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IMAX's Q1 Earnings Beat, Revenues Rise Y/Y on Box Office Gain
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IMAX Corporation (IMAX - Free Report) reported adjusted earnings of 16 cents per share for first-quarter 2023, beating the Zacks Consensus Estimate by 23.08%. The company had reported adjusted loss of 14 cents per share in the year-ago period.
Total revenues of $86.9 million beat the Zacks Consensus Estimate by 10.76% and increased 44.8% from the year-ago quarter’s levels.
Category-wise, technology sales, Image Enhancement & Maintenance Services and technology rentals income were up 98.6%, 30.6% and 58.4% year over year to $17.8 million, $47.1 million and $20.05 million, respectively. Finance Income generated revenues of $1.9 million, down 15.9% from the year-ago quarter’s levels.
In the first quarter of 2023, the company revised its internal segment reporting. Accordingly, the company has two reportable segments namely, the Content Solutions segment, which principally includes the digital remastering of films and other content into IMAX formats for distribution to the IMAX network. The Technology Products and Services segment includes results from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems.
IMAX Corporation Price, Consensus and EPS Surprise
Content Solutions revenues increased 52.9% year over year to $32.1 million in the first quarter of 2023.
Within the segment, Film Remastering and Distribution revenues increased 53.7% year over year to $30.07 million.
Gross box office from IMAX locations in first-quarter 2023 of $273.4 million was up 58% from first-quarter 2022. In the first quarter of 2023, box office numbers were generated by the exhibition of 22 films (15 new films, six carryovers and one re-release) including Avatar: The Way of Water, which generated box office of $109.1 million and other content.
In addition, in the first quarter of 2023, local language films exhibited across the company’s global IMAX network generated more than $80 million in box office collection, representing 30% of the company’s total box office. Growth in local language box office was driven primarily by record IMAX Chinese New Year collections of $61.3 million for the full 26-day Chinese New Year holiday, up 72% from the prior year, as well as growth in Rest of World box office.
Leading local language titles distributed across the IMAX network in the first quarter of 2023 included the Chinese film Wandering Earth 2, which generated $48.8 million in box office, the Japanese anime film Suzume, which generated $6.7 million in box office, and a film from India, Pathaan, which generated $3.6 million at the box office.
In the three months ended Mar 31, 2023, the company’s revenues generated from its Greater China operations represented 31% of consolidated revenues. As of Mar 31, 2023, the company had 793 IMAX Systems operating in Greater China with an additional 200 systems in backlog. The company’s backlog in Greater China represented 43% of its total current backlog, including upgrades in system type.
IMAX has a partnership in China with Wanda Film. As of Mar 31, 2023, through the company’s partnership with Wanda, there were 375 IMAX Systems operational in Greater China of which 361 are under the parties’ joint revenue sharing arrangements.
Other Content Solutions revenues increased 42.4% year over year to $2.02 million.
Technology Products and Services
Technology Products and Services revenues increased 36.5% year over year to $51.6 million, driven by growth in box office tied rental revenues as well as a higher number of sale/hybrid installs and renewals.
Within this segment, System Sales revenues increased 102.2% from the year-ago quarter’s levels to $16.1 million. System Rental revenues increased 58.6% year over year to $20.05 million.
Maintenance revenues were $13.5 million, down 9.3% year over year. Finance Income revenues were $1.93 million in the reported quarter, down 15.9% year over year.
All Other revenues increased 168.2% year over year to $3.17 million.
Network Growth Statistics
As of Mar 31, 2023, there were 1,711 IMAX Systems in 87 countries and territories, including 1,631 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network. This compares with 1,690 IMAX Systems in 87 countries and territories as of Mar 31, 2022, including 1,606 commercial multiplexes, 12 commercial destinations and 72 institutional locations in the company’s global network.
As of Mar 31, 2023, 258 systems in the IMAX network across North America, Europe and Asia were configured with connectivity to deliver live and interactive events.
The films distributed through the company’s global network during the three months ended Mar 31, 2023 included Avatar: The Way of Water, The Wandering Earth 2, Ant-Man and the Wasp: Quantumania, Creed III, John Wick: Chapter 4 and Suzume.
