NEW YORK, April 30, 2020 /PRNewswire/ --
HIGHLIGHTS
- A solid balance sheet and ample cash puts the Company in a
strong position to operate through this historic period of
COVID-19-driven theater closures
- In response to COVID-19, the Company has implemented cost
reductions and drew on its revolver, ending the quarter with
$352.3 million in consolidated cash
and its $300 million revolver fully
drawn
- The Company estimates a monthly cash burn rate of approximately
$10 million and remains confident in
its ability to operate through an extended business shut down and a
zero revenue environment
- First quarter 2020 revenue decreased 56.5% versus 2019 to
$34.9 million
- First quarter 2020 net (loss) attributable to common
shareholders was ($49.4) million.
Non-GAAP adjusted EBITDA (loss) was ($4.4)
million versus $28.5 million
in the prior-year period
- The Company is actively preparing to reopen to what is
projected to be an IMAX-friendly second-half release slate
|
|
Three Months
Ended
|
|
|
March 31
|
(In millions of
U.S. dollars, except per share data)
|
2020
|
|
2019
|
|
YoY
%
|
|
|
|
|
|
|
Change
|
Total
Revenue
|
$
|
34.9
|
$
|
80.2
|
|
(56.5%)
|
|
|
|
|
|
|
|
Gross
Margin
|
$
|
5.1
|
$
|
45.1
|
|
(88.7%)
|
Gross
Margin (%)
|
|
14.6%
|
|
56.3%
|
|
|
|
|
|
|
|
|
|
Net (Loss)
Income(1)
|
$
|
(49.4)
|
$
|
8.3
|
|
N/A
|
Diluted Net (Loss)
Income Per Share(1)
|
$
|
(0.82)
|
$
|
0.13
|
|
N/A
|
Adj. Net (Loss)
Income Per Share(1)(2)
|
$
|
(0.48)
|
$
|
0.18
|
|
N/A
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
$
|
(4.4)
|
$
|
28.5
|
|
N/A
|
Adj.
EBITDA Margin (%)(2)
|
|
(13.1%)
|
|
39.8%
|
|
N/A
|
(1)Attributable to common
shareholders
|
(2)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 first quarter 2020
revenues of $34.9 million, gross
margin of $5.1 million, and a net
(loss) attributable to common shareholders of ($49.4) million, or ($0.82) per diluted share. First quarter non-GAAP
adjusted net loss attributable to common shareholders was
($28.7) million, or ($0.48) per diluted share. For reconciliations of
reported results to non-GAAP financial results, please see the end
of this press release.
The closure of substantially all of the Company's theater
network due to the global outbreak of the COVID-19 pandemic drove
results down in the first quarter. Also contributing to the
Company's first quarter loss was a $10.2
million provision for credit losses on its theater
receivables as a result of the current pandemic-related challenges
facing the exhibition industry. In addition, the
Company's results include a deferred income tax charge of
$19.7 million ($13.7 million attributable to common shareholders
or $0.23 per share) related to its
decision in the first quarter of 2020 to no longer indefinitely
reinvest historical earnings from its Chinese business. The Company
had previously planned to keep these funds overseas and, as a
result, was not required to accrue withholding taxes. The change in
IMAX China's plans reflect its desire for increased capital
allocation flexibility to repatriate cash from the Chinese mainland
including for payment of dividends to shareholders including IMAX
Corporation.
"IMAX is uniquely positioned to manage through a temporary
shutdown of theaters as a result of strategic planning which led to
our strong financial position, valuable brand, and vast global
footprint. With our strong cash balance and continued cost
discipline, we believe that we will be ready to program our
network, accelerate our theater business, and once again bring
audiences the world's most immersive entertainment experience when
ready," said IMAX CEO Richard L.
Gelfond.
"When global economies restart, and theaters reopen, we believe
audiences will turn to strong, trusted brands like IMAX. In 2019,
IMAX delivered a record year across global, international, and
local language box office — underscoring the strength of our brand
and product offering throughout an increasingly diverse geographic
footprint."
"We are working closely with our studio partners to reshape our
slate in the second half of 2020 and into 2021 — a period that is
now scheduled to see an impressive offering of marquee blockbuster
films. Operationally, we are focused on ensuring that we can
support this rich content pipeline with our proprietary
post-production process and our enhanced marketing
capabilities."
