IMAX Corporation Reports Second Quarter 2020 Results
NEW YORK, July 28, 2020 /PRNewswire/ --
HIGHLIGHTS
-- 409 IMAX® theaters reopened in China over the July 24th weekend. The
Company now has 624 theaters or approximately 40% of its global network
generating revenue and is ready to benefit from an IMAX-friendly slate
-- A strong balance sheet, with $319 million in consolidated cash as of
June 30, 2020, and an amended credit agreement, with covenant flexibilty
through Q3 2021, positions the Company well to manage through the
ongoing COVID-19 related challenges
-- Cost reduction measures taken at the outset of the pandemic reduced the
Company's average monthly cash burn to approximately $10 million, as
demonstrated by the second quarter and in line with previous guidance
-- IMAX signed agreements to add 29 theater systems, headlined by the
international 17-theater CGV and 10-theater Wanda deals, demonstrating
continued global demand for The IMAX Experience® from existing partners
in established markets
-- As a result of the global pandemic, second quarter 2020 revenue
decreased 92% versus 2019 to $8.9 million. Second quarter 2020 net
(loss) attributable to common shareholders was ($26) million. Non-GAAP
adjusted EBITDA (loss) was ($18.5) million versus $41.4 million in the
prior-year period
Three Months Ended
June 30,
In thousands except per
share data 2020 2019 YoY %
Change
Total Revenue $
8.9 $
104.8 (91.6)
%
(Margin Loss) Gross Margin $
(7.7) $
59.6 (112.9)
%
(Margin Loss) Gross Margin (86.8) 56.8
(%) % %
Net (Loss) income
attributable to common
shareholders $
(26.0) $
11.4 N/A
Diluted Net (Loss) income
per share attributable to
common shareholders $
(0.44) $
0.19 N/A
Adjusted Net (Loss)
Income(1) $
(26.1) $
19.7 N/A
Adj. Net (Loss) Income Per
Share(1) $
(0.44) $
0.32 N/A
Adjusted EBITDA per Credit
Facility attributable to
common shareholders(1) $
(18.5) $
41.4 N/A
Adj. EBITDA Margin
attributable to common % %
shareholders (%) (1) (219.3) 43.8 N/A
_____________
(1) Non-GAAP Financial Measure
Note: For the definition and
reconciliations of reported results to
non-GAAP financial results, please
refer to the discussion of non-GAAP
financial measures at the end of this
earnings release.
IMAX Corporation (NYSE:IMAX) today reported second quarter 2020 revenues of $8.9 million, gross margin (loss) of ($7.7) million, and a net (loss) attributable to common shareholders of ($26.0) million, or ($0.44) per diluted share. For reconciliations of reported results to non-GAAP financial results, please see the end of this press release.
Results in the second quarter reflect the closure of substantially all of the theaters in the Company's global network driven by the Coronavirus pandemic. These closures reduced IMAX Technology Network and IMAX Maintenance revenue to essentially zero and caused a margin loss for the quarter. During the second quarter, the Company accrued $3.2 million in payroll subsidies and tax credits from the Canadian and US governments as part of their COVID-19 relief programs which benefitted SG&A expense, cost of sales, and R&D expense.
"As the only global theatrical platform for blockbuster entertainment, IMAX is uniquely advantaged as theaters begin to reopen on a rolling basis throughout the world. Our model gives us the flexibility to reopen where safe, program locally relevant content to maximize revenues, and play a leadership role as the industry returns," said IMAX CEO Richard L. Gelfond.
"We are seeing early signs of progress, with approximately 40% of our global network currently generating revenue. This includes 409 IMAX® theaters in China, which are scheduled to debut Hollywood and local language films over the coming weeks. Additionally, the South Korean blockbuster "Peninsula" continues to perform well across markets in Asia and Europe, drawing $26.5 million in global box office despite capacity limitations and highlighting solid demand among moviegoers in lower-risk markets worldwide."
"We believe that our solid financial position gives IMAX the strength to be ready as the rest of our network comes back online. At the end of the second quarter, the Company had $319 million in consolidated cash and recently amended its credit agreement for increased financial flexibility through September 2021."
"We continue to look ahead to an exceptionally strong slate through 2021, as studios affirm their commitment to the theatrical release by rescheduling their key blockbuster titles. Additionally, major global exhibitors continue to underscore the value of The IMAX Experience, with new agreements including a 10-theatre deal with Wanda Film in China and a multinational 17-theatre deal with CGV."
