperate Measures for Photographic Equipment and Supplies Sector

StreetInsider.com: JANCO Partners Downgrades IMAX Corporation (IMAX) to Accumulate; A Sleeping Giant

Health Talk and You!: P&F Low Pole – IMAX, IPI, IRM, IVN, IXP