IMAX CORP
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
IMAX$47.67-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000921582-24-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0000921582-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 206 previous paragraphs and 204 current paragraphs.
129 unchanged; 68 reworded; 6 added; 8 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
During the three months ended September 30, 2024, the Company’s revenues decreased by $12.4 million, or 12%, while net income increased by $1.9 million or 16%, when compared to the same period in 2023, driven by a lower level of IMAX box office that was more than offset by decreases in costs and expenses resulting from corporate and operational initiatives and timing of expenditures, as discussed below.
Current report
For the three months ended September 30, 2024, the Company recognized a net cost recovery for its Research and Development activity of $0.3 million, compared to an expense of $2.8 million during the same period in the prior year. In the third quarter of 2024, the Company concluded that technological feasibility of the new IMAX film cameras was achieved resulting in the capitalization of costs incurred.
Current report
Credit Loss (Reversal) Expense, Net
Current report
For the nine months ended September 30, 2024 gross margin percent was 54% compared to 58% in the prior period, primarily the result of lower rental revenues, as described above.
Current report
For the nine months ended September 30, 2024, the lower level of Selling, General and Administrative Expenses year over year reflects the inclusion in the prior year of $3.1 million in transaction expenses associated with the proposal to acquire the outstanding shares in IMAX China. Also contributing to the decline year over year is the timing of expenditures, adjustments in certain estimates relating to payouts in connection with our streaming and consumer technology division as well as management’s continued focus on operational efficiencies, which were partially offset by the impact of higher inflation during the period.
Current report
Credit Loss (Reversal) Expense, Net
Removed paragraphs (8)
Previous report
Also contributing to the lower level of revenues was the number of systems recognized under sales arrangements, per the table above, and a $4.5 million decrease in revenue contribution from the impact of amendments and renewals to existing IMAX Systems arrangements.
Previous report
The Technology Products and Services segment gross margin decrease during the three months ended June 30, 2024 as compared to 2023 was primarily due to the lower level of revenues, as described above, coupled with higher maintenance costs incurred.
Previous report
For the three months ended June 30, 2024, Research and Development expenses were $2.0 million, representing an decrease of $0.8 million, or 29%, when compared to $2.8 million during the same period in the prior year. The current period expenses reflect continued investment in developing new IMAX film cameras and Streaming Technology product offerings.
Previous report
Credit Loss Expense, Net
Previous report
Also contributing to the lower level of revenue was a decrease resulting from the lower number of systems recognized under sales arrangements, per the table above, and a $9.7 million decrease in revenue contribution from the impact of amendments and renewals to existing IMAX Systems arrangements.
Previous report
The Technology Products and Services segment gross margin decrease during the six months ended June 30, 2024 is primarily due to the lower level of revenues, as described above.
Previous report
For the six months ended June 30, 2024, the lower level of Selling, General and Administrative Expenses experienced over the prior year period reflects management’s continued focus on identifying cost-saving opportunities and realizing operational efficiencies. Management’s cost-saving initiatives were partially offset by increased inflation during the period.
Previous report
Credit Loss Expense, Net
Reworded paragraphs (68)
Previous wording
Presented below is Management’s Discussion and Analysis of Financial Condition and Results of Operations (or “MD&A”) for IMAX Corporation and its consolidated subsidiaries (“IMAX” or the “Company”) for the three and six months ended June 30, 2024 and 2023. MD&A should be read in conjunction with Note 13, “Segment Reporting,” in the accompanying Condensed Consolidated Financial Statements in Item 1.
Current wording
Presented below is Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) for IMAX Corporation and its consolidated subsidiaries (“IMAX” or the “Company”) for the three and nine months ended September 30, 2024 and 2023. MD&A should be read in conjunction with Note 13, “Segment Reporting,” in the accompanying Condensed Consolidated Financial Statements in Item 1.
Previous wording
As of June 30, 2024, the Company indirectly owns 71.55% of IMAX China Holding, Inc. (“IMAX China”), whose shares trade on the Hong Kong Stock Exchange. IMAX China is a consolidated subsidiary of the Company. For the three months ended June 30, 2024, net income attributable to IMAX China is $5.2 million, of which $3.7 million is attributable to the shareholders of the Company (2023 — $4.5 million and $3.2 million, respectively).
Current wording
As of September 30, 2024, the Company indirectly owns 71.55% of IMAX China Holding, Inc. (“IMAX China”), whose shares trade on the Hong Kong Stock Exchange. IMAX China is a consolidated subsidiary of the Company. For the three months ended September 30, 2024, net income attributable to IMAX China is $5.0 million, of which $3.6 million is attributable to the shareholders of the Company (2023 — $11.0 million and $7.9 million, respectively).
