It has been about a month since the last earnings report for Imax (IMAX Quick QuoteIMAX - Free Report) . Shares have lost about 7.9% 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 catalysts.

IMAX Q4 Earnings Beat, Revenues Fall Y/Y on Box Office Loss

IMAX Corporation reported fourth-quarter 2023 adjusted earnings of 17 cents per share, which beat the Zacks Consensus Estimate by a whopping 70% but declined 10.5% from the year-ago quarter.

Total revenues of $86.01 million missed the Zacks Consensus Estimate by 3.84% and decreased 12.3% year over year.

Greater China accounted for 19.2% of revenues. The metric declined 35.8% year over year to $16.5 million.

Category-wise, Technology Sales and Finance Income were up 4.3% and 10.7% year over year to $35.3 million and $2.21 million, respectively. Image Enhancement & Maintenance Services and Technology Rentals Income were down 19.5% and 28.3% year over year to $35.5 million and $12.9 million, respectively.

Segment Details

Content Solutions revenues decreased 34.9% year over year to $19.09 million in the fourth quarter of 2023. Gross box office from IMAX locations in fourth-quarter 2023 was $170 million, down 13% year over year.

Technology Products and Services revenues decreased 5.5% year over year to $62.4 million. All Other revenues surged 69.3% year over year to $4.43 million.

Network Growth Statistics

As of Dec 31, 2023, there were 1,772 IMAX Systems in 90 countries and territories, including 1,693 commercial multiplexes, 12 commercial destinations and 67 institutional locations in the company’s global network.

The company currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,693 IMAX Systems operating as of Dec 31, 2023, representing a market penetration of 46.8%.

IMAX increased its network 3.7% in 2023, driven by 128 system installations, and ended the year with a backlog of 450 IMAX Systems.

As of Dec 31, 2023, the company indirectly owned 71.55% of IMAX China. As of Dec 31, 2023, the company had 807 IMAX Systems operating in Greater China, with an additional 206 systems in backlog.

IMAX has a partnership in China with Wanda, which is its largest exhibitor customer. As of Dec 31, 2023, Wanda represented 22% of the company’s commercial network, 4% of its backlog and 10% of revenues.

The company had a backlog of 382 new systems, including 148 sales and sales-type lease arrangements, 102 hybrid JRSA and 132 traditional JRSA.

Operating Details

Gross margin expanded 100 basis points (bps) to 50.8% in the fourth quarter of 2023. Content Solutions gross margin expanded 950 bps to 50.9% in fourth-quarter 2023.

Technology Products and Services gross margin contracted 540 bps to 47.8% in the fourth quarter of 2023. All other gross margin expanded to 92.4% from 59% in the year-ago quarter.

Adjusted EBITDA per credit facility was $23.01 million, down 17.1% year over year.

Selling, general & administrative expenses decreased 7.4% year over year to $35.07 million. Research & development expenses were $2.72 million, up 66.7% year over year.

IMAX reported an operating income of $2.73 million, down 63.7% year over year.

Balance Sheet & Cash Flow

As of Dec 31, 2023, IMAX’s available liquidity was $407 million, including cash and cash equivalents of $76 million, $276 million in available borrowing capacity under the credit facility and $55 million in available borrowing capacity under IMAX China's revolving facilities.

In comparison, as of Sep 30, 2023, the company’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.

As of Dec 31, 2023, total debt, excluding deferred financing fees, was $257 million compared with $258.2 million as of Sep 30, 2023.

Net cash flow was $58.61 million for the year ended 2023 compared with net cash flow of $17.32 million in the prior-year period.

For full-year 2023, the company repurchased 1.6 million common shares at an average price of $16.45 per share, for a total of $26.4 million, excluding commission, with $24.2 million of repurchases in the fourth quarter of 2023.

Guidance

IMAX expects a global box office of roughly $1.06 billion in 2024. The company expects to install 120-150 systems.

Moreover, adjusted EBITDA margin is expected in the high 30’s percent.

IMAX expects growth in 2025 with at least high-single-digit revenue growth, driven by accelerating IMAX box office and mid-single-digit network growth. The company targets total consolidated adjusted EBITDA margin to be ~40%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted -63.89% due to these changes.

VGM Scores

Currently, Imax has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 C. 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 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.