Presse

IMAX Corporation Reports First Quarter 2021 Results
Avr 29, 2021

HIGHLIGHTS

 

  • IMAX continues to help lead the global film industry out of the pandemic as pent-up demand emerges in global markets driving year-over-year quarterly growth in revenue, box office, gross margins and EBITDA
  • Company posts $110 million in global box office — its first year-over-year quarterly box office growth of the pandemic period — as strong rebound in Asia continues and begins to expand to other key markets
  • IMAX expects further market openings and loosening of capacity restrictions to drive increased network capacity as summer tentpoles including "A Quiet Place 2," "Fast 9," and "Black Widow" arrive in theaters
  • Company raised $230 million in gross proceeds through successful convertible notes offering, further strengthening its financial position and reducing annualized cash interest by approximately $4.3 million or 55%
  • IMAX continues to innovate with announcement of new joint-venture to explore the application of artificial intelligence for super resolution image enhancement across consumer devices and streaming platforms

NEW YORK – April 29, 2021 – IMAX Corporation (NYSE: IMAX) today reported financial results for the first quarter 2021 including year-over-year revenue and box office growth, margin improvement and positive EBITDA — demonstrating strong demand for The IMAX Experience® as theaters reopen around the world.  

"The last year has brought the strong, unique market position of IMAX into sharp focus; we are a global platform for blockbuster entertainment with a valuable brand, flexible, asset-lite business model and strong balance sheet," said Richard L. Gelfond, CEO of IMAX Corporation. "The distinct attributes of our business and brand enable IMAX to help lead the global film industry out of the pandemic — drawing audiences back to the theaters and driving revenue across the ecosystem, as IMAX continues to grow its global footprint, box office, and market share."

"Through our unique global footprint, we continue to see firsthand that where audiences feel safe and the virus is under control they will return quickly to the theaters. Audiences across Asia continue to rediscover the theatrical experience in impressive numbers, driving record-breaking box office and accelerating the continued shift to blockbusters at the multiplex. As Hollywood tentpoles return to theaters, the recovery is spreading to North America and key additional markets including Russia, and Saudi Arabia with the summer season ahead."

 

"As the pandemic recedes, we see clear evidence of global consumers, who've been stuck at home with limited entertainment options, emerging to seek out experiences that transcend the ordinary. The IMAX Experience® is at once accessible and affordable yet immersive and transporting. With cinema among the most significant out-of-home entertainment experiences to come back online, we believe IMAX is well-positioned to capitalize on this movement."

 

"IMAX remains very confident in its leadership position in out-of-home entertainment and continues to explore ways to capitalize on the strength of its brand and technology for the in-home and streaming market as well. Our IMAX Enhanced initiative now encompasses more than 25 device manufacturer and streaming partners across Asia, Europe, and North America, and we recently announced a joint-venture with a cutting-edge artificial intelligence firm to explore solutions for high-speed image enhancement across consumer devices and streaming platforms."

 

IMAX delivered global box office of $110 million for the quarter, marking the Company's first year-over-year quarterly box office growth since the pandemic began. Results were driven by the strong rebound of moviegoing in Asia and encouraging performances at the multiplex as other global markets reopen. For the quarter, IMAX achieved record-breaking Chinese New Year opening weekend results; its number-one and number-two highest grossing Japanese local language releases of all time; and its strongest North American opening of the pandemic period with "Godzilla vs. Kong," which also performed well in key markets including Mexico, Russia, Spain, and Saudi Arabia.

IMAX reported first quarter 2021 revenues of $38.8 million, gross margin of $17.3 million, and a net loss attributable to common shareholders of ($14.8) million, or ($0.25) per diluted share. IMAX achieved positive EBITDA per Credit Facility(1) and its first quarter of year-over-year EBITDA growth since the onset of the pandemic. In the first quarter 2021, the Company continued to strengthen its balance sheet, amending its credit facility and raising $230 million of convertible notes. As a result of the transactions, IMAX added more than $200 million in total available liquidity and reduced its pro forma annual cash interest costs by $4.3 million.

