IMAX CORPORATION REPORTS THIRD QUARTER 2022 RESULTS

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  • IMAX global entertainment technology platform drives double-digit growth across Revenue, Gross Margin and Adjusted EBITDA as well as positive Net Income within IMAX China

  • Total IMAX Gross Box Office increased 25% year over year to $177.1 million, with 30% of box office coming from Local Language blockbusters

  • Strong upcoming blockbuster film slate represents significant expected tailwind, as 2022 concludes with "Black Panther: Wakanda Forever" and "Avatar: The Way of Water," the first of four planned sequels to the highest grossing movie of all time with more than $270 million in IMAX box office receipts

  • IMAX completes acquisition of streaming technology company SSIMWAVE, enhancing its capabilities to deliver the best images on any screen, out of home and in home

  • IMAX increased its Share-Repurchase Authorization by $200 million and repurchased 418 thousand shares in third quarter; cumulative 10.4 million under the program as of September 30th, or 16% of total shares outstanding

NEW YORK, Oct. 31, 2022 -- IMAX Corporation (NYSE: IMAX) today reported solid financial results for the third quarter of 2022 demonstrating the value of its unique global entertainment technology platform and content portfolio.

"IMAX demonstrated the strength of its differentiated model in the third quarter — leaning into its diversified global content portfolio to grow revenue, box office, and EBITDA despite a temporary slowdown in the Hollywood pipeline," said Richard L. Gelfond, CEO of IMAX Corporation.  "As we look toward the end of 2022 and beyond, we see significant potential tailwinds on the horizon, most notably the release of "Black Panther: Wakanda Forever" and "Avatar: The Way of Water", the long-awaited sequel to the highest grossing IMAX film of all time."

"We also took a significant step in the quarter to advance our long-term growth strategy with the acquisition of streaming technology company SSIMWAVE. In the short-term, SSIMWAVE is expected to generate incremental revenue for IMAX and be accretive in 2023, and in the long-term open a new world of possibility for our image enhancement capabilities — across not only streaming and theatrical, but gaming, VR and AR."  

Financial Summary

  • Revenue increased 21% to $68.8 million from $56.6 million in the year-ago period.
  • IMAX China Net Income of $4.2 million or $3.0 million attributable to common shareholders.
  • Net loss(2) was ($9.0) million, or ($0.16) per share, compared to ($8.4) million, or ($0.14) per share in Q3 2021. Q3 2022 included a $4.3 million, or $0.08 per share, valuation allowance against its deferred tax assets as well as $1.0 million, or $0.02 per share, in acquisition-related expenses.
  • Adjusted Net loss(1,2) was ($3.0) million, or ($0.05) per share, improved from an Adjusted Net Loss(1,2) of ($5.0) million, or ($0.08) per share in Q3 2021.
  • Adjusted EBITDA(1,3) of $16.5 million was up from $13.1 million in Q3 2021 and marked the 8th straight quarter of positive Adjusted EBITDA. On a trailing 12-month basis, Adjusted EBITDA(1,3) was $100.7 million as of September 30th.

Third Quarter Financial Highlights


Three Months Ended



Nine Months Ended



September 30,



September 30,


In millions of U.S. Dollars, except per share data

2022



2021



YoY %
Change



2022



2021



YoY %
Change


Total Revenue

$

68.8



$

56.6




21

%


$

202.8



$

146.3




39

%



















Gross Margin

$

31.7



$

27.5




15

%


$

107.5



$

70.4




53

%

Gross Margin (%)


46

%



49

%






53

%



48

%






















Net Loss(2)

$

(9.0)



$

(8.4)



N/A



$

(25.4)



$

(32.4)



N/A


Diluted Net Loss per share(2)

$

(0.16)



$

(0.14)



N/A



$

(0.44)



$

(0.55)



N/A


Adjusted Net Loss(1)(2)

$

(3.0)



$

(5.0)



N/A



$

(7.3)



$

(26.8)



N/A


Adjusted Net Loss per share(1)(2)

$

(0.05)



$

(0.08)



N/A



$

(0.13)



$

(0.44)



N/A




















Adjusted EBITDA per Credit Facility(1)(3)

$

16.5



$

13.1




26

%


$

56.7



$

24.6




130

%

Adjusted EBITDA Margin (%)(1)(2)


25.5

%



26.3

%



(3)

%



30.0

%



19.9

%



50

%



















Weighted average shares outstanding (in millions):


Basic and Diluted


56.0




59.2




(5)

%



57.3




59.2




(3)

%

_______________

(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.

