We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
IMAX's Earnings Surpass Estimates in Q1, Revenues Miss
Read MoreHide Full Article
IMAX Corporation (IMAX - Free Report) delivered first-quarter 2019 adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate by a penny. However, the figure declined 14.3% year over year.
Total revenues of $80.2 million narrowly missed the Zacks Consensus Estimate of $81 million and declined 5.6% from the year-ago quarter. The decline can be attributed to lower sales-type theater installations in the reported quarter.
Category-wise, finance income increased 6.3% year over year to $2.7 million. However, equipment and product sales were $15.2 million, down 22.1% from the year-ago quarter. Additionally, services and rentals revenues were down 1.3% and 0.2% year over year to $44.15 million and $18.2 million, respectively.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX network business revenues were $45.8 million, up 2.1% year over year.
Within the segment, IMAX DMR revenues were up 3.3% from the prior-year quarter to $27.9 million.
Gross box office from IMAX DMR films increased 3.8% year over year to $256.3 million in the reported quarter. The increase was primarily due to the release of 24 films (12 new and 12 carryovers) compared with 22 (14 new and eight carryovers) in the year-ago quarter.
Notably, Greater China box office increased 19% year over year to $106 million in the reported quarter. This is IMAX’s “second highest grossing quarter of all time.” The increase was due to release of key Chinese movie titles, partnership with ticketing platform Maoyan and growth in IMAX theaters in the country.
Additionally, Disney’s (DIS - Free Report) Avengers: Endgame contributed to the biggest ever IMAX opening in China, with the movie collecting more than $21 million in the first two days of its release. Solid performance of The Wandering Earth also aided the company’s box-office results in China.
Notably, the film’s average ticket price increased 85% from the earlier Avengers film. Additionally, Avengers: Endgame domestic pre-sales surged 70% to $21 million compared with Avengers: Infinity War. The film also broke IMAX box office records in markets like Germany and France.
Moreover, Rest of World box office increased 10% year over year in the reported quarter. The increase can be attributed to strong box office performance of Captain Marvel and Bohemian Rhapsody.
Joint revenue sharing arrangements-contingent rent was $17.9 million, almost flat from the year-ago quarter.
IMAX theater business generated revenues of $30.3 million, down 13.3% year over year, primarily due to lower installations of seven sales-type theaters, partially offset by one new system upgrade and four new “hybrid joint revenue sharing lease arrangements.”
Within this segment, IMAX systems revenues declined 36.8% from the year-ago quarter to $13.2 million. However, theater system maintenance revenues were $12.9 million, up 1.9% from the year-ago quarter. Moreover, other theater revenues increased 18.1% from a year ago to $1.6 million in the reported quarter.
New business revenues increased 37.2% year over year to $834K. However, other revenues declined 28.4% from the year-ago period to $3.2 million.
Network Growth Statistics
In first-quarter 2019, IMAX installed 17 theater systems, of which 14 were for new theater locations. As of Mar 31, total IMAX theater network consisted of 1,514 systems, of which 1,420 were in commercial multiplexes. Notably, total signings were 23 in first quarter, of which 15 were for IMAX laser.
There were 571 theaters in backlog as of Mar 31, 2019 compared with 529 in the corresponding period of 2018.
Also, IMAX signed contracts for 14 new theaters and nine upgrades in the reported quarter. In the year-to-date period, the company signed deals across regions – Europe, North America and Japan.
IMAX recently partnered with an independent theater owner, Lochmann Filmtheaterbetriebe in Germany to bring IMAX’s largest screen in the world. Notably, about 70% of the theater owners in Germany are independent theater owners.
In North America, IMAX extended its partnership with Cinemark Holdings (CNK - Free Report) to renew Cinemark's current IMAX locations and two new IMAX laser installations.
Moreover, in the reported quarter, the company signed agreements for two new systems and five upgrades in Japan. Notably, owing to the success of Bohemian Rhapsody, same-store sales in the country increased 21% in the reported quarter. IMAX noted that Japan is the third most contributing country to box office in the world.
At the end of first-quarter 2019, IMAX had 32 installed screens in Japan along with an additional 11 in the backlog. Moreover, the company expects to increase its footprint in the country. Further, IMAX anticipates its box-office revenues to benefit from the release of Frozen 2 in Japan.
