IMAX CORPORATION

EXHIBIT 99.1

 

LOGO

IMAX CORPORATION

2525 Speakman Drive

Mississauga, Ontario, Canada L5K 1B1

Tel: (905) 403-6500 Fax: (905) 403-6450

www.imax.com

IMAX CORPORATION REPORTS THIRD QUARTER 2018 RESULTS

Strategic Focus on Core Business Drives Strong Net Income Jump

HIGHLIGHTS

 

   

Delivered Q3 2018 earnings per share of $0.08, compared to a loss per share of $0.01 last year. Adjusted net income per share was $0.14, compared to $0.08 in Q3 2017.

 

   

Strong box office, continued cost discipline and focus on the core business helped drive a 670-basis point increase in operating margins, the Company’s third consecutive quarter of margin expansion.

 

   

Greater China box office increased 30.5% in the third quarter, compared to last year, driven by compelling slate of Hollywood and Chinese local language blockbusters.

 

   

Since launching its best-in-class IMAX with Laser product in April, the Company has signed agreements for more than 200 systems from exhibitors around the world.

NEW YORK – October 25, 2018 – IMAX Corporation (NYSE:IMAX) today reported third quarter 2018 revenues of $82.1 million, gross profit of $42.2 million and net income attributable to common shareholders of $5.0 million, or $0.08 per diluted share. Adjusted net income attributable to common shareholders for the third quarter was $9.0 million, or $0.14 per diluted share. Adjusted EBITDA was $25.8 million. For reconciliations of reported results to non-GAAP financial results, and for the definition and reconciliation of Adjusted EBITDA, please see the end of this press release.

“Our momentum from the first half of 2018 continued into the third quarter. Compelling blockbuster content from Hollywood and China, coupled with our ongoing focus on controlling costs helped drive our third consecutive quarter of operating margin expansion,” said IMAX CEO Richard L. Gelfond. “Looking ahead, we expect many of the factors contributing to our strong performance this year to benefit the Company into 2019 and beyond including the rapidly evolving media landscape. The convergence of streaming and traditional media platforms creates interesting opportunities for IMAX.

We are increasingly seeing content creators seeking to attract top filmmakers, eventize the launch of new content and broaden the consumer reach of that content. Our 1,400-plus theatre network across nearly 80 countries affords filmmakers the opportunity to launch their content in a highly-differentiated, premium format. We are in active discussions across these converging platforms and believe IMAX has a unique opportunity to influence the emerging trends in our industry and be a direct beneficiary of the evolving landscape.”

Third Quarter 2018 Results

Network Update

During the quarter, the Company installed 37 theater systems, 36 of which were for new theater locations. The total IMAX® theater network consisted of 1,443 systems as of September 30, 2018, of which 1,346 were in commercial multiplexes. There were 635 theaters in backlog as of September 30, 2018, compared to the 545 in backlog as of September 30, 2017.

 

1


IMAX also signed contracts for 25 new theaters and 12 upgrades in the third quarter of 2018. For a breakdown of theater system signings, installations, network and backlog by type for the third quarter of 2018, please see the end of this press release.

Box Office Update

Gross box office from IMAX DMR® films was $206.5 million in the third quarter of 2018 compared to $218.8 million in the third quarter of 2017. Gross box office was generated primarily by the exhibition of 29 films (24 new and 5 carryovers), as compared to 24 films (17 new and 7 carryovers) exhibited in the third quarter of 2017.

Third Quarter Consolidated Results

The gross margin across all segments in the third quarter of 2018 was $42.2 million, or 51.4% of total revenues, compared to $39.9 million, or 40.4% of total revenues, in the third quarter of 2017. Operating expenses (which includes SG&A, excluding stock-based compensation, plus R&D) were $26.0 million in the quarter.

Third Quarter Segment Results

Network Business

 

   

Network business revenues were $36.7 million in the quarter, compared with $42.6 million in the prior-year period. Gross margin for the network business were 61.4% in the most recent quarter, compared to 67.0% in the prior-year period.

 

   

IMAX DMR revenues were $22.4 million in the third quarter of 2018, compared to $26.0 million in the third quarter of 2017. Gross margin for the IMAX DMR segment was 64.6%, compared to 69.7% in the prior-year comparative period.

