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IMAX Q1 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
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IMAX Corporation (IMAX - Free Report) reported first-quarter 2024 adjusted earnings of 15 cents per share, which beat the Zacks Consensus Estimate by a whopping 50% but declined 6.3% from the year-ago quarter.
Total revenues of $79.12 million beat the Zacks Consensus Estimate by 1.6% but decreased 9% year over year. Greater China accounted for 27.1% of revenues. The metric declined 19.2% year over year to $21.4 million.
Category-wise, technology sales and technology rentals were down 55.7% and 7.3% year over year to $7.9 million and $18.6 million, respectively. Image Enhancement & Maintenance Services and Finance Income were up 6.8% and 17.1% year over year to $50.3 million and $2.2 million, respectively.
Segment-wise, Content Solutions revenues rose 6% year over year to $34 million in the first quarter of 2024. Technology Products and Services revenues decreased 16.5% year over year to $43.15 million. All Other revenues declined 38.3% year over year to $1.96 million.
Shares of IMAX have returned 16.2% against the Zacks Consumer Discretionary sector’s 3.3% decline in the year-to-date period.
IMAX Corporation Price, Consensus and EPS Surprise
Within Content Solutions Business, Film Remastering and Distribution revenues decreased 1.2% year over year to $29.7 million. Other content solutions revenues surged 111.6% year over year to $4.29 million.
In the first quarter, the box office generated more than $132.4 million by the exhibition of 27 films (20 new films and seven carryovers), including Dune: Part Two.
Global box office (GBO) from IMAX locations in first-quarter 2024 was $260.7 million, down 4.6% year over year. The negative impact on revenues from the lower box office experienced year over year was offset by revenues earned from the alternative content released to the IMAX network in the first quarter, such as the exclusive release in partnership with Pathé Live of Queen Rock Montreal.
This also marks the company's third highest-grossing first quarter ever, driven by Dune: Part Two, Godzilla x Kong: New Empire, IMAX-exclusive Queen Rock Montreal and local language releases, which contributed 21% of quarterly GBO.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $7.11 million, down 55.8% year over year. System Rental revenues decreased 7.3% year over year to $18.6 million.
Maintenance revenues were $14.1 million, up 4.5% year over year. Finance Income revenues were $2.27 million in the reported quarter, up 17.1% year over year.
Network Growth Statistics
As of Mar 31, 2024, there were 1,772 IMAX Systems in 89 countries and territories, including 1,697 commercial multiplexes, 12 commercial destinations and 63 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 1,772 IMAX Systems operating as of Mar 31, 2024, representing a market penetration of 49%.
As of Mar 31, 2024, the company indirectly owned 71.52% of IMAX China. As of Mar 31, 2024, the company had 804 IMAX Systems operating in Greater China, with an additional 205 systems in backlog.
The company had a backlog of 442 new systems, including 164 sales and sales-type lease arrangements, 101 hybrid JRSA and 177 traditional JRSA.
Operating Details
Gross margin expanded 170 basis points (bps) to 59.3% in the first quarter of 2024. Content Solutions gross margin expanded 890 bps to 65%, while Technology Products and Services gross margin contracted 320 bps to 54.7% in the first quarter. All other gross margin contracted 660 bps to 61.5% in the reported quarter.
Adjusted EBITDA per credit facility was $28.1 million, up 3.1% year over year.
Selling, general & administrative expenses decreased 8.5% year over year to $31.2 million. Research & development expenses were $2.18 million, up 17.9% year over year.
IMAX reported an operating income of $12.06 million, up 5.8% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, IMAX’s available liquidity was $367 million, including cash and cash equivalents of $81 million, $231 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 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.
As of Mar 31, 2024, total debt, excluding deferred financing fees, was $302 million compared with $257 million as of Dec 31, 2023.
Net cash used in operating activities for the first quarter of 2024 was $11 million compared with net cash provided by operating activities of $21.2 million in the first quarter of 2023.
During the first quarter of 2024, the company repurchased 1.2 million common shares at an average price of $13.99 per share for a total of $16.2 million, excluding commission.
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.
The company expects growth in 2025 with at least high-single-digit revenue growth, driven by accelerating IMAX box office and mid-single-digit network growth. It projects total consolidated adjusted EBITDA margin to be ~40%.
Image: Bigstock
IMAX Q1 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
IMAX Corporation (IMAX - Free Report) reported first-quarter 2024 adjusted earnings of 15 cents per share, which beat the Zacks Consensus Estimate by a whopping 50% but declined 6.3% from the year-ago quarter.
