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IMAX Corporation Reports Fourth Quarter and Full Year 2020 Results
Mar 4, 2021

HIGHLIGHTS

  • • Strong box office across Asia drove IMAX results, offering encouraging signs of pent-up demand among global audiences with a robust Hollywood slate scheduled ahead
  • •IMAX posted another quarter of sequential improvement in key financial metrics, validating the Company's superior asset-light business model and strategic market position in the entertainment industry
  • • IMAX ended the quarter with $317 million of cash and cash equivalents
  • • IMAX installed 71 systems and signed agreements for 65 systems for the full year, demonstrating continued partner demand for IMAX® theater systems, contributing to a strong 527 system backlog despite the COVID-19 pandemic

 

NEW YORK – March 4, 2021 – IMAX Corporation (NYSE: IMAX) today reported results for the fourth quarter and full year 2020 driven by the strong recovery of the Asian box office, which offered an encouraging sign of continued demand for The IMAX Experience® around the world.  

Results for the fourth quarter reflect the strong performance of the IMAX network in China and Japan, where local language releases recorded robust box office at near pre-pandemic levels, tapping into pent-up demand for big screen experiences. Additionally, fourth quarter results benefitted from the Company's continued growth in its global network, demonstrating strong exhibitor and consumer demand for The IMAX Experience®.  IMAX installed 33 systems and signed 11 agreements in the fourth quarter, ending the year with 527 systems in backlog.

"As the world's only global blockbuster entertainment platform, we are encouraged to see that audiences are eager to return to the movies where the virus is under control and they feel safe, and this promising trend is reflected in our consistent financial improvement since the start of the pandemic," said IMAX CEO, Richard L. Gelfond. "IMAX continues to lead the recovery of the movie industry in markets like China and Japan as audiences seek out The IMAX Experience®, driving record-breaking performances among local language films, gaining market share, and growing our relationships with local exhibitors, studios, and filmmakers."

"Given strong demand for The IMAX Experience in Asia, the extremely promising pipeline of Hollywood blockbusters, and the accelerating pace of vaccinations in North America and Europe, we remain confident and optimistic that the global film industry is poised for a strong and sustainable recovery in the second half of 2021."

"As we manage through the pandemic, IMAX continues to benefit from its strong, differentiated business model and unique position in the entertainment ecosystem. Our global footprint offers access to open markets and thriving local language film industries. Our premium experience and strong brand help ensure that our passionate, engaged fans will be among the first to return to theaters. Finally, our asset-light, flexible model enables us to manage costs, capitalize on opportunities in this dynamic environment, and generate the improving financial results we posted in the fourth quarter."

IMAX reported fourth quarter 2020 revenues of $56.0 million, gross margin of $20.3 million, and a net (loss) attributable to common shareholders of ($21.2) million, or ($0.36) per diluted share, and operating cash inflows of $7.8 million.

IMAX achieved positive EBITDA per Credit Facility(1) and free cash flow for the first time since the first quarter of 2020, despite capacity limitations and continued delays in the Hollywood film slate. The Company has posted sequential quarterly improvement in EBITDA, cash flow, revenue, and box office since the global impact of the pandemic first took hold in the second quarter of 2020. As a result, the Company continued to strengthen its balance sheet, ending the year with $317 million in cash and cash equivalents, up from $305 million at the close of the third quarter.

IMAX results reflect the COVID-19 related partial closure of the Company's network as well as the inclusion of a number of notable non-cash items, including: a valuation allowance to reduce the value of deferred tax assets of $4.9 million or $0.08 per share; a $3.0 million provision for current expected credit losses reflecting a reduction in the credit quality of the theater receivables balances and the heightened collection risk associated with certain movie studios in foreign markets; and, a $2.9 million write-down of excess and obsolete inventory. The company also recorded a $4.1 million charge associated with the final judgement in a legal matter and received $1.9 million of COVID-19 government relief benefits.

 

Fourth Quarter and December Year-to-Date Financial Highlights

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

In thousands except per share data

 

2020

 

 

2019

 

 

YoY %

Change

 

 

2020

 

 

2019

 

 

YoY %

Change

 

Total Revenue

 

$

56.0

 

 

$

124.3

 

 

 

(54.9

%)

 

$

137.0

 

 

$

395.7

 

 

 

(65.4

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

$

20.3

 

 

$

62.4

 

 

 

(67.4

%)

 

$

21.5

 

 

$

214.2

 

 

 

(89.9

%)

Gross Margin (%)

 

 

36.3

%

 

 

50.2

%

 

 

 

 

 

 

15.7

%

 

 

54.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income attributable to common shareholders

 

