IMAX Posts Sharply Higher Third Quarter Earnings

Posts a profit of $6.7 million for the quarter to Sept. 30


TORONTO -- No fad here, thank you.

IMAX Corp. on Thursday insisted a fast-growing international theatre network is helping the giant screen exhibitor create a sustainable business model as it posted sharply higher third quarter earnings.

And Toronto-based IMAX said it will continue ramping up its roll-out of joint venture theatres and digitally-remastered Hollywood movies, the backbone of its current growth.

IMAX posted a profit of $6.7 million for the quarter to Sept. 30, against earnings of $1.1 million in 2009, on revenue up 17% to $51.1 million.

During the third quarter, IMAX installed 19 theatre systems under joint revenue sharing arrangements, against six in the year-earlier period.

That roll-out pace will grow in the fourth quarter as it expects to install 22 and 24 joint revenue theatre systems, and between 15 and 20 traditional sales-type lease systems, excluding upgrades.

Joint revenue arrangements see IMAX receive a share of a theater's box office and concession revenues in exchange for placing a theater system into an exhibitor's multiplex.

Also during the third quarter, total film revenue jumped 68% to $21 million, against a year-earlier $12.5 million.

This came despite IMAX screening only one major Hollywood tent-pole release during the latest frame, Christopher Nolan's Inception from Warner Bros., which grossed around $50 million on the exhibitor's super-sized screens.

IMAX also did good business with Hubble 3D.

And production and digitally-remastering (DMR) revenues increased 58% to $12.4 million, compared to $7.8 million in the year ago period, an increase due to a larger number of theatres operating in North America and abroad, compared to a year ago.

Going forward, IMAX CEO Richard Gelfond told analysts during a morning call that his company can look forward to sustained earnings growth from on-going joint revenue-share theatres and from re-mastering and releasing Hollywood films in its super-sized format.

"We believe the combination of continued consumer enthusiasm for the IMAX brand worldwide, increasing demand from our exhibitor partners and film commitments from studios as far out as 2013, is setting the stage for long-term growth," he said.

IMAX has faced skepticism in some quarters that it is riding Hollywood's current obsession with 3D movies to short-term growth by offering premium tickets prices, but cannot sustain the current growth over time when the market becomes saturated with big-screen theatres.

For now, IMAX's strategy remains securing a greater percentage of on-going box office from exhibitors as part of joint venture deals, and securing more DMR revenue from the Hollywood studios.

Upcoming Hollywood titles bound for IMAX screens include DreamWorks Animation's Megamind, the first part of Warner Bros.' Harry Potter and the Deathly Hallows, and Disney's Tron: Legacy.

Third quarter systems revenue fell 26% to $14.8 million, reflecting fewer installed sales-type lease theatre systems.

IMAX installed 29 theatre systems, including upgrades, against 19 system installations, including upgrades, in 2009.

IMAX's backlog stood at 257 theatre systems at the end of the third quarter, compared to 163 theatre systems a year-earlier.