IMAX first quarter 2021 net loss attributable to common shareholders reflects the impact of COVID-19 on the Company's network, including theater closures and capacity restrictions, in addition to a non-cash valuation allowance to reduce the value of deferred tax assets of $7.0 million or $0.12 per share. However, the Company also benefited from a $5.2 million gain on the sale of its investment in Maoyan Entertainment ($3.7 million attributable to common shareholders) and $1.5 million of COVID-19 government relief benefits.

 

Additionally, IMAX today announced that Patrick McClymont, Chief Financial Officer of IMAX, will be leaving the Company to become Chief Financial Officer of a private company. McClymont, who has served in the role since 2016, will step down next month. Joseph Sparacio, who preceded McClymont as Chief Financial Officer of IMAX and more recently served as Chief Financial Officer of Entertainment One, will temporarily rejoin the Company to serve as Interim Chief Financial Officer of IMAX while a search is conducted to fill the role permanently.

 

"On behalf of IMAX, I want to thank Patrick for his significant and valued contributions to the Company throughout his tenure," said Gelfond. "He is a strategic, thoughtful executive and we wish him and his family all the best of luck in their new adventure. IMAX is in a strong financial position with real momentum as we grow our network and brand throughout the world and I am confident that momentum will continue without interruption as we search for a successor."

 

First Quarter Financial Highlights

 

 

Three Months Ended

 

 

 

March 31,

 

In millions of U.S. Dollars, except per share data

 

2021

 

 

2020

 

 

YoY %

Change

 

Total Revenue

 

$

38.8

 

 

$

34.9

 

 

 

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

$

17.3

 

 

$

5.1

 

 

 

239.8

%

Gross Margin (%)

 

 

44.6

%

 

 

14.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss attributable to common shareholders

 

$

(14.8

)

 

$

(49.4

)

 

 

69.9

%

Diluted Net Loss per shareattributable to common shareholders

 

$

(0.25

)

 

$

(0.82

)

 

 

69.5

%

Adjusted Net Loss attributable to common shareholders(1)

 

$

(14.8

)

 

$

(28.7

)

 

 

48.4

%

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

 

$

(0.25

)

 

$

(0.48

)

 

 

47.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2.8

 

 

$

(4.4

)

 

 

163.9

%

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

 

 

9.0

%

 

 

(13.1

%)

 

 

168.5

%

____________

(1)    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.

 

First Quarter Segment Results(1)

In millions of U.S. Dollars

 

IMAX Technology

Network

 

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

Gross Margin

Gross Margin %

 

 

Revenue

 

 

Gross Margin

 

 

Gross Margin %

 

1Q21

 

$

20.3

 

 

$

10.1

 

 

 

49.9

%

 

$

17.0

 

 

 

$

7.1

 

 

 

41.5

%

1Q20

 

16.6

 

 

 

2.8

 

 

 

17.0

%

 

15.1

 

 

 

 

4.7

 

 

 

31.3

%

% change

 

 

22.3

%

 

 

258.7

%

 

 

 

 

 

 

12.5

%

 

 

 

49.3

%

 

 

 

 

_____________

(1)    Please refer to the Company's Form 10-Q for the period ended March 31, 2021 for additional segment information

IMAX Technology Network

  • IMAX Technology Network revenues increased 22.3% to $20.3 million in the first quarter of 2021, compared to $16.6 million in the prior-year period. The continued reopening of the Company's network, particularly in Asia, and strong performance of local-language content during the Chinese New Year holiday period, drove the increase in gross box office and revenue.
  • Gross margin for the IMAX Technology Network of $10.1 million in the first quarter of 2021 increased by more than $7 million as improved box office performance drove higher revenue.

 IMAX Technology Sales and Maintenance

 

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of March 31, 2021 were $267.8 million. Total debt, excluding deferred financing fees, was $283 million as of March 31, 2021.

 

Share Count and Capital Return

The weighted average basic and diluted shares outstanding at the end of the first quarter of 2021 declined 2.3% to 59.0 million, compared to 60.4 million in the first quarter of 2020, due primarily to share repurchase activity early in 2020. During the first quarter of 2021, 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 an additional year through to June 2022.

