IMAX CORPORATION REPORTS SECOND QUARTER 2022 RESULTS
07/28/2022 - 04:05 PM
Strong Year-Over-Year Growth across Key Metrics Underscores Company's Position as a Premier Global Technology Platform for Entertainment and Events Global Box Office of $247.7 Million (+128.1% YoY) Driven by "Top Gun: Maverick", "Doctor Strange in the Multiverse of Madness" and "Jurassic World Dominion" as Dramatic Surge in Moviegoing Expands across Demographics and Regions Company Repurchased 2.7M Shares in Second Quarter; 6.4M Since 2020, or 11% of total shares outstanding IMAX Expects to Release 15 Local Language Titles across 50 Global Markets in the Third Quarter IMAX China Network 91% Operational — up from 65% on April 26 NEW YORK , July 28, 2022 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX) today reported solid financial results for the Second Quarter of 2022 demonstrating its leadership position in the global resurgence of moviegoing. Total Gross Box Office increased to $247.7 million from $108.6 million in the second quarter of 2021. Revenue increased to $74.0 million from $51.0 million and Gross Margin increased to $44.0 million from $25.6 million in the year-ago period.
For the Second Quarter of 2022, the net loss attributable to common shareholders was ($2.9) million , or ($0.05) per share, compared to ($9.2) million , or ($0.16) per share, last year and Adjusted Net Income attributable to common shareholders(1) was $3.9 million , or $0.07 per share, compared to an Adjusted Net Loss attributable to common shareholders(1) of ($7.0) million , or ($0.12) per share, last year. The Company's Second Quarter 2022 Adjusted Net Income attributable to common shareholders(1) includes a $3.2 million , or $0.06 per share impairment of a film investment, due in part to Covid related lockdowns and depressed box office levels in China . The Company's Second Quarter 2022 Adjusted Net Income attributable to common shareholders(1) also includes a $5.1 million , or $0.09 per share, valuation allowance against its deferred tax assets.
Adjusted EBITDA per Credit Facility(1) of $25.4 million was up from $8.7 million in the second quarter of 2021. On a trailing 12-month basis, Adjusted EBITDA per Credit Facility(1) was $97.3 million as of June 30th.
"IMAX is playing a leading role in the global resurgence in moviegoing, as demonstrated by our strong financial results, global box office growth, and market share gains we delivered in the second quarter. In fact, our second quarter results in North America were on par with our record-breaking 2019, as consumers continue to seek out IMAX as a destination for fandom," said Richard L. Gelfond , CEO of IMAX Corporation.
(1) Non-GAAP Financial Measure. See the discussion at the end of this earnings release for a description of the Non-GAAP Financial Measures used herein, as well as reconciliations to the most comparable GAAP amounts.
"With three consecutive $25 million -plus global openings for the first time in its history, IMAX continued to affirm its position as a critical launch platform for major entertainment franchises. As the year progresses with key titles such as Brad Pitt's 'Bullet Train', Dwayne 'The Rock' Johnson's 'Black Adam', 'Black Panther: Wakanda Forever' and 'Avatar: The Way of Water' and a remarkable offering of franchise tentpoles through 2023, we are focused on driving future growth for the Company across our global network, content portfolio, and technology platform."
"We are encouraged by recent activity to strengthen key partnerships with global exhibitors, including agreements for new theatres and installations across Asia , Europe , the Middle East , and North America . We also continue to enhance and diversify our content portfolio, with Hollywood blockbusters, more of which feature IMAX DNA; local language blockbusters across a growing international footprint; IMAX documentaries; and exclusive live events and experiences from a growing roster of new partners."