Previous wording
Certain statements included in this quarterly report may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of Canadian securities laws. These forward-looking statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, plans and references to the future success of the Company and expectations regarding its future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada, as well as geopolitical conflicts; risks related to the Company’s growth and operations in China; the performance of IMAX remastering films and other films released to the IMAX network; the signing of IMAX System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to consolidation among commercial exhibitors and studios; risks related to brand extensions and new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company’s inability to protect its intellectual property; risks associated with the Company’s use of artificial intelligence (“AI”) and exploration of additional use cases of AI; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company’s business; risks related to the Company’s indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to political, economic and social instability; the failure to convert system backlog in…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Certain statements included in this quarterly report may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 or “forward-looking information” within the meaning of Canadian securities laws. These forward-looking statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior, plans and references to the future success of the Company and expectations regarding its future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada, as well as geopolitical conflicts; risks related to the Company’s growth and operations in China; the performance of IMAX remastered films and other films released to the IMAX network; the signing of IMAX System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to consolidation among commercial exhibitors and studios; risks related to brand extensions and new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company’s inability to protect its intellectual property; risks associated with the Company’s use of artificial intelligence (“AI”) and exploration of additional use cases of AI; risks related to climate change; risks related to weather conditions and natural disasters that may disrupt or harm the Company’s business; risks related to the Company’s indebtedness and compliance with its debt agreements; general economic, market or business conditions; risks related to political, economic and social instability; the failure to convert system backlog int…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The information posted on the Company’s Corporate and Investor Relations websites may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company’s investor relations websites in addition to the Company’s press releases, SEC and SEDAR+ filings and public conference calls and webcasts.
Current wording
The information posted on the Company’s Corporate and Investor Relations website may be deemed material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company’s investor relations website in addition to the Company’s press releases, SEC and SEDAR+ filings and public conference calls and webcasts.
Previous wording
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of June 30, 2024, there were 1,780 IMAX Systems in 89 countries and territories, including 1,705 commercial multiplexes, 12 commercial destinations, and 63 institutional locations in the Company’s global network. This compares to 1,718 IMAX Systems in 87 countries and territories as of June 30, 2023, including 1,638 commercial multiplexes, 12 commercial destinations, and 68 institutional locations in the Company’s global network. (Refer to the table under “IMAX Network and Backlog” for additional information on the composition of the IMAX network.)
Current wording
IMAX has the largest global premium format network, more than double the size of its nearest competitor. As of September 30, 2024, there were 1,788 IMAX Systems in 89 countries and territories, including 1,714 commercial multiplexes, 12 commercial destinations, and 62 institutional locations in the Company’s global network. This compares to 1,731 IMAX Systems in 87 countries and territories as of September 30, 2023, including 1,651 commercial multiplexes, 12 commercial destinations, and 68 institutional locations in the Company’s global network. (Refer to the table under “IMAX Network and Backlog” for additional information on the composition of the IMAX network.)
Previous wording
IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film. Collectively, the Company refers to these enhancements as “IMAX DNA.” Filmmakers and movie studios have sought IMAX-specific enhancements in recent years to generate interest in and excitement for their films. Such enhancements include shooting films with IMAX cameras to increase the audience’s immersion in the film and to take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. The Company has a Filmed For IMAXTM program for select films under which filmmakers craft films from their inception in numerous ways to optimize The IMAX Experience. The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives a higher market share for IMAX.
Current wording
IMAX films also benefit from enhancements made by individual filmmakers exclusively for the IMAX release of the film. Collectively, the Company refers to these enhancements as “IMAX DNA.” Filmmakers and movie studios have sought IMAX-specific enhancements in recent years to generate interest in and excitement for their films. Such enhancements include shooting films with IMAX cameras to increase the audience’s immersion in the film and to take advantage of the unique dimensions of the IMAX screen by projecting the film in a larger aspect ratio that delivers up to 26% more image onto a standard IMAX movie screen. In select IMAX locations worldwide, movies filmed with IMAX cameras have an IMAX-exclusive 1.43 film aspect ratio, delivering up to 67% more image. The Company has a Filmed For IMAX® program for select films under which filmmakers craft films from their inception in numerous ways to optimize The IMAX Experience. The program includes incremental and bespoke marketing support, which box office metrics demonstrate audiences respond extremely favorably to, and drives a higher market share for IMAX.
Previous wording
The following table provides detailed information about the films that were released to the Company’s global network during the three and six months ended June 30, 2024 and 2023:
Current wording
The following table provides detailed information about the films that were released to the Company’s global network during the three and nine months ended September 30, 2024 and 2023, respectively:
Previous wording
The films distributed through the Company’s global network during the six months ended June 30, 2024 that generated the highest IMAX box office totals were Dune: Part Two, Godzilla x Kong: The New Empire, Inside Out 2, Kingdom of The Planet of The Apes, Furiosa, Bad Boys: Ride or Die, Pegasus 2, and YOLO. In addition, during the six months ended June 30, 2024, a number of alternative content films and events were distributed including Queen Rock Montreal, monthly A24 mid-week film series, Suga - Agust D Tour D-Day The Movie, Fallout series launch event and live streaming of the NBA Finals in select IMAX China locations.
