IMAX Corporation (NYSE: IMAX) today reported first-quarter 2016 revenues of $92.1 million, adjusted EBITDA as calculated in accordance with the Company's credit facility of$31.5 million, and adjusted net income after non-controlling interest of $15.5 million, or$0.22 per diluted share, representing a 214% increase over the prior-year period. GAAP net income after non-controlling interest was $9.5 million, or $0.14 per diluted share. The Company also reported a first-quarter global per-screen average of $284,400, up 40% over Q1 2015. For reconciliations of adjusted net income to reported net income and for the definition of adjusted EBITDA, please see the tables at the end of this press release.
"2016 is off to an exceptional start for IMAX," said IMAX CEO Richard L. Gelfond. "The pace of IMAX® theatre signings, installations and box office growth, both domestically and globally, continues to drive real momentum in the business. We saw strong financial results in the first quarter, with 48% revenue growth, over 1,000 basis points of EBITDA margin expansion, and adjusted EPS growth of more than 214% compared to the same period last year. We believe significant opportunity lies ahead as we continue the year with a robust pipeline of films featuring major blockbuster titles including a strong start to the second quarter with The Jungle Book, followed by Captain America: Civil War, Independence Day: Resurgence, Star Trek Beyond, Fantastic Beasts and Where to Find Them, Rogue One: A Star Wars Story and numerous other "IMAX-centric" motion pictures that are ideally sequenced throughout the year. We think we are well-positioned to continue to deliver sustainable long-term growth for our shareholders."
Network Growth Update
The total IMAX theatre network consisted of 1,066 systems as of March 31, 2016, of which 952 were in commercial multiplexes. There were 388 theatres in backlog as of March 31, 2016, compared to 372 in backlog as of December 31, 2015. In the first quarter of 2016, the Company signed contracts for 36 theatres, of which 35 were for new locations and one was an upgrade. In the quarter, the Company also installed 19 theatres, of which 10 were for new theatre locations and nine were upgrades. For a breakdown of theatre system signings, installations, network and backlog by type, please see the end of this press release.
"We continue to see substantial signings momentum in key geographical areas includingChina, Japan and India," continued Gelfond. "This sustained international expansion, coupled with a North American outlook about which we are very optimistic, reflects the strong opportunity within our business moving forward."
First-Quarter Segment Results
- Revenue from sales and sales-type leases was $18.0 million in the first quarter of 2016, compared to $8.6 million in the first quarter of 2015, primarily reflecting nine digital system upgrades in existing locations, compared to two upgrades (one sale and one operating lease) in the first quarter of 2015. In addition, the company installed five full new theatre systems under sales and sales-type lease arrangements in the most recent first quarter, compared to the five sales-type theatres the Company installed in the first quarter of 2015.
- Revenue from joint revenue-sharing arrangements was $23.4 million in the quarter, compared to $15.9 million in the prior-year period. Gross margins on joint revenue-sharing arrangements grew from 66.9% in Q1 2015, to 76.9% in the first quarter of 2016. During the quarter, the Company installed five new theatres under joint revenue-sharing arrangements, compared to six in 2015. The Company had 534 theatres operating under joint revenue-sharing arrangements as of March 31, 2016, as compared to 457 joint-venture theatres one year prior.
- Production and IMAX DMR® (Digital Re-Mastering) revenues were $29.8 million in the first quarter of 2016, compared to $17.7 million in the first quarter of 2015. DMR gross margins grew from 74.8% in Q1 2015, to 76.6% in the first quarter of 2016. Gross box office from DMR titles was $272.0 million in the first quarter of 2016, compared with$165.6 million in the prior-year period. The average global DMR box office per screen in the first quarter of 2016 was $284,400 compared with $202,900 in same period last year.
- Gross margin of 56.6% compared to 57.8% last year, which was impacted by the installation of nine digital upgrades under sales and sales-type lease arrangements. Excluding the impact of these upgrades, gross margin grew 480 basis points from 58.6% to 63.4%.
- Operating expenses, excluding stock based compensation, were lower than the prior year period and contributed to the significant operating expense leverage realized in the first quarter. Adjusted EBITDA margins of 37.4% grew over 1,000 basis points versus a prior year level of 26.9%.
As previously disclosed, the Company repurchased 1,627,645 shares in the first quarter of 2016, which includes 181,227 shares purchased in connection with the Company's long-term incentive plan. The Company purchased the shares at an average price of $30.98 for a total value of $50.5 million.
On April 20, 2016, the Company's board of directors approved an incremental $50.0 million increase to the repurchase allowance under the Company's previously-announced share repurchase program, for an aggregate repurchase allowance of $200.0 million. All other terms of the repurchase program remain unchanged. In addition, on February 22, 2016, the Company amended the terms of its credit facility to increase the general restricted payment basket thereunder (which covers, among other things, the repurchase of shares) from $150.0 million to $350.0 million in the aggregate after the amendment date.
The Company will host a conference call today at 8:30 AM ET to discuss its first-quarter 2016 financial results. To access the call via telephone, interested parties in the US andCanada should dial (800) 505-9568 approximately 5 to 10 minutes before the call begins. International callers should dial (416) 204-9271. The conference ID for the call is 1374767.A replay of the call will be available via webcast on the 'Investor Relations' section ofwww.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 1374767.
