Imax Corporation

Thank you for standing by, and welcome to IMAX first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Jennifer Horsley. Head of Investor Relations for IMAX. Please go ahead.

Good afternoon, and thank you for joining us for IMAX's first quarter 2025 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 to 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 thank you, everyone, for joining today. IMAX got off to an excellent start in the first quarter. We banked nearly $300 million in global box office, our best first quarter ever. We've signed agreements for more than 100 new and upgraded systems year-to-date, compared to 130 in all 2024. And we kicked off a great summer slate. with a run of eight consecutive film for IMAX releases. The fundamentals of our business have never been stronger. In recent weeks, that fact has been obscured by noise around tariffs, China, and speculation about the potential impact on the Hollywood slate. We've looked deeply at this issue. We've talked to every studio and our industry partners throughout China, cultivated across our 30 years of doing business in the country. And we're highly confident that the, quote, moderate reduction in Hollywood imports announced by China Film Administration will largely target films with limited box office potential in the market, a smaller budget kind of fare, not the kind of films that drive IMAX's business. So we're not letting the noise distract us from the opportunity ahead. We drove double-digit growth in revenue and adjusted EBITDA in the first quarter, an adjusted EBITDA margin of 43%. The Hollywood slate is ramping up, building to the year-end crescendo of Avatar, Fire & Ash in December. We've already seen select footage and are very enthusiastic. We've had many promising new locations set to open across high PSA markets in Asia and Australia this North America, and the Middle East. And IMAX uniquely benefits from a very positive confluence of trends in global content. The rapid rise of big budget, high production value, local language blockbusters from around the world, and two, the continued resurgence of the Hollywood slate with releases from the biggest filmmakers and tentpole franchises lined up through the end of the decade. We continue to wield our leverage in the industry to provide a diverse, dynamic, truly global programming slate. On the content side, FIRST 2025 is shaping up to be a watershed year for our growing successful local language strategy. Chinese New Year exceeded our wildest expectations with 182 million in IMAX box office, triple our previous record. Like Top Gun Maverick, Oppenheimer, and Dune Part II before it, Nezha II became synonymous with IMAX as we've earned more than $164 million to date with the film. We indexed 7.5% with the film in China on less than 1% of the screens, about double our average with local animated releases. As a reminder, IMAX collects a higher fee in China with local language releases than it does with Hollywood releases. We see tremendous opportunities ahead with international films. It's quite possible that IMAX delivers its highest grossing local language films of all time in China, Japan, and India this year. In Japan, Demon Slayer Infinity Castle, the sequel to the highest grossing Japanese film of all time arrives in July, followed by a global release in the fall. And in India, War II has the potential to join the ranks of India's biggest blockbusters when it comes out in August. These well-established markets are building bankable and often exportable franchises to rival Hollywood releases. And we're tapping into fast-growing film industries in priority markets like Saudi Arabia, Vietnam, Indonesia, and Thailand to expand our content portfolio and drive network growth. In 2019, local language film accounted for 12% of our total global box office. In 2023, that figure rose to 21%, and in the first quarter of 25, it was 68% of our box office. We've already delivered more local language box office this year than we did in all of 2024. And we remain very bullish on a Hollywood slate that features more IMAX DNA than ever. Every Hollywood release scheduled from now to August was filmed with IMAX cameras. Just this past weekend, we delivered 20% of the domestic opening of Sinners, which was shot in part for IMAX with IMAX 70mm film. And on Monday, Sinners continued its torrid pace in IMAX, dropping off very little from Sunday and delivering $2 million, indicating a great hold is likely for this week. Yet again, when an auteur filmmaker like Ryan Coogler leans into IMAX, audiences heed the call and turn out for the platform in a big way. This outperformance is consistent with what we've seen with the big IMAX 70mm releases like Oppenheimer and Dune Part 2. Sinners also delivered our biggest domestic opening weekend ever for a horror film. Over the next few months, buzz is building for our film for IMAX Slate. Mission Impossible The Final Reckoning will make a splashy debut at Cannes in just a few weeks followed by the London and New York premieres in IMAX. Insiders are high on both Marvel's Thunderbolts and Fantastic Four. The trailers for Superman have racked up hundreds of millions of views online. How to Train Your Dragon screened to acclaim at CinemaCon. And early IMAX exclusive F1 pre-sales are strong, We have many IMAX exclusive elements and events throughout its promotional campaign. This year concludes with Zootopia 2 and Avatar Fire and Ash. The first two Avatar films earned more than $250 million apiece 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, Greta Gerwig's Narnia, and the Dune sequel from Denis Villeneuve. And 2027 already boasts another Avengers and Star Wars, as well as Batman 2 and Frozen 3. Once viewed as a competitive threat, streaming services are leaning into IMAX in a big way. whether it's our exclusive window for Greta Gerwig's Narnia for Netflix, the longest theatrical window Netflix has ever granted at 28 days, or Apple prioritizing an IMAX release before securing a studio partner for F1, or Amazon purchasing our original documentary Blue Angels and committing tent poles like Project Hail Mary and Mercy to the Film for IMAX program. And as we open our content aperture, we continue to drive incremental box office with our growing slate of events and experiences, including our record-breaking exclusive debut of Becoming Led Zeppelin and this weekend's Pink Floyd live at Pompeii. Our exclusive re-release of Studio Ghibli's classic Princess Mononoke, which earned $4 million in its debut, the biggest IMAX domestic opening ever for local language film, and our sold-out live sports test in France with the annual Le Classique football match. Global network and technology. Looking at our global network, our system signings and installations are a strong indicator of anticipation among exhibitors and the prevailing sentiment that IMAX will be the preferred choice for consumers worldwide as the slate rolls out. We installed 21 systems worldwide in the first quarter, our second best first quarter ever for installs. And we've signed agreements year to date for 101 new and upgraded IMAX systems worldwide. This includes a major agreement with AMC, which will add 12 new IMAX locations and upgrade virtually its entire IMAX footprint. in the US to IMAX with laser. We also continue to expand our roster of partners in the US. This year alone, we'll open at least 11 locations with regional partners that we've signed up in the past 12 months. Internationally, Japan continues to be a priority market for us. Year to date, IMAX has now signed agreements for 11 new and upgraded locations in Japan including a rare location with two auditoriums in Tokyo. We also expanded across Western Europe with our fast-growing partners at Canopolis in a multi-territory agreement spanning France, Belgium, Spain, the Netherlands, as well as the US and Canada. To close, it's a very exciting time at IMAX. Our business has proven to be resilient and able to thrive in many different economic cycles. We have no doubt that will remain true. We have visibility to a more promising slate through the end of the decade than we've ever seen in the future and a strong trajectory for continued network growth. We look forward to seizing the opportunity to deliver results for all of our shareholders. Thank you. With that, I'll turn it over to Natasha.