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Imax kept up its pandemic-era box office recovery in the third quarter, despite a lull in the Hollywood movie pipeline.
Overall revenue at the giant screen exhibitor came to $68.8 million, up 21 percent from a year-earlier $56.6 million, as Imax was impacted by partial COVID-related theater shutdowns in China. And Imax recorded a loss of $9 million, which widened a year-earlier loss of $8.4 million.
During the latest quarter, Imax recorded a $4.3 million valuation allowance against its deferred tax assets, and $1 million in acquisition-related expenses. The adjusted net loss per share in Q3 came to 3 cents, which compared to a 7 cents loss per-share in Q2 owing to a film investment writedown, and was better than a per-share loss of 5 cents a year ago.
Global box office at Imax during the latest quarter hit $177.1 million, up 25 percent from $141.9 million last year. Around 30 percent of the global box office came from Imax’s local-language film slate, which offset a softer Hollywood slate during the third quarter. Imax is targeting 30 to 40 local-language releases worldwide in 2023.
The giant screen technology company faces continuing uncertainty in China, its biggest international growth market, which Imax CEO Richard Gelfond chose to look beyond during an analyst call as he offered commentary on that Asian market.
“Looking at China, we continue to take the long view while managing the business for the current environment,” Gelfond argued. Imax currently has around 800 screens in China and another 200 screens under backlog orders. “Our rapid diversification to local-language content gives us a strong content foundation in China regardless of the political environment,” he added.
On the exhibition market in China, Gelfond said he couldn’t predict the timing on any recovery in that Asian market as it continues to loosen COVID restrictions, where and when possible. “I don’t know exactly, but we’ve been there for over 20 years and we built a unique platform that I have no doubt will endure for a long time and be very profitable. But I can’t narrow it down to a specific part of the quarter,” he told analysts as his company continues to be deeply invested in China and the ebbs and flows of its economy.
Imax had a 4.6 percent domestic box office share through the latest quarter, and said it was on track for its highest share of the domestic and global box office ever in full-year 2022. Gelfond also touted Hollywood’s 2023 slate, where Imax will super-size a host of Marvel and DC films as it targets a core tentpole fan audience.
During the most recent quarter, Imax had its biggest box office play domestically from Thor: Love and Thunder and Top Gun: Maverick, while local-language titles that drew big numbers included Moon Man in China, Japan’s One Piece Red and Dragon Ball Super: Super Hero, and Ponniyin Selvan: I in India.
During the current fourth quarter, Imax is looking to benefit from play on its super-sized screens for Black Panther: Wakanda Forever and Avatar: The Way of Water, the sequel to the highest grossing Imax film of all time. “Avatar: The Way of Water has the potential to be a cultural phenomenon in the same way its predecessor was. And we are confident that Imax will be part of center stage,” Gelfond argued.
He added Imax has worked closely with Disney and James Cameron’s Lightstorm Entertainment on the upcoming tentpole release for the Avatar sequel in its large format theaters. That includes looking ahead to a host of 3D screenings in its theaters for Cameron’s tentpole.
And Gelfond said the company remains “encouraged by what we are hearing from industry sources about the likelihood that the Avatar sequel will be admitted into China.” He also pointed to unconfirmed speculation that Dwayne Johnson’s superhero pic Black Adam would play in China in mid-November.
After the Chinese Communist Party Congress has concluded, Wall Street watchers are hopeful that regulators in that country will loosen requirements for high-earning Hollywood imports as COVID lockdowns lift and that the range of Chinese films deemed politically acceptable will widen.
Also during Q3, Imax completed its acquisition of streaming technology company SSIMWAVE.
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