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Why Is Imax (IMAX) Up 7.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Imax (IMAX - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Imax due for a pullback? 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 Q3 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
IMAX Corporation reported third-quarter 2024 adjusted earnings of 35 cents per share, which beat the Zacks Consensus Estimate by a whopping 59% and remained flat year over year.
Total revenues of $91.4 million missed the Zacks Consensus Estimate by 2.88% and decreased 12% year over year.
Greater China is the Company’s largest market by revenues, with approximately 25% of overall revenues generated from its Greater China operations for the nine months ended Sept. 30, 2024. Greater China accounted for 23.3% of revenues. The metric declined 24.6% year over year to $21.3 million.
Category-wise, image Enhancement & Maintenance Services, technology rentals and finance income were down 22.2%, 29.9% and 9.8% year over year to $46.8 million, $16.1 million and $2.1, respectively. Technology sales revenues were up 44% year over year to $26.3 million.
Segment-wise, Content Solutions revenues declined 31.9% year over year to $30.12 million in the third quarter of 2024. Technology Products and Services revenues increased 3.2% year over year to $57.9 million. All Other revenues declined 4.6% year over year to $3.35 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues decreased 37.2% year over year to $26.6 million. Other content solutions revenues surged 98.6% year over year to $3.44 million.
In the third quarter of 2024, box office generated by IMAX films totaled $239.5 million and represented IMAX’s third-highest third-quarter box office of all time. The decrease of $107.6 million, or 31%, versus the prior year’s comparative period of $347.1 million, was due to a less favorable mix of content globally, which included fewer blockbusters, compared to the prior year that included more than $180 million in box office from Oppenheimer, the company’s fifth highest grossing title of all time.
In the third quarter of 2024, IMAX box office was generated by the exhibition of 44 films and other content (37 new and seven originally released in a prior year), including Deadpool & Wolverine, which generated IMAX box office of more than $83 million.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $24.3 million, up 48.8% year over year. System Rental revenues decreased 30.3% year over year to $16.02 million.
Maintenance revenues were $15.44 million, up 7.6% year over year. Finance Income revenues were $2.13 million in the reported quarter, down 9.8% year over year.
Network Growth Statistics
As of Sept. 30, 2024, there were 1,788 IMAX Systems in 89 countries and territories, including 1,714 commercial multiplexes, 12 commercial destinations and 62 institutional locations in the company’s global network. During the third quarter, the company installed 49 systems compared to 30 systems in the third quarter of 2023, representing an increase of 63% year over year. Of those, 20 systems were under sales arrangements compared to 16 systems in the prior year.
IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,714 IMAX Systems operating as of Sept. 30, 2024, representing a market penetration of only 47%. The company ended third-quarter 2024 with a backlog of 472 IMAX systems.
As of Sept. 30, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets.
As of Sept. 30, 2024, the Company had 808 IMAX Systems operating in Greater China with an additional 254 systems in backlog.
Operating Details
Gross margin contracted 460 basis points (bps) to 55.8% in the third quarter of 2024. Content Solutions gross margin contracted 510 bps to 54.6%, while Technology Products and Services gross margin contracted 500 bps to 55.1% in the third quarter. All other gross margins expanded 520 bps to 77.7% in the reported quarter.
Adjusted EBITDA per credit facility was $35.5 million, up 21.1% year over year.
Selling, general & administrative expenses decreased 13.3% year over year to $31.4 million. Research & development expenses were negative $265 million.
IMAX reported an operating income of $19.41 million, down 11.9% year over year.
Balance Sheet & Cash Flow
Net cash provided by operating activities for year-to-date September 2024 was $59 million compared to $55 million in the prior year period. Third-quarter 2024 net cash provided by operating activities was $35 million compared to $29 million in the prior-year period with the increase reflecting improvements in working capital.
As of Sept. 30, 2024, the company’s available liquidity was $413 million. The company’s liquidity includes cash and cash equivalents of $105 million, $253 million in available borrowing capacity under the Credit Facility, and $56 million in available borrowing capacity under IMAX China’s revolving facilities. Total debt, excluding deferred financing costs, was $280 million as of Sept. 30, 2024.
As of June 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 March 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 June 30, 2024, total debt, excluding deferred financing fees, was $287 million compared with $302 million as of March 31, 2024.
For the nine months ended Sept. 30, 2024, the company repurchased 1,166,370 common shares at an average price of $13.99 for a total of $16 million, excluding commissions.
Guidance
IMAX expects full year 2024 global box office to be similar to 2023. 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 full year 2025 with at least high-single-digit revenue growth, driven by accelerating IMAX box office of more than $1.2 billion and mid-single-digit network growth. It projects total consolidated adjusted EBITDA margin to be ~40%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.02% due to these changes.
