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IMAX's Q4 Loss Wider Than Expected, Revenues DeclineY/Y
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IMAX Corporation (IMAX - Free Report) reported fourth-quarter 2020 adjusted loss of 21 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 20 cents. The figure marked a sharp drop from adjusted earnings of 35 cents per share in the year-ago quarter.
Total revenues of $56 million beat theZacks Consensus Estimate by 14.3% but declined 54.9% from the year-ago quarter.
As of Dec 31, 2020, 71% of the theaters in the IMAX commercial multiplex network were open across 41 countries. This included 44% of the theaters in domestic (United States and Canada) locations, 97% of theaters in Greater China and 53% in Rest of World markets.
In many parts of Asia, audiences returned to theaters, particularly IMAX ones, in numbers consistent with pre-pandemic attendance levels despite the continued delay of Hollywood theatrical releases, which typically account for 70% of box-office ticket sales in the regions.
However, ticket sales have been significantly lower than normal levels in theaters outside Asia as Hollywood movie studios have delayed the theatrical release dates for a number of films. As a result, certain theater chains remained closed or reduced their operating hours. In addition, theaters in major markets remain temporarily closed.
Category-wise, technology sales, Image Enhancement & Maintenance Services, Technology Rentals and financial income were down 58.4%, 53.6%, 53.7% and 6.6% year over year to $25.6 million, $20.2 million, $7.5 million and $2.6 million, respectively.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX technology network business revenues were $17.7 million, down 59.1% year over year due to decrease in IMAX DMR revenues.
Within the segment, IMAX DMR revenues declined 62% year over year to $10.2 million due to a 62.3% year-over-year drop in global box-office receipts generated by IMAX DMR films in the fourth quarter of 2020.
For the year ended Dec 31, 2020, global box office was generated primarily by the exhibition of 35 films (31 new and 4 carryovers) and the re-release of classic titles, as compared to 72 films (60 new and 12 carryovers) exhibited in 2019.
Joint revenue sharing arrangements-contingent rent decreased 54.3%year over year to $7.5 million due to a 77% year-over-year decline in global box office generated by theaters under joint revenue-sharing arrangements in the fourth quarter of 2020.
As of Dec 31, 2020, 890 theaters operated under joint revenue sharing arrangements compared with 870 theatersas of Dec 30, 2019, showing an increase of 2%.
IMAX Technology Sales & Maintenance
IMAX’s technology sales & maintenance business generated revenues of $36.4 million, down 52.9% year over year as the pace of theater system installations slowed significantly and maintenance revenues were not recognized for theaters that remained closed during the period due to the COVID-19 pandemic.
Within this segment, IMAX systems revenues declined 53.6% from the year-ago quarter to $26.4 million. IMAX maintenance revenues fell34.2% year over year to $8.8 million as COVID-related closures of IMAX theater systems through a portion of the quarter prevented the recognition of revenues.
Moreover, joint revenue sharing arrangements-fixed fees were $0.9 million, down 80.8% year over year. Other theater revenues declined 84.6%to $0.4 million in the reported quarter.
New Business & Others
New Business generated revenues of $0.7 million, down 12.8% year over year. Film distribution and post-production generated revenues of $1.2 million, down 51.3% year over year.
Network Growth Statistics
As of Dec 31, 2020, there were 1,650 IMAX Theater Systems operating in 84 countries and territories, including 1,562 commercial multiplexes, 12 commercial destinations and 76 institutional locations. This compares to 1,624 IMAX Theater Systems operating in 81 countries and territories as of Dec 31, 2019, including 1,529 commercial multiplexes, 14 commercial destinations and 81 institutional locations.
Greater China is the company’s largest market, measured by revenues, with more than 38% and 31% of overall revenues generated from its Greater China operations in the years ended Dec 31, 2020 and 2019, respectively.
As of Dec 31, 2020, the company had 745 theaters operating in Greater China and an additional 238 new theaters (including 13 upgrades) in backlog that are scheduled to be installed in Greater China by 2028. The company’s backlog in Greater China represents 47.6% of its total current backlog, including upgrades.
Of the IMAX Systems currently scheduled to be installed in Greater China, 65.3% are under joint revenue sharing arrangements, which widens the company’s exposure to box-office performance in this market.
