IMAX Corporation (IMAX)

IMAX Corporation Financial Report (Q1 2025)

Report Date: 2025-04-30
Period Covered: Q1 2025 (Three months ended March 31, 2025)

1. Income and Profit Analysis

• Net Revenue: $86.7 million (up 9.6% YoY)
• Gross Margin: $53.2 million (61.3% margin, up from 59.2%)
• Net Income: $8.15 million vs. $5.42 million (up 50.4% YoY)
• EPS (diluted): $0.15 vs. $0.10

Drivers of Profit Growth:

• Record Chinese New Year box office and strong performance of local-language titles (e.g., Zha).
• Higher system installations and rental revenues tied to joint‐revenue sharing arrangements.
• Operational leverage on fixed costs as content and system revenues expanded.

2. Debt and Liquidity Analysis

• Total Long-Term Debt: $281.2 million (net of discounts and issuance costs).
• YoY Change: +4.9%, driven by incremental draws on the $500 million revolving credit facility to support working capital.
• Credit Facility: $500 million capacity maturing 2027; $250 million undrawn at March 2025.
• Cash & Equivalents: $97.1 million.

Debt Pros & Cons:

• Pros: Ample headroom under covenants (senior secured net leverage 0.05x vs. 3.25x max).
• Cons: Floating-rate exposure (SOFR plus margin) and FX translation risk on offshore cash.

3. Segment & Operational Highlights

• Content Solutions: Revenue $34.2 M, GM 68.7%; driven by 2,982 M box office ($28.1 M net share).
• Tech. Products & Services: Revenue $50.6 M, GM 57.5%; attributable to 10 new/relocated systems and ongoing rentals.
• Finance Income: $3.1 M from salestype leases.

Backlog: 516 total system commitments (252 new, 264 upgrades), up from 442 a year ago.

4. Pros and Cons

Pros:

• Strong international growth, led by China & local-language content.
• Diversified revenue streams: technology sales, remastering, maintenance, finance.
• Significant backlog of system installations.

Cons:

• Box-office-driven revenue is cyclical and sensitive to release schedules.
• FX and interest rate volatility can pressure margins.
• High capex requirements for supporting joint-revenue sharing arrangements.

Conclusion: IMAX delivered robust top-line growth and margin expansion in Q1 2025, underpinned by blockbuster local releases and steady system deployments. Continued international rollout, backlog conversion, and growth in streaming/consumer technologies bode well, though macro sensitivities warrant close monitoring.

Segment Revenue & Gross Margin (Q1 2025 vs. Q1 2024)

Geography (Revenue % of Total Q1 2025)

• Greater China: 46.3%
• United States & Canada: 27.6%
• Europe & RoW: 26.1%

IMAX is well-positioned for continued growth by leveraging its premium large-format network and technology:

• International Expansion: China remains the biggest growth engine, with local-language releases and new theatre signings driving box-office share. India, Japan and Europe also offer underpenetrated opportunity.

• Backlog Monetization: A record backlog of 516 IMAX system commitments — 252 new installs and 264 upgrades — provides multi-year visibility on equipment revenues.

• Content Pipeline: Partnerships with Hollywood studios (Marvel, Warner Bros.), streaming platforms (Netflix) and local producers bolster the slate of IMAX DMR® titles and exclusive events.

• Product Evolution: Rollout of laser projection systems, enhanced maintenance contracts, and streaming/consumer tech (IMAX Enhanced®) broaden the TAM beyond theatres.

• Financial Discipline: Conservative leverage with ample covenant headroom and strong free-cash-flow potential underpins investment in R&D and brand extension.

Key Risks and Opportunities

• Box office volatility and competitor premium formats present execution risk.
• FX and interest rate shifts require active hedging.
• Continued capital deployment in joint-revenue-sharing deals must be balanced against returns.
• Expansion into streaming and consumer electronics could unlock new recurring revenues.

Overall, IMAX’s robust financial performance, global footprint, and diversified business model support a positive medium-term outlook, provided the company maintains discipline around capex, content exclusivity and risk management.