$

(21.2

)

 

$

18.2

 

 

N/A

 

 

$

(143.8

)

 

$

46.9

 

 

N/A

 

Diluted Net (Loss) Income per shareattributable to common shareholders

 

$

(0.36

)

 

$

0.29

 

 

N/A

 

 

$

(2.43

)

 

$

0.76

 

 

N/A

 

Adjusted Net (Loss) Income attributable to common shareholders(1)

 

$

(12.7

)

 

$

21.5

 

 

N/A

 

 

$

(112.1

)

 

$

64.8

 

 

N/A

 

Adjusted Net (Loss) Income per share attributable to common shareholders(1)

 

$

(0.21

)

 

$

0.35

 

 

N/A

 

 

$

(1.89

)

 

$

1.05

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA per Credit Facility attributable to common shareholders(1)

 

$

10.0

 

 

$

47.0

 

 

 

(78.7

%)

 

$

(13.1

)

 

$

149.3

 

 

 

(108.8

%)

Adjusted EBITDA Margin attributable to common shareholders (%) (1)

 

 

20.8

%

 

 

41.7

%

 

 

(50.0

%)

 

 

(10.8

%)

 

 

41.7

%

 

 

(125.9

%)

_____________

  • Non-GAAP Financial Measure

 

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.

 

Fourth Quarter and December Year-to-Date Segment Results(1)

 

 

IMAX Technology Network

 

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

Gross Margin

Gross Margin %

 

 

Revenue

 

 

Gross Margin

 

 

Gross Margin %

 

4Q20

 

$

17.7

 

 

$

7.3

 

 

 

41.4

%

 

$

36.4

 

 

 

$

13.6

 

 

 

37.5

%

4Q19

 

43.3

 

 

 

24.7

 

 

 

56.9

%

 

77.3

 

 

 

 

39.5

 

 

 

51.2

%

% change

 

 

(59.1

%)

 

 

(70.2

%)

 

 

 

 

 

 

(52.9

%)

 

 

 

(65.5

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD 4Q20

 

$

46.1

 

 

$

4.2

 

 

 

9.2

%

 

$

79.8

 

 

 

$

28.0

 

 

 

35.1

%

YTD 4Q19

 

197.4

 

 

 

127.0

 

 

 

64.3

%

 

 

179.9

 

 

 

 

86.4

 

 

 

48.0

%

% change

 

 

(76.6

%)

 

 

(96.7

%)

 

 

 

 

 

 

(55.6

%)

 

 

 

(67.6

%)

 

 

 

 

_____________

(1)  Please refer to the Company's Form 10-K for the period ended December 31, 2020 for additional segment information

 

IMAX Technology Network

  • IMAX Technology Network revenues decreased 59.1% to $17.7 million in the fourth quarter of 2020, compared to $43.3 million in the prior-year period. The partial closure of the Company's network through the quarter and the release of fewer films, both a result of the COVID-19 global pandemic, drove the decline in gross box office and revenue.
  • Gross margin for the IMAX Technology Network declined 70.2% to $7.3 million in the fourth quarter of 2020. The decline was driven by lower segment revenue and ongoing fixed costs associated with the installed IMAX network.

 IMAX Technology Sales and Maintenance

  • IMAX Technology Sales and Maintenance revenues decreased 52.9% to $36.4 million in the fourth quarter of 2020, compared with $77.3 million in the prior year period. The decline in revenue was the result of installing 12 fewer sales-type-lease and 5 fewer hybrid systems in the quarter.
  • Total gross margin for IMAX Technology Sales and Maintenance was $13.6 million compared to $39.5 million in the prior year period. The decrease in gross margin was the result of lower sales activity and revenue in the quarter.

 

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of December 31, 2020 were $317 million. Total debt, excluding deferred financing fees, was $306 million as of December 31, 2020.

 

Share Count and Capital Return

The weighted average diluted shares outstanding at the end of the fourth quarter of 2020 declined 4.4% to 58.9 million, compared to 61.5 million in the fourth quarter of 2019, due primarily to share repurchase activity during the twelve-month period. During the fourth quarter of 2020, the Company did not repurchase any stock. A total of $89.4 million remains available under the Company's outstanding share repurchase authorization, which was extended in June 2020 and now expires in June 2021.

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 Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week 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 4:30PM ET to discuss its fourth quarter and full year 2020 financial results. This call is being webcast by PGI and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800) 437-2398 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 792-1240. The conference ID for the call is 3139582. 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 3139582.

 

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 December 31, 2020, there were 1,650 IMAX theater systems (1,562 commercial multiplexes, 12 commercial destinations, 76 institutional) operating in 84 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 "HK.1970."