The company’s largest single international partnership is in China with Wanda Film (“Wanda”). Wanda’s total commitment to the company is for 361 IMAX Theater Systems in Greater China,of which 347 IMAX theater Systems are under the parties’ joint revenue-sharing arrangement.
As of Dec 31, 2020, there were 33 IMAX flat screen and IMAX dome theater systems in the IMAX network, as compared to 40 IMAX flat screen and IMAX dome theater systems as of Dec 31, 2019.
IMAX installed 33 systems and signed agreements for 11systems in the quarter, demonstrating continued partner demand for IMAX theater systems despite the temporary delay in major theatrical releases.
As of Dec 31, 2020, 71 IMAX with Laser systems have been installed and the company’s backlog included 148 new IMAX with Laser systems and 95 upgrades to IMAX with Laser systems.
Operating Details
Gross margin contractedfrom 50.2% in the year-ago quarter to 36.3%in fourth-quarter 2020.
Adjusted EBITDA per credit facility was $10 million versus$47million in the year-ago period. IMAX achieved positive EBITDA per Credit Facility 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.
Selling, general & administrative (SG&A) expenses decreased 26.2% year over year to $25.2 million.
Research & development (R&D) expenses contracted 28.9% on a year-over-year basis to $1.1 million.
Operating income margin contracted from 20% in the year-ago quarter to (25.8%) in the reported quarter.
Balance Sheet & Cash Flow
The company continued to strengthen balance sheet, with $317 million in cash and cash equivalents as of Dec 31, 2020, up from $305 million as of Sep 30, 2020.
Cash flow used operating activities was $23.01 million compared with $30.8 millionusedin the prior quarter.
Free cash flow was $6.16 million against negative free cash flow of $11.8 million in the prior quarter.
AMC Entertainment Holdings, Golden Entertainment and Select Interior Concepts will report fourth-quarter 2020 results on Mar 10, Mar 11 and Mar 15, respectively.
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IMAX's Q4 Loss Wider Than Expected, Revenues DeclineY/Y
IMAX Corporation (IMAX - Free Report) reported fourth-quarter 2020 adjusted loss of 21 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 20 cents. The figure marked a sharp drop from adjusted earnings of 35 cents per share in the year-ago quarter.
Total revenues of $56 million beat theZacks Consensus Estimate by 14.3% but declined 54.9% from the year-ago quarter.
As of Dec 31, 2020, 71% of the theaters in the IMAX commercial multiplex network were open across 41 countries. This included 44% of the theaters in domestic (United States and Canada) locations, 97% of theaters in Greater China and 53% in Rest of World markets.
In many parts of Asia, audiences returned to theaters, particularly IMAX ones, in numbers consistent with pre-pandemic attendance levels despite the continued delay of Hollywood theatrical releases, which typically account for 70% of box-office ticket sales in the regions.
However, ticket sales have been significantly lower than normal levels in theaters outside Asia as Hollywood movie studios have delayed the theatrical release dates for a number of films. As a result, certain theater chains remained closed or reduced their operating hours. In addition, theaters in major markets remain temporarily closed.
Category-wise, technology sales, Image Enhancement & Maintenance Services, Technology Rentals and financial income were down 58.4%, 53.6%, 53.7% and 6.6% year over year to $25.6 million, $20.2 million, $7.5 million and $2.6 million, respectively.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote
Segment Details
IMAX Technology Network Business
IMAX technology network business revenues were $17.7 million, down 59.1% year over year due to decrease in IMAX DMR revenues.
Within the segment, IMAX DMR revenues declined 62% year over year to $10.2 million due to a 62.3% year-over-year drop in global box-office receipts generated by IMAX DMR films in the fourth quarter of 2020.
For the year ended Dec 31, 2020, global box office was generated primarily by the exhibition of 35 films (31 new and 4 carryovers) and the re-release of classic titles, as compared to 72 films (60 new and 12 carryovers) exhibited in 2019.
Joint revenue sharing arrangements-contingent rent decreased 54.3%year over year to $7.5 million due to a 77% year-over-year decline in global box office generated by theaters under joint revenue-sharing arrangements in the fourth quarter of 2020.
As of Dec 31, 2020, 890 theaters operated under joint revenue sharing arrangements compared with 870 theatersas of Dec 30, 2019, showing an increase of 2%.