(2)     Attributable to common shareholders.

(3)     Adjusted EBITDA per Credit facility attributable to common shareholders.

 

Third Quarter and September 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 %


3Q22


$

32.5



$

17.7




54

%


$

33.0




$

15.4




47

%

3Q21


25.6




10.9




43

%



27.7





14.9




54

%

% change



27

%



62

%






19

%




3

%
























YTD 3Q22


$

110.8



$

68.4




62

%


$

82.6




$

40.5




49

%

YTD 3Q21



65.5




29.7




45

%



73.4





38.1




52

%

% change



69

%



130

%






13

%




6

%




_______________

(1)     Please refer to the Company's Form 10-Q for the period ended September 30, 2022 for additional segment information.

 

IMAX Technology Network

  • IMAX Technology Network revenues increased 27% to $32.5 million in the third quarter of 2022, compared to $25.6 million in the prior-year period. The strength of local language titles as well as key titles such as "Thor: Love and Thunder" and "Nope" drove the increase in gross box office and revenue.
  • Gross margin for the IMAX Technology Network increased to $17.7 million in the third quarter of 2022, compared to $10.9 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 increased 19% to $33.0 million in the third quarter of 2022, compared with $27.7 million in the prior year period. During the third quarter the Company installed 10 systems under sales and sales-type lease arrangements and hybrid JRSA compared to 9 systems in the third quarter of 2021.
  • Total gross margin for IMAX Technology Sales and Maintenance increased 3% to $15.4 million in the third quarter of 2022 compared to $14.9 million in the prior year period.

Cash Balances and Outstanding Debt 

Total cash and cash equivalents as of September 30, 2022 were $87.2 million. Total debt, excluding deferred financing fees, was $237.6 million as of September 30, 2022. 

As of September 30, 2022, the Company's available liquidity was $437.4 million including its balance of cash and cash equivalents of $87.2 million, $300.0 million in available borrowing capacity under the Credit Facility and $50.2 million in available borrowing capacity under IMAX China's revolving facilities.

Share Count and Capital Return

The weighted average basic and diluted shares outstanding at the end of the third quarter of 2022 was 56.0 million compared to 59.2 million in the third quarter of 2021. During the third quarter of 2022, the Company repurchased 0.4 million shares at an average price of $14.62 for a total of $6.1 million, and IMAX China repurchased 1.5 million shares at an average price of $0.79 for a total of $1.2 million. As of September 30, 2022, a total of $220.1 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 4:30 PM ET to discuss its third quarter 2022 financial results. This call is being webcast and can be accessed at investors.imax.com. To access the call via telephone, there is a new process: interested parties please pre-register here: https://register.vevent.com/register/BI38d122a3ee2046378a62d5b70836c40a. and you will be provided with a dial-in number and unique pin.  To avoid delays, we encourage participants to dial into the conference call ten minutes ahead of the scheduled start time. A replay of the call will be available via webcast at investors.imax.com.

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, 2022, there were 1,703 IMAX theater systems (1,622 commercial multiplexes, 12 commercial destinations, 69 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®,  Films to the Fullest®, SSIMWAVE®, SSIMPLUS®, Viewer Score® 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

Jennifer Horsley

212-821-0154

jhorsley@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 meet 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. Following its acquisition in Q3 2022, SSIMWAVE is being included within All Other for segment reporting purposes. Please refer to the Company's Form 10-Q for the period ended September 30, 2022 for additional segment information.

