Propelled by box office behemoth "Avatar," IMAX Corp. on Thursday reported fourth-quarter adjusted earnings of $20.9 million, compared with $2.6 million for the year-ago quarter.
Total revenue for the fourth quarter ended December 31 rose 98% to $54.2 million, vs. total revenue of $27.4 million in the same period of 2008. That’s a quarterly record for the giant-screen company.
That’s an especially impressive contribution considering the James Cameron epic opened December 18.
And "Avatar" has continued to lift IMAX in the first quarter of 2010.
IMAX CEO Richard L. Gelfond said, "While the success of Fox’s ‘Avatar: An IMAX 3D Experience’ drove our year-end performance and has provided a very strong start to 2010, we believe the film has many positive implications for our business over the long term. A significant number of moviegoers around the world experienced IMAX for the first time, which we believe has added new repeat customers to our theaters and reinforced the power of the IMAX Experience with both studios and exhibitors. We anticipate that our business momentum — from theater signings, to our record $187 million of box office quarter-to-date — is positioning us to deliver a strong first quarter of 2010."
That $187 million thus far in the first quarter, which comes thanks to both "Avatar" and last weekend’s box office champ, Tim Burton’s "Alice in Wonderland," compares with $14 million at the same point last year.
Also boosting the bottom line were increased revenues from IMAX systems installation, up 69% to $19.6 million from $11.6 million in the year-ago period. IMAX installed and recognized revenue on 16 theater systems, including six digital upgrades, under sales or lease arrangements in the fourth quarter of 2009, compared with six theater systems, including one digital upgrade, in Q4 2008.
The entire statement is below:
TORONTO, March 11, 2010 — IMAX Corporation (Nasdaq:IMAX) (TSX:IMX) today reported that fourth quarter adjusted EBITDA was $20.9 million, compared to $2.6 million for the fourth quarter last year. Total revenue for the fourth quarter ended December 31, 2009, increased 98% to $54.2 million, a record for a single quarter for the Company, compared to total revenue of $27.4 million in the same period last year. Fourth quarter adjusted net income which excludes the impact of variable stock compensation was $12.9 million, or $0.20 per diluted share, compared to an adjusted net loss of $9.7 million, or $(0.22) per share on the same basis last year. Reported net income was $4.0 million, or $0.06 per diluted share, for the fourth quarter ended December 31, 2009, compared to a reported net loss of $9.0 million, or $(0.21) per share for the fourth quarter last year.
For the twelve-months ended December 31, 2009, adjusted EBITDA was $58.5 million, compared to $8.2 million last year. Total revenue increased 67% to $171.2 million, a record for a full-year for the Company, compared to $102.7 million for the twelve-months ended December 31, 2008. Fiscal 2009 adjusted net income which excludes the impact of variable stock compensation was $20.5 million, or $0.38 per diluted share, compared to an adjusted net loss of $33.6 million, or $(0.79) per share on the same basis last year. Reported net income increased to $5.0 million, or $0.09 per diluted share during fiscal 2009, compared to a reported net loss of $33.6 million, or $(0.79) per share during fiscal 2008. For a reconciliation of reported results to adjusted results and the definition of adjusted EBITDA as defined by the Company’s credit facility, please see the tables at the end of this press release.
"Our primary goals for 2009 were to return to profitability and recapitalize our balance sheet and we are pleased to have delivered on both," stated IMAX Chief Executive Officer Richard L. Gelfond. "Our fourth quarter results are an exclamation point to a year in which our multiplex theatre network grew by 38%, our strong film slate drove our per screen average to $1.2 million and we refinanced our balance sheet which will enable us to continue to grow and invest in our business."
Mr. Gelfond continued, "While the success of Fox’s Avatar: An IMAX 3D Experience drove our year-end performance and has provided a very strong start to 2010, we believe the film has many positive implications for our business over the long term. A significant number of moviegoers around the world experienced IMAX for the first time, which we believe has added new repeat customers to our theatres and reinforced the power of The IMAX Experience with both studios and exhibitors. We anticipate that our business momentum — from theatre signings, to our record $187 million of box office quarter-to-date – is positioning us to deliver a strong first quarter of 2010."
Adjusted fourth quarter 2009 and fourth quarter 2008 results exclude the impact of the changes in value of the Company’s variable stock compensation. The fourth quarter of 2009 included an $8.9 million charge resulting primarily from the increased value of the Company’s variable stock compensation at the end of the period as compared to a $0.7 million benefit from variable stock compensation in the fourth quarter of 2008, primarily due to the decreased value of the Company’s variable stock compensation over the period. Adjusted fiscal 2009 net earnings excludes the $15.4 million charge primarily due to the increased value of the Company’s variable stock compensation over the period, which compares to less than a $0.1 million charge in fiscal 2008.
Fourth quarter IMAX systems revenue increased 69% to $19.6 million versus $11.6 million in the prior year period. The Company installed and recognized revenue on 16 theatre systems, including six digital upgrades, under sales or sales-type lease arrangements in the fourth quarter of 2009, compared to six theatre systems, including one digital upgrade, recognized in the fourth quarter of 2008.
Revenue from joint revenue sharing arrangements increased more than five-fold to $9.1 million in the fourth quarter of 2009 compared to $1.4 million in the prior year period. In the fourth quarter, the Company installed a total of 22 systems under joint revenue sharing arrangements, including one digital upgrade, compared to 27 such installations, including one digital upgrade, in the fourth quarter of 2008. For the full year 2009, revenue from joint revenue sharing arrangements increased to $21.6 million from $3.4 million in 2008. As of December 31, 2009, a total of 117 theatres under joint revenue sharing arrangements were in operation, a 125% increase compared to 52 joint revenue sharing theatres as of December 31, 2008. Joint revenue sharing theatres open for the full 52 weeks generated per screen averages of approximately $1.1 million in fiscal 2009.