Second Quarter Financial Highlights
Three Months Ended
June 30,
In millions of U.S. Dollars, except per share data
2022
2021
YoY % Change
Total Revenue
$
74.0
$
51.0
45
%
Gross Margin
$
44.0
$
25.6
72
%
Gross Margin (%)
60
%
50
%
Net Loss attributable to common shareholders
$
(2.9)
$
(9.2)
N/A
Diluted Net Loss per share attributable to common shareholders
$
(0.05)
$
(0.16)
N/A
Adjusted Net Income (Loss) attributable to common shareholders(1)
$
3.9
$
(7.0)
N/A
Adjusted Net Income (Loss) per share attributable to common shareholders(1)
$
0.07
$
(0.12)
N/A
Adjusted EBITDA per Credit Facility attributable to common shareholders(1)
$
25.4
$
8.7
192
%
Adjusted EBITDA Margin attributable to common shareholders (%)(1)
35.9
%
20.6
%
74
%
_______________
(1) Non-GAAP Financial Measure. See the discussion at the end of this earnings release for a description of the non-GAAP financial measures used herein, as well as reconciliations to the most comparable GAAP amounts.
Second Quarter and June Year-to-Date Segment Results (1)
IMAX Technology Network
IMAX Technology Sales and Maintenance
In millions of U.S. Dollars
Revenue
Gross Margin
Gross Margin %
Revenue
Gross Margin
Gross Margin %
2Q22
$
46.1
$
30.9
67
%
$
24.3
$
12.8
53
%
2Q21
19.7
8.7
44
%
28.7
16.1
56
%
% change
134
%
255
%
(15)
%
(20)
%
YTD 2Q22
$
78.3
$
50.6
65
%
$
49.6
$
25.0
50
%
YTD 2Q21
40.0
18.8
47
%
45.7
23.2
51
%
% change
96
%
169
%
9
%
8
%
_______________
(1) Please refer to the Company's Form 10-Q for the period ended June 30, 2022 for additional segment information.
IMAX Technology Network
IMAX Technology Network revenues increased 134% to $46.1 million in the second quarter of 2022, compared to $19.7 million in the prior-year period. The strength of key titles such as "Doctor Strange in the Multiverse of Madness", "Top Gun: Maverick" and "Jurassic World Dominion" drove the increase in gross box office and revenue. Gross margin for the IMAX Technology Network increased to $30.9 million in the second quarter of 2022, compared to $8.7 million in the prior year period as improved box office performance drove higher revenue. IMAX Technology Sales and Maintenance
IMAX Technology Sales and Maintenance revenues decreased 15% to $24.3 million in the second quarter of 2022, compared with $28.7 million in the prior year period. The decrease in revenue was driven by seven fewer installations, including upgrades, compared to the second quarter 2021, partially offset by increased maintenance revenues. Total gross margin for IMAX Technology Sales and Maintenance decreased 20% to $12.8 million in the second quarter of 2022 compared to $16.1 million in the prior year period. The decrease in gross margin was the result of fewer system installations completed, partially offset by increased maintenance margin. Cash Balances and Outstanding Debt
Total cash and cash equivalents as of June 30, 2022 were $110.1 million . Total debt, excluding deferred financing fees, was $230.0 million as of June 30, 2022 .
Share Count and Capital Return
The weighted average basic and diluted shares outstanding at the end of the second quarter of 2022 was 57.3 million and 57.9 million, respectively, compared to 59.4 million in the second quarter of 2021. During the second quarter of 2022, the Company repurchased 2,702,548 shares at an average price of $15.92 for a total of $43.0 million and IMAX China did not repurchase any shares. As of June 30, 2022 , a total of $26.2 million remains available under the Company's outstanding share repurchase authorization.
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 investors.imax.com . 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.
The Company may post additional information on the Company's corporate and Investor Relations website which may be material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website in addition to the Company's press releases, SEC filings and public conference calls and webcasts, for additional information about the Company.
Conference Call
The Company will host a conference call today at 4:45 PM ET to discuss its second quarter 2022 financial results. This call is being webcast by PGI and can be accessed at investors.imax.com . To access the call via telephone, interested parties in the US and Canada should dial (888) 220-8451 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 484-0475. The conference ID for the call is 7250150. 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 7250150.
