Presse

IMAX Corporation Reports Fourth Quarter and Full-Year 2019 Results
Fév 19, 2020

NEW YORK, Feb. 19, 2020 /PRNewswire/ -- IMAX Corporation (NYSE:IMAX) today reported full-year 2019 revenues of $395.7 million, gross profit of $214.2 million, net income of $58.6 million, or $0.95 per diluted share, and net income attributable to common shareholders of $46.9 million, or $0.76 per diluted share. Adjusted net income attributable to common shareholders for the year ended December 31, 2019 was $64.8 million, or $1.05 per diluted share. Adjusted EBITDA attributable to common shareholders was $149.3 million.

HIGHLIGHTS

  • Company achieved record full-year 2019 box office of $1.1 billion, up 7% over the prior year
  • Full-year 2019 revenue increased 6% versus 2018 to $396 million, a new record
  • Full-year 2019 net income attributable to common shareholders increased 105% versus 2018 to $47 million and full-year 2019 net income increased 74% to $59 million; Adjusted net income attributable to common shareholders increased 12% year-over-year to $65 million
  • Full-year 2019 earnings per share attributable to common shareholders increased 111% to $0.76; Adjusted net earnings per share attributable to common shareholders increased 15% to $1.05
  • Company's total commercial multiplex network grew to 1,529 theatres, 73% of which are in international markets


Three Months Ended



12 Months Ended



December 31,



December 31,

In millions, except per share data


2019


2018


YoY %



2019


2018


YoY %







Change







Change

Total Revenue

$

124.3

$

109.0


14%


$

395.7

$

374.4


6%















Gross Margin


62.4


54.6


14%



214.2


207.9


3%

   Gross Margin (%)


50.2%


50.1%





54.1%


55.5%

















Net Income

$

21.4

$

3.8


461%


$

58.6

$

33.6


74%

Net Income(1)


18.2


1.7


973%



46.9


22.8


105%

Adjusted Net Income (1)


21.5


16.4


31%



64.8


57.8


12%

Diluted Net Income Per Share(1) 

$

0.29

$

0.03


867%


$

0.76

$

0.36


111%

Adj. Net Income Per Share(1)

$

0.35

$

0.26


35%


$

1.05

$

0.91


15%















Adjusted EBITDA

$

47.0

$

36.4


29%


$

149.3

$

133.2


12%

   Adj. EBITDA Margin (%)


41.7%


37.3%





41.7%


39.6%

















(1) Attributable to common shareholders














Note: For the definition and reconciliations of reported results to non-GAAP financial results, please refer to the discussion of non-GAAP financial measures at the end of this earnings release.

The Company also reported fourth quarter 2019 revenues of $124.3 million, gross profit of $62.4 million, net income of $21.4 million, or $0.35 per diluted share, and net income attributable to common shareholders of $18.2 million, or $0.29 per diluted share. Adjusted net income attributable to common shareholders for the fourth quarter was $21.5 million, or $0.35 per diluted share. Adjusted EBITDA attributable to common shareholders was $47.0 million. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA, please see the end of this press release.

"IMAX is among the world's premiere entertainment experiences, and our record 2019 financial results reflect sharp focus, strong execution, and disciplined cost management as we continue to grow our global footprint, diversify our content portfolio, and enhance our pioneering end-to-end technology," said IMAX CEO Richard L. Gelfond.

"Across 2019, our business demonstrated significant strength by setting a number of new records for the Company including annual revenue as well as global, international, and local language box office — underscoring the increasing geographic diversification of our business."

"In a world of nearly infinite entertainment choices, audiences continue to choose IMAX. Immersive entertainment experiences continue to connect fans and drive culture around the globe. We are committed to building on strong demand for The IMAX Experience® to strengthen our unique position in the entertainment ecosystem and deliver value for our shareholders."

"In terms of the health crisis in China, where movie theatres nationwide remain closed, we are continuing to monitor the situation closely and needless to say the safety of our team and audiences is our top priority," said Mr. Gelfond. "We look forward to circumstances improving and IMAX continuing to satisfy China's strong demand for premium quality content and entertainment experiences."

