Imax Corporation

Good day, and thank you for standing by. Welcome to the Q3 2024 IMAX Corporations Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Jennifer Horsley, Head of Investor Relations for IMAX. Jennifer, you have the floor.

Good afternoon, and thank you for joining us for IMAX's third quarter 2024 earnings conference call. On the call today to review the financial results are Rich Gelfand, Chief Executive Officer, and Natasha Fernandez, our Chief Financial Officer. Rob Lister, Chief Legal Officer, is also joining us today. Today's conference call is being webcast in its entirety on our website. A replay of the webcast will be made available shortly after the call. In addition, the full text of our earnings press release and the slide presentation have been posted on the Investor Relations section of our site. Our historical Excel model is posted to the website as well. I would like to remind you of the following information regarding forward-looking statements. Today's call, as well as the accompanying slide deck, may include statements that are forward-looking and that pertain to future results or outcomes. These forward-looking statements are subject to risks and uncertainties that could cause our actual future results to not occur or occurrences to differ. Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information, future events, or otherwise. During today's call, references may be made to certain non-GAAP financial measures. Discussion of management's use of these measures and the definition of these measures, as well as the reconciliation to non-GAAP financial measures, are contained in this afternoon's press release and our earnings materials, which are available on the investor relations page of our website at imax.com. With that, let me now turn the call over to Mr. Richard Gelfand. Rich?

