Company reports record revenues, earnings and EBITDA for any quarter in its 43-year history -- First Quarter 2010 total revenues increased 120% to $72.8 million vs. $33.1 million in First Quarter 2009 -- Adjusted EBITDA of $42.0 million in First Quarter 2010 vs. $7.0 million in First Quarter 2009 -- First Quarter 2010 Adjusted Net Income of $0.53 per diluted shared vs. Loss of $(0.06) per share in First Quarter 2009 -- First Quarter 2010 Reported Net Income of $0.40 per diluted share vs. Loss of $(0.06) per share in First Quarter 2009 -- Company Signs Deals for 41 Theatres in Q1, Higher than all of Fiscal 2009 -- Second Quarter to Date Gross Box Office up 78% versus last year as attention turns to Iron Man 2: The IMAX Experience
TORONTO, April 29, 2010 (GLOBE NEWSWIRE) -- IMAX Corporation (Nasdaq:IMAX) (TSX:IMX) today reported adjusted EBITDA (as defined by the Company's credit facility) of $42.0 million and $93.4 million for the first quarter and last twelve months ended March 31, 2010, respectively, compared to $7.0 million and $15.1 million for the first quarter and last twelve months ended March 31, 2009, respectively. Total revenue for the first quarter ended March 31, 2010 increased 120% to $72.8 million, a record for a single quarter for the Company, compared to total revenue of $33.1 million in the same period last year. First quarter 2010 adjusted net income, which excludes the impact of variable stock compensation, was $35.3 million, or $0.53 per diluted share, compared to an adjusted net loss of $2.6 million, or $(0.06) per share on the same basis last year. Reported net income was $26.6 million, or $0.40 per diluted share, for the first quarter ended March 31, 2010, compared to a reported net loss of $(2.6) million, or a net loss of $(0.06) per share for the first quarter last year.
During the first quarter of 2010, the Company signed contracts for 41 theatre systems including 19 joint revenue sharing system arrangements and 22 sales arrangements, of which 14 were digital system upgrades. This compares to a total of three system signings in the first quarter of 2009, all of which were system sales, and a total of 35 system signings for all of fiscal 2009. Since quarter-end, the Company has signed deals for another 13 theatre systems, many of which have been announced throughout the month of April.
"We are very pleased with our first quarter financial results," said IMAX Chief Executive Officer Richard L. Gelfond. "Our strong operating and financial performance demonstrates what can happen when great films are combined with our growing theatre network. While we are pleased to have generated record quarterly financial results, we believe the longer term benefits of titles such as Avatar and Alice in Wonderland to our business transcend a single quarter. Such benefits are perhaps best evidenced by the number of theatre deals we are doing, which will fuel additional growth for the Company over the long-term, and an increased level of tentpole movies being committed to the IMAX theatre network."
Adjusted first quarter 2010 net income and adjusted first quarter 2009 net loss exclude the impact of the changes in value of the Company's variable stock compensation. The first quarter of 2010 included an $8.7 million charge resulting primarily from the increased value of the Company's variable stock compensation at the end of the period (primarily driven by the $4.68 increase in the Company's stock price over the course of the first quarter, which impacts variable stock compensation), as compared to less than a $0.1 million charge from variable stock compensation in the first quarter of 2009. For a reconciliation of reported net income (loss) to adjusted results and the definition of adjusted EBITDA as defined by the Company's credit facility, please see the tables at the end of this press release.
Revenue from joint revenue sharing arrangements increased nearly nine-fold to $18.9 million in the first quarter of 2010, compared to $1.9 million in the prior year period. In the first quarter, the Company installed a total of six systems under joint revenue sharing arrangements, including one digital upgrade, compared to 22 such installations, including five digital upgrades, in the first quarter of 2009. As of March 31, 2010, a total of 122 theatres under joint revenue sharing arrangements were in operation, a 77% increase compared to 69 joint revenue sharing theatres operating as of March 31, 2009. Joint revenue sharing theatres open for the entire first quarter of 2010 generated gross box office per screen averages of approximately $665,000 compared to $152,000 last year.
In the first quarter of 2010, the Company recognized revenue on three full, new theatre systems with an average value of $1.6 million, compared to five in the first quarter of 2009, which also had an average value of $1.6 million. The Company also installed nine digital system upgrades in the fist quarter of 2010 compared to three in the same year-ago period. The Company has strategically elected to sell digital system upgrades at a lower sales price and gross margin than a new theatre system as the Company believes this initiative will help to drive box office revenue for its customers and IMAX by maximizing the number of IMAX titles they can show. Each period also included the sale of one used system. Due to the lower number of new systems installed this year versus last year, the increased amount of digital system upgrades, and settlement revenue of $1.2 million last year compared to zero this year, revenue from IMAX systems decreased 33% to $11 million in the first quarter of 2010, compared to $16.5 million in the first quarter of 2009.
Mr. Gelfond commented, "Our strategic initiative to upgrade our film-based network to digital continues to progress well, and our customers continue to show interest in upgrading their theatres from film to digital. Over the past 15 months, we have upgraded 35 film-based systems, and that pace has accelerated over the past six months. These digital upgrades will help to drive our box office revenue as well as that of our customers by maximizing the number of IMAX titles they can show."
