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Why Is Imax (IMAX) Down 10.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Imax (IMAX - Free Report) . Shares have lost about 10.1% in that time frame, underperforming 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 drivers.
IMAX Q3 Earnings Beat, Revenues Rise Y/Y on Box Office Gain
IMAX Corporation reported third-quarter 2023 adjusted earnings of 35 cents per share, beating the Zacks Consensus Estimate by a whopping 66.67%. The company had reported an adjusted loss of 5 cents per share in the year-ago quarter.
Major films, such as Christopher Nolan’s Oppenheimer and Mission: Impossible: Dead Reckoning Part One, contributed to the company’s profit in the third quarter.
Total revenues of $103.8 million beat the Zacks Consensus Estimate by 6.9% and increased 51.1% year over year.
Greater China accounted for 27.2% of revenues. The figure jumped 90.1% year over year to $28.2 million.
Category-wise, technology sales were $18.2 million, up 1.2% year over year. Image Enhancement & Maintenance Services, Technology Rentals Income and Finance Income were up 66.3%, 83.5% and 23.4% year over year to $60.2 million, $23 million and $2.36 million, respectively.
Segment-wise, Content Solutions revenues surged 101.3% year over year to $44.2 million in the third quarter of 2023. Technology Products and Services revenues increased 23.3% year over year to $56.1 million. All Other revenues soared 181.9% year over year to $3.51 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues increased 113.3% year over year to $42.4 million. Other content solutions revenues decreased 15.4% year over year to $1.73 million.
In the third quarter, box office was generated by the exhibition of 41 films (34 new films and seven carryovers), including Oppenheimer, which generated a box office collection of more than $180.4 million and other content.
Gross box office from IMAX locations in third-quarter 2023 was $347.1 million, up 96% year over year. Box office returns benefited from a strong showing of Hollywood titles led by Oppenheimer, with significant contributions coming from Mission Impossible: Dead Reckoning Part 1 and Indiana Jones and the Dial of Destiny.
Box office also benefited from the successful running of local language titles led by the record-setting Chinese film Creation of the Gods: Kingdom of Storms ($32.3 million in IMAX GBO), with strong contributions coming from No More Bets, Lost in the Stars and Jawan.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $16.4 million, down 4.1% year over year. System Rental revenues increased 83.5% year over year to $23 million.
Maintenance revenues were $14.3 million, up 3% year over year. Finance Income revenues were $2.36 million in the reported quarter, up 23.4% year over year.
Network Growth Statistics
As of Sep 30, there were 1,731 IMAX Systems in 87 countries and territories, including 1,651 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network.
During the third quarter, the company installed 30 systems compared with 17 systems in the year-ago quarter. Of those, 16 systems were under sales and hybrid JRSA arrangements compared with nine systems in the prior year.
As of Sep 30, 2023, the company had 798 IMAX Systems operating in Greater China, with an additional 193 systems in backlog.
Total IMAX system signings were 20 compared with 15 in the year-ago quarter. Out of 20, seven were sales and sales-type lease arrangements and seven were traditional JRSA. The rest of the six were upgrades of IMAX systems.
The company had a backlog of 400 new systems, including 172 sales and sales-type lease arrangements, 106 hybrid JRSA and 122 traditional JRSA.
Operating Details
Gross margin expanded to 60.4% in the third quarter of 2023 from 46.1% reported in the year-ago quarter.
Content Solutions gross margin expanded to 59.7% in the third quarter of 2023 from 41.6% reported in the year-ago quarter.
Technology Products and Services gross margin expanded to 60.1% in the third quarter of 2023 from 47.8% reported in the year-ago quarter. All other gross margin expanded 750 basis points year over year to 72.5%.
Adjusted EBITDA per credit facility was $45.08 million, up 174% year over year.
Selling, general & administrative expenses increased 10.3% year over year to $36.2 million. Research & development expenses were $2.77 million, up 148.5% year over year.
IMAX reported an operating income of $22.03 million compared with the year-ago quarter’s operating loss of $4.23 million.
Balance Sheet & Cash Flow
As of Sep 30, 2023, IMAX’s available liquidity was $308.9 million, including cash and cash equivalents of $109.6 million, $150 million in available borrowing capacity under the credit facility and $49.2 million in available borrowing capacity under IMAX China's revolving facilities.
In comparison, as of Jun 30, 2023, the company’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.
As of Sep 30, 2023, total debt, excluding deferred financing fees, was $258.2 million compared with $262.4 million as of Jun 30, 2023.
Net cash flow was $54.6 million for nine months ended Sep 30, 2023 compared with net cash flow of $0.481 million in the prior year period.
IMAX repurchased shares worth $6.1 million in the reported quarter. The current share-repurchase program authorizes the company to repurchase up to $400 million of its common shares, of which approximately $187.3 million remains available.
Guidance
IMAX expects a 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?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -44.87% due to these changes.