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 atinvestors.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 8:30AM ET to discuss its first quarter 2021 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) 367-2403 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 490-5367. The conference ID for the call is 2982656. 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 2982656.

 

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 March 31, 2021, there were 1,652 IMAX theater systems (1,567 commercial multiplexes, 12 commercial destinations, 73 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. These forward-looking 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), industry prospects and consumer behavior,  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; risks related to the Company's indebtedness and compliance with its debt agreements; 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 CompanyThese 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:

 

(i) 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;

(ii) 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;

(iii) 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

(iv) 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).

 

IMAX Network and Backlog

 

 

Three Months

Ended March 31,

 

 

Theater System Signings:

 

2021

 

 

 

2020

 

 

New IMAX Theater Systems

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

6

 

 

 

 

2

 

 

Hybrid joint revenue sharing arrangements

 

 

 

 

 

 

 

 

Traditional joint revenue sharing arrangements

 

 

 

 

 

 

2

 

 

   Total new IMAX theaters Systems

 

 

6

 

 

 

 

4

 

 

Upgrades of IMAX theater systems

 

 

 

 

 

 

11

 

 

   Total IMAX Theater System signings

 

 

6

 

 

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

Ended March 31,

 

 

Theater System Installations:

 

2021

 

 

 

2020

 

 

New IMAX Theater Systems

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

2

 

 

 

 

2

 

 

Hybrid joint revenue sharing lease arrangements

 

 

2

 

 

 

 

1

 

 

Traditional joint revenue sharing arrangements

 

 

5

 

 

 

 

2

 

 

   Total new IMAX Theater Systems

 

 

9

 

 

 

 

5

 

 

Upgrades of IMAX theater systems

 

 

3

 

 

 

 

7

 

 

   Total IMAX Theater System installations

 

 

12

 

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

Ended March 31,

 

 

Theater Sales Backlog:

 

2021

 

 

 

2020

 

 

Sales and sales-type lease arrangements

 

 

189

 

 

 

 

180

 

 

Hybrid joint revenue sharing arrangements

 

 

144

 

 

 

 

138

 

 

Traditional joint revenue sharing arrangements

 

 

188

 

(1)

 

 

215

 

(1)

Total Theater backlog

 

 

521

 

(2)

 

 

533

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

Ended March 31,

 

 

Theater Network:

 

2021

 

 

 

2020

 

 

Commercial Multiplex Theaters

 

 

 

 

 

 

 

 

 

 

Sales and sales-type lease arrangements

 

 

671

 

 

 

 

659

 

 

Hybrid joint revenue sharing lease arrangements

 

 

143

 

 

 

 

136

 

 

Traditional joint revenue sharing lease arrangements

 

 

753

 

 

 

 

731

 

 

Total Commercial Multiplex Theaters

 

 

1,567

 

 

 

 

1,526

 

 

Commercial Destination Theaters

 

 

12

 

 

 

 

14

 

 

Institutional Theaters

 

 

73

 

 

 

 

76

 

 

Total Theater network(4)

 

 

1,652

 

 

 

 

1,616

 

 

_____________

  1. Includes 44 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2020 — 46).
  2. Includes 149 new IMAX with Laser projection system configurations and 92 upgrades of existing locations to IMAX with Laser projection system configurations.
  3. Includes 147 new IMAX with Laser projection system configurations and 94 upgrades of existing locations to IMAX with Laser projection system configurations.
  4. Period-to-period changes are reported net of the effect of permanently closed theaters.

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

 

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

Technology sales

 

$

6,175

 

 

$

5,662

 

Image enhancement and maintenance services

 

 

21,615

 

 

 

20,721

 

Technology rentals

 

 

8,359

 

 

 

5,971

 

Finance income

 

 

2,605

 

 

 

2,548

 

 

 

 

 

38,754

 

 

 

34,902

 

Costs and expenses applicable to revenues

 

 

 

 

 

 

 

 

Technology sales

 

 

5,053

 

 

 

3,869

 

Image enhancement and maintenance services

 

 

9,764

 

 

 

17,816

 

Technology rentals

 

 

6,656

 

 

 

8,131

 

 

 

 

 

21,473

 

 

 

29,816

 

Gross margin

 

 

17,281

 

 

