Imax Corporation

Hello, everyone, and welcome to the IMAX Corporation fourth quarter 2024 and full year results conference 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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to the head of investor relations, Jennifer Hoshley. Please go ahead.

Good afternoon, and thank you for joining us for IMAX's fourth 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 earnings materials. which are available on the investor relations page of our website at imax.com. With that, let me turn the call over to Mr. Richard Gelfand. Rich?

Thanks, Jennifer. Thank you, everyone, for joining us. And a special word of thanks, appreciation, and support to our many employees, partners, and friends across Los Angeles who've shown such strength and determination in overcoming last month's devastating wildfires. As we enter 2025, IMAX has great momentum and there's no better indicator than our record-breaking Chinese New Year's slate, which is on a history-making run. The company advanced several key strategic priorities in 2024. We strengthened our filmmaker and studio relationships, building the biggest film for IMAX slate ever and securing prime placement in studio marketing. We expanded our global network, driving strong system signings and installs and growing our partnerships with WANDA and AMC. And we further diversified our content portfolio, programming a record number of local language films, relaunching IMAX documentaries, and completing a watershed deal with Netflix for Greta Gerwig's Narnia. And by the way, we've already delivered 14 local language films in 2025, year-to-date, and our biggest IMAX-exclusive music opening ever with Becoming Led Zeppelin. The market is recognizing our progress and our leadership in delivering awe-inspiring experiences worldwide. And yet, the bigger opportunity is still right in front of us, given the remarkable slate over the next several years and potential for global network growth. Demand for IMAX among studios is at an all-time high. They're pursuing IMAX release dates earlier than ever and giving us great visibility several years out. Many studios are also increasing their yearly output of IMAX-friendly tent poles, We expect this paradigm shift to play heavily in our favor through the end of the decade. In the near term, we delivered solid results for the fourth quarter, including adjusted EBITDA up 48% to $37 million and adjusted EPS up 59% to 27 cents a share. For the full year 2024, our one significant headwind was softness in the China box office. but we are witnessing a complete 180 degree turn in China this year with a Chinese New Year slate that has delivered a record of more than $120 million and counting and a strong slate of local blockbusters ahead. In fact, in less than two months, we've already surpassed our total local language box office in China for all of 2024. The outstanding start at the box office in China favorably impacts our financial results, given our higher box office take with local Chinese language films, the incrementality in our model when releases vastly overperform, and our concentration of joint venture systems in China. Worldwide, the table is set for what we believe will be a new sustained era of growth for IMAX over the next several years. Today, I'd like to discuss our content portfolio, our global network and technology, and then I'll turn it over to Natasha to review the financials. First, we expect 2025 to be our best year ever at the global box office, projecting more than $1.2 billion in IMAX grosses. We've dramatically expanded our content portfolio. We released a record 118 films, events, and experiences worldwide in 2024, including a record 61 local language films from eight different countries. We were just shy of matching our highest grossing year ever at the domestic box office in 2024, despite a strike-impacted slate and some high profile studio misses. And we've become more fully integrated than ever into studio marketing campaigns, securing prime placement in everything from out of home to TV commercials. In fact, you could argue that IMAX had more spots in last week's record-setting Super Bowl than any company in the world. We're also wielding our increased bargaining power to optimize our programming, as we did during the Thanksgiving holiday in playing Gladiator 2, Wicked, and Moana 2. And we pushed hard to secure an IMAX exclusive re-release of Interstellar, our highest grossing re-release of all time, with more than $28 million in box office to date. We've held our recent global market share gains up from around 2.5% pre-pandemic to 3.1% globally on just over 1,700 screens worldwide and from 3% to 4.5% domestically on 400 screens. We've also been creative in expanding our roster of content partners. We agreed with Netflix to exclusively play Barbie director Greta Gerwigs, Narnia, and IMAX, eventicizing this new franchise and securing a four-week window for a film that otherwise would have gone straight to streaming. Even Netflix, which has only sparingly released films theatrically, recognized the power of the IMAX network to create events around blockbuster entertainment. This is a first-of-its-kind partnership, and it speaks to our surging leverage in the marketplace that we're able to get this done and to our unique standing as a global platform for events. We negotiated directly with Apple for an IMAX release of F1 before the tech giant had even secured a studio partner. We relaunched our doc strategy with the Blue Angels, one of the highest-grossing documentaries of the year, and thanks to an innovative distribution deal with Amazon, one of our best-performing original films on Prime Video. And we continue to deliver distinctive events, from Queen Rock Montreal to the Paris Olympics opening ceremony to the League of Legends Championship in China, which delivered 90% occupancy on 161 IMAX screens at premium ticket prices. Looking