Imax CEO Talks Recent Box-Office Challenges, Touts 2015, 2016 Slates
UPDATED: CEO Richard Gelfond also discusses the business impact of the Ukraine-Russia conflict as the giant-screen operator reports higher earnings.
Giant-screen operator Imax on Thursday reported higher second-quarter earnings despite a slight revenue drop.
The company, led by CEO Richard Gelfond, posted its latest financials before the market open, saying it benefited from "continued cost controls."
The figures also benefited from above-industry box-office trends in the second quarter in Imax theaters.
Imax reported earnings of $13.3 million, up from $11.8 million in the year-ago period and in line with expectations. Revenue of $79.1 million was down from $81.7 million.
"Our bottom-line financials reflected expanding margins and continued cost controls," said Gelfond. "We also made strides in the quarter with respect to key 2014 initiatives, including expanding the network, developing our world-class laser projection system and testing new marketing strategies, which we believe will help further position us to take full advantage of the potentially very strong film slates in 2015 and 2016."
On the earnings conference call, Gelfond discussed recent box-office challenges and the business impact of the conflict between Ukraine and Russia.
Asked about the recent box-office weakness in the U.S., the CEO said that some films have simply not been working as hoped, and maybe some people are feeling sequel fatigue. He also suggested increased interest in the soccer World Cup in the U.S. as a possible reason. But overall, Gelfond emphasized that he doesn't think the recent box-office performance is a sign of a permanent downward trend.
He predicted that Guardians of the Galaxy and Interstellar would do well and stressed that 2015 and 2016 are shaping up as among the strongest years in recent memory in terms of release slates. He mentioned such planned releases as Fast & Furious 7, Tomorrowland, the next James Bond film and Star Wars: Episode VII.
Gelfond also lauded Transformers 4 for confirming Imax's strength in China, where the film has made around $35 million so far. It is the company's biggest-grossing release ever in China, beating Avatar by about 50 percent. That was "promising for our continued growth in the region," Gelfond said.
Is the Ukraine-Russia unrest affecting Imax's business? The CEO said his team has seen "no effects yet in Russia and Ukraine so far" where Transformers 4 has also done well. "None of the sanctions apply right now," he added, concluding that there is "no concern" at Imax about the countries right now.
MKM Partners analyst Eric Handler slightly raised his second-quarter revenue forecast to $77 million, reflecting "a higher-than-estimated global box-office outlook of $215 million versus our prior $204 million estimate."
Stifel Nicolaus analyst Benjamin Mogil recently upgraded his rating on Imax's stock from "neutral" to "buy."
"We view Imax at a positive operational inflection point," he said. "While the strong 2015 and 2016 box-office slate will aid the entire group, we view Imax as exceptionally well positioned given that the attractive slate for their core comes at a time when their operating fundamentals are improving."
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