"We continue to monitor the situation and carefully plan for the
reopening of theaters in China
when it is safe. We look forward to circumstances continuing to
improve in the market and meeting strong audience demand for
immersive filmmaking and entertainment experiences."
"Above all, we are focused on the safety and well-being of our
employees and our audiences. Our thoughts remain with those
impacted by this pandemic around the world, as we continue to
support the efforts of local governments and our industry to
prioritize public health."
First Quarter Segment Results(1)
|
|
IMAX Technology
Network
|
|
IMAX Technology
Sales and
Maintenance
|
|
|
Revenue
|
|
Gross
Margin
|
Gross
Margin %
|
|
Revenue
|
|
Gross
Margin
|
Gross
Margin %
|
|
|
|
|
|
|
|
|
|
|
|
1Q20
|
$
|
16.6
|
$
|
2.8
|
17.0%
|
$
|
15.1
|
$
|
4.7
|
31.3%
|
1Q19
|
|
46.0
|
|
31.7
|
68.9%
|
|
30.1
|
|
13.1
|
43.5%
|
%
change
|
|
(63.9%)
|
|
(91.1%)
|
|
|
(49.9%)
|
|
(63.9%)
|
|
|
(1) Please refer to the Company's
Form 10-Q for the period ended March 31, 2020 for additional
segment information.
|
IMAX Technology Network
- IMAX Technology Network revenues decreased 63.9% to
$16.6 million in the first quarter of
2020, compared to $46.0 million in
the prior-year period. The decline in revenue was driven by a 62.9%
decrease in IMAX global box office connected to COVID-19-related
theater closures.
- Total gross margin for the IMAX Technology Network business was
17.0% in the most recent quarter, compared to 68.9% in the
prior-year period. The year-over-year decrease in total gross
margin was primarily driven by lower revenue.
IMAX Technology Sales and Maintenance
- IMAX Technology Sales and Maintenance revenues decreased 49.9%
to $15.1 million in the first quarter
of 2020, compared with $30.1 million
in the prior year period.
- Total gross margin for IMAX Technology Sales and Maintenance
was 31.3% compared to 43.5% in the prior year period. The
year-over-year decline in total gross margin was primarily driven
by fewer sales and sales-type leases due to COVID-19 related delays
in theater installations and lower maintenance revenue as such
services were not able to be provided while theaters are
closed.
Cash Balances and Outstanding Debt
Total cash and cash equivalents as of March 31, 2020 was $352.3
million. Total debt was $300.0
million as of March 31, 2020
and represented an increase compared to $18.2 million as of December 31, 2019. As of March 31, 2020, the Company's $300.0 million credit facility due June 28, 2023 was drawn in its entirety.
Share Count and Capital Return
- The weighted average diluted shares outstanding at the end of
the first quarter of 2020 declined 1.9% to 60.4 million, compared
to 61.6 million in first quarter 2019, due primarily to share
repurchase activity. During the quarter, a total of 2.5 million
shares were repurchased at an average price of $14.72 for a total value of approximately
$36.6 million. A total of
$89.4 million remains available under
the Company's outstanding share repurchase authorization, which
expires in June 2020.
- During the first quarter of 2020, IMAX China repurchased a
total of 480.6 thousand shares at an average price of $1.85 for a total value of approximately
$890.8 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 8:30AM ET to discuss its first 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) 458-4148
approximately 5 to 10 minutes before the call begins. Other
international callers should dial (647) 484-0477. The conference ID
for the call is 2512506. 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 2512506.
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 March
31, 2020, there were 1,616 IMAX theater systems (1,526
commercial multiplexes, 14 commercial destinations, 76
institutional) operating in 81 countries and territories. Shares of
IMAX China Holding, Inc., a subsidiary of IMAX Corp., trade on the
Hong Kong Stock Exchange under the stock code "HK.1970."
IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D
Experience®, The IMAX Experience®, and IMAX nXos® are trademarks of
IMAX Corporation. 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
Brett
Harriss
212-821-0187
bharriss@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. 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, including the adverse impact of the
coronavirus outbreak 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
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).