 

5,086

 

Selling, general and administrative expenses

 

 

25,209

 

 

 

28,636

 

Research and development

 

 

1,471

 

 

 

2,200

 

Amortization of intangibles

 

 

1,141

 

 

 

1,321

 

Credit loss expense

 

 

305

 

 

 

10,217

 

Asset impairments

 

 

 

 

 

1,151

 

Loss from operations

 

 

(10,845

)

 

 

(38,439

)

Realized and unrealized investment gains (losses)

 

 

5,248

 

 

 

(4,539

)

Retirement benefits non-service expense

 

 

(114

)

 

 

(116

)

Interest income

 

 

583

 

 

 

365

 

Interest expense

 

 

(2,304

)

 

 

(648

)

Loss before taxes

 

 

(7,432

)

 

 

(43,377

)

Income tax expense

 

 

(3,068

)

 

 

(15,505

)

Equity in losses of investees, net of tax

 

 

 

 

(529

)

Net Loss

 

 

(10,500

)

 

 

(59,411

)

Less: Net (income) loss attributable to non-controlling interests

 

 

(4,340

)

 

 

10,057

 

Net loss attributable to common shareholders

 

$

(14,840

)

 

$

(49,354

)

Net loss per share attributable to common shareholders -

      basic and diluted:

 

 

 

 

 

Net loss per share — basic and diluted

 

$

(0.25

)

 

$

(0.82

)

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Basic

 

 

59,012

 

 

 

60,418

 

 

Fully Diluted

 

 

59,012

 

 

 

60,418

 

Additional Disclosure:

 

 

 

 

 

 

 

 

Depreciation and amortization(1)

 

$

12,986

 

 

$

15,252

 

_____________

(1) Includes $0.3 million of amortization of deferred financing costs charged to interest expense for the three months March 31, 2021 (2020 $0.1 million).

 

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except share amounts)

(Unaudited)

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

267,794

 

 

$

317,379

 

Accounts receivable, net

 

 

69,582

 

 

 

56,300

 

Financing receivables, net

 

 

130,836

 

 

 

131,810

 

Variable consideration receivables, net

 

 

41,095

 

 

 

40,526

 

Inventories

 

 

39,119

 

 

 

39,580

 

Prepaid expenses

 

 

12,762

 

 

 

10,420

 

Film assets, net

 

 

5,793

 

 

 

5,777

 

Property, plant and equipment, net

 

 

269,820

 

 

 

277,397

 

Investment in equity securities

 

 

1,086

 

 

 

13,633

 

Other assets

 

 

21,799

 

 

 

21,673

 

Deferred income tax assets, net

 

 

18,303

 

 

 

17,983

 

Goodwill

 

 

39,027

 

 

 

39,027

 

Other intangible assets, net

 

 

25,347

 

 

 

26,245

 

Total assets

 

$

942,363

 

 

$

997,750

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

16,224

 

 

$

20,837

 

Accrued and other liabilities

 

 

104,499

 

 

 

99,354

 

Revolving credit facility borrowings, net

 

 

50,813

 

 

 

305,676

 

Convertible notes, net

 

 

222,486

 

 

 

 

Deferred revenue

 

 

93,208

 

 

 

87,982

 

Deferred income tax liabilities

 

 

19,681

 

 

 

19,134

 

Total liabilities

 

 

506,911

 

 

 

532,983

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

750

 

 

 

759

 

Shareholders' equity

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

59,358,679 issued and 59,357,956 outstanding (December 31, 2020 — 58,921,731 issued and 58,921,008 outstanding)

 

 

414,993

 

 

 

407,031

 

Less: Treasury stock, 723 shares at cost (December 31, 2020 — 723)

 

 

(11

)

 

 

(11

)

Other equity

 

 

155,653

 

 

 

180,330

 

Accumulated deficit

 

 

(217,689

)

 

 

(202,849

)

Accumulated other comprehensive (loss) income

 

 

(459

)

 

 

988

 

Total shareholders' equity attributable to common shareholders

 

 

352,487

 

 

 

385,489

 

Non-controlling interests

 

 

82,215

 

 

 

78,519

 

Total shareholders' equity

 