 

IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX®, The IMAX Experience®, An IMAX Experience®, An IMAX 3D Experience®, IMAX DMR®, DMR®, IMAX nXos® and Films to the Fullest®, 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

Brett Harriss

212-821-0187

bharriss@IMAX.com

 

 

Media:

IMAX Corporation, New York

Mark Jafar

212-821-0102

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 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), 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, the impact of COVID-19 on the Company's business, financial conditions and results of operations and on the businesses of our customers and exhibitor partners; 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; the performance of IMAX DMR® films; the signing of IMAX Theater System agreements; conditions, changes and developments in the commercial exhibition industry and broader entertainment industry, including both the in-home and out-of-home entertainment markets; 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 entertainment technology; risks relating to consolidation among commercial exhibitors and movie studios; risks related to new business initiatives 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 IMAX 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; assumptions related to the foregoing; other risks outlined in our 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 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 the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements; (iii) IMAX Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii) Film Post-Production. The Company organizes its reportable segments into the following four categories, identified by the nature of the product sold or service provided:

 

  1. IMAX Technology Network, which earns revenue based on contingent box office receipts and includes the IMAX DMR segment and contingent rent from the Joint Revenue Sharing Arrangement ("JRSA") segment;

 

  1. IMAX Technology Sales and Maintenance, which includes results from the IMAX Systems, IMAX Maintenance and Other Theater Business segments, as well as fixed revenues from the JRSA segment;

 

  1. New Business Initiatives, which is a segment that includes activities related to the exploration of new lines of business and new initiatives outside of the Company's core business; and

 

  1. Film Distribution and Post-Production, which includes activities related to the licensing of film content, the distribution of films primarily for the Company's institutional theater partners (through the Film Distribution segment) and the provision of film post-production and quality control services (through the Film Post-Production segment).

Signings and Installations

 

 

 

 

Twelve Months

Ended December 31,

 

 

Theater System Signings:

 

2020

 

 

 

2019

 

 

New IMAX Theater Systems

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

28

 

 

 

 

49

 

 

Hybrid joint revenue sharing lease arrangements

 

 

18

 

 

 

 

48

 

 

Traditional joint revenue sharing arrangements

 

 

2

 

 

 

 

7

 

 

Total new IMAX Theater Systems

 

 

48

 

 

 

 

104

 

 

Upgrades of IMAX Theater Systems

 

 

17

 

 

 

 

39

 

 

Total IMAX Theater System signings

 

 

65

 

 

 

 

143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months

Ended December 31,

 

 

Theater System Installations:

 

2020

 

 

 

2019

 

 

New IMAX Theater Systems

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

27

 

 

 

 

55

 

 

Hybrid joint revenue sharing lease arrangements

 

 

5

 

 

 

 

20

 

 

Traditional joint revenue sharing arrangements

 

 

23

 

 

 

 

54

 

 

Total new IMAX Theater Systems

 

 

55

 

 

 

 

129

 

 

Upgrades of IMAX Theater Systems

 

 

16

 

 

 

 

57

 

 

Total IMAX Theater System installations

 

 

71

 

 

 

 

186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months

Ended December 31,

 

 

Theater Sales Backlog:

 

2020

 

 

 

2019

 

 

Sales and sales-type lease arrangements

 

 

185

 

 

 

 

178

 

 

Hybrid joint revenue sharing lease arrangements

 

 

147

 

 

 

 

140

 

 

Traditional joint revenue sharing lease arrangements

 

 

195

 

(1)

 

 

213

 

(1)

Total Theater backlog

 

 

527

 

(2)

 

 

531

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months

Ended December 31,

 

 

Theater Network:

 

2020

 

 

 

2019

 

 

Commercial Multiplex Theaters

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

672

 

 

 

 

659

 

 

Hybrid joint revenue sharing lease arrangements

 

 

140

 

 

 

 

139

 

 

Traditional joint revenue sharing lease arrangements

 

 

750

 

 

 

 

731

 

 

Total Commercial Multiplex Theaters

 

 

1,562

 

 

 

 

1,529

 

 

Commercial Destination Theaters

 

 

12

 

 

 

 

14

 

 

Institutional Theaters

 

 

76

 

 

 

 

81

 

 

Total Theater network

 

 

1,650

 

 

 

 

1,624

 

 

_____________

(1)   Includes 46 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2019 — 47).

(2)  Includes 148 new IMAX with Laser projection system configurations and 95 upgrades of existing locations to IMAX with Laser projection system configurations.

(3)  Includes 144 new IMAX with Laser projection system configurations and 92 upgrades of existing locations to IMAX with Laser projection system configurations.