Current wording
The films distributed through the Company’s global network during the nine months ended September 30, 2024 that generated the highest IMAX box office totals were Dune: Part Two, Deadpool & Wolverine, Godzilla x Kong: The New Empire, Inside Out 2, Alien: Romulus, Kingdom of The Planet of The Apes, Furiosa, Despicable Me 4, Pegasus 2, and YOLO. In addition, during the nine months ended September 30, 2024, a number of alternative content films and events were distributed including Queen Rock Montreal, monthly A24 mid-week film series, Suga - Agust D Tour D-Day The Movie, Fallout series launch event, Fly: The IMAX Experience, Korean concert film IM Hero: The Stadium, live streaming of the NBA Finals in select IMAX China locations and NBC’s Paris Olympics Opening Ceremony in IMAX.
Previous wording
In addition to the 46 IMAX films and alternative content experiences released on the Company’s global network during the six months ended June 30, 2024, the Company has announced the following additional 32 films and additional alternative content experiences to be released throughout the remainder of 2024:
Current wording
In addition to the 83 IMAX films and alternative content experiences released on the Company’s global network during the nine months ended September 30, 2024, the Company has announced the following additional 21 films and alternative content experiences to be released throughout the remainder of 2024:
Previous wording
The Company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network. The Company expects to continue announcing additional local language films and exclusive IMAX events and experiences to be released throughout the remainder of 2024 to its global network. The Company has also announced the majority of the titles to be released in IMAX in 2025 including Avatar 3 and a record 14 or more Filmed for IMAX titles including four Marvel titles, the latest Mission Impossible installment, Superman Legacy and F1 from Apple. Additionally, IMAX expects to distribute a number of major titles in 2026 including an Avengers, Star Wars, Batman and Dune title.
Current wording
The Company remains in active negotiations with studios for additional films to fill out its short- and long-term film slate for the IMAX network. The Company expects to continue announcing additional local language films and exclusive IMAX events and experiences to be released throughout the remainder of 2024 to its global network. The Company has also announced some Hollywood titles to be released in IMAX in 2025 including Avatar 3 and a record 14 or more Filmed For IMAX titles including three Marvel titles, the latest Mission Impossible installment, Superman Legacy and F1 from Apple. Additionally, IMAX expects to distribute a number of major titles in 2026 including sequels to Super Mario Bros, Avengers, Star Wars, Toy Storyand Batman.
Previous wording
The Company distributes large-format documentary feature films through its global commercial network and institutional theaters. The Company traditionally receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. In May 2024, Amazon Content LLC (“Amazon Content”) acquired the worldwide rights to the Company’s original documentary, The Blue Angels, which was filmed with IMAX digital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films. The full-length documentary was released to select commercial locations across the IMAX network on May 17, 2024, and a 40-minute version will be released to institutional locations beginning in early 2025. The Company continues to work on The Elephant Odysseya documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which was announced in 2023 and is expected to be released in 2025, and Stormbound, an additional feature documentary produced by Academy Award-winning producer, Adam McKay, which will be released in late 2025.
Current wording
The Company distributes large-format documentary feature films through its global commercial network and institutional theaters. The Company traditionally receives as its distribution fee either a fixed amount or a fixed percentage of the theater box office receipts and, following the recoupment of its costs, is typically entitled to receive an additional percentage of gross revenues as participation revenues. In May 2024, Amazon Content LLC (“Amazon Content”) acquired the worldwide rights to the Company’s original documentary, The Blue Angels, which was filmed with IMAX digital certified cameras and produced in collaboration with Dolphin Entertainment, Bad Robot Productions, and Zipper Bros Films. The full-length documentary was released to select commercial locations across the IMAX network on May 17, 2024, and a 40-minute version will be released to institutional locations beginning in early 2025. Additionally, the Company had limited commercial network releases of the documentaries Skywalkers: A Love Story The IMAX Experienceand Fly: The IMAX Experience, in partnership with Netflix and National Geographic, respectfully. Upcoming documentaries in production include The Elephant Odyssey, a documentary in collaboration with Beach House Pictures Pte Ltd and China International Communications Group, which was announced in 2023 and is expected to be released in 2025, and Stormbound, an additional feature documentary produced by Academy Award-winning producer, Adam McKay, which will be released in 2025 followed by The Lost Wolves of Yellowstone.
Previous wording
In addition, the Company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide. As of June 30, 2024, the Company had a footprint of 263 connected locations in the IMAX network across the United States, Canada, Europe, and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.
Current wording
In addition, the Company continues to evolve its platform to bring new, innovative IMAX events and experiences to audiences worldwide. As of September 30, 2024, the Company had a footprint of 265 connected locations in the IMAX network across North America, Europe, Africa, Australia and Asia configured with connectivity to deliver live and interactive events with low latency and superior sight and sound.