 

434,702

 

 

 

464,008

 

Total liabilities and shareholders' equity

 

$

942,363

 

 

$

997,750

 

 

IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

 

(10,500

)

 

$

 

(59,411

)

Adjustments to reconcile net loss to cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

12,986

 

 

 

 

15,252

 

Credit loss expense

 

 

 

305

 

 

 

 

10,217

 

Write-downs

 

 

 

213

 

 

 

 

4,403

 

Deferred income tax expense

 

 

 

158

 

 

 

 

5,627

 

Share-based and other non-cash compensation

 

 

 

5,421

 

 

 

 

4,309

 

Unrealized foreign currency exchange loss

 

 

 

113

 

 

 

 

223

 

Realized and unrealized investment (gains) losses

 

 

 

(5,248

)

 

 

 

4,539

 

Equity in losses of investees

 

 

 

 

 

 

 

529

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

(13,744

)

 

 

 

28,191

 

Inventories

 

 

 

437

 

 

 

 

(18,344

)

Film assets

 

 

 

(2,213

)

 

 

 

(3,064

)

Deferred revenue

 

 

 

5,276

 

 

 

 

8,807

 

Changes in other operating assets and liabilities

 

 

 

(4,155

)

 

 

 

4,688

 

Net cash (used in) provided by operating activities

 

 

 

(10,951

)

 

 

 

5,966

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

 

(466

)

 

 

 

(271

)

Investment in equipment for joint revenue sharing arrangements

 

 

 

(1,540

)

 

 

 

(1,580

)

Acquisition of other intangible assets

 

 

 

(1,507

)

 

 

 

(862

)

Proceeds from sale of equity securities

 

 

 

17,769

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

 

14,256

 

 

 

 

(2,713

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible notes, net

 

 

 

223,675

 

 

 

 

 

Purchase of capped calls related to convertible notes

 

 

 

(19,067

)

 

 

 

 

Revolving credit facility borrowings

 

 

 

 

 

 

 

280,000

 

Repayments of revolving credit facility borrowings

 

 

 

(255,000

)

 

 

 

 

Credit facility amendment fees paid

 

 

 

(32

)

 

 

 

 

Settlement of restricted share units and options

 

 

 

 

 

 

 

(1,667

)

Treasury stock repurchased for future settlement of restricted share units

 

 

 

 

 

 

 

(1,419

)

Repurchase of common shares, IMAX China

 

 

 

 

 

 

 

(891

)

Taxes withheld and paid on employee stock awards vested

 

 

 

(3,045

)

 

 

 

(236

)

Common shares issued - stock options exercised

 

 

 

824

 

 

 

 

 

Repurchase of common shares

 

 

 

 

 

 

 

(36,624

)

Net cash (used in) provided by financing activities

 

 

 

(52,645

)

 

 

 

239,163

 

Effects of exchange rate changes on cash

 

 

 

(245

)

 

 

 

377

 

(Decrease) increase in cash and cash equivalents during period

 

 

 

(49,585

)

 

 

 

242,793

 

Cash and cash equivalents, beginning of period

 

 

 

317,379

 

 

 

 

109,484

 

Cash and cash equivalents, end of period

 

$

 

267,794

 

 

$

 

352,277

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

IMAX Technology Network

 

 

 

 

 

 

 

 

IMAX DMR

 

$

11,944

 

 

$

10,629

 

Joint revenue sharing arrangements, contingent rent

 

 

8,359

 

 

 

5,971

 

 

 

 

20,303

 

 

 

16,600

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

IMAX Systems

 

 

5,899

 

 

 

5,688

 

Joint revenue sharing arrangements, fixed fees

 

 

1,738

 

 

 

770

 

IMAX Maintenance

 

 

8,906

 

 

 

7,370

 

Other Theater Business

 

 

437

 

 

 

1,263

 

 

 

 

16,980

 

 

 

15,091

 

New Business Initiatives

 

 

668

 

 

 

478

 

Film Distribution and Post-production

 

 

813

 

 

 

2,494

 

 

 

 

38,764

 

 

 

34,663

 

Other

 

 

(10

)

 

 

239

 

Total revenues

 

