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IMAX to Report Q4 Earnings: How Are Things Shaping Up?

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IMAX Corporation (IMAX - Free Report) is set to report fourth-quarter 2018 results on Feb 26.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, delivering average positive surprise of 34.6%. In the last reported quarter, the company’s adjusted earnings outpaced the Zacks Consensus Estimate by 3 cents.

Moreover, IMAX’s top line beat the consensus mark in three of the trailing four quarters. In third-quarter 2018, revenues came in at $82.1 million, beating the Zacks Consensus Estimate of $80 million. However, revenues declined 16.9% from the year-ago quarter.

The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $101.4 million indicating year-over-year decline of 19%. Moreover, the consensus mark for earnings has been steady at 24 cents over the past seven days.

Let’s see how things are shaping up prior to this announcement.

IMAX Corporation Price and EPS Surprise

IMAX Corporation Price and EPS Surprise | IMAX Corporation Quote

Solid Box Office Results to Aid Network Business Revenues

IMAX’s box-office results are expected to benefit from release of titles like AT&T’s (T - Free Report) Warner Bros., Aquaman, Sony’s (SNE - Free Report) Venom and Spider-Man: Into the Spider-Verse and Disney’s (DIS - Free Report) Ralph Breaks the Internet in fourth-quarter 2018.

Aquaman, which was the highest selling IMAX title in China in fourth-quarter 2018, drove December box office collections to $27.23 million. Additionally, collections from both Aquaman and Venom led to 40% year-over-year over growth at IMAX China box office from Nov 3, 2018 to Jan 3, 2019. Notably, Greater China box office collections were $69.2 million in the soon-to-be reported quarter.

Other Hollywood titles that boosted IMAX’s box office performance include Ralph Breaks the Internet, Spider-Man: Into the Spider-Verse and Viacom owned Paramount Pictures' Bumblebee. IMAX’s global box office collections in fourth-quarter 2018 were $236 million, up from $206.5 million in third-quarter 2018.

Further, in the soon-to-be reported quarter, IMAX and Sony Pictures extended their ongoing partnership to digitally remaster (DMR) upcoming films like Spider-Man: Far From Home, the new Men in Black and the sequel to Jumanji: Welcome to the Jungle. The companies extended partnership owing to the success of Venom, which collected $15.4 million on IMAX screens in the first week of release.

Halted VR Initiative to Hurt Results

IMAX stated that it will wind up its VR pilot program and write off certain investments related to the program. The company expects one-time impairment charges of $6.9 million in the soon-to-be reported quarter due to a few strategic reorganizations.

Notably, IMAX, which started the program in early 2017, will close the reaming VR locations by first-quarter 2019.  Lack of popular content and differentiated VR experience compared with already available “in-home VR market” offerings resulted in IMAX’s failure, per Variety.

IMAX is expected to recognize another one-time charge of $7.5 million in fourth-quarter 2018. These charges are expected to negatively impact IMAX’s fourth-quarter 2018 bottom line.

IMAX currently has a Zack Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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