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IMAX Corp (IMAX) Q2 Earnings Decline Y/Y, Revenues Miss

Zacks Equity Research

Mississauga, Canada-based IMAX Corporation IMAX reported mixed results in the second quarter of 2017. The company reported earnings of 8 cents per share, which compared favorably with the Zacks Consensus Estimate of a loss of 2 cents. Earnings however declined 11.11% on a year-over-year basis.

Total revenue in the second quarter of 2017 was $87.8 million, down 4.34% year over year. The figure also missed the Zacks Consensus Estimate of $91.8 million. Adjusted EBITDA margin in the reported quarter was 37.9%. The company’s top line was hurt by below-par performance by some films in the second quarter.

Category-wise, Equipment and product revenues were $21.3 million, down 19.46%. Services revenues totaled $44.6 million, up 7.77%. Rentals revenues totaled $19.4 million, down 6.33%, while Finance income revenues were $2.4 million, up marginally.

Segmental Results

IMAX Corp. Theater Business generated revenues of $32.7 million, down 15.76% year over year. Within this segment, IMAX system sales and sales-type leases were $16.1 million, down 13.86%. Ongoing fees and finance income was $2.6 million, down 13.76%. Joint revenue sharing arrangements-fixed fees was $1.4 million, down 67.69%. Theatre system maintenance was $10.9 million, up 10.00%, while Other Theatre revenues fell 40.53% to $1.7 million.

Network Business generated revenues of $47.4 million, down 1.41% year over year. Within this segment, IMAX DMR was $27.7 million, up 1.25%. Joint revenue sharing arrangements-contingent rent was $18.9 million, reflecting a decline of 3.09% and IMAX systems-contingent rent deteriorated 34.76% to $0.8 million.

Other segments generated revenues of $6.2 million, up 34.28% year over year. Within this segment, Film distribution and post-production soared a massive 96.26% year over year to $5.1 million and Other revenues plunged 43.46% to $1.2 million.

Imax Corporation Price, Consensus and EPS Surprise


Imax Corporation Price, Consensus and EPS Surprise | Imax Corporation Quote

Liquidity & Share Buyback

IMAX Corp. repurchased $46 million shares in the second quarter, thereby exhausting the previously announced $200 million buyback program. The company’s board authorized a new share repurchase program for an additional $200 million. The program is scheduled to end on Jun 30, 2020. The company exited the second quarter with cash and cash equivalents of $158.2 million, compared with $204.7 million at the end of 2016.

Network Growth Statistics

The company installed 34 (including 1 upgrade) in the reported quarter compared with 40 (including 2 upgrades) in the second quarter of 2016. It signed 95 theatre agreements in the second quarter of 2017, flat on a year-over-year basis. As of Jun 30, 2017, the total theater count in backlog was 580, compared with 498 at the end of 2016. Total theatre installations as of Jun 30, 2017 are 1,257 compared with 1,215 at the end of 2016.

Zacks Rank & Key Picks

IMAX Corp. currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Consumer Discretionary sector are Adidas AG ADDYY, American Woodmark Corporation AMWD and Bassett Furniture Industries, Incorporated BSET. While Adidas and Bassett Furniture sport a Zacks Rank #1 (Strong Buy), American Woodmark carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Shares of Adidas, Bassett Furniture and American Woodmark have gained over 2%, 21% and 6%, respectively, in the last three months.

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