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Imax has posted lower revenues and earnings even amid a record Avatar: The Way of Water box office run on its screens and a strong Chinese market turnaround.
Overall fourth-quarter revenue came to $98 million, down 10 percent from a year-earlier $108.6 million, amid a rapid reopening of cinemas in China, where Imax has around 800 screens. The large-format technology company recorded a profit of $2.6 million, which compared to a year-earlier profit of $10.1 million.
During the latest quarter, Imax recorded a tax valuation allowance loss of $2.1 million. The adjusted per-share profit in Q4 came to 19 cents, which compared to a per-share profit of 31 cents a year ago.
Ahead of the release of the fourth-quarter financials, analysts forecast overall revenues of $95.7 million, net income at $5.4 million and adjusted earning per share at 19 cents, according to a FactSet consensus estimate. During the latest three months, Imax saw technology network revenues fall 11 percent to $45.9 million, while technology sales and maintenance revenues fell 10 percent to $48 million.
To date, Avatar: The Way of Water has been the highest-grossing first-run release of all time, with more than $253 million in box office on Imax giant screens. The sequel delivered $140 million in box office to Imax during the last two weeks of December 2022 alone.
The Toronto-based company also gained during the last quarter from a rapid reopening of the Chinese box office, with the company delivering a record-breaking $61.3 million in local-language ticket receipts during the Chinese New Year holiday, up 72 percent over the year-earlier frame.
In China, Wandering Earth 2 became Imax’s highest-grossing local-language film of all time. Global box office in 2022 for Imax increased 33 percent year-over-year to $850 million, getting the company nearer to the pacing of its highest-grossing year, 2019, when it netted $1.03 billion in box office before the onset of the pandemic.
On an analyst call, Imax CEO Richard Gelfond talked up the company returning to those pre-pandemic levels of box office and strong global network growth — including theater signings and installations in Asia, especially India, and Latin America — in the wake of the Avatar sequel on its giant screens.
“As a result, we are seeing encouraging signs of increasing demand for new and upgraded Imax systems around the world, including recent multi-system agreements in Japan and Indonesia. And the sequel is helping lead the dramatic resurgence of our business in China — which has taken a complete, positive 180-degree turn in the span of just a few months,” the Imax CEO reported in prepared remarks.
The outsize play for the Avatar sequel in China has apparently opened the gates for other Hollywood tentpoles to enter that market, Gelfond argued, as this month China saw the long-awaited return of Disney/Marvel franchises, including Black Panther: Wakanda Forever and Ant-Man and the Wasp: Quantumania.
“As a result of these trends, we have a very bullish outlook on the Chinese box office for 2023,” Gelfond told analysts, predicting China was in a “return to normalcy.” And pointing to the promise of the Hollywood film slate for the rest of the world, the executive also forecast his company’s global box office will return by the end of 2023 to pre-pandemic levels for overall ticket receipts.
“We feel good about our opportunity to drive further global growth in our theater network and box office, as we carry our strong momentum through the year,” he argued as Imax forecast install guidance for the current year at between 110 and 130 theaters.
“You’re seeing a global rebound now, where people really want to sign and install Imax much more rapidly than in the last couple years,” Gelfond added as, at the same time, major filmmakers and Hollywood studios jockey to get their movies into Imax theaters.
“Unfortunately, we have to turn down movies because people have booked that date in advance, and it’s good when the dates are competitive,” the Imax CEO said.
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