IMAX Corporation Reports Second Quarter 2020 Results
IMAX reported a 92% decrease in Q2 2020 revenue, totaling $8.9 million as theater closures due to COVID-19 impacted earnings. The company reported a net loss of $26 million, or ($0.44) per diluted share. Despite challenges, 409 theaters reopened in China, bringing approximately 40% of its global network back online. With a cash reserve of $319 million and an amended credit agreement, IMAX is positioned for recovery. The company anticipates a strong lineup of films in 2021 and has signed agreements for 29 new theater systems.
- 409 IMAX theaters reopened in China, approximately 40% of global network generating revenue.
- Strong cash balance of $319 million as of June 30, 2020, provides financial stability.
- Amended credit agreement offers flexibility through Q3 2021.
- Signed agreements to add 29 theater systems, showcasing global demand.
- Q2 2020 revenue decreased 92% from the previous year to $8.9 million.
- Net loss attributable to common shareholders was $26 million.
- Adjusted EBITDA loss of $18.5 million compared to $41.4 million gain in Q2 2019.
NEW YORK, July 28, 2020 /PRNewswire/ --
HIGHLIGHTS
- 409 IMAX® theaters reopened in China over the July 24th weekend. The Company now has 624 theaters or approximately
40% of its global network generating revenue and is ready to benefit from an IMAX-friendly slate - A strong balance sheet, with
$319 million in consolidated cash as of June 30, 2020, and an amended credit agreement, with covenant flexibilty through Q3 2021, positions the Company well to manage through the ongoing COVID-19 related challenges - Cost reduction measures taken at the outset of the pandemic reduced the Company's average monthly cash burn to approximately
$10 million , as demonstrated by the second quarter and in line with previous guidance - IMAX signed agreements to add 29 theater systems, headlined by the international 17-theater CGV and 10-theater Wanda deals, demonstrating continued global demand for The IMAX Experience® from existing partners in established markets
- As a result of the global pandemic, second quarter 2020 revenue decreased
92% versus 2019 to$8.9 million . Second quarter 2020 net (loss) attributable to common shareholders was ($26) million . Non-GAAP adjusted EBITDA (loss) was ($18.5) million versus$41.4 million in the prior-year period
Three Months Ended | |||||||||||
June 30, | |||||||||||
In thousands except per share data | 2020 | 2019 | YoY % | ||||||||
Total Revenue | $ | 8.9 | $ | 104.8 | (91.6) | % | |||||
(Margin Loss) Gross Margin | $ | (7.7) | $ | 59.6 | (112.9) | % | |||||
(Margin Loss) Gross Margin (%) | (86.8) | % | 56.8 | % | |||||||
Net (Loss) income attributable to common shareholders | $ | (26.0) | $ | 11.4 | N/A | ||||||
Diluted Net (Loss) income per share attributable to common shareholders | $ | (0.44) | $ | 0.19 | N/A | ||||||
Adjusted Net (Loss) Income(1) | $ | (26.1) | $ | 19.7 | N/A | ||||||
Adj. Net (Loss) Income Per Share(1) | $ | (0.44) | $ | 0.32 | N/A | ||||||
Adjusted EBITDA per Credit Facility attributable to common shareholders(1) | $ | (18.5) | $ | 41.4 | N/A | ||||||
Adj. EBITDA Margin attributable to common shareholders (%) (1) | (219.3) | % | 43.8 | % | N/A | ||||||
_____________ |
(1) Non-GAAP Financial Measure |
Note: For the definition and reconciliations of reported results to non-GAAP financial results, please refer to the discussion of non-GAAP financial measures at the end of this earnings release. |
IMAX Corporation (NYSE:IMAX) today reported second quarter 2020 revenues of
Results in the second quarter reflect the closure of substantially all of the theaters in the Company's global network driven by the Coronavirus pandemic. These closures reduced IMAX Technology Network and IMAX Maintenance revenue to essentially zero and caused a margin loss for the quarter. During the second quarter, the Company accrued
"As the only global theatrical platform for blockbuster entertainment, IMAX is uniquely advantaged as theaters begin to reopen on a rolling basis throughout the world. Our model gives us the flexibility to reopen where safe, program locally relevant content to maximize revenues, and play a leadership role as the industry returns," said IMAX CEO Richard L. Gelfond.