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, free
cash flow and return on invested capital 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, and (iii) changes in the fair value of
equity investments, as well as the related tax impact of these
adjustments, and (iv) income tax expense 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 charges to 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
Company's credit agreement, and which is referred to herein as
"Adjusted EBITDA per Credit Facility." As allowed by the Company's
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. 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
income (expense), net; (ii) income tax provision (benefit); and
(iii) depreciation and amortization. Adjusted EBITDA per Credit
Facility is defined as EBITDA excluding: (i) gain (loss) from
equity accounted investments; (ii) stock and other non-cash
compensation; (iii) exit costs, restructuring charges and
associated impairments; (iv) change in fair value of equity
investment; (v) write-downs, net of recoveries, including asset
impairments and receivable provisions; and (vi) adjusted EBITDA
attributable to non-controlling interests.
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 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.
Signings and
Installations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
|
|
|
Theater System
Signings:
|
2020
|
|
2019
|
|
|
|
|
|
|
Full new sales and
sales-type lease arrangements
|
2
|
|
9
|
|
|
|
|
|
|
New hybrid joint
revenue sharing lease arrangements
|
-
|
|
3
|
|
|
|
|
|
|
New traditional joint
revenue sharing arrangements
|
2
|
|
2
|
|
|
|
|
|
|
Total new IMAX
Theater Systems
|
4
|
|
14
|
|
|
|
|
|
|
Upgrades of IMAX
Theater Systems
|
11
|
|
9
|
|
|
|
|
|
|
Total IMAX Theater System signings
|
15
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
|
|
|
Theater System
Installations:
|
2020
|
|
2019
|
|
|
|
|
|
|
Full new sales and
sales-type lease arrangements
|
2
|
|
6
|
|
|
|
|
|
|
New hybrid joint
revenue sharing lease arrangements
|
1
|
|
4
|
|
|
|
|
|
|
New traditional joint
revenue sharing arrangements
|
2
|
|
4
|
|
|
|
|
|
|
Total new IMAX
Theater Systems
|
5
|
|
14
|
|
|
|
|
|
|
Upgrades of IMAX
theater systems
|
7
|
|
3
|
|
|
|
|
|
|
Total
IMAX Theater System installations
|
12
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theater Sales
Backlog:
|
2020
|
|
2019
|
|
|
|
|
|
|
Sales and sales-type
lease arrangements
|
180
|
|
182
|
|
|
|
|
|
|
Joint revenue sharing
arrangements
|
|
|
|
|
|
|
|
|
|
Hybrid lease
arrangements
|
138
|
|
117
|
|
|
|
|
|
|
Traditional
arrangements
|
215
|
(1)
|
272
|
(1)
|
|
|
|
|
|
Total IMAX Theater
System backlog
|
533
|
|
571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IMAX Theater
System Network:
|
2020
|
|
2019
|
|
|
|
|
|
|
Commercial Multiplex
Theaters:
|
|
|
|
|
|
|
|
|
|
Sales and sales-type
lease arrangements
|
659
|
|
611
|
|
|
|
|
|
|
Hybrid joint revenue
sharing lease arrangements
|
136
|
|
128
|
|
|
|
|
|
|
Traditional joint
revenue sharing lease arrangements
|
731
|
|
681
|
|
|
|
|
|
|
Total Commercial
Multiplex Theaters
|
1,526
|
|
1,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Destination Theaters
|
14
|
|
14
|
|
|
|
|
|
|
Institutional
Theaters
|
76
|
|
80
|
|
|
|
|
|
|
Total
IMAX Theater System network
|
1,616
|
|
1,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes 34 IMAX Theater
Systems where the customer has the option to convert from joint
revenue sharing arrangements
to a sales arrangement (2019 — 46).