Canadian Securities Update
The Company has received an exemption decision issued by the Ontario Securities Commission dated April 1, 2016, for relief from the formal issuer bid requirements under Canadian securities laws. The exemption decision permits the Company to repurchase up to 10% of its outstanding common shares in any 12-month period through the facilities of the New York Stock Exchange under repurchase programs that the Company may implement from time to time. Canadian securities laws regulate an issuer's ability to make repurchases of its own securities.
The Company sought the exemption so that it can make repurchases under its repurchase programs in excess of the maximum allowable in reliance on the existing "other published markets" exemption from the formal issuer bid requirements available under Canadian securities laws. The "other published markets" exemption caps the Company's ability to repurchase its securities through the facilities of the NYSE at 5% of the issuer's outstanding securities during any 12-month period.
The conditions of the exemption decision are as follows: (i) any repurchases made in reliance on the exemption decision must be permitted under, and part of repurchase programs established and conducted in accordance with, U.S. securities laws and NYSE rules, (ii) the aggregate number of common shares acquired in reliance on the exemption decision by the Company and any person or company acting jointly or in concert with the Company within any 12 months does not exceed 10% of the outstanding common shares at the beginning of the 12-month period, (iii) the common shares are not listed and posted for trading on an exchange in Canada, (iv) the exemption decision applies only to the acquisition of common shares by the Company within 36 months of the date of the decision, and (v) prior to purchasing common shares in reliance on the exemption decision, the Company discloses the terms of the exemption decision and the conditions applicable thereto in a press release that is issued on SEDAR and includes such language as part of the news release required to be issued in accordance with the "other published markets exemption" in respect of any repurchase program that may be implemented by the Company.
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 offices in London, Tokyo,Shanghai and Beijing. As of Mar. 31, 2016, there were 1,066 IMAX theatres (952 commercial multiplexes, 17 commercial destinations and 97 institutions) in 68 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading 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 Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).
This press 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, the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; the performance of IMAX DMR films; 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 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 Company's largest customer accounting for a significant portion of the Company's revenue and backlog; 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; risks related to the Company's inability to protect its intellectual property; risks related to the Company's implementation of a new enterprise resource planning system; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; 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.
For additional information please contact:
Additional Information (continued)
2016 DMR Films:
In addition to the 11 IMAX DMR films released to the IMAX theater network during the first three months of 2016, 17 additional IMAX DMR films have been announced so far to be released in the remaining nine months of 2016:
- The Crew: An IMAX 3D Experience (Russia-1 Channel, April 2016, Russia only);
- The Jungle Book: An IMAX 3D Experience (Walt Disney Studios, April 2016);
- Captain America: Civil War: An IMAX 3D Experience (Walt Disney Studios, May 2016);
- X-Men: Apocalypse: An IMAX 3D Experience (20th Century Fox, May 2016);
- Alice in Wonderland: Through the Looking Glass: An IMAX 3D Experience (Walt Disney Studios, May 2016);
- Warcraft: An IMAX 3D Experience (Universal Studios, June 2016);
- Finding Dory: An IMAX 3D Experience (Walt Disney Studios, June 2016);
- Independence Day: Resurgence: An IMAX 3D Experience (20th Century Fox, June 2016);
- The Legend of Tarzan: An IMAX 3D Experience (Warner Bros. Pictures, July 2016);
- Ghostbusters: An IMAX 3D Experience (Sony Pictures, July 2016);
- Star Trek Beyond: An IMAX 3D Experience (Paramount Pictures, July 2016);
- Suicide Squad: An IMAX 3D Experience (Warner Bros. Pictures, August 2016);
- Deepwater Horizon: The IMAXExperience (Lionsgate Entertainment, September 2016);
- The Duelist: The IMAX Experience (Non-Stop Production LLC, October 2016, Russiaonly);
- Doctor Strange: An IMAX 3D Experience (Walt Disney Studios, November 2016);
- Fantastic Beasts and Where to Find Them: An IMAX 3D Experience (Warner Bros. Pictures, November 2016); and
- Rogue One: A Star Wars Story: An IMAX 3D Experience (Walt Disney Studios,December 2016).
In addition, the Company will be releasing an IMAX original production, A Beautiful Planet, on April 29, 2016 and a documentary film, Voyage of Time, on October 7, 2016.
To date, the Company has announced the following 9 titles to be released in 2017 to the IMAX theater network:
- Attraction: An IMAX 3D Experience (Art Pictures Studio, January 2017, Russia only);
- The Maze Runner: The Death Cure: The IMAX Experience (20th Century Fox, February 2017);
- Wolverine: The IMAX Experience (20th Century Fox, March 2017);
- Kong: Skull Island: An IMAX 3D Experience (Warner Bros. Pictures, March 2017);
- Guardians of the Galaxy Vol. 2: An IMAX 3D Experience (Walt Disney Studios, May 2017);
- Pirates of the Caribbean: Dead Men Tell No Tales: An IMAX 3D Experience (Walt Disney Studios, May 2017);
- Spider-Man: Homecoming: An IMAX 3D Experience (Sony Pictures, July 2017);
- Thor: Ragnarok: An IMAX 3D Experience (Walt Disney Studios, November 2017);
- Star Wars: Episode VIII: An IMAX 3D Experience (Walt Disney Studios, December 2017);
The Company remains in active negotiations with all of the major Hollywood studios for additional films to fill out its short and long-term film slate, and anticipates that a similar number of IMAX DMR films will be released to the IMAX network in 2016 to the 44 films that were released to the IMAX network in 2015.