IMAX Q3 Earnings & Revenues Surpass Estimates, Stock Jumps

IMAX Corporation (NYSE:IMAX) reported better-than-expected results in the third quarter of 2017, despite the overall movie industry struggling of late. Following its earnings release, shares of the company rose 11.4% to $23.40 at the close of trading session on Oct 26.

The company reported earnings of 8 cents per share, beating the Zacks Consensus Estimate of 3 cents. The bottom line, however, declined 33.3% on a year-over-year basis.

Total revenue in the third quarter of 2017 was $98.8 million, up 14.2% year over year. The figure also surpassed the Zacks Consensus Estimate of $84.7 million. Adjusted EBITDA margin in the reported quarter was 39.6%. Results in the quarter were aided by the impressive performance of some films, increase in theatre installations and high returns from IMAX screens. Global box office revenue at IMAX increased more than 17.4% to $218.8 million in the quarter.

Category-wise, Equipment and product revenues were $30.71 million, marginally down compared with the year-ago quarter. Services revenues totaled $49.82 million, up 33.9%. Rentals revenues totaled $15.85 million, down 0.9%. Finance income revenues were $2.42 million, up 5.8%.

Segmental Results

IMAX Theater Business generated revenues of $43.5 million, slightly higher than the prior-year quarter.Within this segment, IMAX system sales and sales-type leases were $25.11 million, up 15.2%. Ongoing fees and finance income was $2.45 million, down 14.8%. Joint revenue sharing arrangements-fixed fees were $2.66 million, down 51.8%. Theatre system maintenance was $11.51 million, up 11.8%, while Other Theatre revenues fell 35.1% to $1.59 million.

Network Business generated revenues of $42.64 million, up 16.8% year over year. Within this segment, IMAX DMR was $25.97 million, up 20.5%. Joint revenue sharing arrangements-contingent rent was $15.57 million, reflecting an increase of 9.8% and IMAX systems-contingent rent improved 40.4% to $1.09 million.

Other segments generated revenues of $3.73 million, down 41.3% year over year. Within this segment, Film distribution and post-production plunged a massive 38.9% year over year to $2.69 million, while Other revenues tumbled 46.7% to $1.04 million.

Liquidity

The company exited the third quarter with cash and cash equivalents of $157.71 million compared with $204.76 million at the end of 2016.

Network Growth Statistics

The company installed 51 theaters (including 2 upgrades) in the reported quarter compared with 50 (including 2 upgrades) in the third quarter of 2016. It signed 17 theatre agreements in the third quarter of 2017, down a significant 89.5% on a year-over-year basis. As of Sep 30, 2017, the total theater count in backlog was 545 compared with 547 in the year-ago quarter.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the broader Consumer Discretionary sector are Adidas (DE:ADSGN) AG (OTC:ADDYY) , Caleres, Inc. (NYSE:CAL) and Activision Blizzard, Inc (NASDAQ:ATVI) . While Adidas and Activision Blizzard sport a Zacks Rank #1 (Strong Buy), Caleres carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Shares of Adidas, Caleres and Activision Blizzard have rallied more than 35%, 25% and 43% respectively, in a year.

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