Imax Swings to Quarterly Loss Amid Movie Theater Closures

IMAX China - H 2015

IMAX China - H 2015

"The bigger headline is virtually every blockbuster has been rescheduled for a theatrical release date," Imax CEO Richard Gelfond said after NBCUniversal sent 'Trolls World Tour' to premium VOD.

Imax on Wednesday unveiled its first-quarter results, which were hit hard by movie theater closures due to the novel coronavirus pandemic.

The large-format distributor on Wednesday posted a loss of $49.4 million, compared with a year-earlier profit of $8.3 million, as overall revenue tumbled 56.5 percent to $34.9 million from $80.2 million in the year-ago period.

The adjusted per-share loss was 48 cents, compared to an 18 cent per share profit last year, which missed a Wall Street forecast for a loss of 15 cents for the latest quarter and revenue of $42 million.

The first-quarter results came amid the coronavirus outbreak, which forced a closure of all Imax screens in China around six weeks before its giant-screen theaters were shuttered in the rest of the world.

Responding to the COVID-19 crisis, Imax is cutting costs and drawing a credit facility, ending the quarter with $352.3 million in cash and a $300 million credit line fully drawn.

"Imax is uniquely positioned to manage through a temporary shutdown of theaters as a result of strategic planning, which led to our strong financial position, valuable brand and vast global footprint," said Imax CEO Richard Gelfond. "With our strong cash balance and continued cost discipline, we believe that we will be ready to program our network, accelerate our theater business, and once again bring audiences the world’s most immersive entertainment experience when ready."

Currently, Imax has all but 24 of its 1,616 giant-screen theaters across 81 countries shuttered due to public health restrictions.

During an analyst call, Gelfond weighed in on NBCUniversal spurring controversy by sending Trolls World Tour to premium VOD instead of waiting for cinemas to reopen post-coronavirus pandemic, as he argued the move didn't signal a permanent change in how the major studios release their movies.

"From my point of view, the bigger headline coming out of the pandemic is virtually every blockbuster has been rescheduled for a theatrical release date," he told analysts. Gelfond pointed to "special circumstances" for NBCUniversal with Trolls World Tour as the studio had $50 million tied up in a marketing campaign for an April release.

"It was kind of a unicorn event — families were sitting at home. Kids were sitting at home," he told analysts. Gelfond added the major studios will want multiplexes to be full when their delayed tentpoles eventually reach the big screen outside of homes, but they've also made significant investments in theatrical releases. 

"There is simply no way to recoup the substantial financial commitment of a blockbuster film without a theatrical release," he argued.

Gelfond later told The Hollywood Reporter that, after having binge-watched streaming fare while sheltering in his home, he looked forward to seeing tentpoles at the multiplex when government and public health guidelines allow.

"This period has reaffirmed for me the potency of the theatrical window. If you go through the list of big movies that have been postponed -- Bond, Top Gun, Mulan, Wonder Woman 1984 -- none of (their studios) have said, wow, now's my chance to go to streaming," he insisted.

Gelfond added Trolls World Tour has had no competition at the shuttered multiplex as the animated movie streams in homes, nor would Universal have opted to bypass a theatrical release if one were available. "I don't believe for a blockbuster that you can recoup your investment through PVOD. You need the theatrical release," he argued.

Gelfond added Imax had upcoming Hollywood movies like Christopher Nolan's Tenet and Wonder Woman 1984 that had been shot with proprietary Imax cameras, and Marvel titles and James Cameron's Avatar 2 in the pipeline to bring moviegoers back to its out-of-home screens. "The long-term product pipeline is as robust as its ever been. We look forward to working with our studio and exhibition partners to bring audiences the experiences they crave," he said.

Gelfond also on the analyst call addressed the financial woes of its U.S. exhibition partners as they look to weather the industry shutdown caused by the coronavirus pandemic. "I think they're on a pretty good financial footing now and I really don't see a bankruptcy as a significant risk to a number of the chains," he told analysts.

Gelfond said Imax would stand behind domestic exhibitors, with an eye to the industry eventually reopening. "Agility is a hallmark of our theater business, and our ability to service our partnerships with exhibition. As a result, we’re confident we can resume installs quickly when conditions improve," he argued.

At the same time, the Imax boss said his company will give exhibitors more time if required to install new large format screens as they turn the lights back on across their circuits.

Gelfond also predicted domestic exhibitors would gradually reopen their circuits, building from promotional pricing and screening library content to eventually showing Hollywood tentpoles with delayed releases into 2021.

"We are carefully monitoring the Chinese film industry, which in time will drive revenue along with insights in how to safely, responsibly and effectively relaunch theaters. And when theaters reopen, we have a remarkably strong pipeline of blockbuster content that we are actively working to program through next year and beyond," he told analysts.

Gelfond also discussed safety and public health guidelines now under discussion that will allow multiplexes to reopen. He reported that exhibitors, while talking virtually daily with Imax and major studio partners on how to ensure safety, weren't uniform on safety protocols to be rolled out at the multiplex.

"One exhibitor is talking about every other seat, or every other row. Another is talking about a new software program that allows families to stay together," Gelfond said.

April 30, 6:45 a.m. Updated with comments by Imax execs made during an analyst call.