 

   

Revenue from joint revenue-sharing arrangements were $14.3 million in the quarter, compared with $15.6 million in the prior-year period. Gross margin for joint revenue-sharing arrangements was 56.4%, compared to 60.1% in the prior-year comparative period.

Theater Business

 

   

Theater business segment revenues were $40.7 million in the quarter, compared with $43.5 million in the prior-year period, primarily reflecting the installation of four fewer sales-type theaters.

 

   

Gross margin on sales and sales-type leases was 49.6% compared with 60.7% in the year-ago period. The decrease in the recent period is primarily the result of four fewer system installations compared to the prior year period.

In addition to the Company’s core revenue segments, new business revenue was $1.3 million in the quarter, compared to $8.9 million in the same period last year. New business revenues in 2017 were driven primarily by the launch of Marvel’s Inhumans. The company recognized a gross loss of $0.3 million in the quarter, compared to a gross loss of $11.9 million in the third quarter of 2017.

First Nine Months Results

Through the first nine months of 2018, the Company generated $265.4 million of total revenue, a 4.0% increase compared to the same period last year. Gross profit of $153.3 million resulted in a 57.7% gross margin, which compares to 49.0% in 2017. Net income of $29.8 million compares to the $3.8 million generated in 2017, while adjusted net income to common shareholders increased 121.4% to $41.4 million. The Company’s financial performance through the first nine months is driven by its strong box office performance, focus on the core business and continued cost discipline.

 

2


Supplemental Materials

For more information about the Company’s results, please refer to the IMAX Investor Relations website located at investors.imax.com.

Investor Relations Website and Social Media

On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at www.imax.com/content/investor-relations. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week lag. In addition, the Company maintains a Twitter account: @IMAX_Investors. The Company intends to use Twitter to disclose the box office information, as well as other information that may be of interest to the Company’s investor community.

The information posted on the Company’s website and/or via its Twitter account may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company’s website and its Twitter account in addition to the Company’s press releases, SEC filings and public conference calls and webcasts.

Conference Call

The Company will host a conference call today at 8:30AM ET to discuss its third quarter 2018 financial results. This call is being webcast by Nasdaq and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (877) 260-1479 approximately 5 to 10 minutes before the call begins. Other international callers should dial (334) 323-0522. The conference ID for the call is 9002042. A replay of the call will be available via webcast at investors.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 9002042.

About IMAX Corporation

IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you’ve never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX’s network is among the most important and successful theatrical distribution platforms for major event films around the globe.

IMAX is headquartered in New York, Toronto and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of September 30, 2018, there were 1,443 IMAX theater systems (1,346 commercial multiplexes, 13 commercial destinations, 84 institutional) operating in 79 countries as of September 30, 2018. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchange under the stock code “HK.1970.”

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience®, IMAX Is Believing® and IMAX nXos® are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

###

This press release contains forward looking statements that are based on IMAX management’s assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the “Company”) and expectations regarding the Company’s future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the

 

3


circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company’s growth and operations in China; the performance of IMAX DMR films; the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security; risks related to the Company’s inability to protect the Company’s intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from the Company’s restructuring initiative; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

For additional information please contact:

 

Investors:

IMAX Corporation, New York

Michael K. Mougias

212-821-0187

mmougias@imax.com

  

Media:

IMAX Corporation, New York

Amanda Collins

212-821-0155

abcollins@imax.com

 

 

4


Additional Information

Signings and Installations

 

September 30, 2018

 

     Three Months
Ended September 30,
 
Theater Signings:    2018     2017  

Full new sales and sales-type lease arrangements

     22       17  

New traditional joint revenue sharing arrangements

     1       —    

New hybrid joint revenue sharing lease arrangements

     2       —    
  

 

 

   

 

 

 

Total new theaters

     25       17  

Upgrades of IMAX theater systems

     12       —    
  

 

 

   

 

 

 

Total Theater Signings

     37       17  
  

 

 

   

 

 

 
     Three Months
Ended September 30,
 
Theater Installations:    2018     2017  

Full new sales and sales-type lease arrangements

     15       19  

New traditional joint revenue sharing arrangements

     15       25  

New hybrid joint revenue sharing lease arrangements

     6       5  
  

 

 

   

 

 

 