$

38,754

 

 

$

34,902

 

 

 

 

 

 

 

 

 

 

Gross Margin (Margin Loss)

 

 

 

 

 

 

 

 

IMAX Technology Network

 

 

 

 

 

 

 

 

IMAX DMR(1)

 

$

8,251

 

 

$

4,443

 

Joint revenue sharing arrangements, contingent rent(1)

 

 

1,883

 

 

 

(1,618

)

 

 

 

10,134

 

 

 

2,825

 

IMAX Technology Sales and Maintenance

 

 

 

 

 

 

 

 

IMAX Systems (1)

 

 

3,012

 

 

 

3,176

 

Joint revenue sharing arrangements, fixed fees(1)

 

 

156

 

 

 

179

 

IMAX Maintenance

 

 

3,823

 

 

 

759

 

Other Theater Business

 

 

63

 

 

 

610

 

 

 

 

7,054

 

 

 

4,724

 

New Business Initiatives

 

 

458

 

 

 

361

 

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

 

 

(25

)

 

 

(1,935

)

 

 

 

17,621

 

 

 

5,975

 

Other

 

 

(340

)

 

 

(889

)

Total Segment Margin

 

$

17,281

 

 

$

5,086

 

_____________

  1. IMAX DMR gross margin includes marketing costs of $1.1 million for the three months ended March 31, 2021 (2020 — $2.4 million). JRSA gross margin includes advertising, marketing and commission expense of $0.8 million for the three months March 31, 2021 (2020 —$0.5 million). IMAX Systems gross margin includes marketing and commission costs of $0.2 million for the three months ended March 31, 2021 (2020 — $0.2 million). Film Distribution segment gross margin includes marketing recovery of less than $0.1 million for the three months ended March 31, 2021, (2020 — expense of $0.2 million).
  2. During the three months ended March 31, 2020, Film Distribution segment results include impairment losses of $2.3 million to write-down the carrying value of certain documentary and alternative content film assets due to a decrease in projected box office totals and related revenues based on management's regular quarterly recoverability assessments. No such charges incurred in the three months ended March 31, 2021.

IMAX CORPORATION

NON-GAAP FINANCIAL MEASURES

(in thousands of U.S. dollars)

In this release, the Company presents adjusted net loss attributable to common shareholders and adjusted net loss 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 attributable to common shareholders and adjusted net loss attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) COVID-19 government relief benefits, (iii) realized and unrealized investment (gains) losses, as well as the related tax impact of these adjustments, and (iv) 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 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 attributable to common shareholders and the associated per share amounts to adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per diluted share is presented in the table below. Net loss 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.

In addition to the non-GAAP financial measures discussed above, management also uses "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 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) realized and unrealized investment (gains) losses; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) legal judgment and arbitration awards; and (v) gain or loss from equity accounted investments.

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.

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 March 31, 2021 (1)

 

 

For the Three Months Ended March 31, 2020 (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

 

$

 

(10,500

)

 

$

 

4,340

 

 

$

 

(14,840

)

 

$

 

(59,411

)

 

$

 

(10,057

)

 

$

 

(49,354

)

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

3,068

 

 

 

 

974

 

 

 

 

2,094

 

 

 

 

15,505

 

 

 

 

4,556

 

 

 

 

10,949

 

Interest expense, net of interest income

 

 

 

1,412

 

 

 

 

(86

)

 

 

 

1,498

 

 

 

 

150

 

 

 

 

(103

)

 

 

 

253

 

Depreciation and amortization, including film asset

   amortization

 

 

 

12,986

 

 

 

 

1,149

 

 

 

 

11,837

 

 

 

 

15,252

 

 

 

 

1,240

 

 

 

 

14,012

 

EBITDA

 

$

 

6,966

 

 

$

 

6,377

 

 

$

 

589

 

 

$

 

(28,504

)

 

$

 

(4,364

)

 

$

 

(24,140

)

Share-based and other non-cash compensation

 

 

 

5,421

 

 

 

 

246

 

 

 

 

5,175

 

 

 

 

4,309

 

 

 

 

151

 

 

 

 

4,158

 

Realized and unrealized investment (gains) losses

 

