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IMAX Corp. (IMAX) Earnings Miss, Revenues Beat in Q2

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IMAX Corp. (IMAX - Free Report) reported second-quarter 2016 results wherein the bottom line missed but the top line beat the Zacks Consensus Estimate.

The company’s earnings (on an adjusted basis) were 9 cents per share, which missed the Zacks Consensus Estimate of 10 cents. Earnings declined 73.5%.

Quarterly total revenue of $91.7 million was down 14.4% year over year but beat the Zacks Consensus Estimate of $85 million. Gross margin was 54.8% compared with 64.4% in the prior-year quarter due to lower box office collections, rise in DMR costs and larger mix of hybrid sales. EBITDA margin was 16.9% compared with 33.94% in the year-ago quarter. Quarterly results were hurt due to lower box –office revenues. The overall year over year decline was due to a larger base effect as the second quarter of 2015 was one of the best reported quarters for IMAX in terms of revenue and collections.

The company’s stock gained 2.92% in after hours trading as investors seemed to be pleased by the revenue outperformance in the second quarter of 2016.

Segment-wise Results

Under IMAX Theatre systems, Sales and sales-type leases: Quarterly total revenue was $18.7 million, flat year over year.

Joint-revenue sharing arrangement: Quarterly revenues totaled $23.9 million, down 24.4% year over year.

The Film segment recorded $30.0 million in revenues, down 23.9%. In this segment, Production and IMAX DMR (Digital Re-Mastering) quarterly total revenue was $27.4 million, down 25.1% year over year. The average global DMR box-office revenues per screen in second-quarter 2016 were $268,200 compared with $414,600 in the prior-year quarter.

Category-wise Results

In the quarter under review, revenues from equipment and product sales totaled $26.5 million, up 4.7% year over year. Services revenues deteriorated 18.8% from the prior-year quarter to $41.4 million. Rental revenues were $20.8 million, down 27.3% year over year. Finance income came in at $2.4 million, up 6.2% year over year.

Liquidity & Share Repurchase

For the six months ending Jun 30 2016, IMAX generated around $36.1 million of cash from operations compared with $18.5 million in the same period last year. Free cash flow in the period under review was $5.2 million compared with cash consumption of $31.0 million in the same period last year. IMAX exited the second quarter of 2016 with $228.1 million of cash and cash equivalents compared with $317.4 million of cash and no at the end of 2015.

The company repurchased 1.34 million shares amounting to $41.1 million at an average price of $30.55 per share in the second quarter. This excludes .07 million shares purchased in accordance with its long-term incentive plan.

Network Growth Statistics and Box Office Update

At the end of the second quarter of 2016, IMAX installed 40 new theaters (including upgrades) against 35 in the prior-year quarter. Total new theater signings (including upgrades), at the end of the quarter under review, was 95 compared with 30 at the end of second-quarter 2015. At the end of second-quarter 2016, total theater count in backlog (including upgrades) was 442 compared with 391 in the same quarter last year. Total IMAX theater network (inclusive of Commercial Multiplex) was 1,102 in the second quarter of 2016 compared with 976 a year ago.

Gross box office collections from IMAX DMR titles amounted to $260.8 million in the second quarter compared with $343 million in the prior-year quarter.

IMAX CORP Price, Consensus and EPS Surprise

IMAX CORP Price, Consensus and EPS Surprise | IMAX CORP Quote

Zacks Rank and Stocks to Consider

IMAX currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry are Starz , CBS Corporation and E.W. Scripps Company (SSP - Free Report) with a Zacks Rank #2 (Buy).

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