Total new theaters

     36       49  

Upgrades of IMAX theater systems

     1       2  
  

 

 

   

 

 

 

Total Theater Installations

     37       51  
  

 

 

   

 

 

 
     Three Months
Ended September 30,
 
Theater Backlogs:    2018     2017  

New sales and sales-type lease arrangements

     189 (1)       170  

New joint revenue sharing arrangements

    

Hybrid lease arrangements

     119       130  

Traditional arrangements

     327       245  
  

 

 

   

 

 

 

Total Theater Backlog

     635 (2)       545 (3)  
  

 

 

   

 

 

 
     Three Months
Ended September 30,
 
Theater Network:    2018     2017  

Commercial Multiplex Theaters:

    

Sales and sales-type lease arrangements

     589       501  

Traditional joint revenue sharing arrangements

     641       575  

Hybrid joint revenue sharing lease arrangements

     116       127  
  

 

 

   

 

 

 

Total Commercial Multiplex Theaters

     1,346       1,203  

 

Commercial Destination Theaters

     13       13  

Institutional Theaters

     84       86  
  

 

 

   

 

 

 

Total Theater Network

     1,443       1,302  
  

 

 

   

 

 

 

 

 

(1)

Includes 22 hybrid sales theater systems which were previously classified under joint revenue sharing arrangements – hybrid sales arrangements.

(2)

Includes 93 new laser projection system configurations, including 112 upgrades of existing locations to laser projection system configurations (110 of these 112 are for the new next generation laser projection system configurations).

(3)

Includes 25 new laser projection system configurations and three upgrades of existing locations to laser projection system configurations.

 

5


IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except per share amounts)

(Unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  

Revenues

        

Equipment and product sales

   $ 25,301     $ 30,714     $ 60,182     $ 63,593  

Services

     39,440       49,817       138,971       133,264  

Rentals

     14,479       15,849       57,805       51,143  

Finance income

     2,888       2,420       8,479       7,214  
  

 

 

   

 

 

   

 

 

   

 

 

 
     82,108       98,800       265,437       255,214  
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses applicable to revenues

        

Equipment and product sales

     14,099       14,270       29,620       32,352  

Services

     18,824       37,763       62,808       79,678  

Rentals

     6,994       6,899       19,722       18,086  
  

 

 

   

 

 

   

 

 

   

 

 

 
     39,917       58,932       112,150       130,116  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     42,191       39,868       153,287       125,098  

Selling, general and administrative expenses

     26,780       25,540       87,471       85,071  

(including share-based compensation expense of $4.8 million and $15.5 million for the three and nine months ended September 30, 2018 (2017 — $5.2 million and $16.2 million, respectively))

        

Research and development

     4,028       4,626       11,542       14,638  

Asset impairments

     —         —         —         1,225  

Amortization of intangibles

     1,039       802       2,896       2,182  

Receivable provisions, net of recoveries

     861       963       1,667       2,088  

Legal arbitration award

     —         —         7,500       —    

Exit costs, restructuring charges and associated impairments

     —         3,437       1,158       13,695  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     9,483       4,500       41,053       6,199  

Interest income

     631       253       1,121       761  

Interest expense

     (958     (528     (2,303     (1,418
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations before income taxes

     9,156       4,225       39,871       5,542  

Provision for income taxes

     (1,452     (1,009     (9,540     (885

Loss from equity-accounted investments, net of tax

     (202     (318     (507     (837
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     7,502       2,898       29,824       3,820  

Less: net income attributable to non-controlling interests

     (2,482     (3,748     (8,674     (6,307
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common shareholders

   $ 5,020     $ (850   $ 21,150     $ (2,487
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common shareholders – basic and diluted:

 

     

Net income (loss) per share — basic and diluted

   $ 0.08       (0.01   $ 0.33     $ (0.04
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares outstanding (000’s):

        

Basic

     62,551       64,736       63,466       65,624  

Fully Diluted

     62,793       64,803       63,580       65,834  

Additional Disclosure:

        

Depreciation and amortization(1)

   $ 13,950     $ 14,413     $ 41,984     $ 39,767  

 

(1)

Includes $0.4 million and $1.0 million of amortization of deferred financing costs charged to interest expense for the three and nine months ended September 30, 2018, respectively (2017—$0.2 million and $0.4 million, respectively).