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In thousands of
U.S. dollars, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
|
|
2020
|
|
2019
|
Revenues(1)
|
|
|
|
|
|
|
Technology
sales
|
|
$
|
5,662
|
|
$
|
15,200
|
Image enhancement and
maintenance services
|
|
|
20,721
|
|
|
44,147
|
Technology
rentals
|
|
|
5,971
|
|
|
18,170
|
Finance
income
|
|
|
2,548
|
|
|
2,681
|
|
|
|
|
34,902
|
|
|
80,198
|
Costs and expenses
applicable to revenues(1)
|
|
|
|
|
|
|
Technology
sales
|
|
|
3,869
|
|
|
9,435
|
Image enhancement and
maintenance services
|
|
|
17,816
|
|
|
19,243
|
Technology
rentals
|
|
|
8,131
|
|
|
6,380
|
|
|
|
|
29,816
|
|
|
35,058
|
Gross
margin
|
|
|
5,086
|
|
|
45,140
|
Selling, general and
administrative expenses
|
|
|
28,636
|
|
|
27,649
|
Research and
development
|
|
|
2,200
|
|
|
1,136
|
Amortization of
intangibles
|
|
|
1,321
|
|
|
1,075
|
Credit loss
expense
|
|
|
10,217
|
|
|
431
|
Asset
impairments
|
|
|
1,151
|
|
|
-
|
Exit costs,
restructuring charges and associated impairments
|
|
|
-
|
|
|
850
|
(Loss) Income from
operations
|
|
|
(38,439)
|
|
|
13,999
|
Change in fair value
of equity securities
|
|
|
(4,539)
|
|
|
2,491
|
Retirement benefits
non-service expense
|
|
|
(116)
|
|
|
(160)
|
Interest
income
|
|
|
365
|
|
|
570
|
Interest
expense
|
|
|
(648)
|
|
|
(681)
|
(Loss) income
before taxes
|
|
|
(43,377)
|
|
|
16,219
|
Income tax
expense
|
|
|
(15,505)
|
|
|
(3,648)
|
Equity in losses of
investees, net of tax
|
|
(529)
|
|
|
(84)
|
Net (loss)
income
|
|
|
(59,411)
|
|
|
12,487
|
Less: Net loss
(income) attributable to non-controlling interests
|
|
|
10,057
|
|
|
(4,222)
|
Net (loss) income
attributable to common shareholders
|
|
$
|
(49,354)
|
|
$
|
8,265
|
|
|
|
|
|
|
|
|
Net (loss) income
per share attributable to common shareholders -
basic and diluted:
|
|
|
|
Net (loss) income per
share — basic and diluted
|
|
$
|
(0.82)
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding (000's):
|
|
|
|
|
|
|
|
Basic
|
|
|
60,418
|
|
|
61,377
|
|
Fully
Diluted
|
|
|
60,418
|
|
|
61,559
|
|
|
|
|
|
|
|
|
Additional
Disclosure:
|
|
|
|
|
|
|
Depreciation and
amortization(2)
|
|
$
|
15,252
|
|
$
|
14,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In the first
quarter of 2020, the Company updated certain account names within
revenues and costs and
expenses applicable to revenues in its Condensed Consolidated
Statements of Operations to better reflect the
nature of its business activities.
|
(2) Includes $0.1
million of amortization of deferred financing costs charged to
interest expense for the three
months ended March 31, 2020, respectively (2019 - $0.1 million,
respectively).
|
IMAX
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
In accordance with
United States Generally Accepted Accounting
Principles
|
(In thousands of
U.S. dollars, except share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
352,277
|
|
$
109,484
|
Accounts receivable,
net of allowance for credit losses
|
|
64,818
|
|
99,513
|
Financing
receivables, net of allowance for credit losses
|
|
121,112
|
|
128,038
|
Variable
consideration receivable from contracts, net of allowance for
credit losses
|
|
38,694
|
|
40,040
|
Inventories
|
|
61,635
|
|
42,989
|
Prepaid
expenses
|
|
11,558
|
|
10,237
|
Film
assets
|
|
15,645
|
|
17,921
|
Property, plant and
equipment
|
|
294,361
|
|
306,849
|
Investment in equity
securities
|
|
11,131
|
|
15,685
|
Other
assets
|
|
24,559
|
|
25,034
|
Deferred income tax
assets
|
|
37,967
|
|
23,905
|
Other intangible
assets
|
|
29,542
|
|
30,347
|
Goodwill
|
|
39,027
|
|
39,027
|
Total
assets
|
|
$
1,102,326
|
|
$
889,069
|
Liabilities
|
|
|
|
|
Bank
indebtedness
|
|
$
298,355
|
|
$
18,229
|
Accounts
payable
|
|
25,296
|
|
20,414
|
Accrued and other
liabilities
|
|
111,850
|
|
112,779
|
Deferred
revenue
|
|
103,267
|
|
94,552
|
Deferred income tax
liabilities
|
|
19,681
|
|
—
|
Total
liabilities
|
|
558,449
|
|
245,974
|
Commitments and
contingencies
|
|
|
|
|
Non-controlling
interests
|
|
5,500
|
|
5,908
|
Shareholders'
equity
|
|
|
|
|
Capital stock common
shares — no par value. Authorized — unlimited number.