Total revenues of $79.12 million beat the Zacks Consensus Estimate by 1.6% but decreased 9% year over year. Greater China accounted for 27.1% of revenues. The metric declined 19.2% year over year to $21.4 million.
Category-wise, technology sales and technology rentals were down 55.7% and 7.3% year over year to $7.9 million and $18.6 million, respectively. Image Enhancement & Maintenance Services and Finance Income were up 6.8% and 17.1% year over year to $50.3 million and $2.2 million, respectively.
Segment-wise, Content Solutions revenues rose 6% year over year to $34 million in the first quarter of 2024. Technology Products and Services revenues decreased 16.5% year over year to $43.15 million. All Other revenues declined 38.3% year over year to $1.96 million.
Shares of IMAX have returned 16.2% against the Zacks Consumer Discretionary sector’s 3.3% decline in the year-to-date period.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues decreased 1.2% year over year to $29.7 million. Other content solutions revenues surged 111.6% year over year to $4.29 million.
In the first quarter, the box office generated more than $132.4 million by the exhibition of 27 films (20 new films and seven carryovers), including Dune: Part Two.
Global box office (GBO) from IMAX locations in first-quarter 2024 was $260.7 million, down 4.6% year over year. The negative impact on revenues from the lower box office experienced year over year was offset by revenues earned from the alternative content released to the IMAX network in the first quarter, such as the exclusive release in partnership with Pathé Live of Queen Rock Montreal.
This also marks the company's third highest-grossing first quarter ever, driven by Dune: Part Two, Godzilla x Kong: New Empire, IMAX-exclusive Queen Rock Montreal and local language releases, which contributed 21% of quarterly GBO.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $7.11 million, down 55.8% year over year. System Rental revenues decreased 7.3% year over year to $18.6 million.
Maintenance revenues were $14.1 million, up 4.5% year over year. Finance Income revenues were $2.27 million in the reported quarter, up 17.1% year over year.
Network Growth Statistics
As of Mar 31, 2024, there were 1,772 IMAX Systems in 89 countries and territories, including 1,697 commercial multiplexes, 12 commercial destinations and 63 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 1,772 IMAX Systems operating as of Mar 31, 2024, representing a market penetration of 49%.
As of Mar 31, 2024, the company indirectly owned 71.52% of IMAX China. As of Mar 31, 2024, the company had 804 IMAX Systems operating in Greater China, with an additional 205 systems in backlog.
The company had a backlog of 442 new systems, including 164 sales and sales-type lease arrangements, 101 hybrid JRSA and 177 traditional JRSA.
Operating Details
Gross margin expanded 170 basis points (bps) to 59.3% in the first quarter of 2024. Content Solutions gross margin expanded 890 bps to 65%, while Technology Products and Services gross margin contracted 320 bps to 54.7% in the first quarter. All other gross margin contracted 660 bps to 61.5% in the reported quarter.
Adjusted EBITDA per credit facility was $28.1 million, up 3.1% year over year.
Selling, general & administrative expenses decreased 8.5% year over year to $31.2 million. Research & development expenses were $2.18 million, up 17.9% year over year.
IMAX reported an operating income of $12.06 million, up 5.8% year over year.
Balance Sheet & Cash Flow
As of Mar 31, 2024, IMAX’s available liquidity was $367 million, including cash and cash equivalents of $81 million, $231 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 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.
As of Mar 31, 2024, total debt, excluding deferred financing fees, was $302 million compared with $257 million as of Dec 31, 2023.
Net cash used in operating activities for the first quarter of 2024 was $11 million compared with net cash provided by operating activities of $21.2 million in the first quarter of 2023.
During the first quarter of 2024, the company repurchased 1.2 million common shares at an average price of $13.99 per share for a total of $16.2 million, excluding commission.
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.
The company expects growth in 2025 with at least high-single-digit revenue growth, driven by accelerating IMAX box office and mid-single-digit network growth. It projects total consolidated adjusted EBITDA margin to be ~40%.
Zacks Rank & Stocks to Consider
IMAX currently carries a Zacks Rank #3 (Hold).
Disney (DIS - Free Report) , Reynolds Consumer Products (REYN - Free Report) and Roblox (RBLX - Free Report) are some better-ranked stocks that investors can consider in the broader sector. DIS, REYN and RBLX carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Disney have jumped 26.2% year to date. DIS is set to report second-quarter fiscal 2024 results on May 7.
Shares of Reynolds Consumer Products have gained 7% year to date. REYN is slated to report first-quarter 2024 results on May 8.
Shares of Roblox have plunged 23.5% year to date. RBLX is set to report first-quarter 2024 results on May 9.