 

IMAX Network and Backlog




Three Months Ended
September 30,



Nine Months Ended
 September 30,



Theater System Signings:


2022



2021



2022



2021



New IMAX Theater Systems














Sales and sales-type lease arrangements



3




4




9




13



Hybrid JRSA



1







3






Traditional JRSA



7




5




9




8



      Total new IMAX theaters Systems



11




9




21




21



Upgrades of IMAX theater systems



4




2




14




4



Total IMAX Theater System signings



15




11




35




25



















Three Months Ended
September 30,



Nine Months Ended
 September 30,



Theater System Installations:


2022



2021



2022



2021



New IMAX Theater Systems(1)














Sales and sales-type lease arrangements



7




6




14




17



Hybrid JRSA



2




2




5




6



Traditional JRSA



7




6




16




15



      Total new IMAX Theater Systems



16




14




35




38



Upgrades of IMAX theater systems



1




3




5




7



Total IMAX Theater System installations



17




17




40




45



 



September 30,



Theater System Backlog:


2022




2021



Sales and sales-type lease arrangements



170





182



Hybrid JRSA



127





139



Traditional JRSA



192


(2)



185


(2)

Total Theater System backlog



489


(3)



506


(4)












September 30,



Theater Network:


2022




2021



Commercial Multiplex Theaters









Sales and sales-type lease arrangements



696





676



Hybrid JRSA



150





144



Traditional JRSA



776





760



Total Commercial Multiplex Theaters



1,622





1,580



Commercial Destination Theaters



12





12



Institutional Theaters



69





72



Total Theater network(5)



1,703





1,664



_______________

(1)     For the three months ended September 30, 2022, includes two IMAX Theater Systems that were relocated from their original locations (2021 — nil). For the nine months ended September 30, 2022, includes eight IMAX Theater Systems that were relocated from their original location. (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 41 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 116 upgrades of existing locations to IMAX Laser Theater Systems configurations.

(4)     Includes 157 new IMAX Laser Theatre systems configurations and 95 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




Nine Months Ended





September 30,




September 30,





2022



2021




2022



2021


Revenues
















Technology sales


$

18,065



$

13,160





$

35,270




$

34,508


Image enhancement and maintenance services



36,233




30,588






117,285





76,914


Technology rentals



12,540




10,219






43,726





26,708


Finance income



1,917




2,635






6,478





8,181






68,755




56,602






202,759





146,311


Costs and expenses applicable to revenues
















Technology sales



10,061




6,230






20,264





17,779


Image enhancement and maintenance services



20,563




16,461






56,259





38,582


Technology rentals



6,430




6,424






18,728





19,579






37,054




29,115






95,251





75,940


Gross margin



31,701




27,487






107,508





70,371


Selling, general and administrative expenses



32,905




28,377






100,181





82,393


Research and development



1,115




2,025






3,667





5,696


Amortization of intangible assets



1,111




1,255






3,412





3,586


Credit loss expense (reversal), net



808




(3,317)






8,149





(4,884)


Asset impairments











4,470






Legal judgment and arbitration awards















(1,770)


Loss from operations



(4,238)




(853)






(12,371)





(14,650)


Realized and unrealized investment gains



35




30






99





5,311


Retirement benefits non-service expense



(140)




(117)






(417)





(347)


Interest income



257




538






1,176





1,680


Interest expense



(1,323)




(1,540)






(4,354)





(5,534)


Loss before taxes



(5,409)




(1,942)






(15,867)





(13,540)


Income tax expense



(2,348)




(4,402)






(8,091)





(9,416)


Net loss



(7,757)




(6,344)






(23,958)





(22,956)


Less: net income attributable to non-controlling interests



(1,196)




(2,034)






(1,455)





(9,473)


Net loss attributable to common shareholders


$

(8,953)



$

(8,378)





$

(25,413)




$

(32,429)



















Net loss per share attributable to common shareholders - basic and diluted:                                                                                                                                   


Net loss per share - basic and diluted:


$

(0.16)



$

(0.14)





$

(0.44)




$

(0.55)



















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

















Basic



56,039




59,244






57,301





59,207



Diluted



56,039




59,244






57,301





59,207


Additional Disclosure:
















