IMAX Corporation Q2 FY2025 earnings call

• Delivered strong financial results in Q2 with 50% installation growth, over 40% box office growth, and 43% adjusted EBITDA margin.
• Opened 57 new and upgraded IMAX locations year-to-date, moving full year installations range to 150-160 worldwide.
• Q2 was the highest grossing domestic box office quarter ever, on track to achieve $1.2 billion full year box office.
• Had 8 consecutive film for IMAX releases this summer, with strong market share performance, e.g., Superman had 16% opening weekend indexing.
• Global network installs at high end of projection, with significant expansions in France, Netherlands, Japan, etc.
• Local language box office year-to-date near $230 million, expecting new record in Q3.
• Second half and 2026 slate includes films like Fantastic Four, Tron: Ares, Avatar sequels, etc.

Content Solutions revenues were $34 million, reflecting significant growth in IMAX Box Office of over 40%, with a gross margin of $22 million, increasing $6 million at a 66% margin. Technology Products and Services revenues were $56 million, up 9% year-over-year, with a gross margin of $30 million, up 17% year-over-year and at a 54% margin.

• Full year installations expected to be between 150 and 160 worldwide.
• Full year box office guidance remains $1.2 billion.
• Adjusted EBITDA margin expected to be in the low 40s.
• Strong signings and installations momentum with 124 year-to-date signings, close to equaling 2024's total.

• Competitive threats from U.S. theater chains talking about jointly marketing PLF screens, but IMAX believes its brand, technology, and filmmaker relationships are unmatched.
• Potential impact of lower ticket pricing trends on IMAX's premium positioning, though IMAX believes its consumers are willing to pay for the premium experience.

Q: Update on alternative content and theaters wired?

A: Using streaming technology now, more cost-effective; ~200 theaters wired before, now using streaming for alternative content.

Q: Confidence in installations continuing into 2026?

A: Some installations pulled forward due to strong '25 and '26 slate, but backlog is replenished with new theaters, pace is strong.

Q: Adjusted EBITDA guidance second half drivers?

A: Puts and takes include box office incrementality, mix of local vs Hollywood content, marketing spend decisions, e.g., Q1 heavy on local language was margin positive, Q4 may have higher marketing for big films.

Q: Relationship with domestic exhibitor community?

A: Excellent, big clients like AMC have deals, Regal signed big deal, IMAX has competitive advantages with technology and relationships.

Q: Backlogs and 70-millimeter film projectors?

A: Film theaters with 70-millimeter projectors perform well with IMAX film releases, e.g., Sinners and Oppenheimer, limited supply but economics are good.

Q: Cash flow conversion thinking?

A: Cash flow continues to strengthen, trending towards pre-COVID levels, operating leverage pushing through to cash, Q3 expected strong with Ne Zha 2 cash receipts.

Q: Explaining system rentals take rate compression?

A: Puts and takes include theater upgrades, writing off old assets and putting in new ones, but incrementality comes early in the 10-year term, mix of sales vs JV deals affects margin take rate.