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Why Is Imax (IMAX) Down 1.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Imax (IMAX - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Imax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
IMAX reported second-quarter 2023 adjusted earnings of 26 cents per share, beating the Zacks Consensus Estimate by a whopping 52.94%. The company had reported adjusted earnings of 7 cents per share in the year-ago quarter.
Total revenues of $98 million beat the Zacks Consensus Estimate by 10.48% and increased 32.5% year over year.
Greater China accounted for 19.5% of revenues. The figure jumped 70.1% year over year to $19.1 million.
Category-wise, technology sales were $29.4 million, significantly up from $8.2 million reported in the year-ago quarter.
Image Enhancement & Maintenance Services and technology rentals income were up 4.2% and 5.5% year over year to $46.9 million and $19.5 million, respectively. Finance Income generated revenues of $2.2 million, down 2.2% year over year.
Segment wise, Content Solutions revenues increased 5.9% year over year to $31.3 million in the second quarter of 2023. Technology Products and Services revenues surged 49.3% year over year to $64 million. All Other revenues soared 73.1% year over year to $2.7 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues increased 5.9% year over year to $29.2 million. Other content solutions revenues increased 5.5% year over year to $2.1 million.
Gross box office from IMAX locations in second-quarter 2023 were $268.3 million, up 8.2% year over year. Box office returns benefited from strong showing of Hollywood titles, including Super Mario Bros., Guardians of the Galaxy Vol. 3, Fast X and Spider-Man: Across the Spider-Verse.
Box office also benefited from successful running of local language titles like Born to Fly, The First Slam Dunk, Detective Conan: Black Iron Submarine and Lost in the Stars.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $27.7 million, significantly up from $7.4 million reported in the year-ago quarter. System Rental revenues increased 5.5% year over year to $19.5 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.
Network Growth Statistics
As of Jun 30, there were 1,718 IMAX Systems in 87 countries and territories, including 1,638 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network.
During the second quarter, IMAX installed 20 systems compared with nine systems in the year-ago quarter. Of those, 13 systems were under sales and hybrid JRSA arrangements compared with five systems in the prior year.
Total IMAX system signings were 46 compared with 13 in the year-ago quarter. Out of 46, 23 were sales and sales-type lease arrangements and 12 traditional JRSA. Rest 11 were upgrades of IMAX systems.
IMAX had a backlog of 496 systems, including 193 sales and sales-type lease arrangements, 109 hybrid JRSA and 194 traditional JRSA.
Operating Details
Gross margin contracted 50 basis points (bps) year over year to 59.1% in the second quarter of 2023.
Content Solutions gross margin expanded 520 bps year over year to 63.9%. However, Technology Products and Services gross margin contracted 310 bps to 56.9%. All other gross margin plunged 750 bps year over year to 54.6%.
Adjusted EBITDA per credit facility was $32.8 million, up 29% year over year.
Selling, general & administrative expenses increased 4.9% year over year to $39 million. Research & development expenses were $2.8 million, up from $1.4 million reported in the year-ago quarter.
IMAX reported an operating income of $14.3 million compared with the year-ago quarter’s operating loss of $0.1 million.
Balance Sheet & Cash Flow
As of Jun 30, 2023, IMAX’s available liquidity was $420 million, including cash and cash equivalents of $95.3 million, $280 million in available borrowing capacity under the credit facility and $44.7 million in available borrowing capacity under IMAX China's revolving facilities.
In comparison, 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 Jun 30, 2023, total debt, excluding deferred financing fees, was $262.4 million compared with $266 million as of Mar 31, 2023. IMAX has $9 million of debt maturity in 2023.
Net cash flow was $25.9 million in the second quarter of 2023 compared with net cash flow of $21.2 million in the first quarter of 2023.
IMAX repurchased shares worth $2 million in the reported quarter and extended its share repurchased program authorization through Jun 30, 2026. IMAX had $191.5 million available under this program.
Guidance
IMAX expects global box office of roughly $1.1 billion in 2023. The company expects to install 110-130 systems.
Moreover, adjusted EBITDA margin is expected in the mid 30’s percent.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 28.57% due to these changes.