Operating Details
In the reported quarter, gross margin declined 340 basis points (bps) on a year-over-year basis to 56.3%.
Additionally, network gross margin contracted 120 bps on a year-over-year basis to 68.9%. Gross margin for joint revenue-sharing arrangements was down 530 bps year over year to 66.1% in the reported quarter. Nevertheless, IMAX DMR gross margin expanded 130 bps to 70.8%.
Theater gross margin was 43.6% in first-quarter 2019 compared with 58.5% in the year-ago period.
Adjusted EBITDA was $28.5 million in the reported quarter compared with $130.2 million in the year-ago period. Adjusted EBITDA margin was 39.8% compared with 39.2% in the year-ago period.
Selling, general & administrative (SG&A) expenses declined 1.1% year over year to $27.65 million. Additionally, research & development (R&D) expenses plunged 68.4% year over year to $1.14 million.
Operating income margin contracted 270 bps year over year to 17.5% in the reported quarter.
Balance Sheet
As of Mar 31, 2018, IMAX had cash and cash equivalents of $123.1 million compared with $141.6 million in the prior quarter.
Cash used in operations was $669K as against cash flow from operations of $15.5 million in the year-ago period. Free cash flow was negative $28.3 million in the reported quarter.
2019 Guidance
Box office is expected to grow in low double digits compared with the earlier guidance of mid-to-high single-digit range. IMAX is anticipated to install 185-190 theater systems. The company expects to upgrade 45 screens to IMAX laser and is anticipated to install approximately 140-145 new systems.
Additionally, adjusted EBITDA margins are anticipated to increase in the range of 41% to 42% compared with the earlier guidance of 40.5%.
The company anticipates its box-office performance to be strong in 2019 owing to popular releases like Avengers: Endgame.
IMAX stated that three films including Bond 25 will use IMAX cameras in 2020. Notably, Comcast’s (CMCSA - Free Report) Universal Pictures is one of the producers of the film.
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
IMAX's Earnings Surpass Estimates in Q1, Revenues Miss
IMAX Corporation (IMAX - Free Report) delivered first-quarter 2019 adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate by a penny. However, the figure declined 14.3% year over year.
Total revenues of $80.2 million narrowly missed the Zacks Consensus Estimate of $81 million and declined 5.6% from the year-ago quarter. The decline can be attributed to lower sales-type theater installations in the reported quarter.
Category-wise, finance income increased 6.3% year over year to $2.7 million. However, equipment and product sales were $15.2 million, down 22.1% from the year-ago quarter. Additionally, services and rentals revenues were down 1.3% and 0.2% year over year to $44.15 million and $18.2 million, respectively.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX Corporation Price, Consensus and EPS Surprise | IMAX Corporation Quote
Segment Details
IMAX network business revenues were $45.8 million, up 2.1% year over year.
Within the segment, IMAX DMR revenues were up 3.3% from the prior-year quarter to $27.9 million.
Gross box office from IMAX DMR films increased 3.8% year over year to $256.3 million in the reported quarter. The increase was primarily due to the release of 24 films (12 new and 12 carryovers) compared with 22 (14 new and eight carryovers) in the year-ago quarter.
Notably, Greater China box office increased 19% year over year to $106 million in the reported quarter. This is IMAX’s “second highest grossing quarter of all time.” The increase was due to release of key Chinese movie titles, partnership with ticketing platform Maoyan and growth in IMAX theaters in the country.
Additionally, Disney’s (DIS - Free Report) Avengers: Endgame contributed to the biggest ever IMAX opening in China, with the movie collecting more than $21 million in the first two days of its release. Solid performance of The Wandering Earth also aided the company’s box-office results in China.
Notably, the film’s average ticket price increased 85% from the earlier Avengers film. Additionally, Avengers: Endgame domestic pre-sales surged 70% to $21 million compared with Avengers: Infinity War. The film also broke IMAX box office records in markets like Germany and France.
Moreover, Rest of World box office increased 10% year over year in the reported quarter. The increase can be attributed to strong box office performance of Captain Marvel and Bohemian Rhapsody.