 

6


IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)

(Unaudited)

 

     September 30,
2018
    December 31,
2017
 

Assets

    

Cash and cash equivalents

   $ 133,615     $ 158,725  

Accounts receivable, net of allowance for doubtful accounts of $3,192 (December 31, 2017 — $1,613)

     106,117       130,546  

Financing receivables

     126,318       129,494  

Inventories

     52,614       30,788  

Prepaid expenses

     10,442       7,549  

Film assets

     16,220       5,026  

Property, plant and equipment

     276,090       276,781  

Other assets

     55,173       26,757  

Deferred income taxes

     27,326       30,708  

Other intangible assets

     30,688       31,211  

Goodwill

     39,027       39,027  
  

 

 

   

 

 

 

Total assets

   $ 873,630     $ 866,612  
  

 

 

   

 

 

 

Liabilities

    

Bank indebtedness

   $ 17,625     $ 25,357  

Accounts payable

     15,445       24,235  

Accrued and other liabilities

     104,983       100,140  

Deferred revenue

     114,075       113,270  
  

 

 

   

 

 

 

Total liabilities

     252,128       263,002  
  

 

 

   

 

 

 

Commitments and contingencies

    

Non-controlling interests

     8,029       1,353  
  

 

 

   

 

 

 

Shareholders’ equity

    

Capital stock common shares — no par value. Authorized — unlimited number. 62,760,262 issued and 62,585,192 outstanding (December 31, 2017 — 64,902,201 issued and 64,695,550 outstanding)

     431,290       445,797  

Less: Treasury stock, 175,070 shares at cost (December 31, 2017 — 206,651)

     (3,597     (5,133

Other equity

     184,133       175,300  

Accumulated deficit

     (70,888     (87,592

Accumulated other comprehensive loss

     (4,185     (626
  

 

 

   

 

 

 

Total shareholders’ equity attributable to common shareholders

     536,753       527,746  

Non-controlling interests

     76,720       74,511  
  

 

 

   

 

 

 

Total shareholders’ equity

     613,473       602,257  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 873,630     $ 866,612  
  

 

 

   

 

 

 

 

7


IMAX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(Unaudited)

 

     Nine Months Ended
September 30,
 
     2018     2017  

Cash provided by (used in):

    

Operating Activities

    

Net income

   $ 29,824     $ 3,820  

Adjustments to reconcile net income to cash from operations:

    

Depreciation and amortization

     41,984       39,767  

Write-downs, net of recoveries

     2,541       25,620  

Change in deferred income taxes

     (2,849     (5,145

Stock and other non-cash compensation

     18,240       18,916  

Unrealized foreign currency exchange loss (gain)

     406       (863

Loss from equity-accounted investments

     209       539  

Loss on non-cash contribution to equity-accounted investees

     298       298  

Investment in film assets

     (22,240     (30,686

Changes in other non-cash operating assets and liabilities

     (343     11,153  
  

 

 

   

 

 

 

Net cash provided by operating activities

     68,070       63,419  
  

 

 

   

 

 

 

Investing Activities

    

Purchase of property, plant and equipment

     (7,367     (16,356

Investment in joint revenue sharing equipment

     (22,710     (35,538

Acquisition of other intangible assets

     (3,198     (3,939

Investment in new business ventures

     —         (1,500
  

 

 

   

 

 

 

Net cash used in investing activities

     (33,275     (57,333
  

 

 

   

 

 

 

Financing Activities

    

Increase in bank indebtedness

     35,000       —    

Repayment of bank indebtedness

     (40,667     (1,500

Repurchase of common shares

     (46,452     (46,138

Treasury stock purchased for future settlement of restricted share units

     (3,597     (4,386

Taxes withheld and paid on employee stock awards vested

     (1,437     (218

Settlement of restricted share units and options

     (2,567     (15,366

Issuance of subsidiary shares to a non-controlling interest

     7,546       —    

Common shares issued—stock options exercised

     1,017       14,419  

Dividends paid to non-controlling shareholders

     (6,934     —    

Credit facility amendment fees paid

     (1,909     —    
  

 

 

   

 

 

 

Net cash used in financing activities

     (60,000     (53,189
  

 

 

   

 

 

 

