IMAX Corp. Q1 FY2025 earnings call

Key Points

• IMAX got off to an excellent start in Q1 2025 with nearly $300 million in global box office, its best first quarter ever.
• Signed over 100 new and upgraded systems year to date. Chinese New Year box office was $182 million, triple the previous record.
• Local language films accounted for 68% of box office in Q1 2025, up from 12% in 2019. Hollywood slate ramping up with films like Avatar: Fire and Ash, Mission Impossible: The Final Reckoning, etc.
• Installed 21 systems worldwide in Q1, second-best first quarter ever for installs. Backlog at 516 systems, up 17% year over year.

In the first quarter, IMAX Corporation's Content Solutions revenues were $34 million, growing year over year with a gross margin of $24 million, up 7%. Technology Products and Services revenues were $51 million, up 17% year over year with a gross margin of $29 million, up 23%. Total revenues were $87 million, up 10% from the prior year first quarter. Total consolidated adjusted EBITDA was $37 million, increasing $5 million or 15% year over year, with an adjusted EBITDA margin of 42.7%, up over 200 basis points year over year.

Forward-Looking

• Expect full year global box office to be a record $1.2 billion.
• Adjusted EBITDA margin is expected to remain strong. Tax rate expected to normalize based on historical trends. Second quarter off to strong start with good box office from Minecraft and Sinners.

Risks

• Potential moderate reduction in Hollywood film imports to China, but management believes it will target lower potential films and won't materially impact IMAX.
• Economic slowdown in China could pressure consumer attendance, but no immediate concerns seen yet.
• Windowing issues in the industry, but management doesn't see it as material to IMAX's business.

Q: Concerns about China and impact on IMAX slate?

A: Richard Gelfond states China is positive, moderate film reduction won't materially impact IMAX.

Q: Gating factors for more films shot with IMAX cameras?

A: Richard Gelfond says it's more about slots and right content, not purely camera availability.

Q: Visibility of films in China?

A: Rich mentions strong visibility with multiple local language films planned.

Q: Chinese box office during recession?

A: Richard Gelfond notes Q1 was strong during slow economic period in China, no concerns seen.

Q: Margins with more film for IMAX titles?

A: Natasha Fernandes talks about incrementality and outsourcing/cheaper marketing through social media