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IMAX Q2 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
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IMAX Corporation (IMAX - Free Report) reported second-quarter 2024 adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate by a whopping 200% but declined 31% from the year-ago quarter.
Total revenues of $88.96 million beat the Zacks Consensus Estimate by 15.84% but decreased 9% year over year. Greater China accounted for 25.6% of revenues. The metric increased 19% year over year to $22.8 million.
Category-wise, technology sales and technology rentals were down 30.4% and 28.2% year over year to $20.4 million and $14.04 million, respectively. Image Enhancement & Maintenance Services and Finance Income were up 11.4% and 4.7% year over year to $52.19 million and $2.3 million, respectively.
Segment-wise, Content Solutions revenues rose 12% year over year to $35 million in the second quarter of 2024. Technology Products and Services revenues decreased 20% year over year to $51 million. All Other revenues increased 10.1% year over year to $2.98 million.
Shares of IMAX have returned 29.2% against the Zacks Consumer Discretionary sector’s 3.8% decline in the year-to-date period.
IMAX Corporation Price, Consensus and EPS Surprise
Within Content Solutions Business, Film Remastering and Distribution revenues decreased 27.1% year over year to $21.3 million. Other content solutions revenues skyrocketed 565% year over year to $13.7 million.
In the second quarter of 2024, the box office generated by IMAX films totaled $196.4 million, reflecting a decline of 27% from the prior-year quarter’s $268.3 million, driven in part by the Hollywood strike impact on the film slate.
In the second quarter of 2024, the box office generated revenues from the exhibition of 34 films (27 new films and seven films originally released in the prior year), including Inside Out 2, which collected more than $37 million. In the second quarter of 2023, the box office generated revenues from the exhibition of 23 films (17 new films and six films originally released in the prior year), including The Super Mario Bro. Movie, which collected $50 million.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $19.4 million, down 30% year over year. System Rental revenues decreased 28.8% year over year to $13.9 million.
Maintenance revenues were $15.2 million, up 5.1% year over year. Finance Income revenues were $2.3 million in the reported quarter, up 4.7% year over year.
Network Growth Statistics
As of Jun 30, 2024, there were 1,780 IMAX Systems in 89 countries and territories, including 1,705 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 1,780 IMAX Systems operating as of Jun 30, 2024, representing a market penetration of 49%.
As of Jun 30, 2024, the company indirectly owned 71.52% of IMAX China. As of Jun 30, 2024, the company had 790 IMAX Systems operating in Greater China, with an additional 194 systems in backlog.
The company had a backlog of 504 new systems, including 177 sales and sales-type lease arrangements, 101 hybrid JRSA and 226 traditional JRSA.
Operating Details
Gross margin declined 970 basis points (bps) to 49.4% in the second quarter of 2024. Content Solutions’ gross margin contracted 1,800 bps to 46%, while Technology Products and Services’ gross margin contracted 600 bps to 51% in the second quarter. All other gross margin expanded 1,260 bps to 67.2% in the reported quarter.
Adjusted EBITDA per credit facility was $26.8 million, down 18.1% year over year.
Selling, general & administrative expenses decreased 3.4% year over year to $37.6 million. Research & development expenses were $2.03 million, down 26.5% year over year.
IMAX reported an operating income of $2.87 million, down 79.8% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2024, IMAX’s available liquidity was $392 million, including cash and cash equivalents of $92 million, $246 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 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.
As of Jun 30, 2024, total debt, excluding deferred financing fees, was $287 million compared with $302 million as of Mar 31, 2024.
Net cash used in operating activities for the second quarter of 2024 was $35 million compared with net cash provided by operating activities of $5 million in the second quarter of 2023.
During the first half of 2024, the company repurchased 1.2 million common shares at an average price of $13.99 per share for a total of $16 million, excluding commission.
Guidance
IMAX expects a global box office of roughly $1.06 billion in 2024. The company expects to install 130-150 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 Q2 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
IMAX Corporation (IMAX - Free Report) reported second-quarter 2024 adjusted earnings of 18 cents per share, which beat the Zacks Consensus Estimate by a whopping 200% but declined 31% from the year-ago quarter.
