IMAX Q1 Earnings Surpass Expectations, Revenues Increase Y/Y

IMAX Corporation IMAX reported first-quarter 2025 adjusted earnings of 13 cents per share, which beat the Zacks Consensus Estimate by 18.18% but decreased 13.3% year over year.

Total revenues of $86.7 million beat the Zacks Consensus Estimate by 3.57% and increased 9.5% year over year. 

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Category-wise, image Enhancement & Maintenance Services, technology rentals and finance income were up 0.8%, 3.8% and 35.6% year over year to $50.7 million, $19.3 million and $3.1 million, respectively. Technology sales revenues surged 71.1% year over year to $13.5 million.

Segment-wise, Content Solutions revenues increased 0.7% year over year to $34.2 million in the first quarter of 2025. 

Technology Products and Services revenues rose 17.2% year over year to $50.6 million. All Other revenues declined 6.9% year over year to $1.83 million.

IMAX Corporation Price, Consensus and EPS Surprise

IMAX Corporation price-consensus-eps-surprise-chart | IMAX Corporation Quote

Content Solutions Business Details of IMAX

Within Content Solutions Business, Film Remastering and Distribution revenues increased 8.2% year over year to $32.2 million. Other content solutions revenues declined 51.3% year over year to $2.09 million.

The first-quarter box office (including booking fees in China) of $298 million increased 12% year over year. Top-grossing first-quarter titles included Ne Zha 2 ($161 million), Captain America: Brave New World ($27 million), Mickey 17 ($11 million) and Interstellar re-release ($10 million).

Technology Products and Services Details

Within the Technology Products and Services segment, System Sales were $12.7 million, up 78.7% year over year. System Rental revenues increased 2.9% year over year to $19.1 million.

Maintenance revenues were $15.7 million, up 3.3% year over year. Finance Income revenues were $3.08 million in the reported quarter, up 35.6% year over year.

Network Growth Statistics of IMAX

During the first quarter of 2025, IMAX installed 21 systems compared with 15 systems in the first quarter of 2024. 

As of March 31, 2025, there were 1,810 IMAX Systems operating in 89 countries and territories, including 1,738 commercial multiplexes, 11 commercial destinations and 61 institutional locations in the company’s global network. 

IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,738 IMAX Systems operating as of March 31, 2025, representing a market penetration of only 48%. 

Approximately 74% of IMAX System arrangements in backlog as of March 31, 2025, are scheduled to be installed in international markets compared to 32% in the year-ago quarter. The company’s system backlog in Greater China represents 45% (compared to 46% in the first quarter of 2024) of its total current backlog, including 191 new IMAX Systems and 43 upgrades. In the year-ago quarter, there were 195 new IMAX Systems and 10 upgrades.

Operating Details

Gross margin expanded 210 basis points (bps) to 61.4% in the first quarter of 2025. Content Solutions’ gross margin contracted 380 bps to 68.8%, while Technology Products and Services’ gross margin expanded 280 bps to 57.5% in the first quarter. All other gross margin came in at 29.4%, down from 61.5% in the year-ago quarter.

Adjusted EBITDA per credit facility was $28.05 million, down 0.2% year over year.

Selling, general & administrative expenses increased 7.1% year over year to $33.5 million. Research & development expenses were down 39.7% to $1.31 million.

IMAX reported an operating income of $16.7 million, which surged 38.7% year over year.

Balance Sheet & Cash Flow

Net cash provided by operating activities for the first quarter of 2025 was $7 million compared with $11 million in the prior-year period.

As of March 31, 2025, IMAX’s available liquidity was $401 million. The company’s liquidity includes $97 million in cash and cash equivalents, $250 million in available borrowing capacity under the Credit Facility, and $54 million in available borrowing capacity under IMAX China’s revolving facilities. Total debt, excluding deferred financing costs, was $282 million as of March 31, 2025.

In 2021, the company issued $230 million of 0.500% Convertible Senior Notes due 2026 (“Convertible Notes”). In connection with the pricing of the Convertible Notes, IMAX entered into privately negotiated capped call transactions with an initial cap price of $37.2750 per share of the company’s common shares. 

The weighted average basic and diluted shares outstanding in the first quarter of 2025 were 53.1 million and 55.0 million, compared with 52.5 million and 53.4 million in the first quarter of 2024, representing an increase of 1.1% and 3%, respectively. 

The company is authorized under its share-repurchase program, expiring June 30, 2026, to repurchase up to $400 million of its common shares, of which approximately $151 million remains available.

Guidance

IMAX expects to deliver a record box office of more than $1.2 billion in 2025, along with a total adjusted EBITDA margin of over 40% and system installations of 145 to 160.

Zacks Rank & Stocks to Consider

IMAX currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Consumer Discretionary sector are Stride LRN, Atlanta Braves Holding Inc. BATRK and Fox FOX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Stride have gained 34.8% year to date. LRN is set to report third-quarter fiscal 2025 results on April 29.

Shares of BATRK have risen 1.7% year to date. It is slated to report first-quarter 2025 results on May 12.

Shares of Fox have lost 1.5% year to date. It is set to report third-quarter fiscal 2025 results on May 12.

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This article originally published on Zacks Investment Research (zacks.com).

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