Depreciation and amortization


$

15,640



$

14,899





$

42,663




$

40,570


Amortization of deferred financing costs


$

712



$

741





$

2,465




$

1,749


 

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)




September 30,



December 31,




2022



2021


Assets







Cash and cash equivalents


$

87,151



$

189,711


Accounts receivable, net of allowance for credit losses



125,686




110,050


Financing receivables, net of allowance for credit losses



122,618




141,049


Variable consideration receivables, net of allowance for credit losses



43,643




44,218


Inventories



36,378




26,924


Prepaid expenses



13,145




11,802


Film assets, net of accumulated amortization



4,535




4,241


Property, plant and equipment, net of accumulated depreciation



251,518




260,353


Investment in equity securities



1,095




1,087


Other assets



16,294




17,799


Deferred income tax assets, net of valuation allowance



14,369




13,906


Goodwill



61,718




39,027


Other intangible assets, net of accumulated amortization



22,077




23,080


Total assets


$

800,227



$

883,247


Liabilities







Accounts payable


$

22,607



$

15,943


Accrued and other liabilities



119,138




111,896


Deferred revenue



76,461




81,281


Revolving credit facility borrowings, net of unamortized debt issuance costs



2,660




2,472


Convertible Notes and other borrowings, net



226,527




223,641


Deferred income tax liabilities



14,900




17,642


Total liabilities



462,293




452,875


Commitments and contingencies







Non-controlling interests



736




758


Shareholders' equity







Capital stock common shares — no par value. Authorized — unlimited number.







55,973,443 issued and outstanding (December 31, 2021 — 58,653,642 issued and outstanding)



388,953




409,979


Other equity



179,571




174,620


Statutory surplus reserve



3,932




3,932


Accumulated deficit



(282,944)




(234,975)


Accumulated other comprehensive (loss) income



(16,173)




2,527


Total shareholders' equity attributable to common shareholders



273,339




356,083


Non-controlling interests



63,859




73,531


Total shareholders' equity



337,198




429,614


Total liabilities and shareholders' equity


$

800,227



$

883,247


 

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)

(Unaudited)




Nine Months Ended




September 30,




2022



2021


Operating Activities









Net loss


$


(23,958)



$


(22,956)


Adjustments to reconcile net loss to cash provided by (used in) operating activities:









Depreciation and amortization




42,663





40,570


Amortization of deferred financing costs




2,465





1,749


Credit loss expense (reversal), net




8,149





(4,884)


Write-downs




5,707





878


Deferred income tax benefit




(3,374)





(1,687)


Share-based and other non-cash compensation




19,510





18,558


Unrealized foreign currency exchange loss




1,310





555


Realized and unrealized investment gains




(99)





(5,311)


Changes in assets and liabilities:









Accounts receivable




(18,050)





(24,336)


Inventories




(10,131)





653


Film assets




(14,174)





(10,035)


Deferred revenue




(5,989)





(1,434)


Changes in other operating assets and liabilities




(3,548)





(11,902)


Net cash provided by (used in) operating activities




481





(19,582)


Investing Activities









Acquisition of SSIMWAVE, net of cash and cash equivalents acquired




(12,639)






Purchase of property, plant and equipment




(5,248)





(2,353)


Investment in equipment for joint revenue sharing arrangements




(14,543)





(5,361)


Interest in film classified as a financial instrument




(4,731)






Acquisition of other intangible assets




(3,246)





(3,399)


Proceeds from sale of equity securities








17,769


Net cash (used in) provided by investing activities




(40,407)





6,656


Financing Activities









Proceeds from issuance of convertible notes, net








223,675


Debt issuance costs related to convertible notes








(1,163)


Purchase of capped calls related to convertible notes








(19,067)


Revolving credit facility borrowings




4,890





3,600


Repayments of revolving credit facility borrowings




(3,600)





(300,243)


Credit facility amendment fees paid




(2,277)





(474)


Repurchase of common shares, IMAX Corporation




(53,581)