"We are seeing early signs of progress, with approximately
"We believe that our solid financial position gives IMAX the strength to be ready as the rest of our network comes back online. At the end of the second quarter, the Company had
"We continue to look ahead to an exceptionally strong slate through 2021, as studios affirm their commitment to the theatrical release by rescheduling their key blockbuster titles. Additionally, major global exhibitors continue to underscore the value of The IMAX Experience, with new agreements including a 10-theatre deal with Wanda Film in China and a multinational 17-theatre deal with CGV."
"We remain unwavering in our stance that the health and safety of audiences must be the priority as theaters reopen and we support by the work of local governments and our partners to put public health first."
Second Quarter and June Year-to-Date Segment Results(1)
IMAX Technology Network | IMAX Technology Sales and Maintenance | ||||||||||||||||||||||||
Revenue | (Margin Margin | (Margin Margin % | Revenue | Gross Margin | Gross Margin % | ||||||||||||||||||||
2Q20 | $ | 0.4 | $ | (6.5) | N/A | $ | 4.6 | $ | 0.2 | 4.9 | % | ||||||||||||||
2Q19 | 64.8 | 43.3 | 66.8 | % | 34.8 | 15.4 | 44.1 | % | |||||||||||||||||
% change | (99.4) | % | (115.1) | % | (86.8) | % | (98.5) | % | |||||||||||||||||
YTD 2Q20 | $ | 17.0 | $ | (3.7) | (21.8) | % | $ | 19.7 | $ | 5.0 | 25.1 | % | |||||||||||||
YTD 2Q19 | 110.8 | 75.0 | 67.7 | % | 65.0 | 28.5 | 43.8 | % | |||||||||||||||||
% change | (84.7) | % | (104.9) | % | (69.7) | % | (82.6) | % | |||||||||||||||||
(1) Please refer to the Company's Form 10-Q for the period ended June 30, 2020 for additional segment information |
IMAX Technology Network
- IMAX Technology Network revenues decreased
99% to$0.4 million in the second quarter of 2020, compared to$64.8 million in the prior-year period. The closure of the Company's network due to the COVID-19 pandemic impacted results. - Margin (loss) for the IMAX Technology Network was (
$6.5) million in the second quarter of 2020 and was driven by the lack of revenue and ongoing fixed costs associated with our installed IMAX network.
IMAX Technology Sales and Maintenance
- IMAX Technology Sales and Maintenance revenues decreased
87% to$4.6 million in the second quarter of 2020, compared with$34.8 million in the prior year period. Seven fewer sales type lease installations principally resulted in lower IMAX system revenue. IMAX maintenance revenue declined to nil as regular maintenance services were suspended due to the COVID-19 theater closures. - Total gross margin for IMAX Technology Sales and Maintenance was
$0.2 million compared to$15.4 million in the prior year period. Lower revenue was partially offset by the shift in certain overhead costs from cost of sales to SG&A.
Cash Balances and Outstanding Debt
Total cash and cash equivalents as of June 30, 2020 were
Share Count and Capital Return
- The weighted average diluted shares outstanding at the end of the second quarter of 2020 declined
4.4% to 58.8 million, compared to 61.5 million in the second quarter of 2019, due primarily to share repurchase activity during the twelve-month period. During the second quarter of 2020, the Company did not repurchase any stock. A total of$89.4 million remains available under the Company's outstanding share repurchase authorization, which was extended in June and now expires in June 2021. - During the second quarter of 2020, IMAX China repurchased a total of 423 thousand shares at an average price of
$1.50 for a total value of approximately$640 thousand .
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 information posted on the Company's corporate and Investor Relations website may be deemed 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.
Conference Call
The Company will host a conference call today at 4:30PM ET to discuss its second quarter 2020 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 (800) 367-2403 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 490-5367. The conference ID for the call is 9071085. 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 9071085.
