IMAX Corporation (NYSE:IMAX) Q1 2024 Earnings Call Transcript

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So we don’t really have that the same kind of visibility into next year or the year after because our approach is somewhat different. In a way, the bigger films, the Hollywood films is more like, elephant hunting, whereas the other local language films are more tactical on filling and gaps in schedule. But I would say we’re investing in that, and we part of our strategic goal is to continue to develop that, and I haven’t seen anything in terms of obstacles in the way of accomplishing that.

Operator: And our next question will come from Mike Hickey of The Benchmark Company.

Mike Hickey: Hey, Rich, Natasha, Jennifer, thanks for taking our questions here and congratulations on a great quarter. I guess, just thinking about, Rich, your Hollywood collaboration, obviously, you guys are nailing it, Oppenheimer Dune Part 2. And it seems like, it’s pretty clear you’ve got heavy influence with your cameras and tech on the slate that matters for ’25 and ’26. And I think obviously great share performance you had in the quarter in North America. I guess just thinking about the opportunity you see, Rich, outside of maybe your domestic market with Hollywood Blockbusters, obviously, you go serve a global market, but thinking about local language and maybe the opportunity to use more of your cameras and tech with some of those films?

And I guess, you just said it’s difficult to kind of pick the winners, but maybe you can do that. I’m not sure. But just sort of curious the opportunity there and if that can help your share performance and sort of bridge to where you are in North America? And then the second question would be on, just how obvious it is, I guess, on ’25 and ’26 and your influence on the film slate and your likely share of that slate. When should we see more of a follow through you think on system signings and installations? I guess just with the backdrop here of 1Q signings that look like they’re down year-over-year, and I think you said it’s picked up. But just sort of curious how system signings and installations should pace into that, pretty profound ’25, ’26 opportunity led by IMAX?

Rich Gelfond: So I’m going to answer your second one first and then go back to your first question. But you should not get the feeling that signings or installations are slower. I mean, the quarter is a period of time. And as we said in our remarks, we have 17 installs, 17 signings, as of and back we have 17 installs also, but we have 17 signings through today. But the level of activity is very high, and I’m not someone who predicts things. But I think in the coming weeks, you’re going to see a fair amount more coming. So whatever the quarter says, there’s no indication that signings have slowed down. And as a matter of fact, coming out of CinemaCon, there’s a lot of activity as much as I’ve seen. And I think that’s largely driven by things you’re talking about, the ’25 slate, the ’26 slate, filmmakers leaning in heavily, studios leaning in heavily, marketing leaning in heavily.

And I would think a number of those indices, whether it’s signings, whether it’s market share, whether it’s installs, especially as we approach the ’25 incredible slate with lots of IMAX DNA in it. So I think that’s all added to it. And I think that’s going to create a lot of momentum around our business. And I don’t have to remind everyone, but I should that if you go backwards in time, you’re coming out of a pandemic and a rider strike. But when you go forward in time, you’re going into slated in ’25 and ’26 that look remarkable with tons of IMAX DNA in it. So making it simple, I mean, that should influence the trajectory of our whole business. As to your first question about using IMAX technology and cameras and our DNA in international projects.

I’m glad you asked that question because, in fact, yesterday, I was on a call, with Daniel Manwaring, our CEO of China, and I actually didn’t realize this, but we have 6 films now being filmed in China using IMAX cameras. And I think he said he thought 3 would release this year and 3 would release next year on our call. And again, we’re in negotiations with a few people in India about using our cameras in other areas. So the world is small enough where they saw the results of coming out of where IMAX DNA is involved. And certainly, they’re interested in doing that on a global basis. And we didn’t really give you color where just kind of non-quantitative color. But coming out of CinemaCon, we had an IMAX CEO forum, and I think this is important, not just from studios, but from filmmakers on kind of a global basis.

The level of interest and inquiries has really spiked. So if I showed you my call sheet or our incoming inquiry list and the names of the filmmakers about doing different things, that’s really increased dramatically. And that becomes really important because it’s not only the studios who are saying as part of our strategy, but it’s the talent. And as you know, the talent has a lot of influence, not just in Hollywood, but in Beijing and Seoul and a lot of other places. So I think the trends, both financial trends and artistic trends, are definitely spilling over on a global basis.

Operator: And our next question comes from Jim Goss of Barrington Research.

Jim Goss: Rich, you’ve talked about your broadened view of what you feel can work on IMAX screens and especially in terms of the IMAX cameras. And I’m wondering how you and you’ve also talked about interplay with a greater variety of, content creators. And I’m wondering how you navigate and make those decisions, because I know you’re very selective on that, in terms of who you decide to work with and what you think might fit. And is some of this being targeted then to the, screen time during the week, as alternative content rather than, just things that will go on the weekend, displays?