(4,610)


Repurchase of common shares, IMAX China




(3,043)





(5,016)


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




(2,701)





(5,027)


Net cash used in financing activities




(64,595)





(110,487)


Effects of exchange rate changes on cash and cash equivalents




1,961





(958)


Decrease in cash and cash equivalents during period




(102,560)





(124,371)


Cash and cash equivalents, beginning of period




189,711





317,379


Cash and cash equivalents, end of period


$


87,151



$


193,008


 

Segment Revenue and Gross Margin (Margin Loss)




Three Months Ended



Nine Months Ended




September 30,




September 30,


In thousands of U.S. Dollars


2022



2021




2022




2021


Revenue















IMAX Technology Network















IMAX DMR


$

19,919



$

15,701




$

67,064




$

39,438


JRSA, contingent rent



12,540




9,887





43,708





26,108





32,459




25,588





110,772





65,546


IMAX Technology Sales and Maintenance















IMAX Systems



15,957




13,236





32,806





35,117


JRSA, fixed fees



998




1,036





2,486





3,776


IMAX Maintenance



13,939




13,055





43,564





33,196


Other Theater Business(1)



2,107




363





3,697





1,283





33,001




27,690





82,553





73,372


Film Distribution and Post-Production



2,049




1,598





5,418





4,001


Sub-total for reportable segments



67,509




54,876





198,743





142,919


All Other(2)



1,246




1,726





4,016





3,392


Total


$

68,755



$

56,602




$

202,759




$

146,311

















Gross Margin (Margin Loss)















IMAX Technology Network















IMAX DMR


$

11,408



$

7,293




$

42,965




$

22,405


JRSA, contingent rent



6,302




3,626





25,389





7,299





17,710




10,919





68,354





29,704


IMAX Technology Sales and Maintenance















IMAX Systems



9,029




8,086





18,432





21,646


JRSA, fixed fees



(154)




280





79





783


IMAX Maintenance



6,406




6,462





21,643





15,360


Other Theater Business



168




64





314





269





15,449




14,892





40,468





38,058


Film Distribution and Post-Production



(2,082)




416





(3,470)





997


 Sub-total for reportable segments



31,077




26,227





105,352





68,759


All Other(2)



624




1,260





2,156





1,612


Total


$

31,701



$

27,487




$

107,508




$

70,371


_______________

(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, SSIMWAVE, 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. The results of SSIMWAVE, which was acquired on September 22, 2022, were not material to the period.

 

IMAX CORPORATION
NON-GAAP FINANCIAL MEASURES
(in thousands of U.S. dollars)

In this release, the Company presents adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per basic and diluted share, EBITDA, Adjusted EBITDA per Credit Facility, and Adjusted EBITDA margin as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net loss attributable to common shareholders and adjusted net 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; (v) acquisition-related expenses, as well as the related tax impact of these adjustments, and (vi) 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 loss attributable to common shareholders and adjusted net 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) acquisition-related expenses; (iv) write-downs, net of recoveries, including asset impairments and credit loss expense; and (v) 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.

In this release, the Company also presents free cash flow, which is not recognized under U.S. GAAP, as a supplemental measure of the Company's liquidity. Prior to the third quarter of 2022, the Company defined free cash flow as net cash provided by or used in operating activities minus cash used in investing activities (from the Condensed Consolidated Statements of Cash Flows). In the third quarter of 2022, the Company updated its definition of free cash flow to deduct only normal recurring capital expenditures, including the Company's investment in joint revenue sharing arrangements, the purchase of property, plant and equipment and the acquisition of other intangible assets (from the Condensed Consolidated Statements of Cash Flows), from net cash provided by or used in operating activities. Management believes that free cash flow is a supplemental measure of the 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 September 30, 2022 (1)



For the Three Months Ended September 30, 2021 (1)




Attributable to
Non-controlling



Less:






Attributable to
Non-controlling



Less:







Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to




Common



Non-controlling



Common



Common



Non-controlling



Common




Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)

























Reported net loss


$


(7,757)



$


1,196



$


(8,953)