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, 2020, there were 1,615 IMAX theater systems (1,527 commercial multiplexes, 13 commercial destinations, 75 institutional) operating in 81 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 "HK.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®, 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: | Media: |
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. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company's growth and operations in China; the performance of IMAX DMR® films; the signing of theater system agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company's inability to protect the Company's intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; the impact of COVID-19 on our financial condition and results of operations and on the businesses of our customers and exhibitor partners; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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; (iii) IMAX Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii) Film Post-production. The Company organizes its reportable segments into the following four 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 the Joint Revenue Sharing Arrangement ("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; |
(iii) | New Business Initiatives, which is a segment that includes activities related to the exploration of new lines of business and new initiatives outside of the Company's core business; and |
(iv) | Film Distribution and Post-production, which includes activities related to the licensing of film content, the distribution of films primarily for the Company's institutional theater partners (through the Film Distribution segment) and the provision of film post-production and quality control services (through the Film Post-production segment). |
Signings and Installations | |||||||||
Three Months Ended June 30, | |||||||||
Theater System Signings: | 2020 | 2019 | |||||||
Full new sales and sales-type lease arrangements | 12 | 7 | |||||||
New hybrid joint revenue sharing lease arrangements | 17 | 45 | |||||||
New traditional joint revenue sharing arrangements | - | 2 | |||||||
Total new IMAX theaters | 29 | 54 | |||||||
Upgrades of IMAX theater systems | - | 19 | |||||||
Total theater signings | 29 | 73 | |||||||
Three Months Ended June 30, | |||||||||
Theater System Installations: | 2020 | 2019 | |||||||
Full new sales and sales-type lease arrangements | 2 | 9 | |||||||
New hybrid joint revenue sharing lease arrangements | 1 | 5 | |||||||
New traditional joint revenue sharing arrangements | - | 13 | |||||||
Total new IMAX theaters | 3 | 27 | |||||||
Upgrades of IMAX theater systems | — | 8 | |||||||
Total theater installations | 3 | 35 | |||||||
Three Months Ended June 30, | |||||||||
Theater Sales Backlog: | 2020 | 2019 | |||||||
Sales and sales-type lease arrangements | 190 | 182 | |||||||
Hybrid JRSA | 154 | 154 | |||||||
Traditional JRSA | 215 | (1) | 276 | (1) | |||||
Total theater backlog | 559 | (2) | 612 | (3) | |||||
Three Months Ended June 30, | |||||||||
Theater Network: | 2020 | 2019 | |||||||
Commercial Multiplex Theaters: | |||||||||
Sales and sales-type lease arrangements | 659 | 619 | |||||||
Hybrid joint revenue sharing lease arrangements | 138 | 133 | |||||||
Traditional joint revenue sharing lease arrangements | 730 | 693 | |||||||
Total Commercial Multiplex Theaters(4) | 1,527 | 1,445 | |||||||
Commercial Destination Theaters | 13 | 15 | |||||||
Institutional Theaters | 75 | 81 | |||||||
Total theater network | 1,615 | 1,541 | |||||||
(1) Includes 46 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2019 — 60). |
(2) Includes 154 new IMAX with Laser projection system configurations and 94 upgrades of existing locations to IMAX with Laser projection system configurations. |
(3) Includes 139 new IMAX with Laser projection system configurations and 118 upgrades of existing locations to IMAX with Laser projection system configurations. |
(4) Period to period changes are net of the effects 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, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Technology sales | $ | 2,687 | $ | 19,694 | $ | 8,349 | $ | 34,894 | ||||||||