Effects of exchange rate changes on cash

     95       52  
  

 

 

   

 

 

 

Decrease in cash and cash equivalents during period

     (25,110     (47,051

Cash and cash equivalents, beginning of period

     158,725       204,759  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 133,615     $ 157,708  
  

 

 

   

 

 

 

 

8


IMAX CORPORATION

SELECTED FINANCIAL DATA

In accordance with United States Generally Accepted Accounting Principles

(in thousands of U.S. dollars)

The Company has four primary reporting groups identified by nature of product sold or service provided: (1) Network Business, representing variable revenue generated by box-office results and which includes the reportable segments of IMAX DMR and contingent rent from the JRSAs and IMAX systems segments; (2) Theater Business, representing revenue generated by the sale and installation of theater systems and maintenance services, primarily related to the IMAX Systems and Theater System Maintenance reportable segments, and also includes fixed hybrid revenues and upfront installation costs from the JRSA segment; (3) New Business, which includes content licensing and distribution fees associated with our original content investments, virtual reality initiatives, IMAX Home Entertainment, and other business initiatives that are in the development and/or start-up phase, and (4) Other; which includes the film post-production and distribution segments and certain IMAX theaters that the Company owns and operates, camera rentals and other miscellaneous items.

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  

Revenue

        

Network Business

        

IMAX DMR

   $ 22,372     $ 25,971     $ 85,586     $ 77,136  

Joint revenue sharing arrangements – contingent rent

     14,327       15,572       56,919       49,702  

IMAX systems – contingent rent

     —         1,094       —         2,573  
  

 

 

   

 

 

   

 

 

   

 

 

 
     36,699       42,637       142,505       129,411  
  

 

 

   

 

 

   

 

 

   

 

 

 

Theater Business

        

IMAX systems

        

Sales and sales-type leases

     20,427       25,111       50,545       48,178  

Ongoing fees and finance income

     2,971       2,646       8,982       7,844  

Joint revenue sharing arrangements – fixed fees

     2,798       2,658       3,821       4,536  

Theater system maintenance

     12,415       11,511       37,462       33,459  

Other theater

     2,076       1,586       5,707       5,449  
  

 

 

   

 

 

   

 

 

   

 

 

 
     40,687       43,512       106,517       99,466  
  

 

 

   

 

 

   

 

 

   

 

 

 

New Business

     1,275       8,917       4,999       11,508  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other

        

Film distribution and post-production

     3,062       2,698       9,156       11,369  

Other

     385       1,036       2,260       3,460  
  

 

 

   

 

 

   

 

 

   

 

 

 
     3,447       3,734       11,416       14,829  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     $82,108       $98,800       $265,437       $255,214  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

        

Network Business

        

IMAX DMR(1)

   $ 14,461     $ 18,114     $ 57,523     $ 52,578  

Joint revenue sharing arrangements – contingent rent(1)

     8,081       9,351       39,441       33,271  

IMAX systems – contingent rent

     —         1,094       —         2,573  
  

 

 

   

 

 

   

 

 

   

 

 

 
     22,542       28,559       96,964       88,422  
  

 

 

   

 

 

   

 

 

   

 

 

 

Theater Business

        

IMAX systems

        

Sales and sales-type leases

     10,141       15,246       28,648       28,190  

Ongoing fees and finance income

     2,923       2,522       8,839       7,582  

Joint revenue sharing arrangements – fixed fees(1)

     529       624       776       887  

Theater system maintenance

     5,996       4,624       17,289       13,306  

Other theater

     581       247       1,099       1,082  
  

 

 

   

 

 

   

 

 

   

 

 

 
     20,170       23,263       56,651       51,047  
  

 

 

   

 

 

   

 

 

   

 

 

 

New Business

     (298     (11,912     139       (13,432
  

 

 

   

 

 

   

 

 

   

 

 

 

Other

        

Film distribution and post-production(1)

     260       402       320       (262

Other

     (483     (444     (787     (677
  

 

 

   

 

 

   

 

 

   

 

 

 
     (223     (42     (467     (939
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

     $42,191       $39,868       $153,287       $125,098  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

9


 

 

(1)