Given recent deal signings for new systems, the Company now expects to install 40 to 45 joint revenue sharing theatres from backlog in fiscal 2010, up from its previous outlook of 35 to 40 installations. In addition, the Company expects to install approximately 15 to 20 new sales and sales-type lease systems (excluding upgrades) in 2010, up from its previous outlook of approximately 10 to 15 new installations. In any given year, the Company may also have a number of theatre deals that sign and install within the same calendar year. In addition, system installations can slip from period to period, often for reasons outside of the Company's control.
For the first quarter of 2010, total film revenue increased 275% to $29.3 million, compared to $7.8 million in the first quarter of 2009. Production and IMAX DMR(R) revenues increased to $23.5 million, compared to $3.7 million in the year ago period. First quarter results were driven by the stronger film slate in 2010 versus the same quarter in 2009 and the increased number of IMAX(R) theatres as compared to a year ago.
Gross box office from DMR titles was $232.2 million in the first quarter of 2010, compared to $28.0 million in the first quarter of 2009. The primary drivers of gross box office in the first quarter were Twentieth Century Fox's Avatar: An IMAX 3D Experience(R) and Disney's Alice in Wonderland: An IMAX 3D Experience. Avatar has generated approximately $231 million of worldwide box office to date ($171.9 million was captured in the first quarter of 2010). The 179 domestic theatres that played Avatar since December 18th had a per screen average of $714,000, and the international per screen average was $1,116,696. Alice in Wonderland has generated approximately $58.9 million in worldwide box office to date ($51.6 million of which was captured in the first quarter), for a domestic per screen average of $200,000 and international per screen average of $242,000. On March 26th, DreamWorks Animation's How To Train Your Dragon:An IMAX 3D Experience was released day-and-date to IMAX theatres and has generated approximately $26.3 million in worldwide box office to date ($8.2 million of which was captured in the first quarter) for a per screen average of approximately $107,000 to date.
The Company commented that second quarter 2010 gross box office to date equals $30.0 million, a 78% increase compared to $16.8 million in the same timeframe for the second quarter of 2009.
First quarter 2010 gross margin increased to $48.3 million, or 66.4% of revenue, from $14.2 million, or 42.9% of revenue in the first quarter of 2009. The primary drivers of the increase in gross margin were the Company's joint revenue and DMR film business segments.
First quarter 2010 selling, general and administrative expenses, excluding the $8.7 million variable stock compensation charge, was $10.8 million, or 14.8% of revenue, relatively flat compared to $10.8 million, or 32.7% of revenue, on the same basis in the first quarter of 2009. Reported first quarter selling, general and administrative expense was $19.5 million, compared to $10.9 million in the year ago period.
The Company ended the first quarter with cash and cash equivalents of $23.5 million, compared to $18.7 million at the end of last year's first quarter and $20.1 million as of year end 2009. During the quarter, the Company paid down $10 million of its bank debt, resulting in net debt of $16.5 million as of quarter end, compared to $161.3 million at the end of last year's first quarter and $29.9 million as of year end 2009.
Mr. Gelfond concluded, "2010 is off to a great start, and we are pleased with the positive momentum fueling our business. We believe we have a very strong film slate for 2010, and with yesterday's film deal inked with Warner Bros. and new theatre announcements, we are beginning to paint a picture of 2011 and beyond. We are particularly pleased with the many theatre signings overseas, where our brand is gaining traction and where we see much of our future growth residing, providing a complement to our brand's strong foothold in North America."
As of March 31, 2010, the Company's backlog consisted of 156 theatre systems, compared to 190 theatre systems in backlog as of March 31, 2009. Included in the 2010 and 2009 system backlog totals were 56 and 89 theatres, respectively, under joint revenue sharing arrangements and 100 and 101 theatres, respectively, under sales and sales-type lease arrangements. As of March 31, 2010, 172 digital systems were in operation, compared to 73 as of March 31, 2009.
2010 Film Slate
Turning to the 2010 film slate, Paramount Pictures and Marvel Entertainment will release Iron Man 2: The IMAX Experience day-and-date to 182 domestic IMAX theatres on May 7th and many of the 67 international IMAX theatres slated to play the film start this weekend. Following Iron Man 2, the Company's announced 2010 film slate to date includes DreamWorks Animation's Shrek Forever After: An IMAX 3D Experience(May 2010); Walt Disney Pictures' Prince of Persia: Sands of Time: The IMAX Experience (May 2010, international only); Walt Disney Pictures' Toy Story 3: An IMAX 3D Experience (June 2010); Summit Entertainment's The Twilight Saga: Eclipse: The IMAX Experience (June 2010); Warner Bros. Pictures' Inception: The IMAX Experience (July 2010); Warner Bros. Pictures' Legends of the Guardian: The Owls of Ga'hoole: An IMAX 3D Experience (September 2010); Warner Bros. Pictures' Harry Potter and the Deathly Hallows: Part 1: An IMAX 3D Experience(November 2010); and Walt Disney Pictures' Tron Legacy: An IMAX 3D Experience (December 2010). Yesterday, the Company announced a multi-picture deal with Warner Bros. Pictures to release up to 20 pictures in the IMAX format between 2010 and 2013. Under the agreement, Warner Bros. movies that have already been agreed to be released in IMAX are the above referenced Legends of the Guardian: The Owls of Ga'Hoole 3D (September 24, 2010) and Harry Potter and the Deathly Hallows: Part 1 (3D) (November 19, 2010), as well as Harry Potter and the Deathly Hallows: Part II (3D) (July 15, 2011); Happy Feet 2 (3D) (November 18, 2011); and The Hobbit (December 2012). The Company remains in active discussions with all of the major studios regarding potential future titles.