Rich Gelfond: Yes, Jim. Absolutely. I think Natasha spoke a little bit about some of that. So as she mentioned, our partnership within ’24 is aimed to go out on Wednesdays. I mean, right now, we’re in the middle of a discussion where there’s a very exciting project, but it releases on a weekend when we have a really big film release. And we’re declining to do that project because it’s not really incremental. So we’re much more focused on capacity utilization and filling things in on the off days. And when we discuss alternative content with our counterparties, frequently, that’s the discussion that these are the days that are available we would consider. And I actually don’t remember which days, but like, Andre 3000 was released on a weekday.

This weekend, we’re partially doing in our network, a film called challengers. But we did select premiers, I think, on Tuesday night, and Zendaya, the star, showed up in an IMAX theater to do that and things like the Beach Boys concert with Disney plus that we’re doing. So that’s definitely the way we’re positioning it is not to be competitive with our core blockbuster projects, but to use our platform in a complementary way to fill in the utilization gaps.

Jim Goss: And there was a time the studios weren’t so fond of your cutting back on some of their showings during the week, in favor of anything else. So I gather you’re making more headway in terms of your ability to control your screen usage and offer them what you think is appropriate?

Rich Gelfond: Yes. Well, as you know, Jim, you know, every negotiation on life is based on supply and demand and leverage and lots of factors. And I think, you know, I mean, I got to stop and say we get almost 6% of the North American box office on 1% of the screen. So you could understand that’s made studios a little bit more flexible in terms of their willingness to let us program something else on a Tuesday night, and it’s made us maybe a little more careful when we give away the slot. So instead of what we would have said, we promise you a 100% of the network for 2 weeks. We’re carving out exceptions in advance to facilitate the alternative content and the documentations. We’re affirmatively making that effort.

Jim Goss: Okay. And last thing, congratulations on that 5.9%, very impressive. You clearly have had continuing success versus, the depth of product, maybe broad more broadly. As 2025 and 2026, come into play and you have an increased, you know, at least we’re expecting an increased supply of films. So you’ll have greater film strength, but you also have greater competition. And I think Mike was bringing this up a little bit already. But just how should we frame our expectations in that more competitive but more robust environment?

Rich Gelfond: I mean, I think you should assume that we’ll have better financial performance. That’s what we assume. I think it’s, as I said, we don’t have many holes in the whole year for 2025 and 2026, and that doesn’t include the supplemental content, which we’ve been discussing and widening our aperture. So I think at the moment, we feel extremely good.

Operator: And our last question will be coming from Steven Frankel of Rosenblatt Securities.

Steven Frankel: Good morning, and thanks for the opportunity to give me an hour. I’ll be quick. You tried to consolidate the China sub as a way to save money. Maybe detail for us, since that didn’t happen, where you can pull cost out of that operation without sacrificing opportunities?

Rich Gelfond: Well, good question, Steven. In fact, we’ve been doing that. So we just moved our office in Shanghai, our headquarters into half the space and half the rent. And it’s one of our strategic goals is to manage cost there. We brought in our IR effort there and saved some cost in the financial area, you know, kind of across the board, we’ve been looking at what opportunities that presents. And you didn’t ask this, but I’ll address it because we’ve gotten the question, are we going to try and privatize it again? And we can’t go back until much later this year. But we haven’t made a decision yet what to do. I think it will depend on China’s financial performance, what IMAX’s liquidity looks like, and then how the Chinese shareholders feel about it I will make a decision just reminding everyone that wasn’t, have to do.

That was it would be nice if we could do it. But even though we didn’t get it done in the way we wanted, we’ve realized some of those savings along the way by being strategic about how we manage our costs there.

Steven Frankel: Great. And then sales efforts are now concentrated on areas outside of China, true? So that’s another opportunity, I assume?

Natasha Fernandes: Yes, it is, Steve. Actually, in our 17 signings year to date, we actually have 2 new customers, 1 in India and 1 in Turkey. And so as we look at our strategy to continue to expand in rest of world regions, we are thinking through not only which countries we can expand in, but who are the partners we can expand with and getting new opportunities from new partners is a great way to expand as well.

Operator: And I’m showing no further questions. I would now like to turn the conference back to management for closing remarks.

Rich Gelfond: Thank you, operator, and thank you for joining us. I mean, this year was predicted to be a way down year. We didn’t agree with that. The first 2 months, obviously, were challenging, but March was just incredible. And I think starting this quarter, we’re very much on budget for what we see for the second quarter. And I think if people line up this year’s content versus last year’s, it really is not a weaker year, at least for IMAX that was. And we remain consistent with how we felt about this year at the beginning of the year. And I think when you look into rest of the year, Joker, Deadpool, Despicable Me, a lot of other things, there’s a lot of good stuff to come. And as I said, stay tuned on the signings front.

There’s a lot of activity there. And when you look into ’25 and ’26, I think there’s a lot to be excited about. And without getting hyperbolic about it, morale at IMAX and seeing it from the inside, we feel we’re extremely well positioned, and we think that people falsely think we’re like an exhibitor. But if you look at what our box office is and you look at what our margins are and you look at what our balance sheet looks like, I think we continue to deliver, and I think that’ll be more and more visible as we move forward. Thank you all for joining.

Operator: And this concludes today’s conference call. Thank you for participating. You may now disconnect.

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