IMAX DMR segment margins include marketing costs of $3.1 million and $13.7 million for the three and nine months ended September 30, 2018, respectively (2017 – $2.5 million and $9.8 million, respectively). Joint revenue sharing arrangements segment margins include advertising, marketing and commission costs of $1.0 million and $2.2 million for the three and nine months ended September 30, 2018, respectively (2017 – $1.3 million and $2.5, respectively). IMAX system sales and sales-type lease segment margins include marketing and commission costs of $0.8 million and $2.0 million for the three and nine months ended September 30, 2018, respectively (2017 – $1.1 million and $2.2 million). Film distribution and post production segment margins include marketing expense of less than $0.1 million and $2.0 million for the three and nine months ended September 30, 2018 (2017 – an expense of less than $0.1 million and recovery of $0.7 million, respectively).

IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Non-GAAP Financial Measures:

In this release, the Company presents adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share, EBITDA and adjusted EBITDA as supplemental measures of performance of the Company, which are not recognized under U.S. GAAP. The Company presents adjusted net income and adjusted net income per diluted share because it believes that they are important supplemental measures of its comparable controllable operating performance and it wants to ensure that its investors fully understand the impact of its stock-based compensation (net of any related tax impact) on net income. In addition, the Company presents adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share because it believes that they are important supplemental measures of its comparable financial results and could potentially distort the analysis of trends in business performance and it wants to ensure that its investors fully understand the impact of net income attributable to non-controlling interests and its stock-based compensation (net of any related tax impact) in determining net income attributable to common shareholders. Management uses these measures to review operating performance on a comparable basis from period to period. However, these non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share should be considered in addition to, and not as a substitute for, net income and net income attributable to common shareholders and other measures of financial performance reported in accordance with U.S. GAAP.

Management uses “EBITDA”, as such term is defined in the Company’s credit agreement (and which is referred to herein as “Adjusted EBITDA per Credit Facility”, as the credit agreement includes additional adjustments beyond interest, taxes, depreciation and amortization). Adjusted EBITDA per Credit Facility (each as defined below) should not be construed as substitutes for net income or as better measures of liquidity as determined in accordance with U.S. GAAP. The Company believes that Adjusted EBITDA per Credit Facility is relevant and useful information widely used by analysts, investors and other interested parties in the Company’s industry.

 

     For the
3 Months Ended
September 30, 2018
    For the
12 Months Ended
September 30, 2018(1)
 
(In thousands of U.S. Dollars)             

Net income

   $ 7,502     $ 38,522  

Add (subtract):

    

Provision for income taxes

     1,452       25,445  

Interest expense, net of interest income

     327       1,440  

Depreciation and amortization, including film asset amortization

     13,950       69,025  
  

 

 

   

 

 

 

EBITDA

   $ 23,231     $ 134,432  

Stock and other non-cash compensation

     6,320       23,042  

Write-downs, net of recoveries including asset impairments and receivable provisions

     855       6,489  

Exit costs, restructuring charges and associated impairments

     —         3,637  

Legal arbitration award

     —         7,500  

Loss from equity accounted investments

     202       373  
  

 

 

   

 

 

 

Adjusted EBITDA before non-controlling interests(2)

   $ 30,608     $ 175,473  

Adjusted EBITDA attributable to non-controlling interests

     (4,789     (22,682
  

 

 

   

 

 

 

Adjusted EBITDA per Credit Facility

   $ 25,819   $ 152,791
  

 

 

   

 

 

 

Adjusted EBITDA per Credit Facility, excluding impact from “Marvel’s Inhumans”

   $ 25,819   $ 128,922
  

 

 

   

 

 

 

Adjusted revenues attributable to common shareholders(3)

   $ 72,333     $ 352,434  
  

 

 

   

 

 

 

Adjusted EBITDA margin, excluding impact from “Marvel’s Inhumans”

     35.7     36.6
  

 

 

   

 

 

 

 

10


Adjusted EBITDA per Credit Facility of $25.8 million and $152.8 million for the three and twelve months ended September 30, 2018 respectively, includes the impact of the Company’s investment in “Marvel’s Inhumans”, which resulted in a $nil and $1.1 million loss, respectively. However, as permitted by the Credit Facility, this loss was offset by addbacks of $nil and $13.3 million for amortization and by addbacks of $nil and $11.7 million for impairment charges relating to the investment, in each case for the three and twelve months ended September 30, 2018, respectively. The net effect of these addbacks was to increase Adjusted EBITDA per Credit Facility by $nil and $23.9 million for the three and twelve months ended September 30, 2018, respectively. This investment represents the Company’s first foray into a commercial television property, and therefore the Adjusted EBITDA per Credit Facility metric presented above may not be reflective of the Company’s typical operational activity. Further, the Company does not expect to make meaningful direct investments in original content going forward. As a result, the Company is also presenting Adjusted EBITDA per Credit Facility excluding the impact of “Marvel’s Inhumans” to better facilitate comparisons to prior and future periods.