 

IMAX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

Year Ended

 

 

 

 

(Unaudited)

 

 

December 31,

 

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology sales

 

$

25,626

 

 

$

61,616

 

 

$

49,728

 

 

$

118,245

 

Image enhancement and maintenance services

 

 

20,209

 

 

 

43,570

 

 

 

59,318

 

 

 

188,547

 

Technology rentals

 

 

7,534

 

 

 

16,286

 

 

 

17,841

 

 

 

77,961

 

Finance income

 

 

2,621

 

 

 

2,807

 

 

 

10,116

 

 

 

10,911

 

 

 

 

 

55,990

 

 

 

124,279

 

 

 

137,003

 

 

 

395,664

 

Costs and expenses applicable to revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology sales

 

 

17,533

 

 

 

30,513

 

 

 

33,170

 

 

 

63,627

 

Image enhancement and maintenance services

 

 

11,549

 

 

 

21,970

 

 

 

53,598

 

 

 

88,175

 

Technology rentals

 

 

6,595

 

 

 

9,437

 

 

 

28,695

 

 

 

29,690

 

 

 

 

 

35,677

 

 

 

61,920

 

 

 

115,463

 

 

 

181,492

 

Gross margin

 

 

20,313

 

 

 

62,359

 

 

 

21,540

 

 

 

214,172

 

Selling, general and administrative expenses

 

 

25,238

 

 

 

34,189

 

 

 

108,485

 

 

 

123,456

 

Research and development

 

 

1,056

 

 

 

1,486

 

 

 

5,618

 

 

 

5,203

 

Amortization of intangibles

 

 

1,380

 

 

 

1,391

 

 

 

5,394

 

 

 

4,955

 

Credit loss expense

 

 

3,026

 

 

 

473

 

 

 

18,608

 

 

 

2,430

 

Asset impairments

 

 

-

 

 

 

-

 

 

 

1,151

 

 

 

-

 

Legal judgment and arbitration awards

 

 

4,105

 

 

 

-

 

 

 

4,105

 

 

 

-

 

Exit costs, restructuring charges and associated impairments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

850

 

(Loss) income from operations

 

 

(14,492

)

 

 

24,820

 

 

 

(121,821

)

 

 

77,278

 

(Loss) gain in fair value of investments

 

 

(1,142

)

 

 

2,026

 

 

 

(2,081

)

 

 

(517

)

Retirement benefits non-service expense

 

 

(168

)

 

 

(257

)

 

 

(600

)

 

 

(737

)

Interest income

 

 

546

 

 

 

473

 

 

 

2,388

 

 

 

2,105

 

Interest expense

 

 

(2,390

)

 

 

(987

)

 

 

(7,010

)

 

 

(2,793

)

(Loss) income before taxes

 

 

(17,646

)

 

 

26,075

 

 

 

(129,124

)

 

 

75,336

 

Income tax expense

 

 

(1,898

)

 

 

(4,782

)

 

 

(26,504

)

 

 

(16,768

)

Equity in (losses) gains of investees, net of tax

 

-

 

 

 

59

 

 

 

(1,858

)

 

 

3

 

Net (loss) income

 

 

(19,544

)

 

 

21,352

 

 

 

(157,486

)

 

 

58,571

 

Net loss (income) attributable to non-controlling interests

 

 

(1,701

)

 

 

(3,181

)

 

 

13,711

 

 

 

(11,705

)

Net (loss) income attributable to common shareholders

 

$

(21,245

)

 

$

18,171

 

 

$

(143,775

)

 

$

46,866

 

Net (loss) income per share attributable to common shareholders -

      basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share — basic and diluted

 

$

(0.36

)

 

$

0.29

 

 

$

(2.43

)

 

$

0.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

58,872

 

 

 

61,228

 

 

 

59,237

 

 

 

61,310

 

 

Fully Diluted

 

 

58,872

 

 

 

61,542

 

 

 

59,237

 

 

 

61,489

 

Additional Disclosure:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization(1)

 

$

12,312

 

 

$

17,987

 

 

$

53,606

 

 

$

63,487

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes $0.3 million and $0.9 million of amortization of deferred financing costs charged to interest expense for the three months and year ended December 31, 2020, respectively ($0.1 million and $0.5 million, respectively).