Fourth Quarter and Full-Year Segment Results






Network Business


Theatre Business




Revenue


Gross

Margin

Gross

Margin %


Revenue


Gross

Margin

Gross

Margin %














4Q19

$

43.0

$

24.4

56.8%

$

77.6

$

39.7

51.2%


4Q18

$

41.7


24.7

59.2%


61.9


29.1

47.1%


% change


3.3%


(0.9%)



25.3%


36.4%















YTD 4Q19

$

196.8

$

126.7

64.4%

$

180.5

$

86.8

48.1%


YTD 4Q18

$

184.2


121.6

66.0%


168.4


85.8

50.9%


% change


6.9%


4.1%



7.2%


1.2%














Network Business

  • Network business revenues increased 6.9% to $196.8 million in 2019, compared to $184.2 million in the prior-year period. The strong overall increase in network business revenues was primarily driven by a $76.4 million, or 7.4%, increase in IMAX global box office to $1.1 billion.
  • Total gross margin for the network business was 64.4% in the most recent quarter, compared to 66.0% in the prior-year period. The year-over-year decrease in total gross margin was primarily driven by increased contractual marketing expense.

Theatre Business

  • Theatre business segment revenues increased 7.2% to $180.5 million in 2019, compared with $168.4 million in the prior-year period.
  • Total gross margin for the theatre business was 48.1% compared to 50.9% in the prior-year period. The year-over-year decline in total gross margin was primarily driven by the geographic and system mix of installations in the first quarter of 2018. The theatre business gross margin increased steadily throughout 2019, landing at 51.2% for the entire segment in the fourth quarter of 2019, and 53.0% specifically for sales and sales type lease theatres.

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of December 31, 2019 was $109.5 million. Total bank indebtedness was $18.2 million as of December 31, 2019 and represented a decrease compared to $37.8 million as of December 31, 2018. As of December 31, 2019, $280.0 million was available under the Company's $300.0 million credit facility due June 28, 2023.

Share Count and Capital Return

  • The weighted average diluted shares outstanding at the end of the fourth quarter of 2019 declined 2.7% to 61.5 million, compared to 63.2 million in fourth quarter 2018, due primarily to share repurchase activity. During 2019 a total of 134 thousand shares were repurchased at an average price of $19.76 for a total value of approximately $2.7 million. A total of $125.9 million remains available under the Company's outstanding share repurchase authorization, which expires in June 2020.
  • During 2019, IMAX China repurchased a total of 8.05 million shares at an average price of $2.38 for a total value of approximately $19.2 million.

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 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.

The information posted on the Company's website may be deemed 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.

Conference Call

The Company will host a conference call today at 4:30PM ET to discuss its fourth quarter and full year 2019 financial results. This call is being webcast by Nasdaq and can be accessed at www.imax.com/content/investor-relations. To access the call via telephone, interested parties in the US and Canada should dial (888) 204-4368 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 794-4605. The conference ID for the call is 9833755. A replay of the call will be available via webcast at www.imax.com/content/investor-relations or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 9833755.

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 theatres 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 December 31, 2019, there were 1,624 IMAX theatre systems (1,529 commercial multiplexes, 14 commercial destinations, 81 institutional) operating in 81 countries and territories. Shares of IMAX China, a subsidiary of IMAX Corp., trade 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 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

Heather Anthony

212-821-0121

hanthony@imax.com

 

 

Media:

IMAX Corporation, New York

Mark Jafar

212-821-0155

mjafar@imax.com

 

 

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. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, 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 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; risks related to the Company's growth and operations in China, including the adverse impact of the coronavirus outbreak in China; the performance of IMAX DMR® films; the signing of theater 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; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to 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; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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 has four primary reporting groups identified by nature of product sold or service provided: (1) Network Business, representing variable revenue generated by box-office results and which includes the reportable segments of IMAX DMR and contingent rent from the JRSAs and IMAX systems segments; (2) Theater Business, representing revenue generated by the sale and installation of theater systems and maintenance services, primarily related to the IMAX Systems and Theater System Maintenance reportable segments, and also includes fixed hybrid revenues and upfront installation costs from the JRSA segment; (3) New Business, which includes home entertainment, and other new business initiatives that are in the development, start-up and/or wind-up phases, and (4) Other; which includes the film post-production and distribution segments and certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.