Mr. Gelfond concluded, "Our box office momentum has continued with Disney’s home run title Alice in Wonderland. With our projected network growth, increased activity on the theatre signings front – including our recently announced joint venture partnership with CJ CGV in South Korea – our high level of business activity and our compelling film slate, we believe 2010 will be a very strong year and that we have laid a solid foundation for our business to build upon over the years to come."
For the fourth quarter of 2009, total film revenue increased 104% to $15.1 million, compared to $7.4 million in the fourth quarter of 2008. Production and IMAX DMR(R) revenues increased to $12.0 million compared to $3.4 million in the year ago period. For the full year, total film revenue increased 50% to $51.6 million from $34.4 million in 2008. Production and IMAX DMR revenues increased to $35.6 million from $17.9 million in 2008. Results for both the fourth quarter and full year were driven by the increased number of IMAX(R) theatres, the increased number of DMR titles released and the stronger film slate in 2009 versus 2008.
Gross box office from DMR titles was $101.0 million in the fourth quarter of 2009, compared to $30.9 million in the fourth quarter of 2008. The primary drivers of gross box office in the fourth quarter were Twentieth Century Fox’s Avatar: An IMAX 3D Experience and Disney’s A Christmas Carol: An IMAX 3D Experience. Avatar has generated approximately $218 million of worldwide box office to date ($54.2 million was captured in the fourth quarter), for a domestic per screen average of $678,000 and an international per screen average of $1,065,000. A Christmas Carol generated $30.8 million in gross box office during the quarter, for a domestic per screen average of $116,300 and international per screen average of $140,300. On September 18, Sony Pictures Cloudy With A Chance of Meatballs: An IMAX 3D Experience was released day-and-date to IMAX theatres and generated $11.2 million in worldwide box office ($5.8 million of which was captured in the fourth quarter) for a per screen average of approximately $58,100. For fiscal 2009, IMAX DMR gross box increased 108% to a record $270.8 million compared to $130.3 million in 2008.
Fourth quarter 2009 gross margin increased to $27.9 million, or 51.4% of revenue, from $6.5 million, or 23.6% of revenue in the fourth quarter of 2008. Included in gross margin for both periods was $1.1 million and $1.5 million, respectively, in launch costs associated with the opening of new joint revenue sharing theatres. In addition, the fourth quarters of 2009 and 2008 included charges totaling $0.7 million and $2.9 million, respectively, in inventory write-down and accelerated depreciation expense of certain of the Company’s film-based projectors. Excluding the above referenced items from both periods, gross margin was $29.7 million, or 54.8% of revenue in the fourth quarter of 2009, compared to $10.9 million, or 39.8% of revenue in 2008.
Fourth quarter selling, general and administrative expenses, excluding the $8.9 million charge due to the increased value of the Company’s variable stock compensation, (primarily driven by the $3.90 move in the Company’s stock price over the course of the fourth quarter which impacts variable stock compensation), was $11.4 million, or 21.1% of revenue, compared to $10.2 million, or 37.2% of revenue, on the same basis in the fourth quarter of 2008. Reported fourth quarter selling, general and administrative expense was $20.3 million, compared to $9.5 million in the year ago period.
The fourth quarter of 2009 included a one-time charge of $0.8 million primarily due to the write-off of deferred financing costs triggered by the early retirement of the remainder of the Company’s 9 5/8% Senior Notes as well as net earnings of $0.2 million from discontinued operations.
As of December 31, 2009, the Company’s backlog consisted of 136 theatre systems compared to 213 theatre systems in backlog as of December 31, 2008. Included in the 2009 and 2008 system backlog totals were 42 and 106 theatres, respectively, under joint revenue sharing arrangements and 94 and 107 theatres, respectively, under sales and sales-type lease arrangements. During the fourth quarter of 2009, the Company signed contracts for 12 theatre systems, including eight digital system upgrades, compared to eight new system signings during the fourth quarter of 2008. At the end of 2009, 151 digital systems were in operation, compared to 46 at the end of 2008.
2010 Film Slate
Turning to the 2010 film slate,on March 5th, Walt Disney Pictures and IMAX released Alice in Wonderland: An IMAX 3D Experience day-and-date to 188 domestic and 53 international IMAX theatres. Through Tuesday,the film has generated approximately $19.6 million worldwide, or approximately $81,200 per screen both domestically and internationally. Following Alice in Wonderland, the Company’s announced 2010 film slate to date includes DreamWorks Animation’s How to Train Your Dragon: An IMAX 3D Experience (March 26, 2010); Iron Man 2: The IMAX Experience (May 2010); DreamWorks Animation’s Shrek Forever After: An IMAX 3D Experience(May 2010); Walt Disney Pictures’ Prince of Persia: Sands of Time: The IMAX Experience (May 2010); Walt Disney Pictures’ Toy Story 3: An IMAX 3D Experience (June 2010); Summit Entertainment’s The Twilight Saga: Eclipse: The IMAX Experience (June 2010); Warner Bros. Pictures’ Inception: The IMAX Experience (July 2010); Walt Disney Pictures’ Tron Legacy: An IMAX 3D Experience (December 2010); and an IMAX original film in partnership with Warner Brothers, titled Hubble 3D (March 2010). The Company remains in active discussions with all of the major studios regarding potential titles for release as far out as 2012.