Image enhancement and maintenance services | 3,799 | 56,662 | 24,520 | 100,809 | ||||||||||||
Technology rentals | (137) | 25,863 | 5,834 | 44,033 | ||||||||||||
Finance income | 2,506 | 2,578 | 5,054 | 5,259 | ||||||||||||
8,855 | 104,797 | 43,757 | 184,995 | |||||||||||||
Costs and expenses applicable to revenues | ||||||||||||||||
Technology sales | 2,546 | 11,939 | 6,415 | 21,374 | ||||||||||||
Image enhancement and maintenance services | 7,244 | 26,781 | 25,060 | 46,024 | ||||||||||||
Technology rentals | 6,753 | 6,524 | 14,884 | 12,904 | ||||||||||||
16,543 | 45,244 | 46,359 | 80,302 | |||||||||||||
(Margin loss) gross margin | (7,688) | 59,553 | (2,602) | 104,693 | ||||||||||||
Selling, general and administrative expenses | 29,796 | 32,136 | 58,432 | 59,785 | ||||||||||||
Research and development | 1,232 | 1,222 | 3,432 | 2,358 | ||||||||||||
Amortization of intangibles | 1,344 | 1,218 | 2,665 | 2,293 | ||||||||||||
Credit loss expense | 1,440 | 927 | 11,657 | 1,358 | ||||||||||||
Asset impairments | - | - | 1,151 | - | ||||||||||||
Exit costs, restructuring charges and associated impairments | - | - | - | 850 | ||||||||||||
(Loss) income from operations | (41,500) | 24,050 | (79,939) | 38,049 | ||||||||||||
Gain (loss) in fair value of equity investment | 2,025 | (4,544) | (2,514) | (2,053) | ||||||||||||
Retirement benefits non-service expense | (130) | (160) | (246) | (320) | ||||||||||||
Interest income | 891 | 572 | 1,256 | 1,142 | ||||||||||||
Interest expense | (1,581) | (636) | (2,229) | (1,317) | ||||||||||||
(Loss) income before taxes | (40,295) | 19,282 | (83,672) | 35,501 | ||||||||||||
Income tax benefit (expense) | 10,248 | (5,308) | (5,257) | (8,956) | ||||||||||||
Equity in losses of investees, net of tax | - | (138) | (529) | (222) | ||||||||||||
Net (loss) income | (30,047) | 13,836 | (89,458) | 26,323 | ||||||||||||
Less: Net loss (income) attributable to non-controlling interests | 4,080 | (2,439) | 14,137 | (6,661) | ||||||||||||
Net (loss) income attributable to common shareholders | $ | (25,967) | $ | 11,397 | $ | (75,321) | $ | 19,662 | ||||||||
Net (loss) income per share attributable to common shareholders - basic and diluted: | ||||||||||||||||
Net (loss) income per share — basic and diluted | $ | (0.44) | $ | 0.19 | $ | (1.26) | $ | 0.32 | ||||||||
Weighted average number of shares outstanding (000's): | ||||||||||||||||
Basic | 58,808 | 61,331 | 59,613 | 61,354 | ||||||||||||
Fully Diluted | 58,808 | 61,507 | 59,613 | 61,525 | ||||||||||||
Additional Disclosure: | ||||||||||||||||
Depreciation and amortization(1) | $ | 11,930 | $ | 15,593 | $ | 27,182 | $ | 29,804 | ||||||||
(1) Includes | |||||||||||||||||
IMAX CORPORATION | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
In accordance with United States Generally Accepted Accounting Principles | |||||||
(In thousands of dollars, except share amounts) | |||||||
(Unaudited) | |||||||
June 30, | December 31, | ||||||
2020 | 2019 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 318,986 | $ | 109,484 | |||
Accounts receivable, net of allowance for credit losses | 54,839 | 99,513 | |||||
Financing receivables, net of allowance for credit losses | 123,865 | 128,038 | |||||
Variable consideration receivable, net of allowance for credit losses | 39,397 | 40,040 | |||||
Inventories | 60,179 | 42,989 | |||||
Prepaid expenses | 12,008 | 10,237 | |||||
Film assets | 13,147 | 17,921 | |||||
Property, plant and equipment | 287,220 | 306,849 | |||||
Investment in equity securities | 13,192 | 15,685 | |||||
Other assets | 24,575 | 25,034 | |||||
Deferred income tax assets | 46,826 | 23,905 | |||||
Other intangible assets | 28,204 | 30,347 | |||||
Goodwill | 39,027 | 39,027 | |||||
Total assets | $ | 1,061,465 | $ | 889,069 | |||
Liabilities | |||||||
Bank indebtedness | $ | 297,765 | $ | 18,229 | |||
Accounts payable | 13,668 | 20,414 | |||||
Accrued and other liabilities | 108,917 | 112,779 | |||||
Deferred revenue | 104,311 | 94,552 | |||||
Deferred income tax liabilities | 18,475 | — | |||||