Non-GAAP Financial Measures

In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, free cash flow and return on invested capital as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) and non-recurring charges on net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests and its stock-based compensation (net of any related tax impact) and non-recurring charges in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.

The Company is required to maintain a minimum level of "EBITDA", as such term is defined in the Company's credit agreement (and which is referred to herein as "Adjusted EBITDA per Credit Facility", as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). EBITDA and Adjusted EBITDA per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP. The Company believes that EBITDA, Adjusted EBITDA per Credit Facility and Adjusted EBITDA margin are relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry. Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of its operating performance and to provide additional information with respect to the Company's ability to comply with its credit agreement requirements.

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the condensed consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented below. 

Signings and Installations












12 Months Ended December 31,



Theater System Signings:

2019


2018



Full new sales and sales-type lease arrangements

49


57



New traditional joint revenue sharing arrangements

7


55



New hybrid joint revenue sharing lease arrangements

48


10



Total new theaters

104


122



Upgrades of IMAX theater systems

39


112

(1)


    Total theater signings

143


234
















12 Months Ended December 31,



Theater System Installations:

2019


2018



Full new sales and sales-type lease arrangements

55

(2)

63



New traditional joint revenue sharing arrangements

54


72



New hybrid joint revenue sharing lease arrangements

20


14



Total new theaters

129


149



Upgrades of IMAX theater systems

57


23



   Total theater installations

186


172










12 Months Ended December 31,






Theater Sales Backlog:

2019


2018



Sales and sales-type lease arrangements

178


177



Joint revenue sharing arrangements






Hybrid lease arrangements

140


118



Traditional arrangements

213

(3)

269

(5)


Total theater backlog

531

(4)

564

(6)









12 Months Ended December 31,






Theater Network:

2019


2018



Commercial Multiplex Theaters:






Sales and sales-type lease arrangements

659


611



Traditional joint revenue sharing arrangements

731


674



Hybrid joint revenue sharing lease arrangements

139


124



Total Commercial Multiplex Theaters

1,529


1,409









Commercial Destination Theaters

14


14



Institutional Theaters

81


82



   Total theater network

1,624


1,505








(1)     Includes 105 theater systems related to existing AMC, Regal and Pathé theaters to be upgraded to IMAX with Laser projection systems on new lease terms ranging from 10 to 12 years. 

(2)     Includes one IMAX digital theater system that was relocated from a previous location. This installation is incremental to the IMAX theater network but full revenue for the digital theater system was not received.

(3)    Includes 47 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement.

(4)     Includes 153 new laser projection system configurations (144 of which are IMAX with Laser projection system configurations and 9 of which are GT Lasers) and 97 upgrades of existing locations to laser projection system configurations (92 of which are for the IMAX with Laser projection system configurations and 5 of which are GT Lasers).

(5)    Includes 46 theater systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement.

(6)    Includes 83 new laser projection system configurations (73 of which are IMAX with Laser projection system configurations and 10 of which are GT Lasers) and 100 upgrades of existing locations to laser projection system configurations (98 of which are for the IMAX with Laser projection system configurations and 2 of which are GT Lasers).

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars, except per share amounts)



