|
|
|
|
|
58,878,749 issued and
58,786,752 outstanding (December 31, 2019 — 61,362,872 issued
and 61,175,852 outstanding)
|
|
405,583
|
|
423,386
|
Less: Treasury stock,
91,957 shares at cost (December 31, 2019 — 187,020)
|
|
(1,419)
|
|
(4,038)
|
Other
equity
|
|
168,892
|
|
171,789
|
Accumulated
deficit
|
|
(108,428)
|
|
(40,253)
|
Accumulated other
comprehensive loss
|
|
(5,759)
|
|
(3,190)
|
Total
shareholders' equity attributable to common
shareholders
|
|
458,869
|
|
547,694
|
Non-controlling
interests
|
|
79,508
|
|
89,493
|
Total
shareholders' equity
|
|
538,377
|
|
637,187
|
Total liabilities
and shareholders' equity
|
|
$
1,102,326
|
|
$
889,069
|
IMAX
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands of
U.S. dollars)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
Cash provided by
(used in):
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(59,411)
|
|
$
|
12,487
|
|
Adjustments to
reconcile net (loss) income to cash from operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
15,252
|
|
|
14,211
|
|
Credit loss
expense
|
|
|
10,217
|
|
|
431
|
|
Write-downs
|
|
|
4,403
|
|
|
266
|
|
Deferred income tax
expense
|
|
|
5,627
|
|
|
688
|
|
Share and other
non-cash compensation
|
|
|
4,309
|
|
|
4,524
|
|
Unrealized foreign
currency exchange loss (gain)
|
|
|
223
|
|
|
(24)
|
|
Change in fair value
of equity securities
|
|
|
4,539
|
|
|
(2,491)
|
|
Equity in losses of
investees
|
|
|
529
|
|
|
84
|
|
Investment in film
assets
|
|
|
(3,064)
|
|
|
(3,740)
|
|
Changes in other
non-cash operating assets and liabilities
|
|
|
23,342
|
|
|
(27,105)
|
|
Net cash provided
by (used in) operating activities
|
|
|
5,966
|
|
|
(669)
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
|
(271)
|
|
|
(2,237)
|
|
Investment in joint
revenue sharing equipment
|
|
|
(1,580)
|
|
|
(9,716)
|
|
Acquisition of other
intangible assets
|
|
|
(862)
|
|
|
(540)
|
|
Investment in equity
securities
|
|
|
—
|
|
|
(15,153)
|
|
Net cash used in
investing activities
|
|
|
(2,713)
|
|
|
(27,646)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Increase in bank
indebtedness
|
|
|
280,000
|
|
|
35,000
|
|
Repayment of bank
indebtedness
|
|
|
—
|
|
|
(15,000)
|
|
Settlement of
restricted share units and options
|
|
|
(1,667)
|
|
|
(4,987)
|
|
Treasury stock
repurchased for future settlement of restricted share
units
|
|
|
(1,419)
|
|
|
(4,207)
|
|
Repurchase of common
shares, IMAX China
|
|
|
(891)
|
|
|
(1,767)
|
|
Taxes withheld and
paid on employee stock awards vested
|
|
|
(236)
|
|
|
(219)
|
|
Common shares issued
- stock options exercised
|
|
|
—
|
|
|
803
|
|
Repurchase of common
shares
|
|
|
(36,624)
|
|
|
—
|
|
Net cash provided
by financing activities
|
|
|
239,163
|
|
|
9,623
|
|
|
|
|
|
|
|
|
|
Effects of exchange
rate changes on cash
|
|
|
377
|
|
|
186
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents during
period
|
|
|
242,793
|
|
|
(18,506)
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
|
109,484
|
|
|
141,590
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
352,277
|
|
$
|
123,084
|
|
|
|
|
Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
|
2019
|
|
Revenue
|
|
|
|
|
|
IMAX Technology
Network
|
|
|
|
|
|
IMAX DMR
|
|
$
10,629
|
|
$
27,950
|
|
Joint revenue sharing
arrangements, contingent rent
|
|
5,971
|
|
18,044
|
|
|
|
16,600
|
|
45,994
|
|
IMAX Technology
Sales and Maintenance
|
|
|
|
|
|
IMAX
Systems
|
|
5,688
|
|
13,026
|
|
Joint revenue sharing
arrangements, fixed fees
|
|
770
|
|
2,539
|
|
IMAX
Maintenance
|
|
7,370
|
|
12,951
|
|
Other Theater
Business
|
|
1,263
|
|
1,626
|
|
|
|
15,091
|
|