 

 

(5,248

)

 

 

 

(1,571

)

 

 

 

(3,677

)

 

 

 

4,539

 

 

 

 

1,374

 

 

 

 

3,165

 

Write-downs, including asset

impairments and credit loss expense

 

 

 

518

 

 

 

 

(180

)

 

 

 

698

 

 

 

 

14,620

 

 

 

 

2,692

 

 

 

 

11,928

 

Loss from equity accounted investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

529

 

 

 

 

 

 

 

 

529

 

Adjusted EBITDA per Credit Facility

 

$

 

7,657

 

 

$

 

4,872

 

 

$

 

2,785

 

 

$

 

(4,507

)

 

$

 

(147

)

 

$

 

(4,360

)

Revenues attributable to common

   shareholders(2)

 

 

 

38,754

 

 

 

 

7,699

 

 

 

 

31,055

 

 

 

 

34,902

 

 

 

 

1,596

 

 

 

 

33,306

 

Adjusted EBITDA margin attributable to common

   shareholders

 

 

 

19.8

%

 

 

 

63.3

%

 

 

 

9.0

%

 

 

 

-12.9

%

 

 

 

-9.2

%

 

 

 

-13.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended March 31, 2021 (1)

 

 

For the Twelve Months Ended March 31, 2020 (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

 

$

 

(108,575

)

 

$

 

686

 

 

$

 

(109,261

)

 

$

 

(13,327

)

 

$

 

(2,574

)

 

$

 

(10,753

)

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

14,067

 

 

 

 

1,826

 

 

 

 

12,241

 

 

 

 

28,624

 

 

 

 

7,255

 

 

 

 

21,369

 

Interest expense, net of interest income

 

 

 

4,982

 

 

 

 

(353

)

 

 

 

5,335

 

 

 

 

462

 

 

 

 

(468

)

 

 

 

930

 

Depreciation and amortization, including film asset

   amortization

 

 

 

51,340

 

 

 

 

4,479

 

 

 

 

46,861

 

 

 

 

64,527

 

 

 

 

5,025

 

 

 

 

59,502

 

EBITDA

 

$

 

(38,186

)

 

$

 

6,638

 

 

$

 

(44,824

)

 

$

 

80,286

 

 

$

 

9,238

 

 

$

 

71,048

 

Share-based and other non-cash compensation

 

 

 

23,150

 

 

 

 

1,063

 

 

 

 

22,087

 

 

 

 

23,356

 

 

 

 

659

 

 

 

 

22,697

 

Realized and unrealized investment (gains) losses

 

 

 

(7,706

)

 

 

 

(2,314

)

 

 

 

(5,392

)

 

 

 

7,549

 

 

 

 

2,331

 

 

 

 

5,218

 

Write-downs, including asset impairments and

   credit loss expense

 

 

 

22,235

 

 

 

 

5,492

 

 

 

 

16,743

 

 

 

 

20,729

 

 

 

 

3,689

 

 

 

 

17,040

 

Legal judgment and arbitration awards

 

 

 

4,105

 

 

 

 

 

 

 

 

4,105

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from equity accounted investments

 

 

 

1,329

 

 

 

 

 

 

 

 

1,329

 

 

 

 

442

 

 

 

 

 

 

 

 

442

 

Adjusted EBITDA per Credit Facility

 

$

 

4,927

 

 

$

 

10,879

 

 

$

 

(5,952

)

 

$

 

132,362

 

 

$

 

15,917

 

 

$

 

116,445

 

Revenues attributable to common

   shareholders(2)

 

 

 

140,855

 

 

 

 

21,870

 

 

 

 

118,985

 

 

 

 

350,368

 

 

 

 

31,132

 

 

 

 

319,236

 

Adjusted EBITDA margin attributable to common

   shareholders

 

 

 

3.5

%

 

 

 

49.7

%

 

 

 

-5.0

%

 

 

 

37.8

%

 

 

 

51.1

%

 

 

 

36.5

%

_____________

(1) The Senior Secured Net Leverage Ratio is calculated using Adjusted EBITDA per Credit Facility determined on a trailing twelve-month basis. During the first quarter of 2021, the Company entered into the Second Amendment to the Credit Facility Agreement which, among other things, suspends the Senior Secured Net Leverage Ratio financial covenant in the Credit Agreement through the first quarter of 2022 and, once re-established, permits the Company to use EBITDA from the third and fourth quarters of 2019 in lieu of EBITDA for the corresponding quarters of 2021.