$


(6,344)



$


2,034



$


(8,378)


Add (subtract):

























Income tax expense




2,348





(22)





2,370





4,402





634





3,768


Interest expense, net of interest income




354





(39)





393





261





(90)





351


Depreciation and amortization, including film
asset amortization




15,640





1,214





14,426





14,899





1,723





13,176


Amortization of deferred financing costs(2)




712









712





741









741


EBITDA


$


11,297



$


2,349



$


8,948



$


13,959



$


4,301



$


9,658


Share-based and other non-cash compensation




5,544





(27)





5,571





6,226





233





5,993


Unrealized investment gains




(35)









(35)





(30)









(30)


Acquisition-related expenses




955









955














Write-downs (recoveries), including asset impairments
and credit loss expense




1,083





66





1,017





(2,901)





(381)





(2,520)


Adjusted EBITDA per Credit Facility


$


18,844



$


2,388



$


16,456



$


17,254



$


4,153



$


13,101


Revenues attributable to common shareholders(3)




68,755





4,257





64,498





56,602





6,699





49,903


Adjusted EBITDA margin attributable to common
shareholders




27.4

%




56.1

%




25.5

%




30.5

%




62.0

%




26.3

%

 



For the Nine Months Ended September 30, 2022 (1)



For the Nine Months Ended September 30, 2021 (1)




Attributable to
Non-controlling



Less:






Attributable to
Non-controlling



Less:







Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to




Common



Non-controlling



Common



Common



Non-controlling



Common




Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)

























Reported net loss


$


(23,958)



$


1,455



$


(25,413)



$


(22,956)



$


9,473



$


(32,429)


Add (subtract):

























Income tax expense




8,091





470





7,621





9,416





2,492





6,924


Interest expense, net of interest income




713





(236)





949





2,105





(265)





2,370


Depreciation and amortization, including film
asset amortization




42,663





3,711





38,952





40,570





3,910





36,660


Amortization of deferred financing costs(2)




2,465









2,465





1,749









1,749


EBITDA


$


29,974



$


5,400



$


24,574



$


30,884



$


15,610



$


15,274


Share-based and other non-cash compensation




19,510





555





18,955





18,558





824





17,734


Unrealized investment gains




(99)









(99)





(5,311)





(1,571)





(3,740)


Acquisition-related expenses




955









955














Write-downs (recoveries), including asset impairments
and credit loss expense




13,856





1,561





12,295





(4,006)





(1,136)





(2,870)


Legal judgment and arbitration awards
















(1,770)









(1,770)


Adjusted EBITDA per Credit Facility


$


64,196



$


7,516



$


56,680



$


38,355



$


13,727



$


24,628


Revenues attributable to common shareholders(3)




202,759





13,609





189,149





146,311





22,819





123,492


Adjusted EBITDA margin attributable to common
shareholders




31.7

%




55.2

%




30.0

%




26.2

%




60.2

%




19.9

%

 



For the Twelve Months Ended September 30, 2022 (1)



For the Twelve Months Ended September 30, 2021 (1)




Attributable to
Non-controlling



Less:






Attributable to
Non-controlling



Less:







Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to




Common



Non-controlling



Common



Common



Non-controlling



Common




Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)

























Reported net loss


$


(10,579)



$


4,734



$


(15,313)



$


(42,500)



$


11,174



$


(53,674)


Add (subtract):

























Income tax expense




19,239





2,027





17,212





11,314





3,209





8,105


Interest expense, net of interest income




970





(327)





1,297





3,642





(355)





3,997


Depreciation and amortization, including film
asset amortization




58,175





5,056





53,119





52,575





5,009





47,566


Amortization of deferred financing costs(2)




3,229









3,229





2,056









2,056


EBITDA


$


71,034



$


11,490



$


59,544



$


27,087



$


19,037



$


8,050


Share-based and other non-cash compensation




27,031





845





26,186





24,251





1,050





23,201


Unrealized investment gains




(128)









(128)





(4,169)





(1,218)





(2,951)