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 June 30, 2022 , there were 1,694 IMAX theater systems (1,610 commercial multiplexes, 12 commercial destinations, 72 institutional) operating in 87 countries and territories. Shares of IMAX China Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong Kong Stock Exchange under the stock code "1970."
IMAX® , IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX® , The IMAX Experience ® , An IMAX Experience ® , An IMAX 3D Experience ® , IMAX DMR® , DMR® , Filmed For IMAX™ , IMAX LIVE™ , IMAX Enhanced™ , IMAX nXos® and Films to the Fullest® , are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. More information about the Company can be found at www.imax.com . You may also connect with IMAX on Instagram (https://www.instagram.com/imax ), Facebook (www.facebook.com/imax ), Twitter (www.twitter.com/imax ) and YouTube (www.youtube.com/imaxmovies ).
For additional information please contact:
Investors:
IMAX Corporation, New York
Heather Anthony
212-821-0121
hanthony@IMAX.com
Media: IMAX Corporation, New York Mark Jafar 212-821-0102
mjafar@imax.com
Forward-Looking Statements
This earnings 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. These forward-looking statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, 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 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 related to the adverse impact of the COVID-19 pandemic; 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 , as well as geopolitical conflicts, such as the conflict between Russia and Ukraine ; risks related to the Company's growth and operations in China ; the performance of IMAX DMR® films; the signing of IMAX 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, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to consolidation among commercial exhibitors and studios; risks related to brand extensions and 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 and data privacy; risks related to the Company's inability to protect the Company's intellectual property; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company's business; risks related to the Company's indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to political, economic and social instability, including with respect to the Russia -Ukraine conflict; the failure to convert IMAX Theater System backlog into revenue; changes in laws or regulations; any statements of belief and any statements of assumptions underlying any of the foregoing; other factors and risks outlined in our periodic filings with the SEC; and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company . These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Primary Reporting Groups
The Company has the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements ("JRSA"); (iii) IMAX Systems; (iv) IMAX Maintenance; (v) Other Theater Business; (vi) Film Distribution; and (vii) Film Post-Production. The Company's activities that do not met the criteria to be considered a reportable segment are disclosed within All Other. The Company organizes its reportable segments into the following three categories, identified by the nature of the product sold or service provided:
(i) IMAX Technology Network, which earns revenue based on contingent box office receipts and includes the IMAX DMR segment and contingent rent from JRSA segment;
(ii) IMAX Technology Sales and Maintenance, which includes results from the IMAX Systems, IMAX Maintenance and Other Theater Business segments, as well as fixed revenues from the JRSA segment; and
(iii) Film Distribution and Post-Production, which includes activities related to the distribution of large-format documentary films, primarily to institutional theaters, and the distribution of exclusive experiences ranging from live performances to interactive events with leading artists and creators (through the Film Distribution segment) and the provision of film post-production and quality control services.
In the first quarter of 2022, the Company's internal reporting was updated to reclassify the results of IMAX Enhanced, an initiative to bring The IMAX Experience® into the home, out of the New Business Initiatives segment and into All Other for segment reporting purposes. IMAX Enhanced™ was the only component of the New Business Initiatives segment. Prior period comparatives have been reclassified to conform with the current period presentation. Please refer to the Company's Form 10-Q for the period ended June 30, 2022 for additional segment information.