Three Months Ended


12 Months Ended




December 31,


December 31,




2019


2018


2019


2018

Revenues













Equipment and product sales


$

61,616


$

46,409


$

118,245


$

106,591

Services 



43,570



42,769



188,547



181,740

Rentals



16,286



16,667



77,961



74,472

Finance income



2,807



3,119



10,911



11,598





124,279



108,964



395,664



374,401

Costs and expenses applicable to revenues













Equipment and product sales 



30,513



25,233



63,627



54,853

Services



21,970



21,428



88,175



84,236

Rentals 



9,437



7,661



29,690



27,383





61,920



54,322



181,492



166,472

Gross margin



62,359



54,642



214,172



207,929

Selling, general and administrative expenses



34,189



30,380



123,456



117,477

Research and development



1,486



2,186



5,203



13,728

Amortization of intangibles



1,391



1,249



4,955



4,145

Receivable provisions, net of recoveries



473



1,463



2,430



3,130

Legal arbitration award



-



4,237



-



11,737

Executive transition cost



-



2,994



-



2,994

Exit costs, restructuring charges and associated impairments



-



8,384



850



9,542

Income from operations



24,820



3,749



77,278



45,176

Change in fair value of equity securities



2,026



-



(517)



-

Retirement benefits non-service expense



(257)



(125)



(737)



(499)

Interest income



473



723



2,105



1,844

Interest expense



(987)



(613)



(2,793)



(2,916)

Income before income taxes



26,075



3,734



75,336



43,605

Provision for income taxes



(4,782)



22



(16,768)



(9,518)

Income (loss) from equity-accounted investments, net of tax


59



15



3



(492)

Net income 



21,352



3,771



58,571



33,595

Less: net income attributable to non-controlling interests



(3,181)



(2,077)



(11,705)



(10,751)

Net income attributable to common shareholders


$

18,171


$

1,694


$

46,866


$

22,844















Net income per share attributable to common shareholders -
      basic and diluted:










Net income per share — basic and diluted


$

0.29


$

0.03


$

0.76


$

0.36















Weighted average number of shares outstanding (000's):














Basic



61,228



61,924



61,310



63,075


Fully Diluted



61,542



62,127



61,489



63,207















Additional Disclosure:













Depreciation and amortization(1)


$

17,987


$

15,453


$

63,487


$

57,437















(1) Includes $0.1 million and $0.5 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2019, respectively (2018 - $0.1 million and  $1.1 million, respectively).

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of U.S. dollars)







December 31,



2019


2018

Assets






Cash and cash equivalents


$        109,484



$       141,590

Accounts receivable, net of allowance for doubtful accounts of $5,138 (December 31, 2018 — $3,174)


99,513



93,309

Financing receivables, net of allowance for uncollectible amounts


128,038



127,432

Variable consideration receivable from contracts 


40,040



35,985

Inventories 


42,989



44,560

Prepaid expenses


10,237



10,294

Film assets 


17,921



16,367

Property, plant and equipment 


306,849



280,658

Investment in equity securities 


15,685



1,022

Other Assets 


25,034



17,997

Deferred income taxes 


23,905



31,264

Other intangible assets 


30,347



34,095

Goodwill 


39,027



39,027

Total assets 


$      889,069



$    873,600







Liabilities






Bank indebtedness


$          18,229



$         37,753

Accounts payable


20,414



32,057

Accrued and other liabilities 


112,779



97,724

Deferred revenue


94,552



106,709

Total liabilities 


245,974



274,243







Commitments and contingencies 












Non-controlling interests 


5,908



6,439







Shareholders' equity












Capital stock (note 16) common shares — no par value. Authorized — unlimited number
   61,362,872 issued and 61,175,852 outstanding (December 31, 2018 — 61,478,168
   issued and 61,433,589 outstanding)


423,386



422,455

Less: Treasury stock, 187,020 shares at cost (December 31, 2018 — 44,579)


(4,038)



(916)

Other equity


171,789



179,595

Accumulated deficit


(40,253)



(85,385)

Accumulated other comprehensive loss 


(3,190)



(3,588)

Total shareholders' equity attributable to common shareholders


547,694



512,161

Non-controlling interests 


89,493



80,757

Total shareholders' equity


637,187



592,918

Total liabilities and shareholders' equity


$      889,069



$    873,600

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

In accordance with United States Generally Accepted Accounting Principles


(In thousands of U.S. dollars)




Years Ended December 31,




2019


2018









Cash provided by (used in):








Operating Activities








Net income


$

58,571


$

33,595


Adjustments to reconcile net income to cash from operations:








Depreciation and amortization



63,487



57,437


Write-downs, net of recoveries



6,806



11,770


Deferred income taxes



6,762



(6,923)