As of Mar 31, 2023, the company had 927 locations under joint revenue sharing arrangements in its global commercial multiplex network. IMAX also had contracts in backlog for 298 systems under joint revenue sharing arrangements as of Mar 31, 2023, including 75 upgrades to existing locations and 223 new locations.
During the first quarter, the company installed nine systems compared with 14 systems in the first quarter of 2022. Of those nine systems, eight systems were under sales, sales-type lease and hybrid JRSA arrangements compared with seven systems in the prior year.
Operating Details
Gross margin expanded 460 basis points to 57.6% in the first quarter of 2023.
Adjusted EBITDA per credit facility was $27.3 million compared with $14.8 million in the year-ago period.
Selling, general & administrative expenses increased 13.1% year over year to $34.1 million.
Research & development expenses increased 55% on a year-over-year basis to $1.85 million.
The company reported an operating income of $11.4 million compared with the year-earlier quarter’s operating loss of $8.03 million.
Balance Sheet & Cash Flow
As of Mar 31, 2023, the company's available liquidity was $423 million, including cash and cash equivalents of $99 million, $280 million in available borrowing capacity under the credit facility and $44 million in available borrowing capacity under IMAX China's revolving facilities.
As of Mar 31, 2023, total debt, excluding deferred financing fees, was $266 compared with $270.7 million as of Dec 31, 2022.
Net cash provided by operating activities was $21.2 million for the first quarter of 2023 compared with net cash used of $3.8 million in the prior-year period.
Free cash flow was $16.9 million compared with free cash flow of $7.25 million in the prior quarter.
The Zacks Consensus Estimate for SEAS’ first-quarter 2023 earnings is pegged at a loss of 18 cents per share, which widened by 2 cents over the past 30 days.
The Zacks Consensus Estimate for AGS’ first-quarter 2023 earnings is pegged at a loss of 8 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for NRDY’s first-quarter 2023 earnings is pegged at a loss of 5 cents per share, unchanged over the past 30 days.
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IMAX's Q1 Earnings Beat, Revenues Rise Y/Y on Box Office Gain
IMAX Corporation (IMAX - Free Report) reported adjusted earnings of 16 cents per share for first-quarter 2023, beating the Zacks Consensus Estimate by 23.08%. The company had reported adjusted loss of 14 cents per share in the year-ago period.
Total revenues of $86.9 million beat the Zacks Consensus Estimate by 10.76% and increased 44.8% from the year-ago quarter’s levels.
Category-wise, technology sales, Image Enhancement & Maintenance Services and technology rentals income were up 98.6%, 30.6% and 58.4% year over year to $17.8 million, $47.1 million and $20.05 million, respectively. Finance Income generated revenues of $1.9 million, down 15.9% from the year-ago quarter’s levels.
In the first quarter of 2023, the company revised its internal segment reporting. Accordingly, the company has two reportable segments namely, the Content Solutions segment, which principally includes the digital remastering of films and other content into IMAX formats for distribution to the IMAX network. The Technology Products and Services segment includes results from the sale or lease of IMAX Systems, as well as from the maintenance of IMAX Systems.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote
Segment Details
Content Solutions Business
Content Solutions revenues increased 52.9% year over year to $32.1 million in the first quarter of 2023.
Within the segment, Film Remastering and Distribution revenues increased 53.7% year over year to $30.07 million.
Gross box office from IMAX locations in first-quarter 2023 of $273.4 million was up 58% from first-quarter 2022. In the first quarter of 2023, box office numbers were generated by the exhibition of 22 films (15 new films, six carryovers and one re-release) including Avatar: The Way of Water, which generated box office of $109.1 million and other content.
In addition, in the first quarter of 2023, local language films exhibited across the company’s global IMAX network generated more than $80 million in box office collection, representing 30% of the company’s total box office. Growth in local language box office was driven primarily by record IMAX Chinese New Year collections of $61.3 million for the full 26-day Chinese New Year holiday, up 72% from the prior year, as well as growth in Rest of World box office.
Leading local language titles distributed across the IMAX network in the first quarter of 2023 included the Chinese film Wandering Earth 2, which generated $48.8 million in box office, the Japanese anime film Suzume, which generated $6.7 million in box office, and a film from India, Pathaan, which generated $3.6 million at the box office.