Previous wording
In the six months ended June 30, 2024, the Company partnered with Pathé Live for the exclusive release of Queen Rock Montreal which became one of the Company’s highest grossing concert films ever, along with 2023’s Taylor Swift: The Eras Tour. In addition, the Company hosted an IMAX event, Andre 3000: New Blue Sun, and entered into a partnership with A24 for a monthly one-night-only IMAX release of classic A24 titles, including Alex Garland’s highly acclaimed Ex Machina, Uncut Gems, and Hereditary. Additionally, the Company hosted multiple IMAX Live TM events, including screening the National Basketball Association finals across multiple IMAX locations in the Asia Pacific region and the screening of The Beach Boys: IMAX Live Experience. On July 26, 2024, the Company, in partnership with NBC television network, will be extending its live coverage of the 2024 Paris Olympics Opening Ceremony to select IMAX locations throughout the United States.
Current wording
In the nine months ended September 30, 2024, the Company partnered with Pathé Live for the exclusive release of Queen Rock Montreal, which became one of the Company’s highest grossing concert films ever, along with 2023’s Taylor Swift: The Eras Tour. In addition, the Company hosted an IMAX event, Andre 3000: New Blue Sun, and entered into a partnership with A24 for a monthly one-night-only IMAX release of classic A24 titles, including Alex Garland’s highly acclaimed Ex Machina, Uncut Gems, and Hereditary. Additionally, the Company hosted multiple IMAX Live TM events, including screening the NBA finals across multiple IMAX locations in the Asia Pacific region, the screening of The Beach Boys: IMAX Live Experience, the special advance screening and live event for Megalopolis: The Ultimate IMAX Experience, the live pre-show Q&A with the cast of Twisters, and in partnership with NBC television network, extended its live coverage of the 2024 Paris Olympics Opening Ceremony to select IMAX locations throughout the United States.
Previous wording
The Company works with filmmakers, studios, and artists end-to-end from content creation through content delivery. The Company provides IMAX film cameras to select IMAX and third-party productions and certifies a suite of high-end digital cameras to shoot in the IMAX format under its Filmed for IMAX program. In addition, the Company provides post-production — including its proprietary DMR process — and quality control services for films that play in the IMAX network.
Current wording
The Company works with filmmakers, studios, and artists end-to-end from content creation through content delivery. The Company provides IMAX film cameras to select IMAX and third-party productions and certifies a suite of high-end digital cameras to shoot in the IMAX format under its Filmed For IMAX program. In addition, the Company provides post-production — including its proprietary DMR process — and quality control services for films that are distributed across the IMAX network.
Previous wording
Joint revenue sharing arrangements have been an important factor in the expansion of the Company’s commercial system network. Joint revenue sharing arrangements allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease arrangement. Joint revenue sharing arrangements drive recurring cash flows and earnings for the Company as customers under these arrangements pay the Company a portion of their ongoing box office receipts. The Company funds its investment in equipment for joint revenue sharing arrangements through cash flows from operations. As of June 30, 2024, the Company had 898 locations under joint revenue sharing arrangements in its global commercial multiplex network. The Company also had contracts in backlog for 327 systems under joint revenue sharing arrangements as of June 30, 2024, including 108 upgrades to existing locations and 216 new locations.
Current wording
Joint revenue sharing arrangements have been an important factor in the expansion of the Company’s commercial system network. Joint revenue sharing arrangements allow commercial theater exhibitors to install IMAX Systems without the significant initial capital investment required in a sale or sales-type lease arrangement. Joint revenue sharing arrangements drive recurring cash flows and earnings for the Company as customers under these arrangements pay the Company a portion of their ongoing box office receipts. The Company funds its investment in equipment for joint revenue sharing arrangements through cash flows from operations. As of September 30, 2024, the Company had 894 locations under joint revenue sharing arrangements in its global commercial multiplex network. The Company also had contracts in backlog for 302 systems under joint revenue sharing arrangements as of September 30, 2024, including 92 upgrades to existing locations and 210 new locations.
Previous wording
(See “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there.” in Part II, Item 1A. of this Form 10-Q and “Risk Factors – General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems,” and “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows” in Part I, Item 1A of the Company’s 2023 Form 10-K.)
Current wording
(See “Risk Factors – The Company faces risks in connection with its significant presence in China and the continued expansion of its business there.” and “– The Company may not convert all of its backlog into revenue and cash flows” in Part II, Item 1A of this Form 10-Q and “Risk Factors – General political, social and economic conditions can affect the Company’s business by reducing both revenues generated from existing IMAX Systems and the demand for new IMAX Systems,” and in Part I, Item 1A of the Company’s 2023 Form 10-K.)
Previous wording
IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,705 IMAX Systems operating as of June 30, 2024, representing a market penetration of only 47%. The Company believes that the majority of its future growth will come from international markets. As of June 30, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada). Revenues and GBO derived from international markets continue to exceed revenues and GBO from the United States and Canada. Risks associated with the Company’s international business are outlined in “Risk Factors – The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales and future growth prospects” in Part I, Item 1A of the Company’s 2023 Form 10-K.