30,142
|
|
New Business
Initiatives
|
|
478
|
|
834
|
|
Film Distribution
and Post-Production
|
|
2,494
|
|
2,662
|
|
|
|
34,663
|
|
79,632
|
|
Other
|
|
239
|
|
566
|
|
Total
revenues
|
|
$
34,902
|
|
$
80,198
|
|
|
|
|
|
|
|
Gross
Margin
|
|
|
|
|
|
IMAX Technology
Network
|
|
|
|
|
|
IMAX
DMR(1)
|
|
$
4,443
|
|
$
19,775
|
|
Joint revenue sharing
arrangements, contingent rent(1)
|
|
(1,618)
|
|
11,935
|
|
|
|
2,825
|
|
31,710
|
|
IMAX Technology
Sales and Maintenance
|
|
|
|
|
|
IMAX Systems
(1)
|
|
3,176
|
|
7,052
|
|
Joint revenue sharing
arrangements, fixed fees(1)
|
|
179
|
|
295
|
|
IMAX
Maintenance
|
|
759
|
|
5,281
|
|
Other Theater
Business
|
|
610
|
|
475
|
|
|
|
4,724
|
|
13,103
|
|
New Business
Initiatives
|
|
361
|
|
619
|
|
Film Distribution
and Post-Production (1)
|
|
(1,935)
|
|
(25)
|
|
|
|
5,975
|
|
45,407
|
|
Other
|
|
(889)
|
|
(267)
|
|
Total Segment
Margin
|
|
$
5,086
|
|
$
45,140
|
|
|
|
|
|
|
(1)
|
IMAX DMR gross margin
includes marketing costs of $2.4 million for the three months ended
March 31, 2020 (2019 — $3.9 million). JRSA gross margin
includes advertising, marketing and commission expense of $0.5
million for the three months ended March 31, 2020 (2019 — expense
of $0.1 million). IMAX S
ystems gross margin includes marketing and commission costs of $0.2
million for the three months ended March 31, 2020 (2019 — $0.5
million). Film
Distribution segment gross margin includes marketing expense of
$0.2 million for the three months ended March 31, 2020 (2019 —
expense of $0.6 million).
|
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, free
cash flow and return on invested capital 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, and (iii) changes in the fair value of
equity investments, as well as the related tax impact of these
adjustments, and (iv) income tax expense 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 charges to 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
Company's credit agreement, and which is referred to herein as
"Adjusted EBITDA per Credit Facility." As allowed by the Company's
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. 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
income (expense), net; (ii) income tax provision (benefit); and
(iii) depreciation and amortization. Adjusted EBITDA per Credit
Facility is defined as EBITDA excluding: (i) gain (loss) from
equity accounted investments; (ii) stock and other non-cash
compensation; (iii) exit costs, restructuring charges and
associated impairments; (iv) change in fair value of equity
investment; (v) write-downs, net of recoveries, including asset
impairments and receivable provisions; and (vi) adjusted EBITDA
attributable to non-controlling interests.
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.
|
|
For
the
|
|
|
For
the
|
|
|
|
For
the
|
|
|
|
For
the
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
12 Months
Ended
|
|
|
|
12 Months
Ended
|
|
|
|
March 31,
2020
|
|
|
March 31,
2019
|
|
|
|
March 31,
2020(1)
|
|
|
|
March 31,
2019(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net (loss)
income attributable to common shareholders
|
$
|
(49,354)
|
|
$
|
8,265
|
|
|
$
|
(10,753)
|
|
|
$
|
22,604
|
|
Add
(subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
10,949
|
|
|
2,721
|
|
|
|
21,369
|
|
|
|
5,193
|
|
Interest expense, net
of interest income
|
|
253
|
|
|
270
|
|
|
|
930
|
|
|
|
655
|
|
Depreciation and
amortization, including film asset amortization
|
|
14,012
|
|
|
12,964
|
|
|
|
59,502
|
|
|
|
53,148
|
|
EBITDA
|
$
|
(24,140)
|
|
$
|
24,220
|
|
|
$
|
71,048
|
|
|
$
|
81,600