IMAX Network and Backlog
Three Months Ended June 30,
Theater System Signings:
2022
2021
New IMAX Theater Systems
Sales and sales-type lease arrangements
2
3
Hybrid JRSA
1
—
Traditional JRSA
—
3
Total new IMAX theaters Systems
3
6
Upgrades of IMAX theater systems
10
2
Total IMAX Theater System signings
13
8
Three Months Ended June 30,
Theater System Installations:
2022
2021
New IMAX Theater Systems(1)
Sales and sales-type lease arrangements
3
9
Hybrid JRSA
1
2
Traditional JRSA
3
4
Total new IMAX Theater Systems
7
15
Upgrades of IMAX theater systems
2
1
Total IMAX Theater System installations
9
16
June 30,
Theater System Backlog:
2022
2021
Sales and sales-type lease arrangements
170
185
Hybrid JRSA
128
142
Traditional JRSA
194
(2)
187
(2)
Total Theater System backlog
492
(3)
514
(4)
June 30,
Theater Network:
2022
2021
Commercial Multiplex Theaters
Sales and sales-type lease arrangements
687
672
Hybrid JRSA
149
143
Traditional JRSA
774
754
Total Commercial Multiplex Theaters
1,610
1,569
Commercial Destination Theaters
12
12
Institutional Theaters
72
73
Total Theater network(5)
1,694
1,654
_______________
(1) For the three months ended June 30, 2022 , includes four IMAX Theater Systems that were relocated from their original locations (2021 — nil). When a theater system under a sales or sales-type lease arrangement is relocated, the amount of revenue earned by the Company may vary from transaction-to-transaction and is usually less than the amount earned for a new sale. In certain situations when a theater system is relocated, the original location is upgraded to an IMAX Laser Theater System.
(2) Includes 43 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2021 — 44).
(3) Includes 201 new IMAX Laser Theatre systems configurations and 111 upgrades of existing locations to IMAX Laser Theater Systems configurations.
(4) Includes 155 new IMAX Laser Theatre systems configurations and 96 upgrades of existing locations to IMAX Laser Theater Systems configurations.
(5) Period-to-period changes are reported net of the effect of permanently closed theaters.
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. Dollars, except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues
Technology sales
$
8,229
$
15,173
$
17,205
$
21,348
Image enhancement and maintenance services
44,958
24,711
81,052
46,326
Technology rentals
18,525
8,130
31,186
16,489
Finance income
2,256
2,941
4,561
5,546
73,968
50,955
134,004
89,709
Costs and expenses applicable to revenues
Technology sales
4,218
6,496
10,203
11,549
Image enhancement and maintenance services
19,953
12,357
35,696
22,121
Technology rentals
5,761
6,499
12,298
13,155
29,932
25,352
58,197
46,825
Gross margin
44,036
25,603
75,807
42,884
Selling, general and administrative expenses
37,095
28,807
67,276
54,016
Research and development
1,356
2,200
2,552
3,671
Amortization of intangible assets
1,104
1,190
2,301
2,331
Credit loss expense (reversal), net
112
(1,872)
7,341
(1,567)
Asset impairments
4,470
—
4,470
-
Legal judgment and arbitration awards
—
(1,770)
—
(1,770)
Loss from operations
(101)
(2,952)
(8,133)
(13,797)
Realized and unrealized investment gains
30
33
64
5,281
Retirement benefits non-service expense
(138)
(116)
(277)
(230)
Interest income
417
559
919
1,142
Interest expense
(1,326)
(1,690)
(3,031)
(3,994)
Loss before taxes
(1,118)
(4,166)
(10,458)
(11,598)
Income tax expense
(3,133)
(1,946)
(5,743)
(5,014)
Net loss
(4,251)
(6,112)
(16,201)
(16,612)
Less: net loss (income) attributable to non-controlling interests
1,400
(3,099)
(259)
(7,439)
Net loss attributable to common shareholders
$
(2,851)
$
(9,211)
$
(16,460)
$
(24,051)
Net loss per share attributable to common shareholders - basic and diluted:
Net loss per share attributable to common shareholders - basic and diluted:
$
(0.05)
$
(0.16)
$
(0.28)
$
(0.41)
Weighted average number of shares outstanding (000's):
Basic
57,320
59,367
57,943
59,190
Diluted
57,856
59,367
57,943
59,190
Additional Disclosure:
Depreciation and amortization
$
14,282
$
12,994
$
27,023
$
25,671
Amortization of deferred financing costs
$
730
$
699
$
1,753
$
1,008