 

 

(1)

Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility.

 

(2)

The Adjusted EBITDA per Credit Facility calculation specified for purpose of the minimum Adjusted EBITDA covenant excludes the reduction in Adjusted EBITDA from the Company’s non-controlling interests.

 

(3)         3 months ended
September 30, 2018
    12 months ended
September 30, 2018
 
   Total revenues      $ 82,108       $ 390,989  
   Greater China revenues    $ 30,480       $ 120,306    
   Non-controlling interest ownership percentage(4)      32.07       32.05  
     

 

 

     

 

 

   
   Deduction for non-controlling interest share of revenues        (9,775       (38,555
       

 

 

     

 

 

 
   Adjusted revenues attributable to common shareholders      $ 72,333       $ 352,434  
       

 

 

     

 

 

 
(4)

Weighted average ownership percentage for change in non-controlling interest share

 

11


IMAX CORPORATION

OTHER INFORMATION

(in thousands of U.S. dollars)

Adjusted Net Income and Adjusted Diluted Per Share Calculations – Quarter Ended September 30, 2018 vs. 2017:

The Company reported net income of $7.5 million, which calculates to $0.12 per basic and diluted share, for the third quarter of 2018 as compared to a net income of $2.9 million, $0.04 per basic and diluted share for the third quarter of 2017.

Net income for the third quarter of 2018 includes a $5.6 million charge, or $0.08 per diluted share (2017 — $5.7 million or $0.09 per diluted share), for stock-based compensation. In the third quarter of 2018, the Company did not have any additional expenses for exit costs, restructuring charges and associated impairments (2017—$3.4 million or $0.05 per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, and the related tax impact of these adjustments, was $11.6 million, or $0.18 per diluted share, for the third quarter of 2018 as compared to adjusted net income of $9.2 million, or $0.14 per diluted share, for the third quarter of 2017.

The Company reported net income attributable to common shareholders of $5.0 million, or $0.08 per basic and diluted share for the third quarter of 2018 (2017 — net loss of $0.9 million, or a loss of $0.01 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, and the related tax impact of these adjustments, was $9.0 million, or $0.14 per diluted share, for the third quarter of 2018 as compared to adjusted net income attributable to common shareholders of $5.2 million, or $0.08 per diluted share, for the third quarter of 2017.

A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:

 

     Quarter Ended September 30,  
  

 

 

 
(In thousands of U.S. dollars, except per share amounts)    2018     2017  
     Net Income     Diluted EPS     Net Income     Diluted EPS  

Reported net income

   $ 7,502     $ 0.12     $ 2,898     $ 0.04  

Adjustments:

        

Stock-based compensation

     5,562       0.08       5,739       0.09  

Exit costs, restructuring charges and associated impairments

     —         —         3,437       0.05  

Tax impact on items listed above

     (1,500     (0.02     (2,855     (0.04
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     11,564       0.18       9,219       0.14  

Net income attributable to non-controlling interests

     (2,482     (0.04     (3,748     (0.06

Stock-based compensation (net of tax of less than $0.1 million and $0.1 million, respectively)

     (75     —         (263     —    

Exit costs, restructuring charges and associated impairments (net of tax of $nil and less than $0.1 million, respectively)

     —         —         (11     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to common shareholders

   $ 9,007     $ 0.14     $ 5,197     $ 0.08  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average diluted shares outstanding

       62,793         64,803  
    

 

 

     

 

 

 

 

12


Adjusted Net Income and Adjusted Diluted Per Share Calculations – Nine Months Ended September 30, 2018 vs. 2017:

The Company reported net income of $29.8 million, or $0.47 per basic and diluted share, for the nine months ended September 30, 2018 as compared to net income of $3.8 million, or $0.06 per basic and diluted share for the nine months ended September 30, 2017.