Thanks, Jennifer, and thanks, everyone, for joining today. IMAX is setting the table for what we believe to be a new sustained era of growth over the next several years. Moviegoing has rebounded after the Hollywood strikes ahead of a phenomenal slate in 2025 and 2026. Exhibitor demand for IMAX is surging. with system sales and installations significantly outpacing 2023. We expect 2025 to be our best year ever at the global box office with more than $1.2 billion in IMAX grosses worldwide. The fundamental measures of growth in our business, system installations, signings, and the content pipeline are all strong. And this came to the fore in the third quarter. We beat consensus estimates with adjusted EBITDA of $39 million at a 42% margin, an EPS of 35 cents, beating the street by over 50%. We've already installed 100 systems worldwide year to date, including one of our best third quarters ever. We're now tracking to hit the high end of our installation guidance, which we raised last quarter to between 130 and 150 systems this year we signed agreements for 119 imac systems worldwide year-to-date on track to deliver more than 129 we completed in 2023 we delivered one of our best third quarters ever at the global box office driven by domestic box office that exceeded 2019 by 45 these results are noteworthy given the tough comp versus Oppenheimer in 2023 Q3. Network expansion offset box office softness, further demonstrating a diversified revenue base and flexible asset-light business model. More than anything, we're focused on the future. The 25 and 26 slates look as strong as we've ever seen, with releases from the biggest filmmakers and most successful franchises, from Avatar to Avengers. 2025 alone boasts at least 14 film for IMAX releases worldwide, Hollywood and local language films shot without cameras, specifically for our screens. We typically index much higher with these titles. And as reported, we're very excited to be working with our longstanding partners, Christopher Nolan and Emma Thomas, on the release of their next film in July 2026. I'm pleased to share that Chris will be utilizing new IMAX technology in the making of the film, never before used equipment that our teams have been developing throughout this past year. As filmmakers and studios lean into our technology, moviegoers worldwide drive our global box office and market share, and exhibitors install more of our systems to meet consumer demand. An influx of great content will only accelerate these trends, and we look forward to executing to deliver results for our business and our shareholders. Today, I'd like to offer updates on the opportunity we see ahead in our global network and our content slate. Then I'll hand it over to Natasha before we both take your questions. First, momentum continues to build in our global network. with strong installations and sales activity in the third quarter. We completed 49 installations in the third quarter alone, compared to 30 for the same period in 2023. And we made progress in priority markets around the world, with signings in France, Australia, and Saudi Arabia. Our recent agreement with MUVI, Saudi Arabia's largest exhibitor, puts us in business with the four top exhibitors in the kingdom, Saudi movies, though, continue to embrace a variety of IMAX content, from Oppenheimer to Bad Boys 4 to Indian and Japanese titles. We are pursuing our first local language project in Saudi, which will make the IMAX platform even more attractive to local exhibitors. We see an opportunity to expand IMAX's Saudi footprint from the 10 currently in operation to at least 50 in the years ahead. Around the world, conversations with existing and new exhibition partners are robust. Already in the fourth quarter, we've completed agreements with partners in Australia, Japan, and Latin America. And in the wake of our landmark deal with Wanda Film, we're seeing encouraging signs of progress at the Chinese box office. China has lagged the rest of the world in 2024, but as we look ahead, we have reason for optimism. Next year's Hollywood slate is more consistent with the diversity of tentpoles and franchises that have historically resonated with Chinese audiences. As demonstrated by this weekend's Venom, The Last Dance, and Alien Romulus, which delivered greater IMAX box office in China than it did in the U.S., there is still a market for distinctive Hollywood films there. Our local language slate next year looks promising. starting with Chinese New Year, which is set to feature big blockbuster titles initially slated for this year. And China is in the process of rolling out an economic stimulus package to bolster consumer confidence in the economy. We saw progress during the October national holiday, where our daily box office returns and market share grew year over year, despite a relatively soft slate. China also offers fertile testing ground as we open our aperture with new IMAX events and experiences. We are live streaming the 2024 League of Legends World Championship, an online multiplayer battle video game, which is among the world's largest esports across more than 70 IMAX locations in China. League of Legends is published by Tencent-owned Riot Games, and Tencent is also a major investor in Rui Holdings, our partners that own Wanda Film. Our streaming and consumer technology division is testing a new proprietary technology with the potential to rapidly expand our connected live network without the considerable capex necessary to wire our locations. We successfully tested this technology with our sellout presentation of the NBA Finals in Hong Kong and Taiwan earlier this year, and we see an opportunity to efficiently scale our global connected network and will continue to explore unique live events as we enter the new year. We're seeing strong momentum across our content portfolio and pipeline. While many initially tagged 2024 as a recovery year, the global box office is showing encouraging signs of progress sooner than many anticipated. we delivered more than $83 million with Deadpool and Wolverine alone. That's more than a 50% better than any previous installment in the franchise and good for our fifth highest Marvel title of all time. Last weekend's Venom, The Last Dance, a film for IMAX release, delivered a strong international opening led by China, resulting in one of our best ever October debuts globally. and we strategically managed our network to accommodate a diverse, promising slate of 10 polls this Thanksgiving and through the holidays, including Gladiator 2, Wicked, Moana 2, and Mufasa the Lion King. It's a great on-ramp for what looks set to be a very special year ahead. Every IMAX release currently scheduled from May through September is filmed with IMAX cameras. That includes Mission Impossible 8, Marvel's Thunderbolts, F1, and Superman Legacy. The strong, consistent slate concludes with Avatar 3, the follow-up to our highest-grossing films of all time. 2026 kicks off with Avatar Carryover and includes new installments of major franchises, including Avengers, Star Wars, The Batmans, Super Mario Brothers, and Toy Story, alongside our expanding portfolio of local language, documentaries, and events. IMATS powers awe-inspiring experiences. We are opening our content aperture to deliver new experiences for our audiences and drive capacity utilization of our network. We recently hired our first chief content officer to coordinate our content portfolio across Hollywood, local language, docs, live, and new events and experiences, and fine tune our strategy as our portfolio grows to more than 100 experiences per year. We've had successes this year with a more consistent pipeline of experiences beyond first-run theatrical releases, nearly quadruple the output of the previous year. That includes a balanced mix of music, including Queen Rock's Montreal and a recent concert hit in South Korea, I Am Hero, which is now our highest grossing local language title of any kind in that market. Documentaries, both originals like Blue Angels and through distribution partnership with companies including Netflix and Nat Geo, as well as library content events, most notably our partnership with A24 to release one of their iconic films, each month during an underutilized weekday. We also continue to push the envelope in experimentation with new experiences, like the Paris Olympics opening ceremony and League of Legends. We remain in talks with NBCUniversal on additional sports and entertainment events, as well as tonight's launch event of Amazon Prime's new concert film with hip-hop artist Megan Thee Stallion which builds on our successful launch of Prime's hit series, Fallout, earlier this year. To close, we are building momentum at the right time for our business, with our system installations and sales activity ahead of expectations years to date and a 2024 slate that, on balance, has delivered. Consumers continue to prove that. When there are awe-inspiring events that fully capitalize on the IMATS experience, they will show up. and we have a fuller, more promising slate over the next two years and beyond than we've ever seen. We continue to believe we are entering a very exciting time for our business, and we look forward to continuing to deliver results in our business and for our shareholders. Thank you again, and with that, I'll turn it over to Natasha.