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IMAX's Q1 Loss Wider Than Expected, Revenues Decline Y/Y
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IMAX Corporation (IMAX - Free Report) reported first-quarter 2020 adjusted loss of 48 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 12 cents per share. The figure was down from adjusted earnings of 18 cents per share reported in the year-ago quarter.
Total revenues of $34.9 million missed the Zacks Consensus Estimate by 20.5% and declined 56.5% from the year-ago quarter.
The year-over-year decrease in revenues was attributed to the closure of substantially the entire theater network of the company and decrease in theater system installations due to the COVID-19 pandemic in the reported quarter.
Category-wise, Technology Sales, Image Enhancement & Maintenance Services, Technology Rentals and Financial Income were down 62.8%, 53.1%, 67.1% and 5% year over year to $5.6 million, $20.7 million, $5.9 million and $2.5 million, respectively.
Segment Details
IMAX Technology Network Business
IMAX technology network business revenues were $43 million, down 63.9% year over year due to decrease in IMAX DMR revenues.
Within the segment, IMAX DMR revenues were down 62% year over year to $10.6 million due to 62.9% decrease in IMAX global box office revenues connected to COVID-19-related theater closures.
IMAX Corporation Price, Consensus and EPS Surprise
Notably, Chinese New Year titles slated for first-quarter release were postponed as a result of theater closures.
Joint revenue sharing arrangements-contingent rent was $5.9 million, down 66.9% year over year.
IMAX Technology Sales & Maintenance
IMAX technology sales & maintenance business generated revenues of $15 million, down 49.9% year over year.
Within this segment, IMAX systems revenues declined 56.3% from the year-ago quarter to $5.6 million. IMAX maintenance revenues were $7.3 million, down 43.1%.
Moreover, Joint revenue sharing arrangements-fixed fees were $0.77 million, down 69.7% year over year. Other theater revenues declined 22.3% to $1.3 million in the reported quarter.
New Business & Others
New Business generated revenues of $0.47 million. Film distribution and post-production generated revenues of $2.4 million and other revenues were $0.23 million in first-quarter 2020.
Network Growth Statistics
There were 1,616 theater systems (1,526 commercial multiplex, 14 commercial destination, 76 institutional) operating in 81 countries and territories as of Mar 31, 2020.
As at Mar 31, 2020, 140 IMAX with Laser systems were installed, and the company’s backlog included 147 new IMAX with Laser systems and 94 upgrades to IMAX with Laser systems.
As at Mar 31, 2020, the company signed IMAX with Laser agreements with leading, global exhibitors such as AMC Entertainment Holdings, Inc., Cineworld Group PLC, CGV Holdings Limited and Les Cinemas Pathe Gaumont among others for a total of 140 new theaters, 157 upgrades to existing IMAX theaters, and 52 upgrades to existing arrangements in the company’s backlog.
Operating Details
Gross margin contracted from 56.3% in the year-ago quarter to 14.6% in first-quarter 2020.
IMAX Technology Network business gross margin contracted from 51.9% in the year-ago quarter to 17% in first-quarter 2020.
IMAX technology sales & maintenance gross margin contracted from 43.5% in the year-ago quarter to 31.3% in first-quarter 2020.
Adjusted EBITDA for the quarter was a loss of $4.4 million, down from $28.5 million in the year-ago period..
Selling, general & administrative (SG&A) expenses increased 3.6% year over year to $28.6 million.
Research & development (R&D) expenses increased 93.7% on a year-over-year basis to $2.2 million.
Operating income margin contracted from 17.5% in the year-ago quarter to -110.1% in the reported quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2020, IMAX had cash and cash equivalents of $352.3 million compared with $109.5 million in the prior quarter.
Cash flow from operating activities was $5.96 million compared with $90.4 million in the prior quarter.
Free cash flow was $3.25 million compared with $10.77 million in the prior quarter.
2020 Guidance
The company is actively preparing to reopen to what is projected to be an IMAX-friendly second-half release slate.
Moreover, all major Hollywood releases that were scheduled for the first quarter have been delayed to second half of 2020 or 2021. However, slump in IMAX China box office revenues is anticipated till the coronavirus-led lockdown continues.
Electronic Arts, Roku and Take-Two are set to report their quarterly results on May 5, May 7 and May 20, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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IMAX's Q1 Loss Wider Than Expected, Revenues Decline Y/Y
IMAX Corporation (IMAX - Free Report) reported first-quarter 2020 adjusted loss of 48 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 12 cents per share. The figure was down from adjusted earnings of 18 cents per share reported in the year-ago quarter.