Current wording
IMAX currently estimates a worldwide commercial multiplex addressable market of 3,619 locations, of which there are 1,714 IMAX Systems operating as of September 30, 2024, representing a market penetration of only 47%. The Company believes that the majority of its future growth will come from international markets. As of September 30, 2024, 76% of IMAX Systems in the global commercial multiplex network were located within international markets (defined as all countries other than the United States and Canada). Revenues and GBO derived from international markets continue to exceed revenues and GBO from the United States and Canada. Risks associated with the Company’s international business are outlined in “Risk Factors – The Company conducts business internationally, which exposes it to uncertainties and risks that could negatively affect its operations, sales and future growth prospects” in Part I, Item 1A of the Company’s 2023 Form 10-K.
Previous wording
In the six months ended June 30, 2024 the Company’s revenue generated from its Greater China operations represents 26% of consolidated revenue. As of June 30, 2024, the Company had 803 IMAX Systems operating in Greater China with an additional 263 systems in backlog.
Current wording
In the nine months ended September 30, 2024, the Company’s revenue generated from its Greater China operations represents 25% of consolidated revenue. As of September 30, 2024, the Company had 808 IMAX Systems operating in Greater China with an additional 254 systems in backlog.
Previous wording
In the six months ended June 30, 2024, the IMAX network generated over $80.0 million in box office from local language films, representing approximately 18% of the Company’s total box office in the period. The Company is also seeing its local language films increasingly generate significant IMAX box office in markets outside of those in which they are released, such as the Japanese film Conan 27 as well as the Chinese film Formed Police Unitand the Korean film Suga - Agust D Tour D-Day The Movie.
Current wording
In the nine months ended September 30, 2024, the IMAX network generated over $114 million in box office from local language films, representing approximately 16% of the Company’s total box office in the period. The Company is also seeing its local language films increasingly generate significant IMAX box office in markets outside of those in which they are released.
Previous wording
Approximately 30% of IMAX System arrangements in backlog as of June 30, 2024 are scheduled to be installed in international markets excluding Greater China (2023 — 36%). The Company’s backlog in Greater China represents 52% of its total current backlog including upgrades in system type (2023 — 40%).
Current wording
Approximately 31% of IMAX System arrangements in backlog as of September 30, 2024 are scheduled to be installed in international markets excluding Greater China (2023 — 37%). The Company’s system backlog in Greater China represents 54% (2023 — 40%) of its total current backlog, including 194 new IMAX Systems and 60 upgrades (2023 — 183 new and 10 upgrades).
Previous wording
(See “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows.” in Part II, Item 1A. of this form Form 10-Q.)
Current wording
(See “Risk Factors – The Company may not convert all of its backlog into revenue and cash flows.” in Part II, Item 1A. of this Form 10-Q.)
Previous wording
The following tables provide detailed information about IMAX System signings and installations for the three and six months ended June 30, 2024 and 2023:
Current wording
The following tables provide detailed information about IMAX System signings and installations for the three and nine months ended September 30, 2024 and 2023:
Previous wording
The Company’s business and future prospects are evaluated by Richard L. Gelfond, its Chief Executive Officer (“CEO”), using a variety of factors and financial and operational metrics including: (i) IMAX box office performance and the securing of new IMAX films and alternative content to be exhibited across the IMAX network; (ii) the signing, installation, and financial performance of IMAX System arrangements, particularly those involving laser-based projection systems; (iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology, including the integration of SSIMWAVE and the distribution of live events to the IMAX network; (iv) revenues and gross margins earned by the Company’s segments, as discussed below; (v) consolidated earnings (loss) from operations, as adjusted for unusual items; (vi) the continuing ability to invest in and improve the Company’s technology to enhance the differentiation of The IMAX Experience versus other out-of-home experiences; (vii) the overall execution, reliability, and consumer acceptance of The IMAX Experience; and (viii) short- and long-term cash flow projections.
Current wording
The Company’s business and future prospects are evaluated by Richard L. Gelfond, its Chief Executive Officer (“CEO”), using a variety of factors and financial and operational metrics including: (i) IMAX box office performance and the securing of new IMAX films and alternative content to be exhibited across the IMAX network; (ii) the signing, installation, and financial performance of IMAX System arrangements, particularly those involving IMAX Laser Systems; (iii) the success of the Company’s investments in business evolution and brand extensions into streaming and consumer technology, and the distribution of live events to the IMAX network; (iv) revenues and gross margins earned by the Company’s segments, as discussed below; (v) consolidated earnings (loss) from operations, as adjusted for unusual items; (vi) the continuing ability to invest in and improve the Company’s technology to enhance the differentiation of The IMAX Experience versus other out-of-home experiences; (vii) the overall execution, reliability, and consumer acceptance of The IMAX Experience; and (viii) short- and long-term cash flow projections.
Previous wording
For the six months ended June 30, 2024, the Company’s revenues and gross margin decreased by $16.8 million or 9% and $17.1 million or 16%, respectively, when compared to same period in 2023, principally due to weaker IMAX box office performance driven in part by the Hollywood strike impact on the film slate, fewer IMAX systems installed under sales arrangements and lower aftermarket sales as the first half of 2023 included Avatar: The Way of Water, a 3D film. These year over year declines were partially offset by the sale of commercial and streaming rights for an IMAX documentary.