Total liabilities | 543,136 | 245,974 | |||||
Commitments and contingencies | |||||||
Non-controlling interests | 4,237 | 5,908 | |||||
Shareholders' equity | |||||||
Capital stock common shares — no par value. Authorized — unlimited number. | |||||||
58,878,749 issued and 58,857,436 outstanding (December 31, 2019 — 61,362,872 issued and 61,175,852 outstanding) | 405,583 | 423,386 | |||||
Less: Treasury stock, 21,313 shares at cost (December 31, 2019 — 187,020) | (329) | (4,038) | |||||
Other equity | 172,690 | 171,789 | |||||
Accumulated deficit | (134,395) | (40,253) | |||||
Accumulated other comprehensive loss | (4,180) | (3,190) | |||||
Total shareholders' equity attributable to common shareholders | 439,369 | 547,694 | |||||
Non-controlling interests | 74,723 | 89,493 | |||||
Total shareholders' equity | 514,092 | 637,187 | |||||
Total liabilities and shareholders' equity | $ | 1,061,465 | $ | 889,069 | |||
IMAX CORPORATION | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In thousands of dollars) | |||||||
(Unaudited) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2020 | 2019 | ||||||
Cash (used in) provided by: | |||||||
Operating Activities | |||||||
Net (loss) income | $ | (89,458) | $ | 26,323 | |||
Adjustments to reconcile net (loss) income to cash from operating activities: | |||||||
Depreciation and amortization | 27,182 | 29,804 | |||||
Credit loss expense | 11,657 | 1,358 | |||||
Write-downs | 6,806 | 508 | |||||
Deferred income tax (benefit) expense | (4,878) | 1,296 | |||||
Share-based and other non-cash compensation | 10,850 | 11,710 | |||||
Unrealized foreign currency exchange loss (gain) | 312 | (14) | |||||
Loss in fair value of equity securities | 2,514 | 2,053 | |||||
Equity in losses of investees | 529 | 222 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 36,971 | 489 | |||||
Inventories | (16,887) | (3,226) | |||||
Film Assets | (4,057) | (8,214) | |||||
Deferred revenue | 9,799 | (1,355) | |||||
Changes in other operating assets and liabilities | (12,220) | (12,437) | |||||
Net cash (used in) provided by operating activities | (20,880) | 48,517 | |||||
Investing Activities | |||||||
Purchase of property, plant and equipment | (594) | (4,175) | |||||
Purchase of equipment for joint revenue sharing arrangements | (3,908) | (22,235) | |||||
Acquisition of other intangible assets | (1,221) | (1,121) | |||||
Investment in equity securities | — | (15,153) | |||||
Net cash used in investing activities | (5,723) | (42,684) | |||||
Financing Activities | |||||||
Increase in credit facility borrowings | 280,244 | 35,000 | |||||
Repayment of credit facility borrowings | — | (50,000) | |||||
Credit facility amendment fees paid | (959) | — | |||||
Settlement of restricted share units and options | (2,757) | (7,619) | |||||
Treasury stock repurchased for future settlement of restricted share units | (329) | (1,575) | |||||
Repurchase of common shares, IMAX China | (1,532) | (16,813) | |||||
Taxes withheld and paid on employee stock awards vested | (251) | (219) | |||||
Common shares issued - stock options exercised | — | 2,379 | |||||
Repurchase of common shares | (36,624) | (1,258) | |||||
Issuance of subsidiary shares to non-controlling interests (net of return on capital) | — | 1,106 | |||||
Dividends paid to non-controlling interests | (2,118) | (2,266) | |||||
Net cash provided by (used in) financing activities | 235,674 | (41,265) | |||||
Effects of exchange rate changes on cash | 431 | 293 | |||||
Increase (decrease) in cash and cash equivalents during period | 209,502 | (35,139) | |||||
Cash and cash equivalents, beginning of period | 109,484 | 141,590 | |||||
Cash and cash equivalents, end of period | $ | 318,986 | $ | 106,451 | |||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenue | |||||||||||||||
IMAX Technology Network | |||||||||||||||
IMAX DMR | $ | 546 | $ | 39,293 | $ | 11,175 | $ | 67,243 | |||||||
Joint revenue sharing arrangements, contingent rent(2) | (137) | 25,540 | 5,834 | 43,584 | |||||||||||
409 | 64,833 | 17,009 | 110,827 | ||||||||||||
IMAX Technology Sales and Maintenance | |||||||||||||||
