IMAX China Holding, Inc.

Today, ladies and gentlemen, and welcome to IMAX China's first half 2022 earnings conference call. All participants are currently in a listen-only mode. Following the presentation, we will conduct a questions and answer session. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. As a reminder, today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Chan, Vice President of Investors Relations. Please go ahead, ma'am.

Good morning, everyone, and thank you for joining us on IMAX China's first half 2022 earnings conference call. Joining me today is our chairman, Rich Gelfand, CEO at Winten, and Jim Anthanasopoulos, our CFO and COO, who will have prepared remarks. Also joining us is Megan Colligan, President of IMAX Entertainment. For the purpose of this call, all financial figures will be provided in U.S. dollars unless stated otherwise. Furthermore, the financials we provide to you today will follow IFRS accounting standards, which may differ in some respects to U.S. GAAP. I would also like to remind you of the following information regarding forward-looking statements. Our comments and answers to your questions on this call may include statements that are forward-looking and pertain to future results or outcomes. Forward-looking statements involve a number of risks uncertainties, or other factors beyond our control. Actual future results or occurrences may differ materially from these forward-looking statements. We are under no obligation to and expressly disclaim any such obligation to update the forward-looking statement as a result of new information, future events, or otherwise. The full text of our first half 2022 earnings release, along with supporting financial statements and the slide presentation we have prepared for this call, are available on our website, imax.cn. Today's conference call is also being webcast in its entirety on our website. And with that, let me now turn the call over to Rich Gelfand. Rich?

Thank you, Karen, and good morning, everyone. Due to the surge in COVID across China for much of the first half of the year and the resulting closure of many of our highest-grossing theaters, IMAX China had a challenging first half of 2022. We essentially operated at break even through the first six months of the year with our asset light business model and strategic cost control initiatives, offsetting the soft box office. Notably, this is in stark contrast to the rest of the world where a strong resurgence in movie going driven by a formidable slate is demonstrating the power of the IMAX platform and the continued pent up demand for movie going globally. While the environment in China remains challenging, we are beginning to see some early signs of encouragement. Today I'll discuss the reopening of our network and our position in the market. Edwin will provide an additional update on our network growth, content portfolio, and new growth initiatives. Jim will then review our financial results. First reopening. Close to 400 of our theaters, or half of our network, were temporarily closed at the peak of the pandemic in late March. As of today, 91% of our theaters have resumed operation, including most of our sites in Shanghai and Beijing, which have been closed for the majority of the second quarter. Shanghai ended its two-month lockdown in early June, and theaters started to reopen on July 8th on a rolling basis. Along with Beijing, these theaters are now operating at a 50% to 75% In Hong Kong, theaters opened in late April with a capacity restriction that was eased to 85%. As we've seen in and around the world, a consistent cadence of releases is critical to getting audiences back in theaters. And the pipeline of local blockbusters in China is beginning to accelerate with an increasing number of local films featuring IMAX DNA. The upcoming local language pipeline includes the highly anticipated Moon Man, releasing today. The title is also the most anticipated summer release, according to the Maoyan platform. Warriors of Future, scheduled for release in IMAX on August 12th. Homecoming, a film for IMAX title. The Outcast, also filmed for IMAX. And Wandering Earth 2, a sequel to the highest grossing IMAX local title of all time. Scheduled for release in Chinese New Year 2023, this movie will feature 45 minutes shot with IMAX certified cameras. Movies empowered by IMAX DNA contributed over 40% of IMAX's box office in 2021. We've been doubling down on this effort and deepening our partnership with top directors with a driving force behind billion-dollar franchises. We've also seen incremental progress in Hollywood movies gaining entry to the Chinese market. Most recently, Jurassic World Dominion became the first Hollywood film in more than a year to gross over 1 billion RMB in box office, and IMAX theaters accounted for 19 out of the top 20 locations during the opening weekend. That comes on the heels of The Batman, Fantastic Beasts, and Ambulance. all gaining China censorship approval. Hollywood films on the 2023 slate that we hope to see released in China include top-grossing franchises Fast and Furious, Transformers, Mission Impossible, Aquaman, and the sequel to the highly acclaimed Dune. We believe two developments should help clear the way for more Hollywood films to gain entry. First, the failed experiment of day-and-date streaming releases for blockbusters has been abandoned, a misguided effort that unleashed rampant piracy in China. And second, the backlog of Chinese local films that built up throughout the pandemic is now running its course, which should create more space for Hollywood content in the slate. We are encouraged by the mix of local and Hollywood films anticipated to hit the Chinese IMAX network through the end of the year. Whether it's the current crop of local language summer films, the always lucrative October national holiday period, or Avatar, The Way of Water, which we feel has a good chance to gain entry to China, given Jim Cameron's and the franchise's history in the market, the original Avatar still stands as IMAX's highest per-screen average release of all time, generating $24 million U.S. box office on our initial footprint of only 14 IMAX screens in China. When the film was re-released in early 2021, we indexed a powerful 31% of its opening weekend box office. To conclude, we're optimistic the situation will continue to turn as lockdowns fully lift and consumers are free to get out and enjoy out-of-home experiences. We see similarities now to the position we were in at the end of the summer of 2020 when COVID restrictions began to ease in China and we ultimately saw local blockbusters like the 800 open to record-breaking business. We've been in business successfully in China for more than 20 years. We've seen up years and we've seen down years and we remain confident that these recent setbacks are only temporary and we can start to see a vision towards normalcy. With that, I'd like to turn the call over to Edwin.