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars, except share amounts)
(Unaudited)
June 30,
December 31,
2022
2021
Assets
Cash and cash equivalents
$
110,112
$
189,711
Accounts receivable, net of allowance for credit losses
122,440
110,050
Financing receivables, net of allowance for credit losses
127,173
141,049
Variable consideration receivables, net of allowance for credit losses
43,040
44,218
Inventories
33,422
26,924
Prepaid expenses
14,418
11,802
Film assets, net of accumulated amortization
6,026
4,241
Property, plant and equipment, net of accumulated depreciation
252,309
260,353
Investment in equity securities
1,092
1,087
Other assets
16,986
17,799
Deferred income tax assets, net of valuation allowance
13,958
13,906
Goodwill
39,027
39,027
Other intangible assets, net of accumulated amortization
21,821
23,080
Total assets
$
801,824
$
883,247
Liabilities
Accounts payable
$
19,849
$
15,943
Accrued and other liabilities
105,776
111,896
Deferred revenue
75,951
81,281
Revolving credit facility borrowings, net of unamortized debt issuance costs
—
2,472
Convertible notes, net of unamortized discounts and debt issuance costs
224,379
223,641
Deferred income tax liabilities
17,642
17,642
Total liabilities
443,597
452,875
Commitments and contingencies
Non-controlling interests
742
758
Shareholders' equity
Capital stock common shares — no par value. Authorized — unlimited number.
56,095,372 issued and outstanding (December 31, 2021 — 58,653,642 issued and outstanding)
391,107
409,979
Other equity
174,668
174,620
Statutory surplus reserve
3,932
3,932
Accumulated deficit
(272,022)
(234,975)
Accumulated other comprehensive income
(6,755)
2,527
Total shareholders' equity attributable to common shareholders
290,930
356,083
Non-controlling interests
66,555
73,531
Total shareholders' equity
357,485
429,614
Total liabilities and shareholders' equity
$
801,824
$
883,247
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. Dollars)
(Unaudited)
Six Months Ended
June 30,
2022
2021
Operating Activities
Net loss
$
(16,201)
$
(16,612)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
27,023
25,671
Amortization of deferred financing costs
1,753
1,008
Credit loss expense (reversal), net
7,341
(1,567)
Write-downs
5,432
462
Deferred income tax (benefit) expense
(300)
33
Share-based and other non-cash compensation
13,966
12,332
Unrealized foreign currency exchange loss (gain)
841
(490)
Realized and unrealized investment gains
(64)
(5,281)
Changes in assets and liabilities:
Accounts receivable
(14,745)
(11,049)
Inventories
(6,949)
1,867
Film assets
(10,420)
(5,808)
Deferred revenue
(5,291)
(447)
Changes in other operating assets and liabilities
(7,679)
(17,135)
Net cash used in operating activities
(5,293)
(17,016)
Investing Activities
Purchase of property, plant and equipment
(2,934)
(1,365)
Investment in equipment for joint revenue sharing arrangements
(8,651)
(2,397)
Interest in film classified as a financial instrument
(4,731)
—
Acquisition of other intangible assets
(1,680)
(2,631)
Proceeds from sale of equity securities
—
17,769
Net cash (used in) provided by investing activities
(17,996)
11,376
Financing Activities
Proceeds from issuance of convertible notes, net
—
223,675
Debt issuance costs related to convertible notes
—
(242)
Purchase of capped calls related to convertible notes
—
(19,067)
Revolving credit facility borrowings
—
3,600
Repayments of revolving credit facility borrowings
—
(300,243)
Credit facility amendment fees paid
(2,028)
(32)
Repurchase of common shares, IMAX Corporation
(49,355)
—
Repurchase of common shares, IMAX China
(1,844)
—
Taxes withheld and paid on employee stock awards vested
(3,393)
(3,045)
Common shares issued - stock options exercised
—
883
Principal payment under finance lease obligations
(890)
—
Dividends paid to non-controlling interests
—
(2,099)
Net cash used in financing activities
(57,510)
(96,570)
Effects of exchange rate changes on cash and cash equivalents
1,200
(1,044)
Decrease in cash and cash equivalents during period
(79,599)
(103,254)
Cash and cash equivalents, beginning of period
189,711