Stock and other non-cash compensation



23,570



23,723


Unrealized foreign currency exchange loss



33



631


Change in fair value of equity investment



517




Loss from equity-accounted investments



730



95


(Gain) loss on non-cash contribution to equity-accounted investees



(733)



397


Investment in film assets



(23,437)



(23,200)


Changes in other non-cash operating assets and liabilities



(45,929)



12,447


Net cash provided by operating activities



90,377



109,972










Investing Activities








Purchase of property, plant and equipment



(7,421)



(13,368)


Investment in joint revenue sharing equipment



(40,489)



(34,810)


Acquisition of other intangible assets



(2,931)



(8,696)


Investment in equity securities



(15,153)




Net cash used in investing activities



(65,994)



(56,874)










Financing Activities








Increase in bank indebtedness



35,000



65,000


Repayment of bank indebtedness



(55,000)



(50,667)


Treasury stock repurchased for future settlement of restricted share units



(4,038)



(916)


Settlement of restricted share units and options



(9,795)



(5,249)


Repurchase of common shares, IMAX China



(19,162)



(6,084)


Taxes withheld and paid on employee stock awards vested



(590)



(1,437)


Common shares issued - stock options exercised



2,404



1,017


Repurchase of common shares



(2,659)



(71,479)


Issuance of subsidiary shares to non-controlling interests (net of return on capital)



1,106



7,796


Dividends paid to non-controlling interests



(4,384)



(6,934)


Credit facility amendment fees paid





(1,909)


Net cash used in financing activities



(57,118)



(70,862)










Effects of exchange rate changes on cash



630



629










Decrease in cash and cash equivalents during period



(32,106)



(17,135)


Cash and cash equivalents, beginning of period



141,590



158,725


Cash and cash equivalents, end of period


$

109,484


$

141,590


IMAX CORPORATION
SELECTED FINANCIAL DATA
In accordance with United States Generally Accepted Accounting Principles
(in thousands of U.S. dollars)





Three Months Ended


12 Months Ended




December 31,



December 31,




2019



2018



2019



2018


Revenue













Network business













IMAX DMR


$     26,857



$     25,207



$   120,765



$   110,793


Joint revenue sharing arrangements – contingent rent


16,228



16,452



75,932



73,371


IMAX systems – contingent rent


(50)





139






43,035



41,659



196,836



184,164


Theater business













IMAX systems













     Sales and sales-type leases 


54,098



37,887



96,310



88,432


     Ongoing fees and finance income 


3,025



3,242



11,613



12,224


Joint revenue sharing arrangements – fixed fees


4,489



5,885



11,014



9,706


Theater system maintenance


13,336



12,222



53,151



49,684


Other theater


2,624



2,651



8,390



8,358




77,572



61,887



180,478



168,404


New business


846



770



2,754



5,769


Other 













Film distribution and film post-production


2,419



3,806



12,210



12,962


Other


407



842



3,386



3,102




2,826



4,648



15,596



16,064


Total revenues


$   124,279



$   108,964



$   395,664



$   374,401




























Gross Margin













Network business













IMAX DMR(1)


$     16,990



$     15,250



$     78,592



$     72,773


Joint revenue sharing arrangements – contingent rent(1)


7,498



9,415



47,935



48,856


IMAX systems – contingent rent


(50)





139






24,438



24,665



126,666



121,629


Theater business













IMAX systems(1)













     Sales and sales-type leases 


28,689



19,338



47,118



47,986


     Ongoing fees and finance income 


2,977



3,194



11,422



12,033


Joint revenue sharing arrangements – fixed fees(1)


1,312



1,206



2,613



1,982


Theater system maintenance


5,964



4,702



23,010



21,991


Other theater


803



707



2,624



1,806




39,745



29,147



86,787



85,798


New business


665



(489)



2,106



(350)


Other 













Film distribution and film post-production(1)


(1,745)



1,443



(1,262)



1,763


Other


(744)



(124)



(125)



(911)




(2,489)



1,319



(1,387)