Net income for the nine months ended September 30, 2018 includes a $17.2 million charge, or $0.26 per diluted share (2017 — $17.8 million or $0.27 per diluted share) for stock-based compensation, and a $1.2 million charge, or $0.02 per diluted share for exit costs, restructuring charges and associated impairments (2017 — $13.7 million, or $0.20 per diluted share), and a $7.5 million charge, or $0.12 per diluted share for a legal arbitration award related to one of the Company’s litigation matters from 2006 (2017—$nil, or $nil per diluted share).

Adjusted net income, which consists of net income excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $50.4 million, or $0.79 per diluted share, for the nine months ended September 30, 2018 as compared to adjusted net income of $25.7 million, or $0.38 per diluted share, for the nine months ended September 30, 2017.

The Company reported a net income attributable to common shareholders of $21.2 million, or $0.33 per basic and diluted share for the nine months ended September 30, 2018 (2017 — net loss of $2.5 million, or a loss of $0.04 per basic and diluted share).

Adjusted net income attributable to common shareholders, which consists of net income attributable to common shareholders excluding the impact of stock-based compensation, exit costs, restructuring charges and associated impairments, the legal arbitration award and the related tax impact, was $41.4 million, or $0.65 per diluted share, for the nine months ended September 30, 2018 as compared to adjusted net income attributable to common shareholders of $18.7 million, or $0.28 per diluted share, for the nine months ended September 30, 2017.

A reconciliation of net income and net income attributable to common shareholders, the most directly comparable U.S. GAAP measure, to adjusted net income, adjusted net income per diluted share, adjusted net income attributable to common shareholders and adjusted net income attributable to common shareholders per diluted share is presented in the table below:

 

     Nine Months Ended September 30,  
  

 

 

 
(In thousands of U.S. dollars, except per share amounts)    2018     2017  
     Net Income     Diluted EPS     Net Income     Diluted EPS  

Reported net income

   $ 29,824     $ 0.47     $ 3,820     $ 0.06  

Adjustments:

        

Stock-based compensation

     17,165       0.26       17,796       0.27  

Exit costs, restructuring charges and associated impairments

     1,158       0.02       13,695       0.20  

Legal arbitration award

     7,500       0.12       —         —    

Tax impact on items listed above

     (5,287     (0.08     (9,578     (0.15
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

     50,360       0.79       25,733       0.38  

Net income attributable to non-controlling interests

     (8,674     (0.14     (6,307     (0.10

Stock-based compensation (net of tax of $0.1 million and $0.2 million, respectively)

     (279     —         (544     —    

Exit costs, restructuring charges and associated impairments (net of tax of $nil and $0.1 million, respectively)

     —         —         (179     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income attributable to common shareholders

   $ 41,407     $ 0.65     $ 18,703     $ 0.28  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average diluted shares outstanding

       63,580         65,834  
    

 

 

     

 

 

 

 

13


Free Cash Flow:

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the consolidated statements of cash flows). Cash provided by operating activities consist of net income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company’s after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented in the table below:

 

     For the
Three months ended
September 30, 2018
    For the
Nine months ended
September 30, 2018
 
(In thousands of U.S. Dollars)             

Net cash provided by operating activities

   $ 21,416     $ 68,070  

Net cash used in investing activities

     (14,483     (33,275
  

 

 

   

 

 

 

Net cash flow

   $ 6,933     $ 34,795  
  

 

 

   

 

 

 

 

 

14

View differences made from one to another to evaluate Imax Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Imax Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Intrinsic Value Calculator


Intrinsic Value Calculator
Screenshot of intrinsic value for AT&T (2019)
Last10K.com Member Feature

Our Intrinsic Value calculator estimates what an entire company is worth using up to 10 years of financial ratios to determine if a stock is overvalued or not

Continue

Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
Last10K.com Member Feature

Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

Continue

Get a Better Picture of a Company's Performance


Financial Ratios
Available Financial Ratios
Last10K.com Member Feature

See how over 70 Growth, Profitability and Financial Ratios perform over 10 Years

Continue

Log in with your credentials

or    

Forgot your details?

Create Account