VGM Scores
At this time, Imax has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Imax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Imax (IMAX) Down 1.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Imax (IMAX - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Imax due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
IMAX Beat Q2 Earnings Estimates, Revenues Rise Y/Y
IMAX reported second-quarter 2023 adjusted earnings of 26 cents per share, beating the Zacks Consensus Estimate by a whopping 52.94%. The company had reported adjusted earnings of 7 cents per share in the year-ago quarter.
Total revenues of $98 million beat the Zacks Consensus Estimate by 10.48% and increased 32.5% year over year.
Greater China accounted for 19.5% of revenues. The figure jumped 70.1% year over year to $19.1 million.
Category-wise, technology sales were $29.4 million, significantly up from $8.2 million reported in the year-ago quarter.
Image Enhancement & Maintenance Services and technology rentals income were up 4.2% and 5.5% year over year to $46.9 million and $19.5 million, respectively. Finance Income generated revenues of $2.2 million, down 2.2% year over year.
Segment wise, Content Solutions revenues increased 5.9% year over year to $31.3 million in the second quarter of 2023. Technology Products and Services revenues surged 49.3% year over year to $64 million. All Other revenues soared 73.1% year over year to $2.7 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues increased 5.9% year over year to $29.2 million. Other content solutions revenues increased 5.5% year over year to $2.1 million.
Gross box office from IMAX locations in second-quarter 2023 were $268.3 million, up 8.2% year over year. Box office returns benefited from strong showing of Hollywood titles, including Super Mario Bros., Guardians of the Galaxy Vol. 3, Fast X and Spider-Man: Across the Spider-Verse.
Box office also benefited from successful running of local language titles like Born to Fly, The First Slam Dunk, Detective Conan: Black Iron Submarine and Lost in the Stars.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $27.7 million, significantly up from $7.4 million reported in the year-ago quarter. System Rental revenues increased 5.5% year over year to $19.5 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.
Network Growth Statistics
As of Jun 30, there were 1,718 IMAX Systems in 87 countries and territories, including 1,638 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network.
During the second quarter, IMAX installed 20 systems compared with nine systems in the year-ago quarter. Of those, 13 systems were under sales and hybrid JRSA arrangements compared with five systems in the prior year.
Total IMAX system signings were 46 compared with 13 in the year-ago quarter. Out of 46, 23 were sales and sales-type lease arrangements and 12 traditional JRSA. Rest 11 were upgrades of IMAX systems.
IMAX had a backlog of 496 systems, including 193 sales and sales-type lease arrangements, 109 hybrid JRSA and 194 traditional JRSA.
Operating Details
Gross margin contracted 50 basis points (bps) year over year to 59.1% in the second quarter of 2023.
Content Solutions gross margin expanded 520 bps year over year to 63.9%. However, Technology Products and Services gross margin contracted 310 bps to 56.9%. All other gross margin plunged 750 bps year over year to 54.6%.
Adjusted EBITDA per credit facility was $32.8 million, up 29% year over year.
Selling, general & administrative expenses increased 4.9% year over year to $39 million. Research & development expenses were $2.8 million, up from $1.4 million reported in the year-ago quarter.
IMAX reported an operating income of $14.3 million compared with the year-ago quarter’s operating loss of $0.1 million.
Balance Sheet & Cash Flow
As of Jun 30, 2023, IMAX’s available liquidity was $420 million, including cash and cash equivalents of $95.3 million, $280 million in available borrowing capacity under the credit facility and $44.7 million in available borrowing capacity under IMAX China's revolving facilities.
In comparison, 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 Jun 30, 2023, total debt, excluding deferred financing fees, was $262.4 million compared with $266 million as of Mar 31, 2023. IMAX has $9 million of debt maturity in 2023.
Net cash flow was $25.9 million in the second quarter of 2023 compared with net cash flow of $21.2 million in the first quarter of 2023.
IMAX repurchased shares worth $2 million in the reported quarter and extended its share repurchased program authorization through Jun 30, 2026. IMAX had $191.5 million available under this program.
Guidance
IMAX expects global box office of roughly $1.1 billion in 2023. The company expects to install 110-130 systems.
Moreover, adjusted EBITDA margin is expected in the mid 30’s percent.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 28.57% due to these changes.
VGM Scores
At this time, Imax has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Imax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.