"We remain unwavering in our stance that the health and safety of audiences must be the priority as theaters reopen and we support by the work of local governments and our partners to put public health first."
Second Quarter and June Year-to-Date Segment Results((1))
IMAX Technology Network IMAX Technology Sales and Maintenance
Revenue (Margin (Margin Revenue Gross Gross
Loss) Gross Loss) Gross
Margin Margin %
Margin Margin %
2Q20 $
0.4 $
(6.5) N/A $
4.6 $
0.2 4.9
%
2Q19 64.8 43.3 66.8 34.8 15.4 44.1
% %
% change (99.4) (115.1) (86.8) (98.5)
% % % %
YTD 2Q20 $
17.0 $
(3.7) (21.8) $
19.7 $
5.0 25.1
% %
YTD 2Q19 110.8 75.0 67.7 65.0 28.5 43.8
% %
% change (84.7) (104.9) (69.7) (82.6)
% % % %
(1) Please refer to the
Company's Form 10-Q for the
period ended June 30, 2020
for additional segment
information
IMAX Technology Network
-- IMAX Technology Network revenues decreased 99% to $0.4 million in the
second quarter of 2020, compared to $64.8 million in the prior-year
period. The closure of the Company's network due to the COVID-19
pandemic impacted results.
-- Margin (loss) for the IMAX Technology Network was ($6.5) million in the
second quarter of 2020 and was driven by the lack of revenue and ongoing
fixed costs associated with our installed IMAX network.
IMAX Technology Sales and Maintenance
-- IMAX Technology Sales and Maintenance revenues decreased 87% to $4.6
million in the second quarter of 2020, compared with $34.8 million in
the prior year period. Seven fewer sales type lease installations
principally resulted in lower IMAX system revenue. IMAX maintenance
revenue declined to nil as regular maintenance services were suspended
due to the COVID-19 theater closures.
-- Total gross margin for IMAX Technology Sales and Maintenance was $0.2
million compared to $15.4 million in the prior year period. Lower
revenue was partially offset by the shift in certain overhead costs from
cost of sales to SG&A.
Cash Balances and Outstanding Debt
Total cash and cash equivalents as of June 30, 2020 were $319 million. Total debt was $300.2 million as of June 30, 2020.
Share Count and Capital Return
-- The weighted average diluted shares outstanding at the end of the second
quarter of 2020 declined 4.4% to 58.8 million, compared to 61.5 million
in the second quarter of 2019, due primarily to share repurchase
activity during the twelve-month period. During the second quarter of
2020, the Company did not repurchase any stock. A total of $89.4 million
remains available under the Company's outstanding share repurchase
authorization, which was extended in June and now expires in June 2021.
-- During the second quarter of 2020, IMAX China repurchased a total of 423
thousand shares at an average price of $1.50 for a total value of
approximately $640 thousand.
Supplemental Materials
For more information about the Company's results, please refer to the IMAX Investor Relations website located at investors.imax.com.
Investor Relations Website and Social Media
On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at investors.imax.com. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week lag.
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 website in addition to the Company's press releases, SEC filings and public conference calls and webcasts.
Conference Call
The Company will host a conference call today at 4:30PM ET to discuss its second quarter 2020 financial results. This call is being webcast by PGI and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800) 367-2403 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 490-5367. The conference ID for the call is 9071085. A replay of the call will be available via webcast at investors.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 9071085.
About IMAX Corporation
IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe.
IMAX is headquartered in New York, Toronto, and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2020, there were 1,615 IMAX theater systems (1,527 commercial multiplexes, 13 commercial destinations, 75 institutional) operating in 81 countries and territories. Shares of IMAX China Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong Kong Stock Exchange under the stock code "HK.1970."
IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX®, The IMAX Experience®, An IMAX Experience®, An IMAX 3D Experience®, IMAX DMR®, DMR®, IMAX nXos® and Films to the Fullest(®), are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Instagram (https://www.instagram.com/imax), Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).