IMAX Systems | 4,549 | 16,501 | 10,237 | 29,527 | |||||||||||
Joint revenue sharing arrangements, fixed fees | 369 | 2,548 | 1,139 | 5,087 | |||||||||||
IMAX Maintenance | — | 13,207 | 7,370 | 26,158 | |||||||||||
Other Theater Business(3) | (309) | 2,580 | 954 | 4,206 | |||||||||||
4,609 | 34,836 | 19,700 | 64,978 | ||||||||||||
New Business Initiatives | 632 | 478 | 1,110 | 1,312 | |||||||||||
Film Distribution and Post-production | 3,182 | 3,601 | 5,676 | 6,263 | |||||||||||
8,832 | 103,748 | 43,495 | 183,380 | ||||||||||||
Other | 23 | 1,049 | 262 | 1,615 | |||||||||||
Total revenues | $ | 8,855 | $ | 104,797 | $ | 43,757 | $ | 184,995 | |||||||
(Margin Loss) Gross Margin | |||||||||||||||
IMAX Technology Network | |||||||||||||||
IMAX DMR(1) | $ | (30) | $ | 23,961 | $ | 4,413 | $ | 43,736 | |||||||
Joint revenue sharing arrangements, contingent rent(1) | (6,501) | 19,318 | (8,119) | 31,253 | |||||||||||
(6,531) | 43,279 | (3,706) | 74,989 | ||||||||||||
IMAX Technology Sales and Maintenance | |||||||||||||||
IMAX Systems (1) | 2,650 | 8,019 | 5,826 | 15,071 | |||||||||||
Joint revenue sharing arrangements, fixed fees(1) | 48 | 870 | 227 | 1,165 | |||||||||||
IMAX Maintenance | (1,908) | 5,640 | (1,149) | 10,921 | |||||||||||
Other Theater Business | (564) | 841 | 46 | 1,316 | |||||||||||
226 | 15,370 | 4,950 | 28,473 | ||||||||||||
New Business Initiatives | 512 | 281 | 873 | 900 | |||||||||||
Film Distribution and Post-production (1) | (1,396) | 458 | (3,331) | 433 | |||||||||||
(7,189) | 59,388 | (1,214) | 104,795 | ||||||||||||
Other | (499) | 165 | (1,388) | (102) | |||||||||||
Total Segment Margin | $ | (7,688) | $ | 59,553 | $ | (2,602) | $ | 104,693 | |||||||
__________________ |
(1) IMAX DMR gross margin includes marketing expense of $nil and |
(2) The Company is reporting negative revenue due to the continued amortization of lessee incentives that are typically netted against lease revenues, which are abnormally low during the period due to the COVID-19 global pandemic. |
(3) The Company is reporting negative revenue due to an adjustment to prior period revenue. |
IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Non-GAAP Financial Measures:
In this release, the Company presents adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per 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 (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share exclude, where applicable: (i) share-based compensation; (ii) exit costs, restructuring charges and associated impairments, (iii) changes in the fair value of equity investments, (iv) COVID-19 government relief benefits, as well as the related tax impact of these adjustments, and (v) the income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain 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) income 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.
In addition to the non-GAAP financial measures discussed above, management also uses "EBITDA," as such term is defined in the 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. Accordingly, this non-GAAP financial 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 in the current period, if 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 (loss) income excluding (i) interest expense, net of interest income; (ii) income tax (benefit) expense; and (iii) depreciation and amortization, including film asset amortization. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) gain (loss) in fair value of equity investment; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) gain (loss) from equity accounted investment; (v) exit costs, restructuring charges and associated impairments; (vi) legal arbitration award; and (vii) executive transition costs.
Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the condensed consolidated statements of cash flows). Cash provided by operating activities consist of net (loss) income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented 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. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measures is presented below.