 

IMAX CORPORATION

CONSOLIDATED BALANCE SHEETS

In accordance with United States Generally Accepted Accounting Principles

(In thousands of dollars, except share amounts)

 

 

 

As of December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

317,379

 

 

$

109,484

 

Accounts receivable, net of allowance for credit losses

 

 

56,300

 

 

 

99,513

 

Financing receivables, net of allowance for credit losses

 

 

131,810

 

 

 

128,038

 

Variable consideration receivable, net of allowance for credit losses

 

 

40,526

 

 

 

40,040

 

Inventories

 

 

39,580

 

 

 

42,989

 

Prepaid expenses

 

 

10,420

 

 

 

10,237

 

Film assets

 

 

5,777

 

 

 

17,921

 

Property, plant and equipment, net of accumulated depreciation

 

 

277,397

 

 

 

306,849

 

Investment in equity securities

 

 

13,633

 

 

 

15,685

 

Other assets

 

 

21,673

 

 

 

25,034

 

Deferred income tax assets

 

 

17,983

 

 

 

23,905

 

Other intangible assets, net of accumulated amortization

 

 

26,245

 

 

 

30,347

 

Goodwill

 

 

39,027

 

 

 

39,027

 

Total assets

 

$

997,750

 

 

$

889,069

 

Liabilities

 

 

 

 

 

 

 

 

Bank indebtedness, net of unamortized debt issuance costs

 

$

305,676

 

 

$

18,229

 

Accounts payable

 

 

20,837

 

 

 

20,414

 

Accrued and other liabilities

 

 

99,354

 

 

 

112,779

 

Deferred revenue

 

 

87,982

 

 

 

94,552

 

Deferred income tax liabilities

 

 

19,134

 

 

 

 

Total liabilities

 

 

532,983

 

 

 

245,974

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

759

 

 

 

5,908

 

Shareholders' equity

 

 

 

 

 

 

 

 

Capital stock common shares — no par value. Authorized — unlimited number.

 

 

 

 

 

 

 

 

58,921,731 issued and 58,921,008 outstanding (December 31, 2019 — 61,362,872 issued and 61,175,852 outstanding)

 

 

407,031

 

 

 

423,386

 

Less: Treasury stock, 723 shares at cost (December 31, 2019 — 187,020)

 

 

(11

)

 

 

(4,038

)

Other equity

 

 

180,330

 

 

 

171,789

 

Accumulated deficit

 

 

(202,849

)

 

 

(40,253

)

Accumulated other comprehensive income (loss)

 

 

988

 

 

 

(3,190

)

Total shareholders' equity attributable to common shareholders

 

 

385,489

 

 

 

547,694

 

Non-controlling interests

 

 

78,519

 

 

 

89,493

 

Total shareholders' equity

 

 

464,008

 

 

 

637,187

 

Total liabilities and shareholders' equity

 

$

997,750

 

 

$

889,069

 

IMAX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

 

 

 

Years Ended December 31,

 

 

 

2020

 

 

2019

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

 

(157,486

)

 

$

 

58,571

 

Adjustments to reconcile net (loss) income to cash from operations:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

53,606

 

 

 

 

63,487

 

Credit loss expense

 

 

 

18,608

 

 

 

 

2,430

 

Write-downs

 

 

 

17,729

 

 

 

 

4,376

 

Deferred income tax expense

 

 

 

23,618

 

 

 

 

6,762

 

Share-based and other non-cash compensation

 

 

 

22,038

 

 

 

 

23,570

 

Unrealized foreign currency exchange (gain) loss

 

 

 

(1,355

)

 

 

 

32

 

Loss in fair value of investments

 

 

 

2,081

 

 

 

 

517

 

Equity in losses (income) of investees

 

 

 

1,858

 

 

 

 

(3

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

33,597

 

 

 

 

(8,621

)

Inventories

 

 

 

1,637

 

 

 

 

1,942

 

Film assets

 

 

 

(7,665

)

 

 

 

(23,437

)

Deferred revenue

 

 

 

(6,637

)

 

 

 

(12,242

)

Changes in other operating assets and liabilities

 

 

 

(24,640

)

 

 

 

(27,008

)

Net cash (used in) provided by operating activities

 

 

 

(23,011

)

 

 

 

90,376

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

 

(697

)

 

 

 

(7,421

)

Investment in equipment for joint revenue sharing arrangements

 

 

 

(6,654

)

 

 

 

(40,489

)

Acquisition of other intangible assets

 

 

 

(1,904

)

 

 

 

(2,931

)

Investment in equity securities

 

 

 

 

 

 

 

(15,153

)

Net cash used in investing activities

 

 

 

(9,255

)

 

 

 

(65,994

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

Increase in revolving credit facility borrowings

 

 

 

287,610

 

 

 

 

35,000

 

Repayment of revolving credit facility borrowings

 

 

 

 

 

 

 

(55,000

)

Credit facility amendment fees paid

 

 

 

(1,073

)

 

 

 

 