Joint revenue sharing arrangements-contingent rent was $17.9 million, almost flat from the year-ago quarter.
IMAX theater business generated revenues of $30.3 million, down 13.3% year over year, primarily due to lower installations of seven sales-type theaters, partially offset by one new system upgrade and four new “hybrid joint revenue sharing lease arrangements.”
Within this segment, IMAX systems revenues declined 36.8% from the year-ago quarter to $13.2 million. However, theater system maintenance revenues were $12.9 million, up 1.9% from the year-ago quarter. Moreover, other theater revenues increased 18.1% from a year ago to $1.6 million in the reported quarter.
New business revenues increased 37.2% year over year to $834K. However, other revenues declined 28.4% from the year-ago period to $3.2 million.
Network Growth Statistics
In first-quarter 2019, IMAX installed 17 theater systems, of which 14 were for new theater locations. As of Mar 31, total IMAX theater network consisted of 1,514 systems, of which 1,420 were in commercial multiplexes. Notably, total signings were 23 in first quarter, of which 15 were for IMAX laser.
There were 571 theaters in backlog as of Mar 31, 2019 compared with 529 in the corresponding period of 2018.
Also, IMAX signed contracts for 14 new theaters and nine upgrades in the reported quarter. In the year-to-date period, the company signed deals across regions – Europe, North America and Japan.
IMAX recently partnered with an independent theater owner, Lochmann Filmtheaterbetriebe in Germany to bring IMAX’s largest screen in the world. Notably, about 70% of the theater owners in Germany are independent theater owners.
In North America, IMAX extended its partnership with Cinemark Holdings (CNK - Free Report) to renew Cinemark's current IMAX locations and two new IMAX laser installations.
Moreover, in the reported quarter, the company signed agreements for two new systems and five upgrades in Japan. Notably, owing to the success of Bohemian Rhapsody, same-store sales in the country increased 21% in the reported quarter. IMAX noted that Japan is the third most contributing country to box office in the world.
At the end of first-quarter 2019, IMAX had 32 installed screens in Japan along with an additional 11 in the backlog. Moreover, the company expects to increase its footprint in the country. Further, IMAX anticipates its box-office revenues to benefit from the release of Frozen 2 in Japan.
Operating Details
In the reported quarter, gross margin declined 340 basis points (bps) on a year-over-year basis to 56.3%.
Additionally, network gross margin contracted 120 bps on a year-over-year basis to 68.9%. Gross margin for joint revenue-sharing arrangements was down 530 bps year over year to 66.1% in the reported quarter. Nevertheless, IMAX DMR gross margin expanded 130 bps to 70.8%.
Theater gross margin was 43.6% in first-quarter 2019 compared with 58.5% in the year-ago period.
Adjusted EBITDA was $28.5 million in the reported quarter compared with $130.2 million in the year-ago period. Adjusted EBITDA margin was 39.8% compared with 39.2% in the year-ago period.
Selling, general & administrative (SG&A) expenses declined 1.1% year over year to $27.65 million. Additionally, research & development (R&D) expenses plunged 68.4% year over year to $1.14 million.
Operating income margin contracted 270 bps year over year to 17.5% in the reported quarter.
Balance Sheet
As of Mar 31, 2018, IMAX had cash and cash equivalents of $123.1 million compared with $141.6 million in the prior quarter.
Cash used in operations was $669K as against cash flow from operations of $15.5 million in the year-ago period. Free cash flow was negative $28.3 million in the reported quarter.
2019 Guidance
Box office is expected to grow in low double digits compared with the earlier guidance of mid-to-high single-digit range. IMAX is anticipated to install 185-190 theater systems. The company expects to upgrade 45 screens to IMAX laser and is anticipated to install approximately 140-145 new systems.
Additionally, adjusted EBITDA margins are anticipated to increase in the range of 41% to 42% compared with the earlier guidance of 40.5%.
The company anticipates its box-office performance to be strong in 2019 owing to popular releases like Avengers: Endgame.
IMAX stated that three films including Bond 25 will use IMAX cameras in 2020. Notably, Comcast’s (CMCSA - Free Report) Universal Pictures is one of the producers of the film.
IMAX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>