317,379
Cash and cash equivalents, end of period
$
110,112
$
214,125
Segment Revenue and Gross Margin (Margin Loss)
Three Months Ended
Six Months Ended
June 30,
June 30,
In thousands of U.S. Dollars
2022
2021
2022
2021
Revenue
IMAX Technology Network
IMAX DMR
$
27,581
$
11,793
$
47,145
$
23,737
JRSA, contingent rent
18,525
7,862
31,168
16,221
46,106
19,655
78,313
39,958
IMAX Technology Sales and Maintenance
IMAX Systems
8,231
15,982
16,849
21,881
JRSA, fixed fees
498
1,002
1,488
2,740
IMAX Maintenance
14,683
11,235
29,625
20,141
Other Theater Business(1)
920
483
1,590
920
24,332
28,702
49,552
45,682
Film Distribution and Post-Production
1,963
1,590
3,369
2,403
Sub-total for reportable segments
72,401
49,947
131,234
88,043
All Other(2)
1,567
1,008
2,770
1,666
Total
$
73,968
$
50,955
$
134,004
$
89,709
Gross Margin (Margin Loss)
IMAX Technology Network
IMAX DMR
$
18,000
$
6,861
$
31,557
$
15,112
JRSA, contingent rent
12,889
1,790
19,087
3,673
30,889
8,651
50,644
18,785
IMAX Technology Sales and Maintenance
IMAX Systems
5,427
10,548
9,403
13,560
JRSA, fixed fees
(19)
347
233
503
IMAX Maintenance
7,367
5,075
15,237
8,898
Other Theater Business
46
142
146
205
12,821
16,112
25,019
23,166
Film Distribution and Post-Production
(527)
606
(1,388)
581
Sub-total for reportable segments
43,183
25,369
74,275
42,532
All Other(2)
853
234
1,532
352
Total
$
44,036
$
25,603
$
75,807
$
42,884
_______________
(1) The revenue from this segment principally includes after-market sales of IMAX Theater system parts and 3D glasses.
(2) All Other includes the results from IMAX Enhanced and other ancillary activities. In the first quarter of 2022, the Company's internal reporting was updated to reclassify the results of IMAX Enhanced out of the New Business Initiatives segment into All Other for segment reporting purposes. Prior period comparatives have been revised to conform with the current period presentation.
IMAX CORPORATION NON-GAAP FINANCIAL MEASURES (in thousands of U.S. dollars)
In this release, the Company presents adjusted net income (loss) attributable to common shareholders and adjusted net income (loss) attributable to common shareholders per basic and diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, and free cash flow as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net income (loss) attributable to common shareholders and adjusted net income (loss) attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) COVID-19 government relief benefits (iii) legal judgment and arbitration awards; (iv) realized and unrealized investment gains or losses, as well as the related tax impact of these adjustments, and (v) income taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries.
The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company's financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net loss attributable to common shareholders. Although share-based compensation is an important aspect of the Company's employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures.
A reconciliation of net loss attributable to common shareholders and the associated per share amounts to adjusted net income (loss) attributable to common shareholders and adjusted net income (loss) attributable to common shareholders per diluted share is presented in the table below. Net loss attributable to common shareholders and the associated per share amounts are the most directly comparable GAAP measures because they reflect the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests.
In addition to the non-GAAP financial measures discussed above, management also 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 allowed by the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Adjusted EBITDA per Credit Facility measure is presented to allow a more comprehensive analysis of the Company's operating performance and to provide additional information with respect to the Company's compliance against its Credit Agreement requirements when applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry to evaluate, assess and benchmark the Company's results.