For additional information please contact:
Investors: Media:
IMAX Corporation, New York IMAX Corporation, New York
Brett Harriss
Mark Jafar
212-821-0187
212-821-0102
bharriss@IMAX.com
mjafar@imax.com
---
Forward-Looking Statements
This earnings release contains forward looking statements that are based on IMAX management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the "Company") and expectations regarding the Company's 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; risks related to the Company's growth and operations in China; the performance of IMAX DMR(®) films; the signing of theater 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; competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to 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 the Company's intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; the impact of COVID-19 on our financial condition and results of operations and on the businesses of our customers and exhibitor partners; and other factors, many of which are beyond the control of the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Primary Reporting Groups
The Company has the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements; (iii) IMAX Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii) Film Post-production. The Company organizes its reportable segments into the following four categories, identified by the nature of the product sold or service provided:
(i) IMAX Technology Network, which
earns revenue based on contingent
box office receipts and includes
the IMAX DMR segment and
contingent rent from the Joint
Revenue Sharing Arrangement
("JRSA") segment;
(ii) IMAX Technology Sales and
Maintenance, which includes
results from the IMAX Systems,
IMAX Maintenance and Other
Theater Business segments, as
well as fixed revenues from the
JRSA segment;
(iii) New Business Initiatives, which is
a segment that includes
activities related to the
exploration of new lines of
business and new initiatives
outside of the Company's core
business; and
(iv) Film Distribution and Post-
production, which includes
activities related to the
licensing of film content, the
distribution of films primarily
for the Company's institutional
theater partners (through the
Film Distribution segment) and
the provision of film post-
production and quality control
services (through the Film Post-
production segment).
Signings and Installations
---
Three Months
Ended June 30,
Theater System Signings: 2020 2019
Full new sales and sales-type lease arrangements 12 7
New hybrid joint revenue sharing lease arrangements 17 45
New traditional joint revenue sharing arrangements 2
Total new IMAX theaters 29 54
Upgrades of IMAX theater systems 19
Total theater signings 29 73
Three Months
Ended June 30,
Theater System Installations: 2020 2019
Full new sales and sales-type lease arrangements 2 9
New hybrid joint revenue sharing lease arrangements 1 5
New traditional joint revenue sharing arrangements 13
Total new IMAX theaters 3 27
Upgrades of IMAX theater systems 8
Total theater installations 3 35
Three Months
Ended June 30,
Theater Sales Backlog: 2020 2019
Sales and sales-type lease arrangements 190 182
Hybrid JRSA 154 154
Traditional JRSA 215 (1) 276 (1)
Total theater backlog 559 (2) 612 (3)
Three Months
Ended June 30,
Theater Network: 2020 2019
Commercial Multiplex Theaters:
Sales and sales-type lease arrangements 659 619
Hybrid joint revenue sharing lease arrangements 138 133
Traditional joint revenue sharing lease arrangements 730 693
Total Commercial Multiplex Theaters(4) 1,527 1,445
Commercial Destination Theaters 13 15
Institutional Theaters 75 81
Total theater network 1,615 1,541
(1) Includes 46 IMAX Theater
Systems where the customer has the
option to convert from a joint
revenue sharing arrangement to a
sales arrangement (2019 -60).
(2) Includes 154 new IMAX with
Laser projection system
configurations and 94 upgrades of
existing locations to IMAX with
Laser projection system
configurations.
(3) Includes 139 new IMAX with
Laser projection system
configurations and 118 upgrades of
existing locations to IMAX with
Laser projection system
configurations.
(4) Period to period changes are
net of the effects of permanently
closed theaters.
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Revenues
Technology sales $
2,687 $
19,694 $
8,349 $
34,894
Image enhancement and
maintenance services 3,799 56,662 24,520 100,809
Technology rentals (137) 25,863 5,834 44,033
Finance income 2,506 2,578 5,054 5,259
8,855 104,797 43,757 184,995
Costs and expenses applicable
to revenues
Technology sales 2,546 11,939 6,415 21,374
Image enhancement and
maintenance services 7,244 26,781 25,060 46,024
Technology rentals 6,753 6,524 14,884 12,904
16,543 45,244 46,359 80,302
(Margin loss) gross margin (7,688) 59,553 (2,602) 104,693
Selling, general and
administrative expenses 29,796 32,136 58,432 59,785
Research and development 1,232 1,222 3,432 2,358
Amortization of intangibles 1,344 1,218 2,665 2,293
Credit loss expense 1,440 927 11,657 1,358
Asset impairments 1,151
Exit costs, restructuring
charges and associated
impairments 850
(Loss) income from operations (41,500) 24,050 (79,939) 38,049
Gain (loss) in fair value of
equity investment 2,025 (4,544) (2,514) (2,053)
Retirement benefits non-
service expense (130) (160) (246) (320)
Interest income 891 572 1,256 1,142
Interest expense (1,581) (636) (2,229) (1,317)
(Loss) income before taxes (40,295) 19,282 (83,672) 35,501
Income tax benefit (expense) 10,248 (5,308) (5,257) (8,956)
Equity in losses of investees,
net of tax (138) (529) (222)
Net (loss) income (30,047) 13,836 (89,458) 26,323
Less: Net loss (income)
attributable to non-
controlling interests 4,080 (2,439) 14,137 (6,661)
Net (loss) income
attributable to
common shareholders $
(25,967) $
11,397 $
(75,321) $
19,662
Net (loss) income per share
attributable to common
shareholders -
basic and diluted:
Net (loss) income
per share -basic
and diluted $
(0.44) $
0.19 $
(1.26) $
0.32
Weighted average number of
shares outstanding (000's):
Basic 58,808 61,331 59,613 61,354
Fully Diluted 58,808 61,507 59,613 61,525
Additional Disclosure:
Depreciation and
amortization(1) $
11,930 $
15,593 $
27,182 $
29,804
(1) Includes $0.2 million and
$0.3 million of amortization of
deferred financing costs charged
to interest expense for the
three months and six months
ended June 30, 2020,
respectively ($0.1 million and
$0.2 million, respectively).
IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In accordance with United States Generally Accepted Accounting Principles
(In thousands of dollars, except share amounts)
(Unaudited)
June 30, December 31,
2020 2019
Assets
Cash and cash equivalents $
318,986 $
109,484
Accounts receivable, net of allowance for credit losses 54,839 99,513
Financing receivables, net of allowance for credit losses 123,865 128,038
Variable consideration receivable, net of allowance for credit
losses 39,397 40,040
Inventories 60,179 42,989
Prepaid expenses 12,008 10,237
Film assets 13,147 17,921
Property, plant and equipment 287,220 306,849
Investment in equity securities 13,192 15,685
Other assets 24,575 25,034
Deferred income tax assets 46,826 23,905
Other intangible assets 28,204 30,347
Goodwill 39,027 39,027
Total assets $
1,061,465 $
889,069
Liabilities
Bank indebtedness $
297,765 $
18,229
Accounts payable 13,668 20,414
Accrued and other liabilities 108,917 112,779
Deferred revenue 104,311 94,552
Deferred income tax liabilities 18,475
Total liabilities 543,136 245,974
Commitments and contingencies
Non-controlling interests 4,237 5,908
Shareholders' equity
Capital stock common shares -no par value. Authorized -unlimited
number.
58,878,749 issued and 58,857,436 outstanding (December 31, 2019 -
61,362,872 issued and 61,175,852 outstanding) 405,583 423,386
Less: Treasury stock, 21,313 shares at cost (December 31, 2019 -
187,020) (329) (4,038)
Other equity 172,690 171,789
Accumulated deficit (134,395) (40,253)
Accumulated other comprehensive loss (4,180) (3,190)
Total shareholders' equity attributable to common shareholders 439,369 547,694
Non-controlling interests 74,723 89,493
Total shareholders' equity 514,092 637,187
Total liabilities and shareholders' equity $
1,061,465 $
889,069
IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
Six Months Ended
June 30,
2020 2019
Cash (used in) provided by:
Operating Activities
Net (loss) income $
(89,458) $
26,323
Adjustments to reconcile net (loss)
income to cash from operating
activities:
Depreciation and amortization 27,182 29,804
Credit loss expense 11,657 1,358
Write-downs 6,806 508
Deferred income tax (benefit) expense (4,878) 1,296
Share-based and other non-cash
compensation 10,850 11,710
Unrealized foreign currency exchange
loss (gain) 312 (14)
Loss in fair value of equity
securities 2,514 2,053
Equity in losses of investees 529 222
Changes in assets and liabilities:
Accounts receivable 36,971 489
Inventories (16,887) (3,226)
Film Assets (4,057) (8,214)
Deferred revenue 9,799 (1,355)
Changes in other operating assets and
liabilities (12,220) (12,437)
Net cash (used in) provided by
operating activities (20,880) 48,517
Investing Activities
Purchase of property, plant and
equipment (594) (4,175)
Purchase of equipment for joint
revenue sharing arrangements (3,908) (22,235)
Acquisition of other intangible assets (1,221) (1,121)
Investment in equity securities (15,153)
Net cash used in investing activities (5,723) (42,684)
Financing Activities
Increase in credit facility borrowings 280,244 35,000
Repayment of credit facility
borrowings (50,000)
Credit facility amendment fees paid (959)
Settlement of restricted share units
and options (2,757) (7,619)
Treasury stock repurchased for future
settlement of restricted share units (329) (1,575)
Repurchase of common shares, IMAX
China (1,532) (16,813)
Taxes withheld and paid on employee
stock awards vested (251) (219)
Common shares issued -stock options
exercised 2,379
Repurchase of common shares (36,624) (1,258)
Issuance of subsidiary shares to non-
controlling interests (net of return
on capital) 1,106
Dividends paid to non-controlling
interests (2,118) (2,266)
Net cash provided by (used in)
financing activities 235,674 (41,265)
Effects of exchange rate changes on
cash 431 293
Increase (decrease) in cash and cash
equivalents during period 209,502 (35,139)
Cash and cash equivalents, beginning
of period 109,484 141,590
Cash and cash equivalents,