Total revenues of $88.96 million beat the Zacks Consensus Estimate by 15.84% but decreased 9% year over year. Greater China accounted for 25.6% of revenues. The metric increased 19% year over year to $22.8 million.
Category-wise, technology sales and technology rentals were down 30.4% and 28.2% year over year to $20.4 million and $14.04 million, respectively. Image Enhancement & Maintenance Services and Finance Income were up 11.4% and 4.7% year over year to $52.19 million and $2.3 million, respectively.
Segment-wise, Content Solutions revenues rose 12% year over year to $35 million in the second quarter of 2024. Technology Products and Services revenues decreased 20% year over year to $51 million. All Other revenues increased 10.1% year over year to $2.98 million.
Shares of IMAX have returned 29.2% against the Zacks Consumer Discretionary sector’s 3.8% 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 27.1% year over year to $21.3 million. Other content solutions revenues skyrocketed 565% year over year to $13.7 million.
In the second quarter of 2024, the box office generated by IMAX films totaled $196.4 million, reflecting a decline of 27% from the prior-year quarter’s $268.3 million, driven in part by the Hollywood strike impact on the film slate.
In the second quarter of 2024, the box office generated revenues from the exhibition of 34 films (27 new films and seven films originally released in the prior year), including Inside Out 2, which collected more than $37 million. In the second quarter of 2023, the box office generated revenues from the exhibition of 23 films (17 new films and six films originally released in the prior year), including The Super Mario Bro. Movie, which collected $50 million.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $19.4 million, down 30% year over year. System Rental revenues decreased 28.8% year over year to $13.9 million.
Maintenance revenues were $15.2 million, up 5.1% year over year. Finance Income revenues were $2.3 million in the reported quarter, up 4.7% year over year.
Network Growth Statistics
As of Jun 30, 2024, there were 1,780 IMAX Systems in 89 countries and territories, including 1,705 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 1,780 IMAX Systems operating as of Jun 30, 2024, representing a market penetration of 49%.
As of Jun 30, 2024, the company indirectly owned 71.52% of IMAX China. As of Jun 30, 2024, the company had 790 IMAX Systems operating in Greater China, with an additional 194 systems in backlog.
The company had a backlog of 504 new systems, including 177 sales and sales-type lease arrangements, 101 hybrid JRSA and 226 traditional JRSA.
Operating Details
Gross margin declined 970 basis points (bps) to 49.4% in the second quarter of 2024. Content Solutions’ gross margin contracted 1,800 bps to 46%, while Technology Products and Services’ gross margin contracted 600 bps to 51% in the second quarter. All other gross margin expanded 1,260 bps to 67.2% in the reported quarter.
Adjusted EBITDA per credit facility was $26.8 million, down 18.1% year over year.
Selling, general & administrative expenses decreased 3.4% year over year to $37.6 million. Research & development expenses were $2.03 million, down 26.5% year over year.
IMAX reported an operating income of $2.87 million, down 79.8% year over year.
Balance Sheet & Cash Flow
As of Jun 30, 2024, IMAX’s available liquidity was $392 million, including cash and cash equivalents of $92 million, $246 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 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.
As of Jun 30, 2024, total debt, excluding deferred financing fees, was $287 million compared with $302 million as of Mar 31, 2024.
Net cash used in operating activities for the second quarter of 2024 was $35 million compared with net cash provided by operating activities of $5 million in the second quarter of 2023.
During the first half of 2024, the company repurchased 1.2 million common shares at an average price of $13.99 per share for a total of $16 million, excluding commission.
Guidance
IMAX expects a global box office of roughly $1.06 billion in 2024. The company expects to install 130-150 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).
Bally’s (BALY - Free Report) , Cinemark (CNK - Free Report) and Crocs (CROX - Free Report) are some better-ranked stocks that investors can consider in the Zacks Consumer Discretionary sector. BALY, CNK and CROX 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 Bally’s have gained 21.3% year to date. BALY is set to report second-quarter 2024 results on Jul 31.
Shares of Cinemark have jumped 51.2% year to date. CNK is slated to report second-quarter 2024 results on Aug 2.
Shares of Crocs have gained 34% year to date. CROX is set to report second-quarter 2024 results on Aug 1.