VGM Scores
At this time, Imax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Imax has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Imax (IMAX) Up 7.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Imax (IMAX - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Imax due for a pullback? 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 Q3 Earnings Beat, Revenues Fall Y/Y on Box Office Slump
IMAX Corporation reported third-quarter 2024 adjusted earnings of 35 cents per share, which beat the Zacks Consensus Estimate by a whopping 59% and remained flat year over year.
Total revenues of $91.4 million missed the Zacks Consensus Estimate by 2.88% and decreased 12% year over year.
Greater China is the Company’s largest market by revenues, with approximately 25% of overall revenues generated from its Greater China operations for the nine months ended Sept. 30, 2024. Greater China accounted for 23.3% of revenues. The metric declined 24.6% year over year to $21.3 million.
Category-wise, image Enhancement & Maintenance Services, technology rentals and finance income were down 22.2%, 29.9% and 9.8% year over year to $46.8 million, $16.1 million and $2.1, respectively. Technology sales revenues were up 44% year over year to $26.3 million.
Segment-wise, Content Solutions revenues declined 31.9% year over year to $30.12 million in the third quarter of 2024. Technology Products and Services revenues increased 3.2% year over year to $57.9 million. All Other revenues declined 4.6% year over year to $3.35 million.
Content Solutions Business Details
Within Content Solutions Business, Film Remastering and Distribution revenues decreased 37.2% year over year to $26.6 million. Other content solutions revenues surged 98.6% year over year to $3.44 million.
In the third quarter of 2024, box office generated by IMAX films totaled $239.5 million and represented IMAX’s third-highest third-quarter box office of all time. The decrease of $107.6 million, or 31%, versus the prior year’s comparative period of $347.1 million, was due to a less favorable mix of content globally, which included fewer blockbusters, compared to the prior year that included more than $180 million in box office from Oppenheimer, the company’s fifth highest grossing title of all time.
In the third quarter of 2024, IMAX box office was generated by the exhibition of 44 films and other content (37 new and seven originally released in a prior year), including Deadpool & Wolverine, which generated IMAX box office of more than $83 million.
Technology Products and Services Details
Within the Technology Products and Services segment, System Sales were $24.3 million, up 48.8% year over year. System Rental revenues decreased 30.3% year over year to $16.02 million.
Maintenance revenues were $15.44 million, up 7.6% year over year. Finance Income revenues were $2.13 million in the reported quarter, down 9.8% year over year.
Network Growth Statistics
As of Sept. 30, 2024, there were 1,788 IMAX Systems in 89 countries and territories, including 1,714 commercial multiplexes, 12 commercial destinations and 62 institutional locations in the company’s global network.
During the third quarter, the company installed 49 systems compared to 30 systems in the third quarter of 2023, representing an increase of 63% year over year. Of those, 20 systems were under sales arrangements compared to 16 systems in the prior year.
IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,714 IMAX Systems operating as of Sept. 30, 2024, representing a market penetration of only 47%. The company ended third-quarter 2024 with a backlog of 472 IMAX systems.
As of Sept. 30, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets.
As of Sept. 30, 2024, the Company had 808 IMAX Systems operating in Greater China with an additional 254 systems in backlog.
Operating Details
Gross margin contracted 460 basis points (bps) to 55.8% in the third quarter of 2024. Content Solutions gross margin contracted 510 bps to 54.6%, while Technology Products and Services gross margin contracted 500 bps to 55.1% in the third quarter. All other gross margins expanded 520 bps to 77.7% in the reported quarter.
Adjusted EBITDA per credit facility was $35.5 million, up 21.1% year over year.
Selling, general & administrative expenses decreased 13.3% year over year to $31.4 million. Research & development expenses were negative $265 million.
IMAX reported an operating income of $19.41 million, down 11.9% year over year.
Balance Sheet & Cash Flow
Net cash provided by operating activities for year-to-date September 2024 was $59 million compared to $55 million in the prior year period. Third-quarter 2024 net cash provided by operating activities was $35 million compared to $29 million in the prior-year period with the increase reflecting improvements in working capital.
As of Sept. 30, 2024, the company’s available liquidity was $413 million. The company’s liquidity includes cash and cash equivalents of $105 million, $253 million in available borrowing capacity under the Credit Facility, and $56 million in available borrowing capacity under IMAX China’s revolving facilities. Total debt, excluding deferred financing costs, was $280 million as of Sept. 30, 2024.
As of June 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 March 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 June 30, 2024, total debt, excluding deferred financing fees, was $287 million compared with $302 million as of March 31, 2024.
For the nine months ended Sept. 30, 2024, the company repurchased 1,166,370 common shares at an average price of $13.99 for a total of $16 million, excluding commissions.
Guidance
IMAX expects full year 2024 global box office to be similar to 2023. 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 full year 2025 with at least high-single-digit revenue growth, driven by accelerating IMAX box office of more than $1.2 billion and mid-single-digit network growth. It projects total consolidated adjusted EBITDA margin to be ~40%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.02% due to these changes.
VGM Scores
At this time, Imax has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Imax has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.