Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Imax Corp (IMAX, Financial) reported a strong Q3 with adjusted EBITDA of $39 million at a 42% margin, beating consensus estimates.
- The company has already installed 100 systems worldwide year-to-date, tracking to hit the high end of their installation guidance of 130 to 150 systems for the year.
- Imax Corp (IMAX) delivered one of its best third quarters ever at the global box office, with domestic box office exceeding 2019 by 45%.
- The company is optimistic about the future, with a strong slate of films for 2025 and 2026, including major franchises like Avatar and Avengers.
- Imax Corp (IMAX) is expanding its global network, with recent agreements in France, Australia, and Saudi Arabia, and is pursuing its first local language project in Saudi Arabia.
Negative Points
- The company faced top-line headwinds due to a challenging comparison to last year's record performance with Oppenheimer.
- Content Solutions revenues declined 32% year-over-year, driven by the mix of content and the comparison to the prior year's strong performance.
- The Chinese box office has been lagging, impacting overall performance, though there are signs of improvement with upcoming releases.
- System rentals revenue was lower due to a decrease in box office-related rental revenues resulting from the global content mix.
- There is uncertainty in predicting future box office performance, as highlighted by the mixed results of recent releases like Joker and Venom.
Q & A Highlights
Q: Are theater operators looking to accelerate the installation pace for IMAX systems given the strong content cycle for the next two years?
A: Richard Gelfond, CEO: The empirical data shows increased installations and signings. This quarter, installations were significantly higher than last year, and we are guiding to the upper end of our range, indicating increased demand from theater operators.
Q: Can you comment on the potential collaboration with Netflix for exclusive content, such as the Narnia movie?
A: Richard Gelfond, CEO: While I can't comment on specific stories, we are always exploring new models and approaches to emphasize content, including early releases and exclusive content.
Q: How does the 2025 film slate look, especially in China, and what are the expectations for IMAX DNA films?
A: Richard Gelfond, CEO: The 2025 slate is very strong, with every slot filled from May to September. In China, several films have been approved for release, including Creation of the Gods II and A Writer's Odyssey, indicating a more balanced genre slate next year.
Q: Can you elaborate on the operating leverage in the Content Solutions business if the box office performs as expected in 2025?
A: Natasha Fernandes, CFO: High box office levels lead to incrementality in our model, with payments from studios and exhibitors. Coupled with a larger system footprint and operational efficiencies, we expect EBITDA margins to exceed 40%.
Q: What factors contributed to the recent performance of IMAX in China, and what are the expectations moving forward?
A: Richard Gelfond, CEO: The weak economy and film quality affected performance. However, recent government measures and approvals for more films, including unexpected ones like Deadpool, suggest a more robust outlook for next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