Current wording
During the three months ended September 30, 2024, the Company’s revenues and gross margin decreased by $12.4 million, or 12%, and $11.7 million, or 19%, respectively, when compared to same period in 2023 principally due to a lower level of IMAX box office performance driven by a less favorable mix of film content available to play across the IMAX global network, partially offset by higher IMAX Systems installed under sales arrangements.
Previous wording
For the three months ended June 30, 2024, Content Solutions segment revenues and gross margin increased by $3.8 million, or 12%, and decreased by $3.9 million, or 19%, respectively, when compared to the same period in 2023, which was driven by the sale of The Blue Angels commercial and streaming rights, as described below.
Current wording
For the three months ended September 30, 2024, Content Solutions segment revenues and gross margin decreased by $14.1 million, or 32%, and decreased by $10.0 million, or 38%, respectively, when compared to the same period in 2023.
Previous wording
In the second quarter of 2024, box office generated by IMAX films totaled $196.4 million, a $71.9 million, or 27%, decrease versus the prior year comparative period of $268.3 million driven in part by the Hollywood strike impact on the film slate. In the second quarter of 2024, IMAX box office was generated by the exhibition of 34 films (27 new films and 7 films originally released in a prior year), including Inside Out 2, which generated IMAX box office of over $37 million. In the second quarter of 2023, IMAX box office was generated by the exhibition of 23 films (17 new films and 6 films originally released in a prior year), including The Super Mario Bro. Movie, which generated box office of $50 million.
Current wording
In the third quarter of 2024, box office generated by IMAX films totaled $239.5 million and represented IMAX’s third highest third quarter box office of all time. The decrease of $107.6 million, or 31%, decrease versus the prior year comparative period of $347.1 million, driven in part by a less favorable mix of content globally which included fewer blockbusters, as well as a challenging compare to the prior year that included over $180 million in box office from Oppenheimer, the Company’s fifth highest grossing title of all time. In the third quarter of 2024, IMAX box office was generated by the exhibition of 44 films and other content (37 new and 7 originally released in a prior year), including Deadpool & Wolverine, which generated IMAX box office of over $83 million. In the third quarter of 2023, IMAX box office was generated by the exhibition of 41 films (34 new films and 7 films originally released in a prior year).
Previous wording
The impact on revenue from the lower box office experienced year over year was more than offset by the revenue earned from the completion of the sale of worldwide commercial and streaming rights of the Company’s original documentary, The Blue Angels, to Amazon Content as well as from higher revenues from alternative content. The Company continues to build out its alternative content strategy, including evolving its documentary strategy, as a way to increase utilization and revenues across the IMAX system footprint.
Current wording
The impact on revenue from the lower box office experienced year over year was partially offset by the revenue earned from higher revenues from alternative content including A24 title release Everything, Everywhere All At Once, NBC’s 2024 Paris Olympics Opening Ceremony, Korean concert film IM Hero: The Stadium, and limited release documentaries FLY: The IMAX Experience and Skywalkers: A Love Story The IMAX Experience. The Company continues to build out its alternative content strategy, including evolving its documentary strategy, as a way to increase utilization and revenues across the IMAX System footprint.
Previous wording
In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content (documentaries, live and alternative) exhibited in the period. The costs associated with films and other content can include production, post-production, distribution and marketing, which are expensed as incurred, For the three months ended June 30, 2024, gross margin percent was 46% compared to 64% in the prior year period, with the decrease being driven by the lower level of IMAX box office coupled with a higher mix of self-produced content expensed, including The Blue Angels.
Current wording
In addition to the level of revenues, Content Solutions segment gross margin is influenced by the costs associated with films and other content (documentaries, live, alternative and other) exhibited in the period. The costs associated with films and other content can include production, post-production, distribution and marketing, which are expensed as incurred. For the three months ended September 30, 2024, gross margin percent was 55% compared to 60% in the prior year period, with the decrease being driven primarily by a lower level of IMAX box office year over year.
Previous wording
For the three months ended June 30, 2024, Technology Products and Services segment revenue and gross margin decreased by $13.1 million, or 20%, and $10.6 million, or 29%, respectively, when compared to the same period in 2023, primarily driven by a lower level of rental revenues, which is box office dependent. Rental revenues decreased by $5.5 million, as a result of GBO from joint revenue sharing arrangements which decreased by $36.8 million or 27% in the second quarter of 2024 when compared to the prior year comparative period, from $137.8 million to $101.0 million.
Current wording
For the three months ended September 30, 2024, Technology Products and Services segment revenue increased by $1.8 million , or 3%, while gross margin decreased by $1.8 million, or 5%, when compared to the same period in 2023. These results reflect an increase in system installations under sales arrangements that offset the impact of a lower level of rental revenues, which is box office dependent. Rental revenues decreased by $6.9 million, driven by GBO from joint revenue sharing arrangements which decreased by $35.2 million in the third quarter of 2024 when compared to the prior year comparative period, from $159.5 million to $124.3 million.
