Imax Posts Third-Quarter Loss, Revenue Fall Amid Pandemic

Richard Gelfond  - Getty - h 2018
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The giant-screen exhibitor, led by Richard Gelfond, while hobbled by tentpole release delays and North American movie theaters operating at reduced capacity, saw gains from the resurgence of the Asian film industry.

Giant-screen exhibitor Imax continues to see a direct hit to its balance sheet from the coronavirus pandemic.

On Thursday, Imax reported a loss of $47.2 million attributable to shareholders, compared to a year-earlier $9 million profit, as it posted third-quarter financial results dominated by the COVID-19 crisis.

The loss per share came to 80 cents, compared with a 15 cents per share profit in 2019, on quarterly revenue falling to $37.3 million, against $86.4 million a year earlier. That beat an analyst forecast from FactSet for $29.1 million in revenue.

During the most recent quarter, Imax, while hobbled by tentpole release delays and North American movie theaters operating at reduced capacity, saw gains from the resurgence of the Asian film industry.

The giant-screen exhibitor has been screening local-language fare like The Eight Hundred in China, which was shot with Imax cameras, and Demon Slayer in Japan as theaters fully reopen.

"With continued box office revenues from our strong local-language slate and revenues from theater installations, the company estimates our average monthly cash flow will be approximately break-even through the first quarter of 2021," Imax CEO Richard Gelfond said in a statement.

During a morning analyst call, Gelfond focused on the resurgent Asian box office for helping the giant-screen exhibitor restore its balance sheet amid a pandemic slump in North America.

"We believe we remain among the best companies in the industry to manage through this situation with the only geographically diversified global platform for theatrical blockbuster entertainment," Gelfond told investors.

The Imax boss pointed to China and around $1.7 billion in overall box office generated since that Asian market reopened in July, with Imax screens having rebounded to around 95 percent of its average weekly box office, compared to business done in the second half of 2019.

"Our fans have been among the first back to the multiplex, we’ve gained market share and continued to expand our brand into local-language releases," Gelfond said.

Japan, South Korea and Taiwan have also performed well for Imax, he added, despite the lack of Hollywood tentpoles to complement release of local-language fare and reduced seating capacity for reopened theaters.

Given the Asian box office gains, Gelfond said the average monthly cash burn for his circuit currently stood at $4 million, or $12 million over the third quarter.

Gelfond also addressed concerns about the North American exhibition industry, which has been slower to reopen amid the pandemic as it lags the Asian market. "There is no doubt that the continued delay in the Hollywood slate and theater reopenings will have a significant impact on our exhibition partners, particularly in North America and certain parts of Europe where many are highly leveraged with large fixed costs," he told investors.

At the same time, Gelfond argued Imax screens tend to be in the best multiplexes when it comes to generating box office revenues. So if the North American exhibition industry shrinks due to the impact of the COVID-19 crisis, as expected, Imax could gain market share.

"In short, should the industry contract, our theaters are not the marginal theaters and our consumers are not the marginal consumer. In fact, based on our preferred locations and premium product, it’s feasible we could gain market share in such a scenario," Gelfond said during the analyst call.

The Imax boss also touted the continuing appeal of the theatrical release for major Hollywood studios, even if in the short term they delay tentpoles to 2021 or send them to premium video-on-demand or streaming platforms.

"Despite the further delay in theater reopenings, we are encouraged to see that with a few exceptions, major blockbusters continue to be delayed — rather than moved to PVOD or SVOD," Gelfond said, as he pointed to the James Bond franchise pic No Time To Die being moved to April 2021, and Wonder Woman 1984 still being scheduled for the upcoming Christmas season.

After the analyst call, Gelfond told The Hollywood Reporter that getting North American moviegoers to follow their peers in the Asian market and feel safe enough to return to the local cinema as they did pre-pandemic was a given.

"What bothers me is I sometimes see narratives or people saying 'will people go back to the movies?' The answer is an unqualified yes. It's not something in the brains or genetic makeup of people from Asia that's different from North America. The only difference is how the pandemic has been handled and how and whether people feel safe," he argued.

"I'd like to think that leadership in North America will get its act together sooner at both the state and federal level to create the environment where people feel safe," Gelfond added after major cinema chains had done their part by introducing mask-wearing and socially distanced seating as part of their safety protocols.