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IMAX's Q3 Loss Narrower Than Expected, Revenues Miss Estimates

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IMAX Corporation (IMAX - Free Report) reported third-quarter 2021 adjusted loss of 8 cents per share, much narrower than the Zacks Consensus Estimate of a loss of 14 cents and the year-ago quarter’s 75 cents per share.

Total revenues of $56.6 million surged 51.5% from the year-ago quarter. However, the top-line number marginally fell short of the Zacks Consensus Estimate of $57 million.

Category wise, Image Enhancement & Maintenance Services, Technology rentals and Finance income were up 110%, 128% and 8% year over year to $30.6 million, $10.2 million and $2.6 million, respectively. However, Technology sales declined 16% to $13.2 million.

IMAX Corporation Price, Consensus and EPS Surprise IMAX Corporation Price, Consensus and EPS Surprise

IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote

Segment Details

IMAX Technology Network Business

The IMAX technology network business revenues came in at $25.6 million, up from the $11.4 million reported in the year-ago quarter. Moreover, the company’s global box office collection jumped more than two-fold to $141.9 million from the year-ago quarter’s $70.2 million. The continued reopening of the company's network, particularly in the United States, and strong performance of Hollywood releases drove the increase in gross box office and revenues.

Within the segment, IMAX DMR revenues increased from the year-ago quarter’s $6.9 million to $15.7 million. The joint revenue sharing arrangements-contingent rent increased from $4.5 million in the year-ago quarter to $9.9 million.

IMAX Technology Sales & Maintenance

IMAX’s technology sales & maintenance business generated revenues of $27.7 million, up 16.9% year over year on higher IMAX maintenance sales associated with the continued reopening of the IMAX global network. This was partially offset by fewer number of IMAX theater installations.

Within this segment, IMAX systems revenues decreased 24% from the year-ago quarter to $13.2 million. The IMAX maintenance revenues increased to $13.1 million from the year-ago quarter’s $5.9 million on the continued reopening of the IMAX network.

Moreover, joint revenue sharing arrangements-fixed fees were $1 million, up from the prior-year quarter’s $0.06 million. Other theater revenues came in at $0.4 million in the reported quarter, up from $0.3 million in third-quarter 2020.

New Business & Others

The New Business generated revenues of $1.2 million, up from the year-ago quarter’s $0.4 million. The Film distribution and post-production segment generated revenues of $1.6 million, down 14.3%, year on year.

Network Growth Statistics

As of Sep 30, 2021, there were 1,664 IMAX Theater Systems operating in 85 countries and territories, including 1,580 commercial multiplexes, 12 commercial destinations and 72 institutional locations. This compares with 1,632 IMAX Theater Systems as of Sep 30, 2020, including 1,542 commercial multiplexes, 13 commercial destinations and 77 institutional locations.

IMAX installed 17 systems and signed agreements for 11 systems in the quarter, demonstrating continued partner demand for IMAX theater systems despite the temporary delay in the major theatrical releases.

Operating Details

Gross margin expanded to 48.6% from the year-ago quarter’s 10.3%.

The adjusted EBITDA per credit facility was $17.3 million versus the prior-year period’s $4.2 million.

Selling, general & administrative (SG&A) expenses flared up 14.4% year over year to $28.4 million.

Research & development (R&D) expenses shot up 79.2% on a year-over-year basis to $2 million.

Operating loss declined to $0.9 million from the year-earlier quarter’s $27.4 million.

Balance Sheet & Cash Flow

As of Sep 30, 2021, the company had $193 million in cash and cash equivalents compared with $214.1 million as of Jun 30, 2021.

Cash flow used in operating activities was $19.6 million compared with the $30.8 million used in the prior quarter.

Negative free cash flow was $7.3 million compared to free cash flow of $12.9 million in the prior quarter.

Zacks Rank & Stocks to Consider

IMAX currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Advanced Micro Devices (AMD - Free Report) and CACI International (CACI - Free Report) , all carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Applied Materials, Advanced Micro Devices and CACI is currently pegged at 19.4%, 44.6% and 5.5%, respectively.