Previous wording
For the three months ended June 30, 2024, All Other revenue and gross margin increased by $0.3 million and $0.5 million, respectively, when compared to the same period in 2023, principally due to growth in revenues earned by the Company's Streaming and Consumer Technology business.
Current wording
For the three months ended September 30, 2024, All Other revenue and gross margin decreased by $0.2 million and less than $0.1 million, respectively, when compared to the same period in 2023, principally due to the performance of the Company’s one owned and operated theater.
Previous wording
For the second quarter of 2024, the lower level of Selling, General and Administrative Expenses experienced over the prior year period reflects savings from management’s continued focus on operational efficiencies, which were partially offset by the impact of higher inflation on wages and other business expenses.
Current wording
For the third quarter of 2024, the lower level of Selling, General and Administrative Expenses year over year is driven by inclusion in the prior year of $3.1 million in transaction expenses associated with the proposal to acquire the outstanding shares in IMAX China. Also contributing to the decline year over year is the timing of expenditures, adjustments in certain estimates relating to payouts in connection with our streaming and consumer technology division as well as management’s continued focus on operational efficiencies, which were partially offset by the impact of higher inflation during the period.
Previous wording
For the three months ended June 30, 2024, the Company recorded a credit loss expense of $0.1 million, as compared to a credit loss expense of $0.8 million recognized in the prior year.
Current wording
For the three months ended September 30, 2024, the Company recorded a credit loss reversal of $1.1 million, as compared to a credit loss expense of $0.5 million recognized in the prior year primarily due to increases in collections of the Company’s account receivables, primarily in China, as exhibition partners continue to improve their cash position post pandemic.
Previous wording
For the three months ended June 30, 2024, interest expense was $2.3 million, representing an increase of $0.5 million, or 27% when compared to interest expense of $1.8 million during the same period of the prior year primarily due to increased borrowings under the Credit Facility in the current period. For the three months ended June 30, 2024, interest income was $0.6 million, when compared to interest expense of $0.7 million during the same period of the prior year due to lower average cash balances maintained at major financial institutions.
Current wording
For the three months ended September 30, 2024, interest expense was $2.2 million, representing an increase of $0.8 million, or 51% when compared to interest expense of $1.5 million during the same period of the prior year primarily due to a higher level of borrowings under the Credit Facility in the current period. For the three months ended September 30, 2024 and 2023, interest income was $0.6 million and $0.7 million, respectively.
Previous wording
For the three months ended June 30, 2024, the Company recorded an income tax benefit of $4.0 million (2023 — tax expense of $3.5 million). The Company’s effective tax rate of (371.5)% for the three months ended June 30, 2024 differs from the Canadian statutory rate of 26.5% primarily due to tax rate differences in foreign jurisdictions and a tax benefit related to an internal asset sale during the quarter which was partially offset by an increase in the valuation allowance and withholding taxes. The Company’s effective tax rate of 26.5% for the three months ended June 30, 2023 is similar to the Canadian statutory rate of 26.5% which includes tax rate differences in foreign jurisdictions that were offset by withholding taxes.
Current wording
For the three months ended September 30, 2024, the Company recorded an income tax expense of $2.4 million (2023 — tax expense of $6.6 million). The Company’s effective tax rate of 13.4% for the three months ended September 30, 2024 differs from the Canadian statutory rate of 26.5% primarily due to tax rate differences in foreign jurisdictions and a decrease in the valuation allowance which was partially offset by an increase in tax reserves, tax return adjustments and withholding taxes. The Company’s effective tax rate of 30.4% for the three months ended September 30, 2023 differs from the Canadian statutory rate of 26.5% primarily due to tax rate differences in foreign jurisdictions which was offset by an increase in the valuation allowance, tax return adjustments and withholding taxes. (Refer to Note 10 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1).
Previous wording
The Company’s Condensed Consolidated Financial Statements primarily include the non-controlling interest in the net income or loss of IMAX China, as well as the impact of non-controlling interests in the activity of its Original Film Fund subsidiary. For the six months ended June 30, 2024, the net income attributable to non-controlling interests of the Company’s subsidiaries was $3.6 million, a decrease of $0.3 million, when compared to the same period in 2023.
Current wording
The Company’s Condensed Consolidated Financial Statements primarily include the non-controlling interest in the net income or loss of IMAX China, as well as the impact of non-controlling interests in the activity of its Original Film Fund subsidiary. For the three months ended September 30, 2024, the net income attributable to non-controlling interests of the Company’s subsidiaries was $1.4 million, a decrease of $1.6 million, when compared to the same period in 2023, primarily due to lower IMAX box office earned in Greater China.
