Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Imax Corp (IMAX, Financial) delivered one of the best years in its history in 2023, despite temporary setbacks from Hollywood strikes.
- The company has seen a significant increase in system sales and installations, with 39 IMAX systems installed in the first half of 2024 compared to 29 in the same period in 2023.
- Imax Corp (IMAX) signed a landmark deal with Wanda Film in China, covering up to 123 upgraded, new, and renewed IMAX systems.
- The company has a robust content slate for 2025 and 2026, with a record number of releases being filmed with IMAX cameras.
- Imax Corp (IMAX) continues to diversify its content portfolio, including the successful launch of the original documentary 'The Blue Angels', which scored the highest-grossing theatrical documentary opening year to date.
Negative Points
- The lower box office performance due to the Hollywood strikes impacted rental revenues and led to a decline in technology products and services revenue by 20% year over year.
- The company faces challenges in the Chinese market, with less visibility on movie release dates due to government control.
- There is uncertainty around the scalability and future success of the SSIMWAVE business, which is still in the development phase.
- The mix of system installations, including a higher level of joint revenue sharing arrangements, led to lower upfront system sales and impacted overall revenue.
- Despite strong financial performance, the company had to navigate through periods of disruption, including the pandemic and Hollywood strikes, which affected its operations.
Q & A Highlights
Q: Can you discuss the factors behind the installation improvement and the raised lower end of your guidance?
A: One of the reasons for the wide range this year was uncertainty around China, which has been clarified by the Wanda agreement. Increased signings have also given us more confidence. For example, the movie deal in Saudi Arabia for four theaters, three of which are opening this year, reflects the strong slate in '25 and '26. Exhibitors are motivated to open before the strong slate of IMAX titles next year. (Richard Gelfond, CEO)
Q: What is the potential for alternative content opportunities, particularly outside the United States?
A: We are in a test phase, experimenting with different kinds of content like the NBA Finals and the Olympics Opening Ceremony. The early results are promising, but it's too early to predict the ceiling. Leagues are interested in using IMAX to build global audiences, which could be a significant growth area. (Richard Gelfond, CEO)
Q: What is the impact of films shot with IMAX cameras on your box office share?
A: Films shot with IMAX cameras tend to index higher and generate more demand. Examples like Oppenheimer and Dune show significantly higher box office shares. We have 14 films in North America shot with IMAX cameras for next year, which is very promising. (Richard Gelfond, CEO)
Q: How should we think about the cadence of film remastering revenue?
A: Film remastering revenue is driven by box office performance, with a historical take rate of about 18%. As box office increases, remastering revenue will grow, contributing significantly to our margins and bottom line. (Natasha Fernandes, CFO)
Q: Can you elaborate on the recent success of the Blue Angels documentary and its future potential?
A: The Blue Angels documentary has been a significant contributor, with strong box office and streaming performance. We have several more documentaries in the pipeline, and the strategy is capital-light, often involving early sales of streaming rights to finance production. (Richard Gelfond, CEO)
Q: What are your expectations for the China box office in the second half of the year and into 2025?
A: We expect the second half of the year in China to be better than the first, with promising local language films and a stronger slate for next year's Chinese New Year. However, exact dating of films is less predictable due to government control. (Richard Gelfond, CEO)
Q: How is the relationship with studios given the growing number of blockbusters and alternative content?
A: Our relationship with studios is better than ever, driven by increased market share and demand for IMAX. We try to accommodate all our studio partners and are exploring ways to manage screen sharing effectively. (Richard Gelfond, CEO)
Q: Can you provide an update on SSIMWAVE and its growth potential?
A: SSIMWAVE continues to generate leads and has expanded its product offering to include live content. While it's too early to predict its success, we remain optimistic about its potential as a significant margin contributor. (Richard Gelfond, CEO)
Q: What are your thoughts on the Sphere experience in Las Vegas and its potential impact on IMAX?
A: The Sphere is an impressive experience, but its scalability outside Las Vegas is uncertain. We are exploring ways to create a similar, smaller-scale experience in IMAX theaters with less capital investment. (Richard Gelfond, CEO)
Q: How do you see the future of local language films in India and their potential for international markets?
A: Indian films tend to perform well internationally due to the large Indian expat community. We are focused on finding the right titles and expanding our network in India, which is currently underpenetrated. (Richard Gelfond, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
