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Giant-screen exhibitor Imax reported a sharp rebound in revenues and a smaller second-quarter loss amid the reopening of its global theater network.
On Tuesday, Imax reported a loss of $9.2 million attributable to shareholders, which compares to a year-earlier loss of $26.1 million when the company’s theaters were nearly all shut down at the height of the COVID-19 pandemic.
The adjusted loss per share for the second quarter was 12 cents, against a year-earlier loss of 44 cents, and quarterly revenue was $51 million, well up from a year-earlier $8.9 million. Imax posted global box office of $109 million in the second quarter, which marked its second consecutive quarter of $100 million-plus.
Analysts forecast a per-share second-quarter loss of 27 cents, on revenue of $42.8 million.
With around 90 percent of its global theater network now open during the second quarter, Imax saw the return of Hollywood blockbusters to its screens, including A Quiet Place Part II and F9. It also came ahead of a $12 million opening weekend for Black Widow on Imax screens, which included 22 minutes of scenes in an expanded aspect ratio.
The North American reopening also meant Imax’s box office was no longer so heavily weighted toward China and its local content. For Black Widow, North America contributed $7.2 million of Imax’s box office from 380 screens, while internationally the superhero pic opened to $4.8 million from 315 screens in 59 countries.
During an analyst call held after the market close, Imax CEO Richard Gelfond pointed to “encouraging signs of improvement” at the global box office. “Indeed, we believe Imax is helping to lead the global recovery of the film industry, uniquely positioned to benefit immediately from the upcoming acceleration of Hollywood blockbuster releases and poised to take market share as the world reopens,” Gelfond said.
Gelfond added that, as the pandemic eased, domestic box office numbers underlined “signs of pent-up demand for blockbusters that we’ve seen in Asia and the Middle East,” though the Imax boss insisted the current recovery for the global exhibition sector was likely to take time.
“As we’ve said, the recovery of the box office will be a gradual, incremental process — a faucet, not a light switch — but it’s clear we are headed in the right direction,” Gelfond told analysts.
Imax executives also discussed how much the day-and-date model for Black Widow and other tentpoles will impact theatrical box office heading into 2021. Gelfond said new tentpole releases — while fewer in number so far than anticipated as Hollywood studios take “a conservative approach” and push many big releases into the fall or 2022 — continue to perform at the box office. “Despite a day-and-date release on HBO Max, Godzilla vs. Kong has delivered more than $100 million at the domestic box office and $460 million globally — including $37 million in Imax,” he said.
However, shares in Imax and other exhibitors took a hit when a steep second-week box office drop-off for Disney’s day-and-date release of Black Widow followed the first week in theaters. “The combination of PVOD and a lot of piracy accounted for the cannibalization and significantly affected the box office at the end of the day,” Gelfond said, though he declined to cite a dollar figure for the impact of the Disney+ Premier Access release of Black Widow on the Imax box office haul.
Looking ahead to the end of the pandemic, Gelfond predicted that Disney, which has experimented with release strategies while movie theaters have been shuttered, would re-embrace the exclusive theatrical window for tentpoles once the exhibition sector fully reopened. “The way to maximize value is to have a theatrical window,” he insisted.
Imax execs also discussed Hollywood’s upcoming slate into September, when tentpole films will start to arrive in theaters every two weeks through the end of the year, including No Time to Die, Dune and Top Gun: Maverick — all three of which include footage shot with Imax cameras.
“The reopening of theaters is accelerating. Audiences are coming back in big numbers. And the flow of blockbuster content into theaters this fall and beyond looks to be unprecedented,” Gelfond told analysts. But Imax faces industry headwinds as it plods into the latter half of 2021.
The resurgence of COVID-19 cases across the U.S. due to the Delta variant could potentially threaten that upcoming release slate, warn analysts, adding to volatility around the exhibition sector and its stock prices.
“Looking ahead, the industry appears to be at an inflection point with the volume of big-budget, Hollywood content on the rise and the vast majority of Imax’s key markets having not only reopened but also starting to benefit from looser capacity restrictions. The exhibition industry as a whole will likely take time to rebuild attendance, while also dealing with some secular headwinds. That said, we fully believe the pandemic has shown that Hollywood needs an exclusive exhibition window in order to make the economics of major movies work,” MKM Partners analyst Eric Handler wrote in a July 26 investors note.
But on the analyst call, Gelfond discounted the potential impact of the Delta variant on attendance at the local multiplex. “It’s too early to say in terms of whether it’s having an impact. I personally don’t think it’s going to. Among the vaccinated people, there’s not a lot of reticence to go to theaters,” he insisted.
Gelfond added the box office rebound in Asia this year, especially in China and Japan, happened among populations that were largely unvaccinated. “Unless it gets much more out of control than it is now, and there’s no evidence for that, I don’t think [the Delta variant is] a significant game-changer,” he said.
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