Previous wording
Results of Operations for the Six Months Ended June 30, 2024 and 2023
Current wording
Results of Operations for the Nine Months Ended September 30, 2024 and 2023
Previous wording
The following table presents the Company’s net income attributable to common shareholders and the associated per share amounts, as well as adjusted net income attributable to common shareholders* and adjusted net income attributable to common shareholders per share(1) for the six months ended June 30, 2024 and 2023:
Current wording
The following table presents the Company’s net income attributable to common shareholders and the associated per share amounts, as well as adjusted net income attributable to common shareholders* and adjusted net income attributable to common shareholders per share(1) for the nine months ended September 30, 2024 and 2023:
Previous wording
During the three months ended June 30, 2024, the Company’s revenues and gross margin decreased by $9.0 million, or 9%, and $14.0 million, or 24%, respectively, when compared to same period in 2023 principally due to IMAX box office performance driven in part by the Hollywood strike impact on the film slate, fewer IMAX systems installed under sales arrangements and a lower contribution from IMAX system amendments and renewals. These year over year declines were partially offset by the sale of commercial and streaming rights for an IMAX documentary.
Current wording
For the nine months ended September 30, 2024, the Company’s revenues and gross margin decreased by $29.3 million or 10% and $28.8 million or 17%, respectively, when compared to same period in 2023, principally due to weaker IMAX box office performance driven in part by the Hollywood strike impact on the film slate and a less favorable mix of content across our global network. These year over year declines were partially offset by the sale of commercial and streaming rights for an IMAX documentary and higher revenues associated with alternative content.
Previous wording
The following table presents the Company’s revenue, gross margin and gross margin percentage by reportable segment for the six months ended June 30, 2024 and 2023:
Current wording
The following table presents the Company’s revenue, gross margin and gross margin percentage by reportable segment for the nine months ended September 30, 2024 and 2023:
Previous wording
For the six months ended June 30, 2024, Content Solutions segment revenues and gross margin increased by $5.7 million, or 9%, and $0.2 million, or 1%, respectively, when compared to the same period in 2023. In the six months ended June 30, 2024, box office generated by IMAX films totaled $457.1 million, a $84.6 million or 16% decrease versus the prior year comparative period of $541.7 million driven in part by the Hollywood strike impact on the film slate. During the six months ended June 30, 2024, IMAX box office was generated by the exhibition of 60 films (46 new films and 14 films that were originally released in prior years), including Dune: Part Two ($145 million), Godzilla x Kong: The New Empire ($41 million), Inside Out 2 ($37 million), Kingdom of The Planet of The Apes($25 million) and Furiosa ($23 million). Additionally, in the six months ended June 30, 2024, local language films exhibited across the Company’s global network generated over $80 million in box office, representing 18% of its total box office. Leading local language titles distributed across the IMAX network in the six months ended June 30, 2024 included the Chinese film Pegasus 2, the Japanese film, Conan 27, and the Korean film, Suga - Agust D Tour D-Day The Movie. In the six months ended June 30, 2023, IMAX box office was generated by the exhibition of 39 films (33 new films and 10 films that were originally released in prior years).
Current wording
For the nine months ended September 30, 2024, Content Solutions segment revenues and gross margin decreased by $8.4 million, or 8%, and $9.7 million, or 15%, respectively, when compared to the same period in 2023. In the nine months ended September 30, 2024, box office generated by IMAX films totaled $696.5 million, a $192.4 million or 22% decrease versus the prior year comparative period of $888.9 million driven in part by the Hollywood strike impact on the film slate and a less favorable mix of content globally which included fewer blockbusters in 2024. During the nine months ended September 30, 2024, IMAX box office was generated by the exhibition of 104 films and other content (83 new and 21 that were originally released in prior years), including Dune: Part Two ($145 million), Deadpool & Wolverine($83 million), Godzilla x Kong: The New Empire ($41 million), Inside Out 2 ($39 million), and Alien: Romulus($39 million). Additionally, in the nine months ended September 30, 2024, local language films exhibited across the Company’s global network generated over $114 million in box office, representing 16% of its total box office. Leading local language titles distributed across the IMAX network in the nine months ended September 30, 2024 included the Chinese films Pegasus 2 and Yolo, the Japanese film Haikyu!!, and the Korean concert film, IM Hero: The Stadium. In the nine months ended September 30, 2023, IMAX box office was generated by the exhibition of 84 films (67 new films and 17 films that were originally released in prior year) including Oppenheimer, which generated box office of over $180 million, and local language Chinese titles Wandering Earth 2($49 million) and Creation of the Gods 1: Kingdom of Storms ($32 million).
Showing the first 40 of 68 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the three months ended September 30, 2024, gross margin percent was 55% compared to 60% in the prior period with the decrease being driven by the lower level of IMAX box office year over year.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During three months ended June 30, 2024, the Company completed an internal asset sale to more closely align its intellectual property ownership with its operations. In order to effect this internal asset sale, transactions between entities within the group resulted in capital gains for tax purposes. The tax expense related to the capital gain was partially offset by the reversal of the valuation allowance. Net deferred tax assets were also recorded on the transaction, resulting in a net tax benefit of $7.7 million. (Refer to Note 10 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1.)