For the Three Months Ended June 30, 2020 | For the Three Months Ended June 30, 2019 | ||||||||||||||||||||||||||||
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 | $ | (30,047) | $ | (4,080) | $ | (25,967) | $ | 13,836 | $ | 2,439 | $ | 11,397 | |||||||||||||||||
Add (subtract): | |||||||||||||||||||||||||||||
Income tax (benefit) expense | (10,248) | 638 | (10,886) | 5,308 | 1,187 | 4,121 | |||||||||||||||||||||||
Interest expense, net of interest income | 524 | (96) | 620 | 64 | (140) | 204 | |||||||||||||||||||||||
Depreciation and amortization, including film asset amortization | 11,930 | 1,049 | 10,881 | 15,593 | 1,177 | 14,416 | |||||||||||||||||||||||
EBITDA | $ | (27,841) | $ | (2,489) | $ | (25,352) | $ | 34,801 | $ | 4,663 | $ | 30,138 | |||||||||||||||||
Share-based and other non-cash compensation | 6,541 | 299 | 6,242 | 7,186 | 228 | 6,958 | |||||||||||||||||||||||
(Gain) Loss in fair value of equity investment | (2,025) | (612) | (1,413) | 4,544 | 1,443 | 3,101 | |||||||||||||||||||||||
Write-downs, including asset impairments and credit loss expense | 3,843 | 1,815 | 2,028 | 1,169 | 84 | 1,085 | |||||||||||||||||||||||
Loss from equity accounted investments | — | — | — | 138 | — | 138 | |||||||||||||||||||||||
Adjusted EBITDA per Credit Facility | $ | (19,482) | $ | (987) | $ | (18,495) | $ | 47,838 | $ | 6,418 | $ | 41,420 | |||||||||||||||||
Revenues attributable to common shareholders(2) | 8,855 | 421 | 8,434 | 104,797 | 10,216 | 94,581 | |||||||||||||||||||||||
Adjusted EBITDA margin attributable to common shareholders | (220.0) | % | (234.7) | % | (219.3) | % | 45.6 | % | 62.8 | % | 43.8 | % | |||||||||||||||||
For the Twelve Months Ended June 30, 2020 (1) | For the Twelve Months Ended June 30, 2019 (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 | $ | (57,210) | $ | (9,093) | $ | (48,117) | $ | 37,596 | $ | 11,220 | $ | 26,376 | |||||||||||||||||
Add (subtract): | |||||||||||||||||||||||||||||
Income tax expense | 13,069 | 6,707 | 6,362 | 10,386 | 3,737 | 6,649 | |||||||||||||||||||||||
Interest expense, net of interest income | 922 | (424) | 1,346 | 392 | 63 | 329 | |||||||||||||||||||||||
Depreciation and amortization, including film asset amortization | 60,865 | 4,897 | 55,968 | 59,207 | 5,372 | 53,835 | |||||||||||||||||||||||
EBITDA | $ | 17,646 | $ | 2,087 | $ | 15,559 | $ | 107,581 | $ | 20,392 | $ | 87,189 | |||||||||||||||||
Share-based and other non-cash compensation | 22,710 | 730 | 21,980 | 23,513 | 527 | 22,986 | |||||||||||||||||||||||
Loss in fair value of equity investment | 978 | 274 | 704 | 2,053 | 652 | 1,401 | |||||||||||||||||||||||
Write-downs, including asset impairments and credit loss expense | 23,404 | 5,420 | 17,984 | 5,518 | 1,827 | 3,691 | |||||||||||||||||||||||
Loss from equity accounted investments | 304 | — | 304 | 409 | — | 409 | |||||||||||||||||||||||
Exit costs, restructuring charges and associated impairments | — | — | — | 9,234 | — | 9,234 | |||||||||||||||||||||||
Legal arbitration award | — | — | — | 4,237 | — | 4,237 | |||||||||||||||||||||||
Executive transition costs | — | — | — | 2,994 | — | 2,994 | |||||||||||||||||||||||
Adjusted EBITDA per Credit Facility | $ | 65,042 | $ | 8,511 | $ | 56,531 | $ | 155,539 | $ | 23,398 | $ | 132,141 | |||||||||||||||||
Revenues attributable to common shareholders(2) | 254,426 | 21,697 | 232,729 | 376,067 | 39,905 | 336,162 | |||||||||||||||||||||||
Adjusted EBITDA margin attributable to common shareholders | 25.6 | % | 39.2 | % | 24.3 | % | 41.4 | % | 58.6 | % | 39.3 | % | |||||||||||||||||
_____________ | |
(1) Senior Secured Net Leverage Ratio calculated using twelve months ended Adjusted EBITDA per Credit Facility. During the second quarter, the Company entered into the Amendment to the Credit Facility Agreement which provides for, among other things, the suspension of the Senior Secured Net Leverage Ratio financial covenant through the first quarter of 2021. | |
(2) | |