ahead, there are three reasons why we're so bullish on the 25 box office. Our biggest and most promising film slate of film for IMAX ever, Second, the strength and continuity of the overall slate. And three, what we see is a very likely rebound for moviegoing in China. Our first Hollywood film for IMAX title of the year, Captain America Brave New World, delivered an $18 million opening worldwide for the company, including 10% of the domestic box office. Almost every IMAX release scheduled from May through September is filmed with IMAX cameras. That includes Mission Impossible, The Final Reckoning, Marvel's Thunderbolts and Fantastic Four, F1, and Superman. This year concludes with Avatar 3, the follow-up to our two biggest grossing films of all time, with each of which earned more than $250 million dollars. a piece in IMAX. 2026 kicks off with the Avatar carryover and features Christopher Nolan's The Odyssey, as well as Avengers, Star Wars, Super Mario Brothers, Toy Story, and the next film from Dune's Denis Villeneuve. And 2027, already boasts another Avengers and Star Wars, as well as Batman 2 and Frozen 3. With the current Chinese New Year slate, we set records across every key metrics, including our best ever box office market share and attendance. We're on our way to doubling our previous box office record for Chinese New Year titles, with more than $120 million in so far versus 66 million in 2023, our previous record. And the phenomenon, Nezha 2, has earned more than $105 million to date and is our highest grossing local language film of all time and our biggest release ever in China, local language or Hollywood. A recent NRG study found that 78% of Chinese prefer to watch movies in the theater than higher than in the United States, the UK, France, and Japan. We believe that supply, not demand, specifically the mix and genre of Chinese local language films in 24 helped drive the softness at the Chinese box office last year. The 24 Chinese slate was greenlit immediately post-COVID when budgets were more conservative and speed to market was a priority. This yielded dramas and comedies that typically commanded lower box office. That tide is turning. There are seven film for IMAX blockbusters currently in production by Chinese studios, at least three of which will be released in 2025. Alibaba, Malian, and Wanda all have multiple big-budget blockbusters in production, including this year's highly-anticipated action-adventure sequel, A Writer's Odyssey 2. When Chinese moviegoers see Hollywood films more than ever, they're choosing IMAX. Our average indexing on Hollywood titles in China has swelled to 15%, up from 9%, five years ago. Distinctive films that are differentiated from local language, heavy on spectacle, and light on language or cultural barriers play best. Creature features like Alien Romulus, Godzilla and Kong, and Venom have all performed very well. We did even better with Alien Romulus in China than we did in the United States. This bodes well for a 2025 slate that includes How to Train Your Dragon, Jurassic World, and Avatar 3. We are optimistic about the year ahead in China. Underlying demand for moviegoing is there, local film production budgets are growing, and the government is as supportive of the industry as it's ever been. Turning to our network and technology, we continue to expand and diversify our global footprint, which now spans 90 countries and territories. We renewed our partnership with WANDA as it transitioned to new ownership, securing and upgrading a significant portion of our best-performing locations in China. AMC announced a significant expansion of IMAX with Laser, potentially into more than two-thirds of its IMAX locations. And we entered agreements with five new exhibition partners across North America. Looking ahead, we're focused on markets where we generate high PSAs but will remain under-penetrated, including Southeast Asia and the Middle East, Australia, and select markets across Europe and South America. In all those places, we see a lot of opportunity. Local language is a powerful sales tool. We've seen a correlation between our support of local film industries and our ability to drive network growth in these markets. In Japan, we programmed just one local language film in 2019, but grew to 13 in 2024, and we've gone from 36 to 53 systems nationwide over that same period of time. We've already notched eight system signings in Japan in 2025, with many scheduled for installation this year. We've increased our rollout out of JV agreements to capitalize on the film slate over the next several years, especially in a place with really high PSAs. And we're expanding with smaller, well-run exhibitors. In recent months, we've seen success with Cinema West, Epic, Harkins, and Paragon, all in the US. Our end-to-end technology remains a key differentiator. We increased our use of cloud-based digital media remastering to scale our local language business efficiently. We designed a new proprietary technology to quickly scale our live network while bringing transmission costs down dramatically. And we built the first of our next generation film cameras, working with Chris Nolan to develop proprietary technology he's using in his current filming of The Odyssey, which comes out in 26. To close, we believe we're entering a very exciting time for IMAX. we continue to strengthen our brand, increase demand among consumers, and make IMAX technology even more attractive to filmmakers and exhibitors. More than ever, studios are driving moviegoers to IMAX in their marketing. When there are awe-inspiring events that fully capitalize on the IMAX experiences, audiences show up, and we have made a more promising slate through the end of the decade than we've ever seen in the few years going forward. We look forward to seizing this opportunity to deliver results for our shareholders. Thank you, and with that, I'll turn it over to Natasha.