Acquisition-related expenses




955









955














Write-downs (recoveries), including asset impairments
and credit loss expense




15,675





1,538





14,137





3,410





(603)





4,013


Legal judgment and arbitration awards
















2,335









2,335


Adjusted EBITDA per Credit Facility


$


114,567



$


13,873



$


100,694



$


52,914



$


18,266



$


34,648


Revenues attributable to common shareholders(3)




311,331





24,347





286,984





202,301





30,744





171,557


Adjusted EBITDA margin attributable to common
shareholders




36.8

%




57.0

%




35.1

%




26.2

%




59.4

%




20.2

%

_______________

(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
September 30, 2022



Three Months Ended
September 30, 2021



Total revenues






$


68,755







$


56,602



Greater China revenues


$


14,889







$


22,203







Non-controlling interest ownership percentage(4)




28.59

%








30.17

%






Deduction for non-controlling interest share of revenues








(4,257)









(6,699)



Revenues attributable to common shareholders






$


64,498







$


49,903





















(In thousands of U.S. Dollars)


Nine Months Ended
September 30, 2022



Nine Months Ended
September 30, 2021



Total revenues






$


202,759







$


146,311



Greater China revenues


$


47,602







$


75,634







Non-controlling interest ownership percentage(4)




28.59

%








30.17

%






Deduction for non-controlling interest share of revenues








(13,609)









(22,819)



Revenues attributable to common shareholders






$


189,149







$


123,492



 

(In thousands of U.S. Dollars)


Twelve Months Ended
September 30, 2022



Twelve Months Ended
September 30, 2021



Total revenues






$


311,331







$


202,301



Greater China revenues


$


84,769







$


101,957







Non-controlling interest ownership percentage(4)




28.72

%








30.15

%






Deduction for non-controlling interest share of revenues








(24,347)









(30,744)



Revenues attributable to common shareholders






$


286,984







$


171,557



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

 

Adjusted Net Loss Attributable to Common Shareholders and Adjusted Diluted Per Share Calculations










Three Months Ended



Three Months Ended




September 30, 2022



September 30, 2021


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


Net Loss



Per Share



Net Loss



Per Share


Net loss attributable to common shareholders


$

(8,953)



$

(0.16)



$

(8,378)



$

(0.14)


Adjustments(1):













Stock-based compensation



5,431




0.10




5,876




0.10


COVID-19 government relief benefits, net



(212)







(2,048)




(0.03)


Realized and unrealized investment gains



(34)







(30)





Acquisition-related expenses



955




0.02








Tax Impact on items listed above



(214)







(452)




(0.01)


Adjusted net loss(1)


$

(3,027)



$

(0.05)



$

(5,032)



$

(0.08)















Weighted average shares outstanding - basic and diluted






56,039







59,244


 



Nine Months Ended



Nine Months Ended




September 30, 2022



September 30, 2021


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


Net Loss



Per Share



Net Loss



Per Share


Net loss attributable to common shareholders


$

(25,413)



$

(0.44)



$

(32,429)



$

(0.55)


Adjustments(1):













Stock-based compensation



18,651




0.33




17,675




0.30


COVID-19 government relief benefits, net



(373)




(0.01)




(5,513)




(0.09)


Legal judgment and arbitration awards









(1,770)




(0.03)


Realized and unrealized investment gains



(98)







(3,740)




(0.06)


Acquisition-related expenses



955




0.02








Tax impact on items listed above



(1,071)




(0.02)




(1,417)




(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)


$

(7,349)



$

(0.13)



$

(26,813)



$

(0.44)















 Weighted average shares outstanding - basic and diluted






57,301







59,207


_______________

(1)     Reflects amounts attributable to common shareholders.

 

Free Cash Flow  



Three Months Ended



Nine Months Ended


(In thousands of U.S. Dollars)


September 30, 2022



September 30, 2022


Net cash provided by operating activities


$


5,774



$


481


Net cash used in capital expenditures




(9,772)





(23,037)


Free cash flow


$


(3,998)



$


(22,556)


 

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SOURCE IMAX Corporation