Imax Corporation

Thank you for standing by. Welcome to the Q2 2025 IMAX Corporation earnings call. At this time, all participants are in 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 hear an automated message advising 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 conference over to your first speaker today, Jennifer Horsley, head of investor relations. Please go ahead.

Good morning, and thank you for joining us for IMAX's second 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 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 those 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 morning'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 us as we review another outstanding quarter for IMAX. We delivered strong financial results in Q2, highlighted by installation growth of 50%, box office growth of over 40%, and an adjusted EBITDA margin of 43%. We've opened a total of 57 new and upgraded IMAX locations year to date, compared to 39 during the same period of 2024. Given the demand for IMAX systems, we're moving higher in our range for full-year installations to between 150 and 160 systems worldwide. And we've now completed agreements for 124 new and upgraded IMAX systems worldwide year to date, compared to 130 in all of 2024. Q2 was our highest grossing quarter ever at the domestic box office, as we remain on track to achieve our guidance of $1.2 billion for the full year. This is a direct result of our strategy to increase our global market share, which at .6% of total box office on less than 1% of screens is up 19% year over year in the second quarter. And to ensure that IMAX is the platform of choice for filmmakers and studios who want to deliver the best experience for the greatest films from around the world. Coming into the second quarter, we're focused on an unprecedented run of eight consecutive films for IMAX releases this summer. Films shot with our cameras, featuring exclusive IMAX expanded aspect ratio, designed every step of the way to be experienced on our screens. With all seven of these films to date, we've averaged about 15% of the North American box office on opening weekend on just 400 IMAX screens. Soaring as high as 20% on Mission Impossible, The Final Reckoning, Sinners, and F1. That's a feat we've only achieved eight times in our entire history. And three of those milestones came in this second quarter. And with Superman, our 16% opening weekend indexing marked our highest market share ever on a domestic debut over $100 million. It's becoming increasingly clear that we're raising the floor for our market share. 10% used to be the high end of what we delivered on major tent pole releases. Now thanks to our Film for IMAX strategy, the higher level is business as usual. In May, a New York Times feature posed the question, quote, why is IMAX suddenly everywhere, unquote. And the preponderance of Film for IMAX releases this summer, along with our outside share of the global box office, demonstrates the importance of IMAX across the global cinema business. More filmmakers are wielding our technology to create films designed to be experienced on our screens. Studios are competing more fiercely than ever to secure IMAX release windows and make IMAX a centerpiece of their marketing campaigns to event-size their films. Audiences are responding, demonstrating a strong preference for seeing films in IMAX. And exhibitors are clamoring to get more IMAX systems into their networks and fully capitalize on the very IMAX-friendly slate rolling out over the next several years. We're seeing that our strong system signings and installations this year, which is a powerful catalyst for our business, the more we grow our network, the more we grow sales and box office revenue. And we maintain a strong capital position. A recent renewal and expansion of our revolving credit facility demonstrates the continued confidence in our financial growth model. Simply put, this is a fantastic time to be in the IMAX business. And we have good reason to believe it will only get better. Looking at our global network, installs came in at the high end of our projection with 36 systems in the quarter. The full year has set the yield several milestones, including our largest single-year expansion ever in France with seven expected installations, five of which have already been completed. Our largest single-year expansion in the Netherlands with four expected installations, close to doubling our network in that country. And our largest single-year expansion ever in Japan with eight already installed and at least four to go, representing network growth of over 20% in that country from last year. Our recent agreement with Regal will see us expand into our first new location in Manhattan in 15 years, as well as a new location in the iconic LA Live Entertainment Complex with an 80-foot screen and an IMAX 70mm film projector. With eight new domestic exhibition partners in 2024 and our record domestic box office in the second