852


Total segment margin


$     62,359



$     54,642



$   214,172



$   207,929














(1)

IMAX DMR segment margins include marketing costs of $4.8 million and $22.5 million for the three months and year ended December 31, 2019, respectively (2018 - $2.8 million and $16.5 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $3.4 million and $4.5 million for the three months and year ended December 31, 2019, respectively (2018 - $1.4 million and $3.6 million, respectively). IMAX system segment margins include marketing and commission costs of $0.5 million and $2.0 million for the three months and year ended December 31, 2019, respectively (2018 - $1.5 million and $2.4 million). Film distribution and post production segment margins include marketing recovery of $0.3 million and expense of $0.4 million for the three months and year ended December 31, 2019, respectively (2018 - $0.2 million and expense of $2.2 million, respectively). 

IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share, EBITDA, adjusted EBITDA per Credit Facility, free cash flow and return on invested capital as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) and non-recurring charges on net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests, its stock-based compensation (net of any related tax impact) and non-recurring charges in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.

The Company is required to maintain a minimum level of "EBITDA", as such term is defined in the Company's credit agreement (and which is referred to herein as "Adjusted EBITDA per Credit Facility" or "Adjusted EBITDA per Credit Facility excluding Marvel's Inhumans", as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). EBITDA and Adjusted EBITDA per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP. The Company believes that EBITDA and Adjusted EBITDA per Credit Facility excluding Marvel's Inhumans are relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry.




Three Months Ended



Three Months Ended



12 Months Ended



12 Months Ended





December 31, 2019



December 31, 2018



December 31, 2019(1)



December 31, 2018(1)

















Net income

$

21,352


$

3,771


$

58,571


$

33,595



Add (subtract): 


-












Provision for income taxes


4,782



(22)



16,768



9,518



Interest expense, net of interest income


381



(110)



423



1,072



Depreciation and amortization, including film asset amortization


17,987



15,453



63,487



57,437



EBITDA

$

44,502


$

19,092


$

139,249


$

101,622



Stock and other non-cash compensation


6,173



5,483



23,570



23,723



Change in fair value of equity investment


(2,026)





517





Write-downs, net of recoveries including asset impairments and
   receivable provisions


3,822



2,797



6,806



5,338



Exit costs, restructuring charges and associated impairments




8,384



850



9,542



Legal arbitration award




4,237



-



11,737



Executive transition costs




2,994



-



2,994



(Income) loss from equity accounted investments


(59)



(15)



(3)



492



Adjusted EBITDA before non-controlling interests

$

52,412


$

42,972


$

170,989


$

155,448



Adjusted EBITDA attributable to non-controlling interests(2)


(5,457)



(6,593)



(21,661)



(22,220)



Adjusted EBITDA per Credit Facility

$

46,955


$

36,379


$

149,328


$

133,228



Adjusted revenues attributable to common shareholders(3)

$

112,635


$

97,573


$

358,053


$

336,723



Adjusted EBITDA margin


41.7

%


37.3

%


41.7

%


39.6

%

_____________













(1)

Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility.





(2)

The Adjusted EBITDA per Credit Facility calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in Adjusted EBITDA from the Company's non-controlling interests. 





(3)


Three months ended

December 31, 2019


Three months ended

December 31, 2018


12 months ended

December 31, 2019


12 months ended

December 31, 2018


Total revenues




$

124,279




$

108,964




$

395,664




$

374,401


Greater China revenues


$

38,481




$

35,553




$

124,294




$

117,520




Non-controlling interest ownership percentage(4)



30.26%





32.04%





30.26%





32.06%




Deduction for non-controlling interest share of revenues





(11,644)





(11,391)





(37,611)





(37,678)


Adjusted revenues attributable to common shareholders




$

112,635




$

97,573




$

358,053




$

336,723























(4)

Weighted average ownership percentage for change in non-controlling interest share





















IMAX CORPORATION
Adjusted Net Income and Adjusted Diluted Per Share Calculations
(In thousands of U.S. dollars)
(Unaudited)