EBITDA is defined as net income or loss excluding (i) income tax expense or benefit; (ii) interest expense, net of interest income; (iii) depreciation and amortization, including film asset amortization; and (iv) amortization of deferred financing costs. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) realized and unrealized investment gains or losses; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; and (iv) legal judgment and arbitration awards.
A reconciliation of net loss attributable to common shareholders, which is the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit Facility is presented in the table below. Net loss attributable to common shareholders is the most directly comparable GAAP measure because it reflects the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests.
Free cash flow is defined as net cash provided by or used in operating activities minus cash used in investing activities (from the Condensed Consolidated Statements of Cash Flows). 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 below.
These non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered as a substitute for, or superior to, the comparable GAAP amounts.
Adjusted EBITDA per Credit Facility
For the Three Months Ended June 30, 2022 (1)
For the Three Months Ended June 30, 2021 (1)
Attributable to Non-controlling
Interests and
Common
Shareholders
Less:
Attributable to
Non-controlling
Interests
Attributable to
Common
Shareholders
Attributable to Non-controlling
Interests and
Common
Shareholders
Less:
Attributable to
Non-controlling
Interests
Attributable to
Common
Shareholders
(In thousands of U.S. Dollars)
Reported net loss
$
(4,251)
$
(1,400)
$
(2,851)
$
(6,112)
$
3,099
$
(9,211)
Add (subtract):
Income tax expense
3,133
5
3,128
1,946
884
1,062
Interest expense, net of interest income
179
(91)
270
432
(89)
521
Depreciation and amortization, including film asset amortization
14,282
1,196
13,086
12,994
1,038
11,956
Amortization of deferred financing costs(2)
730
—
730
699
—
699
EBITDA
$
14,073
$
(290)
$
14,363
$
9,959
$
4,932
$
5,027
Share-based and other non-cash compensation
7,777
379
7,398
6,911
345
6,566
Unrealized investment gains
(30)
—
(30)
(33)
—
(33)
Write-downs, including asset impairments and credit loss expense
5,163
1,477
3,686
(1,623)
(575)
(1,048)
Legal judgment and arbitration awards
—
—
—
(1,770)
—
(1,770)
Adjusted EBITDA per Credit Facility
$
26,983
$
1,566
$
25,417
$
13,444
$
4,702
$
8,742
Revenues attributable to common shareholders(3)
73,968
3,213
70,755
50,955
8,421
42,534
Adjusted EBITDA margin attributable to common shareholders
36.5
%
48.7
%
35.9
%
26.4
%
55.8
%
20.6
%
For the Twelve Months Ended June 30, 2022 (1)
For the Twelve Months Ended June 30, 2021 (1)
Attributable to Non-controlling
Interests and
Common
Shareholders
Less:
Attributable to
Non-controlling
Interests
Attributable to Non-controlling
Interests and
Common
Shareholders
Less:
Attributable to
Non-controlling
Interests
Attributable to
Common
Shareholders
Attributable to
Common
Shareholders
(In thousands of U.S. Dollars)
Reported net loss
$
(9,166)
$
5,572
$
(14,738)
$
(84,640)
$
7,865
$
(92,505)
Add (subtract):
Income tax expense
21,293
2,683
18,610
26,261
2,072
24,189
Interest expense, net of interest income
877
(378)
1,255
4,890
(346)
5,236
Depreciation and amortization, including film asset amortization
57,434
5,565
51,869
51,492
4,468
47,627
Amortization of deferred financing costs(2)
3,258
—
3,258
1,611
—
1,008
EBITDA
$
73,696
$
13,442
$
60,254
$
(386)
$
14,059
$
(14,445)
Share-based and other non-cash compensation
27,713
1,105
26,608
23,520
1,109
22,411
Realized and unrealized investment gains
(123)
—
(123)
(5,714)
(1,702)
(4,012)
Write-downs, including asset impairments and credit loss expense
11,691
1,091
10,600
16,769
3,102
13,667
Legal judgment and arbitration awards
—
—
—
2,335
—
2,335
Loss from equity accounted investments
—
—
—
1,329
—
1,329
Adjusted EBITDA per Credit Facility
$
112,977
$
15,638
$
97,339
$
37,853
$
16,568
$
21,285
Revenues attributable to common shareholders(3)
299,178
26,789
272,389
182,955
29,869
153,086
Adjusted EBITDA margin attributable to common shareholders
37.8
%
58.4
%
35.7
%
20.7
%
55.5
%
13.9
%
_______________
(1) The Senior Secured Net Leverage Ratio is calculated using Adjusted EBITDA per Credit Facility determined on a trailing twelve-month basis.