IMAX Technology Sales & Maintenance
IMAX’s technology sales & maintenance business generated revenues of $36.4 million, down 52.9% year over year as the pace of theater system installations slowed significantly and maintenance revenues were not recognized for theaters that remained closed during the period due to the COVID-19 pandemic.
Within this segment, IMAX systems revenues declined 53.6% from the year-ago quarter to $26.4 million. IMAX maintenance revenues fell34.2% year over year to $8.8 million as COVID-related closures of IMAX theater systems through a portion of the quarter prevented the recognition of revenues.
Moreover, joint revenue sharing arrangements-fixed fees were $0.9 million, down 80.8% year over year. Other theater revenues declined 84.6%to $0.4 million in the reported quarter.
New Business & Others
New Business generated revenues of $0.7 million, down 12.8% year over year. Film distribution and post-production generated revenues of $1.2 million, down 51.3% year over year.
Network Growth Statistics
As of Dec 31, 2020, there were 1,650 IMAX Theater Systems operating in 84 countries and territories, including 1,562 commercial multiplexes, 12 commercial destinations and 76 institutional locations. This compares to 1,624 IMAX Theater Systems operating in 81 countries and territories as of Dec 31, 2019, including 1,529 commercial multiplexes, 14 commercial destinations and 81 institutional locations.
Greater China is the company’s largest market, measured by revenues, with more than 38% and 31% of overall revenues generated from its Greater China operations in the years ended Dec 31, 2020 and 2019, respectively.
As of Dec 31, 2020, the company had 745 theaters operating in Greater China and an additional 238 new theaters (including 13 upgrades) in backlog that are scheduled to be installed in Greater China by 2028. The company’s backlog in Greater China represents 47.6% of its total current backlog, including upgrades.
Of the IMAX Systems currently scheduled to be installed in Greater China, 65.3% are under joint revenue sharing arrangements, which widens the company’s exposure to box-office performance in this market.
The company’s largest single international partnership is in China with Wanda Film (“Wanda”). Wanda’s total commitment to the company is for 361 IMAX Theater Systems in Greater China,of which 347 IMAX theater Systems are under the parties’ joint revenue-sharing arrangement.
As of Dec 31, 2020, there were 33 IMAX flat screen and IMAX dome theater systems in the IMAX network, as compared to 40 IMAX flat screen and IMAX dome theater systems as of Dec 31, 2019.
IMAX installed 33 systems and signed agreements for 11systems in the quarter, demonstrating continued partner demand for IMAX theater systems despite the temporary delay in major theatrical releases.
As of Dec 31, 2020, 71 IMAX with Laser systems have been installed and the company’s backlog included 148 new IMAX with Laser systems and 95 upgrades to IMAX with Laser systems.
Operating Details
Gross margin contractedfrom 50.2% in the year-ago quarter to 36.3%in fourth-quarter 2020.
Adjusted EBITDA per credit facility was $10 million versus$47million in the year-ago period. IMAX achieved positive EBITDA per Credit Facility 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.
Selling, general & administrative (SG&A) expenses decreased 26.2% year over year to $25.2 million.
Research & development (R&D) expenses contracted 28.9% on a year-over-year basis to $1.1 million.
Operating income margin contracted from 20% in the year-ago quarter to (25.8%) in the reported quarter.
Balance Sheet & Cash Flow
The company continued to strengthen balance sheet, with $317 million in cash and cash equivalents as of Dec 31, 2020, up from $305 million as of Sep 30, 2020.
Cash flow used operating activities was $23.01 million compared with $30.8 millionusedin the prior quarter.
Free cash flow was $6.16 million against negative free cash flow of $11.8 million in the prior quarter.
Zacks Rank & Stocks to Consider
IMAX currently has a Zacks Rank #3 (Hold).
AMC Entertainment Holdings, Inc. (AMC - Free Report) , Golden Entertainment, Inc. (GDEN - Free Report) and Select Interior Concepts, Inc. are a few better-ranked stocks in the broader computer and technology sector. Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks#1 Rank (Strong Buy) stocks here.
AMC Entertainment Holdings, Golden Entertainment and Select Interior Concepts will report fourth-quarter 2020 results on Mar 10, Mar 11 and Mar 15, respectively.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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