Three Months Ended


Three Months Ended



December 31, 2019


December 31, 2018



Net Income


Diluted EPS


Net Income


Diluted EPS

Reported net income


$                    21,352


$                        0.35


$                      3,771


$                        0.06

Adjustments:








Stock-based compensation


5,914


0.10


5,046


0.08

Exit costs, restructuring charges and associated impairments




8,384


0.13

Legal arbitration award




4,237


0.07

Executive transition costs




2,994


0.05

Change in fair value of equity investment


(2,026)


(0.03)



Impact of enactment of U.S. Tax Act





Tax impact on items listed above


(1,095)


(0.02)


(4,586)


(0.07)

Adjusted net income


24,145


0.40


19,846


0.32

Net income attributable to non-controlling interests(1)


(3,181)


(0.05)


(2,077)


(0.04)

Stock-based compensation (net of tax of less than
   $0.1 million and less than $0.1 million, respectively)(1)


(112)


(0.01)


(115)


Exit costs, restructuring charges and associated impairments (net of tax of $nil and $0.4 million, respectively)(1)




(1,262)


(0.02)

Change in fair value of equity investment


617


0.01



Adjusted net income attributable to common shareholders


$                    21,469


$                        0.35


$                    16,392


$                        0.26










Weighted average diluted shares outstanding




61,542




62,127



















(1) Reflects amounts attributable to non-controlling interests.






















12 Months Ended


12 Months Ended



December 31, 2019


December 31, 2018



Net Income


Diluted EPS


Net Income


Diluted EPS

Reported net income


$                    58,571


$                        0.95


$                    33,595


$                        0.53

Adjustments:









Stock-based compensation


22,830


0.37


22,211


0.35

Exit costs, restructuring charges and associated impairments


850


0.01


9,542


0.15

Legal arbitration award




11,737


0.19

Executive transition costs




2,994


0.05

Change in fair value of equity investment


517


0.01



Impact of enactment of U.S Tax Cut and Jobs Act





Tax impact on items listed above


(5,614)


(0.09)


(9,873)


(0.16)

Adjusted net income


77,154


1.25


70,206


1.11

Net income attributable to non-controlling interests(1)


(11,705)


(0.19)


(10,751)


(0.17)

Stock-based compensation (net of tax of $0.1 million and
   $0.1 million, respectively)(1)


(480)


(0.01)


(394)


(0.01)

Exit costs, restructuring charges and associated impairments (net of tax of $nil and $0.4 million, respectively)(1)




(1,262)


(0.02)

Change in fair value of equity investment


(184)




Adjusted net income attributable to common shareholders


$                    64,785


$                        1.05


$                    57,799


$                        0.91










Weighted average diluted shares outstanding




61,489




63,207



















(1) Reflects amounts attributable to non-controlling interests.



Return on Invested Capital:

Return on Invested Capital ("ROIC") is not defined under U.S. generally accepted accounting principles. Therefore, ROIC should not be considered a substitute for other measures prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures used by other companies. The Company defines ROIC as earnings before interest after taxes (before non-controlling interests) divided by total invested capital (total equity plus total debt less goodwill and other intangible assets). The Company believes ROIC is meaningful to investors as it focuses on shareholder value creation. A reconciliation of ROIC is presented in the table below:



Twelve Months Ended

December 31,


2019


2018







Income from operations

$

77,278


$

45,176

Provision for income taxes


(16,768)



(9,518)

EBIAT

$

60,510


$

35,658







Total shareholders' equity

$

637,187


$

592,918

Total bank indebtedness


18,229



37,753

Less: Goodwill


39,027



39,027

Less: Other intangible assets


30,347



34,095

Total Invested Capital

$

586,042


$

557,549







Return on Invested Capital (Non-GAAP measure)


10.33%



6.40%

Free Cash Flow:

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:




Three Months Ended


12 Months Ended



December 31, 2019


December 31, 2019








Net cash provided by operating activities


$

23,119


$

90,376

Net cash used in investing activities



(12,340)



(65,994)


Free cash flow


$

10,779


$

24,382

SOURCE IMAX Corporation

Related Links

http://www.imax.com