Settlement of restricted share units and options

 

 

 

(3,075

)

 

 

 

(9,795

)

Treasury stock repurchased for future settlement of restricted share units

 

 

 

(11

)

 

 

 

(4,038

)

Repurchase of common shares, IMAX China

 

 

 

(1,534

)

 

 

 

(19,162

)

Taxes withheld and paid on employee stock awards vested

 

 

 

(512

)

 

 

 

(590

)

Common shares issued - stock options exercised

 

 

 

 

 

 

 

2,404

 

Repurchase of common shares

 

 

 

(36,624

)

 

 

 

(2,659

)

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

 

 

 

 

 

 

 

1,106

 

Dividends paid to non-controlling interests

 

 

 

(4,214

)

 

 

 

(4,384

)

Net cash provided by (used in) financing activities

 

 

 

240,567

 

 

 

 

(57,118

)

Effects of exchange rate changes on cash

 

 

 

(406

)

 

 

 

630

 

Increase (decrease) in cash and cash equivalents during year

 

 

 

207,895

 

 

 

 

(32,106

)

Cash and cash equivalents, beginning of year

 

 

 

109,484

 

 

 

 

141,590

 

Cash and cash equivalents, end of year

 

$

 

317,379

 

 

$

 

109,484

 

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Technology Network

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX DMR

 

$

10,204

 

 

$

26,857

 

 

$

28,265

 

 

$

120,765

 

Joint revenue sharing arrangements, contingent rent

 

 

7,534

 

 

 

16,484

 

 

 

17,841

 

 

 

76,673

 

 

 

 

17,738

 

 

 

43,341

 

 

 

46,106

 

 

 

197,438

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Systems

 

 

26,381

 

 

 

56,817

 

 

 

54,055

 

 

 

107,321

 

Joint revenue sharing arrangements, fixed fees

 

 

860

 

 

 

4,489

 

 

 

2,056

 

 

 

11,014

 

IMAX Maintenance

 

 

8,774

 

 

 

13,336

 

 

 

21,999

 

 

 

53,151

 

Other Theater Business

 

 

405

 

 

 

2,624

 

 

 

1,666

 

 

 

8,390

 

 

 

 

36,420

 

 

 

77,266

 

 

 

79,776

 

 

 

179,876

 

New Business Initiatives

 

 

738

 

 

 

846

 

 

 

2,226

 

 

 

2,754

 

Film Distribution and Post-Production

 

 

1,178

 

 

 

2,419

 

 

 

8,719

 

 

 

12,210

 

 

 

 

56,074

 

 

 

123,872

 

 

 

136,827

 

 

 

392,278

 

Other

 

 

(84

)

 

 

407

 

 

 

176

 

 

 

3,386

 

Total revenues

 

$

55,990

 

 

$

124,279

 

 

$

137,003

 

 

$

395,664

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (Margin Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Technology Network

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX DMR(1)

 

$

6,239

 

 

$

16,990

 

 

$

13,731

 

 

$

78,592

 

Joint revenue sharing arrangements, contingent rent(1)

 

 

1,110

 

 

 

7,669

 

 

 

(9,500

)

 

 

48,446

 

 

 

 

7,349

 

 

 

24,659

 

 

 

4,231

 

 

 

127,038

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMAX Systems (1)

 

 

10,319

 

 

 

31,445

 

 

 

24,816

 

 

 

58,168

 

Joint revenue sharing arrangements, fixed fees(1)

 

 

419

 

 

 

1,312

 

 

 

529

 

 

 

2,613

 

IMAX Maintenance

 

 

3,423

 

 

 

5,964

 

 

 

3,068

 

 

 

23,010

 

Other Theater Business

 

 

(515

)

 

 

803

 

 

 

(438

)

 

 

2,624

 

 

 

 

13,646

 

 

 

39,524

 

 

 

27,975

 

 

 

86,415

 

New Business Initiatives

 

 

633

 

 

 

665

 

 

 

1,878

 

 

 

2,106

 

Film Distribution and Post-Production (1)(2)

 

 

(806

)

 

 

(1,745

)

 

 

(10,198

)

 

 

(1,262

)

 

 

 

20,822

 

 

 

63,103

 

 

 

23,886

 

 

 

214,297

 

Other

 

 

(509

)

 

 

(744

)

 

 

(2,346

)

 

 

(125

)

Total Segment Margin

 

$

20,313

 

 

$

62,359

 

 

$

21,540

 

 

$

214,172

 

__________________

(1)   IMAX DMR segment margins include marketing cost of $0.6 million and $3.4 million for the three months and year ended December 31, 2020, respectively (2019 — $4.8 million and $22.5 million, respectively). JRSA gross margin includes advertising, marketing and commission expense of $0.5 million and $1.8 million for the three months and year ended December 31, 2020, respectively (2019 — $3.4 million and $4.5 million, respectively). IMAX Systems gross margin includes marketing and commission costs of $1.0 million and $2.0 million for the three months and year ended December 31, 2020, respectively, (2019 — $0.5 million and $2.0 million, respectively). Film Distribution segment gross margin includes marketing expense of $0.3 million and $0.7 million for the three months and year ended December 31, 2020, respectively (2019 — recovery of $0.3 million and expense of $0.4 million, respectively).