quarter, we remain keenly focused on growth in North America, one of our highest per-screen markets in the world. We also recently completed another agreement with Wanda that will see IMAX systems replace existing premium format auditoriums in up to 27 locations, a sign of our dominant competitive position in China. And we continue to do brisk system sales in Australia, where recent agreements with EVT, Hoyts and Villichs will help satisfy strong consumer demand and high PSAs for the IMAX experience. The second quarter offered strong evidence of our ability to elevate box office hits and drive results through our diversified global slate. One of Hollywood's biggest hits in years, it's easy to forget the questions that surrounded sinners in advance of its release. As longtime partners of director Ryan Coogler, we encouraged him to make IMAX a centerpiece of the marketing. IMAX drove 21% of the film's global box office during its two-weeks IMAX run, even bringing it back weeks later for an encore run in IMAX film locations. Mission Impossible, The Final Reckoning, made similar use of IMAX from the production through the marketing and the launch of the film. Final Reckoning includes more IMAX exclusive expanded aspect ratio than any mission film. And premieres from Tokyo to London to New York were hosted on IMAX screens. We far outpaced our projections in delivering over $75 million in global box office, our best result ever of the Mission Impossible franchise and a double-digit percentage of the film's overall gross across its entire run. The third quarter is already off to a great start. F1 the movie was designed from top to bottom for the IMAX experience, shot entirely in IMAX expanded aspect ratio by our long-term partner, Joe Kozinski. And we exceeded our internal projections in delivering more than $80 million and counting a whopping 22% of the domestic box office and .5% of the global box office for the film. Superman will conclude its IMAX run this week with well over $50 million in global box office. And in local language, the Demon Slayer sequel delivered our biggest opening weekend ever in Japan this past weekend with $3 million and an incredible $48,000 per screen average. And in China, the much anticipated film for IMAX release, Ganje Rescue, opens next month. Our -to-date local language box office stands at nearly $230 million, just shy of the $244 million full-year record we set in 23. At the current pace, we expect to set a new record within Q3. The second half slate looks promising. This weekend Marvel's long-awaited Fantastic Four opens worldwide. The Rotten Tomatoes scores and pre-sales are pretty strong. Our film for IMAX slate continues into the fall with Tron Ares and Mortal Kombat 2. There are several IMAX-friendly genre releases, including Predator Badlands and The Running Man. Zootopia 2 is shaping up to be another big sequel for Disney animation and holds significant global appeal, particularly across our Asian markets. And the year concludes with the second installment of Wicked and finally with Avatar Fire and Ash, which will be preceded with an IMAX re-release of Avatar, The Way of Water, in October. 2026 kicks off the year with the Avatar carryover and features Christopher Nolan's The Odyssey, as well as Avengers, Star Wars, The Mandalorian and Grogu, Super Mario Bros. movie sequel, Toy Story 5, Greta Gerrard's Narnia, and Dune Part III. And a very compelling 27th slate continues to take shape, including Star Wars Starfighter from Deadpool and Wolverine, director Sean Levy, Avengers Secret Wars, The Batman 2, and Spider-Man Beyond the Spider-Verse. We continue to deepen our relationships with tech companies in the theatrical space as well. Our partnership with Apple has yielded excellent results to date on F1, and we're re-releasing F1 on August 8th. Amazon will release its first ever Film for IMAX title next year with Ryan Gosling's Project Hail Mary. We were very pleased by the announcement that Dune director Denis Villeneuve, a long-term partner of the company who has called IMAX, quote, the future of cinema, unquote, has been tapped to direct the next James Bond movie for Amazon MGM. And we are working closely with Netflix on the rollout of next year's IMAX exclusive theatrical run of Narnia from Greta Gerrard. Furthermore, we continue to offer diversified content, including films for music fans, including concert documentaries for The Grateful Dead, Prince, and The Rolling Stones. To close, the fundamentals of our business are strong. The strength and impact of our brand across the entertainment landscape has reached new highs, and we have tremendous runway with a strong slate and network growth prospects ahead. And we're focused on building on our momentum to strengthen our strategic position, executing with financial discipline, continuing to provide the most immersive entertainment experience in the world, and delivering for our shareholders. Thank you. With that, I'll turn it over to Natasha.