|
|
Stock and other
non-cash compensation
|
|
4,158
|
|
|
4,414
|
|
|
|
22,697
|
|
|
|
22,594
|
|
Change in fair value
of equity investment
|
|
3,165
|
|
|
(1,700)
|
|
|
|
5,218
|
|
|
|
(1,700)
|
|
Write-downs,
including asset impariments and credit loss expense
|
|
11,928
|
|
|
655
|
|
|
|
17,040
|
|
|
|
2,917
|
|
Exit costs,
restructuring charges, and associated impairments
|
|
-
|
|
|
850
|
|
|
|
-
|
|
|
|
9,690
|
|
Legal arbitration
award
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
11,737
|
|
Executive transition
costs
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
2,994
|
|
Loss from equity
accounted investments
|
|
529
|
|
|
84
|
|
|
|
442
|
|
|
|
371
|
|
Adjusted EBITDA
attributable to common shareholders
|
$
|
(4,360)
|
|
$
|
28,523
|
|
|
$
|
116,445
|
|
|
$
|
130,203
|
|
Adjusted revenues
attributable to common shareholders(2)
|
$
|
33,306
|
|
$
|
71,724
|
|
|
$
|
319,236
|
|
|
$
|
332,489
|
|
Adjusted EBITDA
margin attributable to common shareholders
|
|
(13.1)
|
%
|
|
39.8
|
%
|
|
36.5
|
%
|
|
39.2
|
%
|
(1)
|
Senior Secured Net
Leverage Ratio calculated using twelve months ended Adjusted EBITDA
per Credit Facility.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
Three months
ended
March 31, 2020
|
|
Three months
ended
March 31, 2019
|
|
12 months
ended
March 31, 2020
|
|
12 months
ended
March 31, 2020
|
|
Total
revenues
|
|
|
|
$
|
34,902
|
|
|
|
$
|
80,198
|
|
|
|
$
|
350,368
|
|
|
|
$
|
369,615
|
|
Greater China
revenues
|
|
$
|
5,269
|
|
|
|
$
|
26,681
|
|
|
|
$
|
102,882
|
|
|
|
$
|
116,055
|
|
|
|
Non-controlling
interest ownership percentage(3)
|
|
|
30.29%
|
|
|
|
|
31.76%
|
|
|
|
|
30.26%
|
|
|
|
|
31.99%
|
|
|
|
Deduction for
non-controlling interest share of revenues
|
|
|
|
|
(1,596)
|
|
|
|
|
8,474
|
|
|
|
|
(31,132)
|
|
|
|
|
(37,126)
|
|
Adjusted revenues
attributable to common shareholders
|
|
|
|
$
|
33,306
|
|
|
|
$
|
71,724
|
|
|
|
$
|
319,236
|
|
|
|
$
|
332,489
|
(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)
|
|
|
|
March 31,
2020
|
|
|
March 31,
2019
|
|
|
Net
Income
|
|
Diluted
EPS
|
|
|
Net
Income
|
|
|
Diluted
EPS
|
Reported net (loss)
income attributable to common shareholders
|
|
$
(49,354)
|
|
$
(0.82)
|
|
|
$
8,265
|
|
|
$
0.13
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
4,075
|
|
0.07
|
|
|
4,277
|
|
|
0.07
|
Exit costs,
restructuring charges and associated impairments
|
|
—
|
|
—
|
|
|
850
|
|
|
0.01
|
Change in fair value
of equity securities
|
|
3,165
|
|
0.05
|
|
|
(1,700)
|
|
|
(0.02)
|
Tax impact on items
listed above
|
|
(338)
|
|
(0.01)
|
|
|
(881)
|
|
|
(0.01)
|
Income tax expense
related to removal of indefinitely reinvested assertion on the
historical earnings of certain
subsidiaries
|
|
13,726
|
|
0.23
|
|
|
—
|
|
|
—
|
Adjusted net (loss)
income
|
|
$
(28,726)
|
|
$
(0.48)
|
|
|
$
10,811
|
|
|
$
0.18
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
basic shares outstanding
|
|
|
|
60,418
|
|
|
|
|
|
61,377
|
Weighted average
diluted shares outstanding
|
|
|
|
60,418
|
|
|
|
|
|
61,559
|
Free Cash Flow:
Free cash flow is defined as cash provided by operating
activities minus cash used in investing activities (from the
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. A
reconciliation of cash provided by operating activities to free
cash flow is presented in the table below:
|
|
Three Months
Ended
|
|
March 31,
2020
|
|
|
|
Net cash provided by
operating activities
|
$
|
5,966
|
Net cash used in
investing activities
|
|
(2,713)
|
|
Free cash
flow
|
$
|
3,253
|
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SOURCE IMAX Corporation