(2)  Film Distribution margins were significantly influenced by impairment loss recorded of $0.1 million and $10.0 million for the three months and year ended December 31, 2020 to write-down the carrying value of certain documentary and alternative content film assets (2019 – $1.2 million and $1.4 million).

 

 

IMAX CORPORATION

NON-GAAP FINANCIAL MEASURES

(in thousands of U.S. dollars)

In this release, the Company presents adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, and free cash flow as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) COVID-19 government relief benefits, (iii) legal judgment and arbitration awards; (iv) exit costs, restructuring charges and associated impairments, (v) gain (loss) in the fair value of investments, as well as the related tax impact of these adjustments, and (vi) income taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries .

The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company's financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net (loss) income attributable to common shareholders. Although share-based compensation is an important aspect of the Company's employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures.

A reconciliation from net (loss) income attributable to common shareholders and the associated per share amounts to adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share is presented in the table below. Net (loss) income attributable to common shareholders and the associated per share amounts are the most directly comparable GAAP measures because they reflect the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests. Accordingly, beginning in the first quarter of 2020, the Company updated its reconciliations of these non-GAAP financial measures to reflect this approach

In addition to the non-GAAP financial measures discussed above, management also uses "EBITDA," as such term is defined in the Credit Agreement, and which is referred to herein as "Adjusted EBITDA per Credit Facility." As allowed by the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Adjusted EBITDA per Credit Facility measure is presented to allow a more comprehensive analysis of the Company's operating performance and to provide additional information with respect to the Company's compliance against its Credit Agreement requirements when applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry to evaluate, assess and benchmark the Company's results.

EBITDA is defined as net income or loss excluding (i) interest expense, net of interest income; (ii) income tax expense or benefit; and (iii) depreciation and amortization, including film asset amortization. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) gain or loss in fair value of investments; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) legal judgment and arbitration award; (v) gain or loss from equity accounted investments; and (vi) exit costs, restructuring charges and associated impairments.

A reconciliation of net loss attributable to common shareholders, which is the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit Facility is presented in the table below. Net loss attributable to common shareholders is the most directly comparable GAAP measure because it reflects the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests. Accordingly, beginning in the first quarter of 2020, the Company updated its reconciliations of these non-GAAP financial measures to reflect this approach.

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 (loss) 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.

These non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered as a substitute for, or superior to, the comparable GAAP amounts.

 

Adjusted EBITDA per Credit Facility

 

 

For the Three Months Ended December 31, 2020

 

 

For the Three Months Ended December 31, 2019

 

 

 

Attributable to

Non-controlling

 

 

Less:

 

 

 

 

 

Attributable to

Non-controlling

 

 

Less:

 

 

 

 

 

 

Interests and

 

 

Attributable to

 

 

Attributable to

 

 

Interests and

 

 

Attributable to

 

 

Attributable to

 

 

 

Common

 

 

Non-controlling

 

 

Common

 

 

Common

 

 

Non-controlling

 

 

Common

 

 

 

Shareholders

 

 

Interests

 

 

Shareholders

 

 

Shareholders

 

 

Interests

 

 

Shareholders

 

(In thousands of U.S. Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported net (loss) income

 

$

 

(19,544

)

 

$

 

1,701

 

 

$

 

(21,245

)

 

$

 

21,352

 

 

$

 

3,181

 

 

$

 

18,171

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

1,898

 

 

 

 

717

 

 

 

 

1,181

 

 

 

 

4,782

 

 

 

 

858

 

 

 

 

3,924

 

Interest expense, net of interest income

 

 

 

1,537

 

 

 

 

(90

)

 

 

 

1,627

 

 

 

 

381

 

 

 

 

(108

)

 

 

 

489

 

Depreciation and amortization, including film asset

   amortization

 

 

 

12,312

 

 

 

 

1,099

 

 

 

 

11,213

 

 

 

 

17,987

 

 

 

 

1,266

 

 

 

 

16,721

 

EBITDA

 

$

 

(3,797

)