Three months ended June 30, 2020 | Three months ended June 30, 2019 | 12 months ended June 30, 2020 | 12 months ended June 30, 2019 | |||||||||||||||||||||||||||||||||||
Total revenues | $ | 8,855 | $ | 104,797 | $ | 254,426 | $ | 376,067 | ||||||||||||||||||||||||||||||
Greater China revenues | $ | 1,393 | $ | 32,575 | $ | 71,700 | $ | 125,289 | ||||||||||||||||||||||||||||||
Non-controlling interest ownership percentage(3) | 30.19 | % | 31.36 | % | 30.26 | % | 31.85 | % | ||||||||||||||||||||||||||||||
Deduction for non-controlling interest share of revenues | (421) | (10,216) | (21,697) | (39,905) | ||||||||||||||||||||||||||||||||||
Revenues attributable to common shareholders | $ | 8,434 | $ | 94,581 | $ | 232,729 | $ | 336,162 | ||||||||||||||||||||||||||||||
(3) Weighted average ownership percentage for change in non-controlling interest share |
IMAX CORPORATION | |||||||||||||||
Adjusted Net (Loss) Income Attributable to Common Shareholders and Adjusted Diluted Per Share Calculations | |||||||||||||||
(In thousands of U.S. dollars) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||||||
(In thousands of U.S. dollars, except per share amounts) | Net Loss | Diluted EPS | Net Income | Diluted EPS | |||||||||||
Reported net (loss) income attributable to common shareholders | $ | (25,967) | $ | (0.44) | $ | 11,397 | $ | 0.19 | |||||||
Adjustments(1): | |||||||||||||||
Share-based compensation | 6,168 | 0.10 | $ | 6,799 | 0.11 | ||||||||||
Change in the fair value of equity securities | (1,413) | (0.02) | 3,101 | 0.05 | |||||||||||
COVID-19 government relief benefits | (3,151) | (0.05) | — | — | |||||||||||
Tax Impact on items listed above | (857) | (0.01) | (1,604) | (0.03) | |||||||||||
Income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain subsidiaries | (841) | (0.02) | — | — | |||||||||||
Adjusted net (loss) income(1) | $ | (26,061) | $ | (0.44) | $ | 19,693 | $ | 0.32 | |||||||
Weighted average basic shares outstanding | 58,808 | 61,331 | |||||||||||||
Weighted average diluted shares outstanding | 58,808 | 61,507 | |||||||||||||
(1) | Reflects amounts attributable to non-controlling interests. |
Six Months Ended | Six Months Ended | ||||||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||||||
(In thousands of U.S. dollars, except per share amounts) | Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||
Reported net (loss) income attributable to common shareholders | $ | (75,321) | $ | (1.26) | $ | 19,662 | $ | 0.32 | |||||||
Adjustments(1): | |||||||||||||||
Share-based compensation | 10,243 | 0.17 | $ | 11,076 | 0.18 | ||||||||||
Exit costs, restructuring charges and associated impairments | — | — | 850 | 0.01 | |||||||||||
Change in the fair value of equity securities | 1,752 | 0.03 | 1,401 | 0.03 | |||||||||||
COVID-19 government relief benefits | (3,151) | (0.05) | — | — | |||||||||||
Tax impact on items listed above | (1,195) | (0.02) | (2,484) | (0.04) | |||||||||||
Income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain subsidiaries | 12,885 | 0.21 | — | — | |||||||||||
Adjusted net (loss) income(1) | $ | (54,787) | $ | (0.92) | $ | 30,505 | $ | 0.50 | |||||||
Weighted average basic shares outstanding | 59,613 | 61,354 | |||||||||||||
Weighted average diluted shares outstanding | 59,613 | 61,525 | |||||||||||||
(1) | Reflects amounts attributable to non-controlling interests. |
Free Cash Flow: | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, 2020 | June 30, 2020 | ||||||||
Net cash used in operating activities | $ | (26,846) | $ | (20,880) | |||||
Net cash used in investing activities | (3,010) | (5,723) | |||||||
Free cash flow | $ | (29,856) | $ | (26,603) | |||||
View original content to download multimedia:http://www.prnewswire.com/news-releases/imax-corporation-reports-second-quarter-2020-results-301101555.html
SOURCE IMAX Corporation
FAQ
What were IMAX's Q2 2020 financial results?
How many IMAX theaters reopened recently?
What is IMAX's cash position as of June 30, 2020?
What is the adjusted EBITDA for IMAX in Q2 2020?
What new agreements did IMAX sign in 2020?