(2)

 

 

Three months ended March 31, 2021

 

 

Three months ended March 31, 2020

 

 

12 months ended March 31, 2021

 

 

12 months ended March 31, 2020

 

Total revenues

 

 

 

 

 

 

$

 

38,754

 

 

 

 

 

 

 

$

 

34,902

 

 

 

 

 

 

 

$

 

140,855

 

 

 

 

 

 

$

 

350,368

 

Greater China revenues

 

$

 

25,518

 

 

 

 

 

 

 

$

 

5,269

 

 

 

 

 

 

 

$

 

72,580

 

 

 

 

 

 

 

$

 

102,882

 

 

 

 

 

Non-controlling interest ownership percentage(3)

 

 

 

30.17

%

 

 

 

 

 

 

 

 

30.29

%

 

 

 

 

 

 

 

 

30.13

%

 

 

 

 

 

 

 

 

30.26

%

 

 

 

 

Deduction for non-controlling interest share of revenues

 

 

 

 

 

 

 

 

(7,699

)

 

 

 

 

 

 

 

 

(1,596

)

 

 

 

 

 

 

 

 

(21,870

)

 

 

 

 

 

 

 

(31,132

)

Revenues attributable to common shareholders

 

 

 

 

 

 

$

 

31,055

 

 

 

 

 

 

 

$

 

33,306

 

 

 

 

 

 

 

$

 

118,985

 

 

 

 

 

 

$

 

319,236

 

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

 

Adjusted Net Loss Attributable to Common Shareholders and Adjusted Diluted Per Share Calculations

 

 

 

Three Months Ended

 

 

 

Three Months Ended

 

 

 

March 31, 2021

 

 

 

March 31, 2020

 

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

 

Net Loss

 

 

 

Per Share

 

 

 

Net Loss

 

 

 

Per Share

 

Reported net loss attributable to common shareholders

 

$

(14,840

)

 

 

$

(0.25

)

 

 

$

(49,354

)

 

 

$

(0.82

)

Adjustments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 

5,348

 

 

 

 

0.09

 

 

 

 

4,075

 

 

 

 

0.07

 

COVID-19 government relief benefits(2)

 

 

(1,484

)

 

 

 

(0.03

)

 

 

 

 

 

 

 

 

Realized and unrealized investment (gains) losses

 

 

(3,677

)

 

 

 

(0.06

)

 

 

 

3,165

 

 

 

 

0.05

 

Tax impact on items listed above

 

 

(537

)

 

 

 

(0.01

)

 

 

 

(338

)

 

 

 

(0.01

)

Income taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries

 

 

381

 

 

 

 

0.01

 

 

 

 

13,726

 

 

 

 

0.23

 

Adjusted net loss(1)

 

$

(14,809

)

 

 

$

(0.25

)

 

 

$

(28,726

)

 

 

$

(0.48

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic shares outstanding

 

 

 

 

 

 

 

59,012

 

 

 

 

 

 

 

 

 

60,418

 

Weighted average diluted shares outstanding

 

 

 

 

 

 

 

59,012

 

 

 

 

 

 

 

 

 

60,418

 

_____________

  1. Reflects amounts attributable to common shareholders.
  2. In the three months ended March 31, 2021, the Company recognized $1.5 million in benefits from the CEWS program, as reductions to Selling, General and Administrative Expenses ($1.2 million) and Costs and Expenses Applicable to Revenues ($0.3 million) in the Condensed Consolidated Statements of Operations. No such benefits were recognized in the same period of 2020.

 

Free Cash Flow

 

 

Three Months Ended

 

(In thousands of U.S. Dollars)

 

March 31, 2021

 

Net cash used in operating activities

 

$

 

(10,951

)

Net cash provided by investing activities

 

 

 

14,256

 

Free cash flow

 

$

 

3,305