 

$

 

3,427

 

 

$

 

(7,224

)

 

$

 

44,502

 

 

$

 

5,197

 

 

$

 

39,305

 

Share-based and other non-cash compensation

 

 

 

5,693

 

 

 

 

226

 

 

 

 

5,467

 

 

 

 

6,173

 

 

 

 

143

 

 

 

 

6,030

 

Loss (gain) in fair value of investments

 

 

 

1,142

 

 

 

 

353

 

 

 

 

789

 

 

 

 

(2,026

)

 

 

 

(642

)

 

 

 

(1,384

)

Write-downs, including asset

impairments and credit loss expense

 

 

 

7,416

 

 

 

 

533

 

 

 

 

6,883

 

 

 

 

3,822

 

 

 

 

759

 

 

 

 

3,063

 

Legal judgment and arbitration awards(4)

 

 

 

4,105

 

 

 

 

 

 

 

 

4,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain from equity accounted investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(59

)

 

 

 

 

 

 

 

(59

)

Adjusted EBITDA per Credit Facility

 

$

 

14,559

 

 

$

 

4,539

 

 

$

 

10,020

 

 

$

 

52,412

 

 

$

 

5,457

 

 

$

 

46,955

 

Revenues attributable to common

   shareholders(2)

 

 

 

55,990

 

 

 

 

7,926

 

 

 

 

48,064

 

 

 

 

124,279

 

 

 

 

11,644

 

 

 

 

112,635

 

Adjusted EBITDA margin attributable to common

   shareholders

 

 

 

26.0

%

 

 

 

57.3

%

 

 

 

20.8

%

 

 

 

42.2

%

 

 

 

46.9

%

 

 

 

41.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended December 31, 2020 (1)

 

 

For the Twelve Months Ended December 31, 2019 (1)

 

 

 

Attributable to

Non-controlling

 

 

Less:

 

 

 

 

 

Attributable to

Non-controlling

 

 

Less:

 

 

 

 

 

 

Interests and

 

 

Attributable to

 

 

Attributable to

 

 

Interests and

 

 

Attributable to

 

 

Attributable to

 

 

 

Common

 

 

Non-controlling

 

 

Common

 

 

Common

 

 

Non-controlling

 

 

Common

 

 

 

Shareholders

 

 

Interests

 

 

Shareholders

 

 

Shareholders

 

 

Interests

 

 

Shareholders

 

(In thousands of U.S. Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported net (loss) income

 

$

 

(157,486

)

 

$

 

(13,711

)

 

$

 

(143,775

)

 

$

 

58,571

 

 

$

 

11,705

 

 

$

 

46,866

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

26,504

 

 

 

 

5,408

 

 

 

 

21,096

 

 

 

 

16,768

 

 

 

 

3,625

 

 

 

 

13,143

 

Interest expense, net of interest income

 

 

 

3,720

 

 

 

 

(370

)

 

 

 

4,090

 

 

 

 

423

 

 

 

 

(524

)

 

 

 

947

 

Depreciation and amortization, including film asset

   amortization

 

 

 

53,606

 

 

 

 

4,570

 

 

 

 

49,036

 

 

 

 

63,487

 

 

 

 

5,033

 

 

 

 

58,454

 

EBITDA

 

$

 

(73,656

)

 

$

 

(4,103

)

 

$

 

(69,553

)

 

$

 

139,249

 

 

$

 

19,839

 

 

$

 

119,410

 

Share-based and other non-cash compensation

 

 

 

22,038

 

 

 

 

968

 

 

 

 

21,070

 

 

 

 

23,570

 

 

 

 

617

 

 

 

 

22,953

 

Loss in fair value of investments

 

 

 

2,081

 

 

 

 

631

 

 

 

 

1,450

 

 

 

 

517

 

 

 

 

165

 

 

 

 

352

 

Write-downs, including asset impairments and

   credit loss expense

 

 

 

36,337

 

 

 

 

8,364

 

 

 

 

27,973

 

 

 

 

6,806

 

 

 

 

1,040

 

 

 

 

5,766

 

Legal judgment and arbitration awards(4)

 

 

 

4,105

 

 

 

 

 

 

 

 

4,105

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from equity accounted investments

 

 

 

1,858

 

 

 

 

 

 

 

 

1,858

 

 

 

 

(3

)

 

 

 

 

 

 

 

(3

)

Exit costs, restructuring charges and associated impairments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

850

 

 

 

 

 

 

 

 

850

 

Adjusted EBITDA per Credit Facility

 

$

 

(7,237

)

 

$

 

5,860

 

 

$

 

(13,097

)

 

$

 

170,989