(2) The amortization of deferred financing costs is recorded within Interest Expense in the Condensed Consolidated Statement of Operations.
(3)
(In thousands of U.S. Dollars)
Three months ended June 30, 2022
Three months ended June 30, 2021
Twelve months ended June 30, 2022
Twelve months ended June 30, 2021
Total revenues
$
73,968
$
50,955
$
299,178
$
182,955
Greater China revenues
$
11,237
$
27,913
$
92,083
$
99,100
Non-controlling interest ownership percentage(4)
28.59
%
30.17
%
29.09
%
30.14
%
Deduction for non-controlling interest share of revenues
(3,213)
(8,421)
(26,789)
(29,869)
Revenues attributable to common shareholders
$
70,755
$
42,534
$
272,389
$
153,086
(4) Weighted average ownership percentage for change in non-controlling interest share
Adjusted Net Income (Loss) Attributable to Common Shareholders and Adjusted Diluted Per Share Calculations
Three Months Ended
Three Months Ended
June 30, 2022
June 30, 2021
(In thousands of U.S. dollars, except per share amounts)
Net (Loss) Income
Per Share
Net Loss
Per Share
Net loss attributable to common shareholders
$
(2,851)
$
(0.05)
$
(9,211)
$
(0.16)
Adjustments(1) :
Stock-based compensation
7,261
0.13
6,451
0.11
COVID-19 government relief benefits, net
32
—
(1,981)
(0.03)
Legal judgment and arbitration awards
—
—
(1,770)
(0.03)
Realized and unrealized investment gains
(30)
—
(33)
—
Tax Impact on items listed above
(490)
(0.01)
(428)
(0.01)
Adjusted net income (loss)(1)
$
3,922
$
0.07
$
(6,972)
$
(0.12)
Weighted average basic shares outstanding
57,320
59,367
Weighted average diluted shares outstanding
57,856
59,367
Six Months Ended
Six Months Ended
June 30, 2022
June 30, 2021
(In thousands of U.S. dollars, except per share amounts)
Net Loss
Diluted EPS
Net Loss
Diluted EPS
Net loss attributable to common shareholders
$
(16,460)
$
(0.28)
$
(24,051)
$
(0.41)
Adjustments(1) :
Stock-based compensation
13,220
0.23
11,799
0.20
COVID-19 government relief benefits, net
(161)
—
(3,465)
(0.06)
Legal judgment and arbitration awards
—
—
(1,770)
(0.03)
Realized and unrealized investment gains
(64)
—
(3,710)
(0.06)
Tax impact on items listed above
(857)
(0.01)
(965)
(0.02)
Income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain subsidiaries
—
—
381
0.01
Adjusted net loss(1)
$
(4,322)
$
(0.07)
$
(21,781)
$
(0.37)
Weighted average shares outstanding - basic and diluted
57,943
59,190
_______________
(1) Reflects amounts attributable to common shareholders.
Free Cash Flow
Three Months Ended
Six Months Ended
(In thousands of U.S. Dollars)
June 30, 2022
June 30, 2022
Net cash used in operating activities
$
(1,510)
$
(5,293)
Net cash used in investing activities
(7,399)
(17,996)
Free cash flow
$
(8,909)
$
(23,289)
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SOURCE IMAX Corporation