In the three months ended Mar 31, 2023, the company’s revenues generated from its Greater China operations represented 31% of consolidated revenues. As of Mar 31, 2023, the company had 793 IMAX Systems operating in Greater China with an additional 200 systems in backlog. The company’s backlog in Greater China represented 43% of its total current backlog, including upgrades in system type.
IMAX has a partnership in China with Wanda Film. As of Mar 31, 2023, through the company’s partnership with Wanda, there were 375 IMAX Systems operational in Greater China of which 361 are under the parties’ joint revenue sharing arrangements.
Other Content Solutions revenues increased 42.4% year over year to $2.02 million.
Technology Products and Services
Technology Products and Services revenues increased 36.5% year over year to $51.6 million, driven by growth in box office tied rental revenues as well as a higher number of sale/hybrid installs and renewals.
Within this segment, System Sales revenues increased 102.2% from the year-ago quarter’s levels to $16.1 million. System Rental revenues increased 58.6% year over year to $20.05 million.
Maintenance revenues were $13.5 million, down 9.3% year over year. Finance Income revenues were $1.93 million in the reported quarter, down 15.9% year over year.
All Other revenues increased 168.2% year over year to $3.17 million.
Network Growth Statistics
As of Mar 31, 2023, there were 1,711 IMAX Systems in 87 countries and territories, including 1,631 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network. This compares with 1,690 IMAX Systems in 87 countries and territories as of Mar 31, 2022, including 1,606 commercial multiplexes, 12 commercial destinations and 72 institutional locations in the company’s global network.
As of Mar 31, 2023, 258 systems in the IMAX network across North America, Europe and Asia were configured with connectivity to deliver live and interactive events.
The films distributed through the company’s global network during the three months ended Mar 31, 2023 included Avatar: The Way of Water, The Wandering Earth 2, Ant-Man and the Wasp: Quantumania, Creed III, John Wick: Chapter 4 and Suzume.
As of Mar 31, 2023, the company had 927 locations under joint revenue sharing arrangements in its global commercial multiplex network. IMAX also had contracts in backlog for 298 systems under joint revenue sharing arrangements as of Mar 31, 2023, including 75 upgrades to existing locations and 223 new locations.
During the first quarter, the company installed nine systems compared with 14 systems in the first quarter of 2022. Of those nine systems, eight systems were under sales, sales-type lease and hybrid JRSA arrangements compared with seven systems in the prior year.
Operating Details
Gross margin expanded 460 basis points to 57.6% in the first quarter of 2023.
Adjusted EBITDA per credit facility was $27.3 million compared with $14.8 million in the year-ago period.
Selling, general & administrative expenses increased 13.1% year over year to $34.1 million.
Research & development expenses increased 55% on a year-over-year basis to $1.85 million.
The company reported an operating income of $11.4 million compared with the year-earlier quarter’s operating loss of $8.03 million.
Balance Sheet & Cash Flow
As of Mar 31, 2023, the company's available liquidity was $423 million, including cash and cash equivalents of $99 million, $280 million in available borrowing capacity under the credit facility and $44 million in available borrowing capacity under IMAX China's revolving facilities.
As of Mar 31, 2023, total debt, excluding deferred financing fees, was $266 compared with $270.7 million as of Dec 31, 2022.
Net cash provided by operating activities was $21.2 million for the first quarter of 2023 compared with net cash used of $3.8 million in the prior-year period.
Free cash flow was $16.9 million compared with free cash flow of $7.25 million in the prior quarter.
Zacks Rank & Stocks to Consider
IMAX currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are SeaWorld Entertainment , PlayAGS (AGS - Free Report) and Nerdy (NRDY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. These companies are scheduled to report the quarterly results on May 5. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for SEAS’ first-quarter 2023 earnings is pegged at a loss of 18 cents per share, which widened by 2 cents over the past 30 days.
The Zacks Consensus Estimate for AGS’ first-quarter 2023 earnings is pegged at a loss of 8 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for NRDY’s first-quarter 2023 earnings is pegged at a loss of 5 cents per share, unchanged over the past 30 days.