Imax Second-Quarter Earnings Fall

Marvel's Captain America: Civil War - airport-H 2016
Courtesy of Walt Disney Studios Motion Pictures/Marvel 2016

The sharp drop came as the big-screen exhibitor had few performing titles beyond 'Captain America: Civil War' and 'The Jungle Book.'

Imax on Wednesday reported a sharp fall in second-quarter earnings on weaker box office.

The giant-screen exhibitor reported a profit of $10.6 million on overall revenue at $91.6 million, compared to year-earlier earnings of $26.3 million on revenue at $107 million. The adjusted earnings per share was 18 cents per share, just beating a 17 cents a share consensus.

Captain America: Civil War and The Jungle Book had their work cut out during the latest quarter as Imax faced headwinds from soft box-office revenue for Hollywood tentpoles. Gross box-office revenue from Imax's digitally remastered movies was $260.8 million, down sharply from $343 million in the same period of 2015.

During the latest quarter, $79 million of its global box office came from the market in China, where Warcraft generated $30 million alone in receipts on Imax screens. Imax CEO Richard Gelfond during an analyst call insisted the recent downturn in the China box office did not suggest a long-term trend.

"It's just movies not performing," he said. Imax also during the second quarter of fiscal 2015 had outsized box office from performers like Jurassic World, Avengers: Age of Ultron and Furious 7, which represented the highest-grossing box-office quarter in the company's history.

"While Imax faced a challenging comparison to last year's second quarter box office ... considering the strong outperformance in box office we saw in the first quarter, we believe our portfolio of titles released across the full year will result in an annual box office that is relatively consistent with our historical PSA (per-screen average)," Imax said in a statement.

The exhibitor pointed to such upcoming Hollywood releases as Suicide Squad, Marvel's Dr. Strange and Fantastic Beasts and Where to Find Them, in addition to next year's Star Wars: Episode VIII, to indicate better box-office performance projected going forward. Greg Foster, CEO of Imax Entertainment and the company's creative czar, told analysts the large-screen exhibitor was set to release at least one Hollywood tentpole title each month over the next two years.

On the theater front, Imax said it signed up 95 new screens during the second quarter, up 217 percent from the year-earlier period. The company also increased its 2016 installation guidance to 155 theaters, up from original guidance of 115 to 120 theaters, as Imax continues to diversify beyond North America and into the international market. 

Imax said the increased guidance sprang from increased theater signings in China, where more revenue-sharing deals are being signed with local partners, and Wanda-owned AMC Entertainment being likely to acquire more Imax screens should it acquire Carmike Cinemas in the U.S. market and Odeon & UCI Cinemas in Europe.