VGM Scores
Currently, Imax has a great 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. 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 10.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Imax (IMAX - Free Report) . Shares have lost about 10.1% in that time frame, underperforming 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 drivers.
IMAX Q3 Earnings Beat, Revenues Rise Y/Y on Box Office Gain
IMAX Corporation reported third-quarter 2023 adjusted earnings of 35 cents per share, beating the Zacks Consensus Estimate by a whopping 66.67%. The company had reported an adjusted loss of 5 cents per share in the year-ago quarter.
Major films, such as Christopher Nolan’s Oppenheimer and Mission: Impossible: Dead Reckoning Part One, contributed to the company’s profit in the third quarter.
Total revenues of $103.8 million beat the Zacks Consensus Estimate by 6.9% and increased 51.1% year over year.
Greater China accounted for 27.2% of revenues. The figure jumped 90.1% year over year to $28.2 million.
Category-wise, technology sales were $18.2 million, up 1.2% year over year. Image Enhancement & Maintenance Services, Technology Rentals Income and Finance Income were up 66.3%, 83.5% and 23.4% year over year to $60.2 million, $23 million and $2.36 million, respectively.
Segment-wise, Content Solutions revenues surged 101.3% year over year to $44.2 million in the third quarter of 2023. Technology Products and Services revenues increased 23.3% year over year to $56.1 million. All Other revenues soared 181.9% year over year to $3.51 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues increased 113.3% year over year to $42.4 million. Other content solutions revenues decreased 15.4% year over year to $1.73 million.
In the third quarter, box office was generated by the exhibition of 41 films (34 new films and seven carryovers), including Oppenheimer, which generated a box office collection of more than $180.4 million and other content.
Gross box office from IMAX locations in third-quarter 2023 was $347.1 million, up 96% year over year. Box office returns benefited from a strong showing of Hollywood titles led by Oppenheimer, with significant contributions coming from Mission Impossible: Dead Reckoning Part 1 and Indiana Jones and the Dial of Destiny.
Box office also benefited from the successful running of local language titles led by the record-setting Chinese film Creation of the Gods: Kingdom of Storms ($32.3 million in IMAX GBO), with strong contributions coming from No More Bets, Lost in the Stars and Jawan.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $16.4 million, down 4.1% year over year. System Rental revenues increased 83.5% year over year to $23 million.
Maintenance revenues were $14.3 million, up 3% year over year. Finance Income revenues were $2.36 million in the reported quarter, up 23.4% year over year.
Network Growth Statistics
As of Sep 30, there were 1,731 IMAX Systems in 87 countries and territories, including 1,651 commercial multiplexes, 12 commercial destinations and 68 institutional locations in the company’s global network.
During the third quarter, the company installed 30 systems compared with 17 systems in the year-ago quarter. Of those, 16 systems were under sales and hybrid JRSA arrangements compared with nine systems in the prior year.
As of Sep 30, 2023, the company had 798 IMAX Systems operating in Greater China, with an additional 193 systems in backlog.
Total IMAX system signings were 20 compared with 15 in the year-ago quarter. Out of 20, seven were sales and sales-type lease arrangements and seven were traditional JRSA. The rest of the six were upgrades of IMAX systems.
The company had a backlog of 400 new systems, including 172 sales and sales-type lease arrangements, 106 hybrid JRSA and 122 traditional JRSA.
Operating Details
Gross margin expanded to 60.4% in the third quarter of 2023 from 46.1% reported in the year-ago quarter.
Content Solutions gross margin expanded to 59.7% in the third quarter of 2023 from 41.6% reported in the year-ago quarter.
Technology Products and Services gross margin expanded to 60.1% in the third quarter of 2023 from 47.8% reported in the year-ago quarter. All other gross margin expanded 750 basis points year over year to 72.5%.
Adjusted EBITDA per credit facility was $45.08 million, up 174% year over year.
Selling, general & administrative expenses increased 10.3% year over year to $36.2 million. Research & development expenses were $2.77 million, up 148.5% year over year.
IMAX reported an operating income of $22.03 million compared with the year-ago quarter’s operating loss of $4.23 million.
Balance Sheet & Cash Flow
As of Sep 30, 2023, IMAX’s available liquidity was $308.9 million, including cash and cash equivalents of $109.6 million, $150 million in available borrowing capacity under the credit facility and $49.2 million in available borrowing capacity under IMAX China's revolving facilities.
In comparison, as of Jun 30, 2023, the company’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.
As of Sep 30, 2023, total debt, excluding deferred financing fees, was $258.2 million compared with $262.4 million as of Jun 30, 2023.
Net cash flow was $54.6 million for nine months ended Sep 30, 2023 compared with net cash flow of $0.481 million in the prior year period.
IMAX repurchased shares worth $6.1 million in the reported quarter. The current share-repurchase program authorizes the company to repurchase up to $400 million of its common shares, of which approximately $187.3 million remains available.
Guidance
IMAX expects a 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?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -44.87% due to these changes.
VGM Scores
Currently, Imax has a great 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Imax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.