Total revenues of $34.9 million missed the Zacks Consensus Estimate by 20.5% and declined 56.5% from the year-ago quarter.
The year-over-year decrease in revenues was attributed to the closure of substantially the entire theater network of the company and decrease in theater system installations due to the COVID-19 pandemic in the reported quarter.
Category-wise, Technology Sales, Image Enhancement & Maintenance Services, Technology Rentals and Financial Income were down 62.8%, 53.1%, 67.1% and 5% year over year to $5.6 million, $20.7 million, $5.9 million and $2.5 million, respectively.
Segment Details
IMAX Technology Network Business
IMAX technology network business revenues were $43 million, down 63.9% year over year due to decrease in IMAX DMR revenues.
Within the segment, IMAX DMR revenues were down 62% year over year to $10.6 million due to 62.9% decrease in IMAX global box office revenues connected to COVID-19-related theater closures.
IMAX Corporation Price, Consensus and EPS Surprise
IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote
Notably, Chinese New Year titles slated for first-quarter release were postponed as a result of theater closures.
Joint revenue sharing arrangements-contingent rent was $5.9 million, down 66.9% year over year.
IMAX Technology Sales & Maintenance
IMAX technology sales & maintenance business generated revenues of $15 million, down 49.9% year over year.
Within this segment, IMAX systems revenues declined 56.3% from the year-ago quarter to $5.6 million. IMAX maintenance revenues were $7.3 million, down 43.1%.
Moreover, Joint revenue sharing arrangements-fixed fees were $0.77 million, down 69.7% year over year. Other theater revenues declined 22.3% to $1.3 million in the reported quarter.
New Business & Others
New Business generated revenues of $0.47 million. Film distribution and post-production generated revenues of $2.4 million and other revenues were $0.23 million in first-quarter 2020.
Network Growth Statistics
There were 1,616 theater systems (1,526 commercial multiplex, 14 commercial destination, 76 institutional) operating in 81 countries and territories as of Mar 31, 2020.
As at Mar 31, 2020, 140 IMAX with Laser systems were installed, and the company’s backlog included 147 new IMAX with Laser systems and 94 upgrades to IMAX with Laser systems.
As at Mar 31, 2020, the company signed IMAX with Laser agreements with leading, global exhibitors such as AMC Entertainment Holdings, Inc., Cineworld Group PLC, CGV Holdings Limited and Les Cinemas Pathe Gaumont among others for a total of 140 new theaters, 157 upgrades to existing IMAX theaters, and 52 upgrades to existing arrangements in the company’s backlog.
Operating Details
Gross margin contracted from 56.3% in the year-ago quarter to 14.6% in first-quarter 2020.
IMAX Technology Network business gross margin contracted from 51.9% in the year-ago quarter to 17% in first-quarter 2020.
IMAX technology sales & maintenance gross margin contracted from 43.5% in the year-ago quarter to 31.3% in first-quarter 2020.
Adjusted EBITDA for the quarter was a loss of $4.4 million, down from $28.5 million in the year-ago period..
Selling, general & administrative (SG&A) expenses increased 3.6% year over year to $28.6 million.
Research & development (R&D) expenses increased 93.7% on a year-over-year basis to $2.2 million.
Operating income margin contracted from 17.5% in the year-ago quarter to -110.1% in the reported quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2020, IMAX had cash and cash equivalents of $352.3 million compared with $109.5 million in the prior quarter.
Cash flow from operating activities was $5.96 million compared with $90.4 million in the prior quarter.
Free cash flow was $3.25 million compared with $10.77 million in the prior quarter.
2020 Guidance
The company is actively preparing to reopen to what is projected to be an IMAX-friendly second-half release slate.
Moreover, all major Hollywood releases that were scheduled for the first quarter have been delayed to second half of 2020 or 2021. However, slump in IMAX China box office revenues is anticipated till the coronavirus-led lockdown continues.
Zacks Rank & Stocks to Consider
IMAX currently has a Zacks Rank #4 (Sell).
Electronic Arts, Inc. (EA - Free Report) , Roku Inc. (ROKU - Free Report) and Take-Two Interactive Software, Inc. (TTWO - Free Report) are some better-ranked stocks in the broader consumer discretionary sector, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Electronic Arts, Roku and Take-Two are set to report their quarterly results on May 5, May 7 and May 20, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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