end of period $
318,986 $
106,451
Three Months Ended Six Months Ended
June 30,
June 30,
2020 2019 2020 2019
Revenue
IMAX Technology Network
IMAX DMR $
546 $
39,293 $
11,175 $
67,243
Joint revenue sharing
arrangements, contingent
rent(2) (137) 25,540 5,834 43,584
409 64,833 17,009 110,827
IMAX Technology Sales and
Maintenance
IMAX Systems 4,549 16,501 10,237 29,527
Joint revenue sharing
arrangements, fixed fees 369 2,548 1,139 5,087
IMAX Maintenance 13,207 7,370 26,158
Other Theater Business(3) (309) 2,580 954 4,206
4,609 34,836 19,700 64,978
New Business Initiatives 632 478 1,110 1,312
Film Distribution and
Post-production 3,182 3,601 5,676 6,263
8,832 103,748 43,495 183,380
Other 23 1,049 262 1,615
Total revenues $
8,855 $
104,797 $
43,757 $
184,995
(Margin Loss) Gross
Margin
IMAX Technology Network
IMAX DMR(1) $
(30) $
23,961 $
4,413 $
43,736
Joint revenue sharing
arrangements, contingent
rent(1) (6,501) 19,318 (8,119) 31,253
(6,531) 43,279 (3,706) 74,989
IMAX Technology Sales and
Maintenance
IMAX Systems (1) 2,650 8,019 5,826 15,071
Joint revenue sharing
arrangements, fixed
fees(1) 48 870 227 1,165
IMAX Maintenance (1,908) 5,640 (1,149) 10,921
Other Theater Business (564) 841 46 1,316
226 15,370 4,950 28,473
New Business Initiatives 512 281 873 900
Film Distribution and
Post-production (1) (1,396) 458 (3,331) 433
(7,189) 59,388 (1,214) 104,795
Other (499) 165 (1,388) (102)
Total Segment Margin $
(7,688) $
59,553 $
(2,602) $
104,693
__________________
(1) IMAX DMR gross margin includes marketing
expense of $nil and $2.4 million for the three and
six months ended June 30, 2020, respectively (2019
-$9.5 million and $13.4 million, respectively).
JRSA gross margin includes advertising, marketing
and commission expense of less than $0.1 million
and $0.6 million for the three and six months ended
June 30, 2020, respectively (2019 -$0.2 million and
$0.3 million, respectively). IMAX Systems gross
margin includes marketing and commission costs of
$0.2 million and $0.4 million for the three and six
months ended June 30, 2020, respectively, (2019 -
$0.4 million and $0.9 million, respectively). Film
Distribution segment gross margin includes
marketing expense of $nil and $0.2 million for the
three and six months ended June 30, 2020,
respectively (2019 -less than $0.1 million and
$0.6 million, respectively).
(2) The Company is reporting negative revenue due
to the continued amortization of lessee incentives
that are typically netted against lease revenues,
which are abnormally low during the period due to
the COVID-19 global pandemic.
(3) The Company is reporting negative revenue due
to an adjustment to prior period revenue.
IMAX CORPORATION
OTHER INFORMATION
(in thousands of U.S. dollars)
Non-GAAP Financial Measures:
In this release, the Company presents adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, and free cash flow as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net (loss) income attributable to common shareholders and adjusted net (loss) income attributable to common shareholders per diluted share exclude, where applicable: (i) share-based compensation; (ii) exit costs, restructuring charges and associated impairments, (iii) changes in the fair value of equity investments, (iv) COVID-19 government relief benefits, as well as the related tax impact of these adjustments, and (v) the income tax effects related to the removal of the indefinitely reinvested assertion on the historical earnings of certain subsidiaries.
The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company's financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net (loss) income attributable to common shareholders. Although share-based compensation is an important aspect of the Company's employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures.
In addition to the non-GAAP financial measures discussed above, management also uses "EBITDA," as such term is defined in the Credit Agreement, and which is referred to herein as "Adjusted EBITDA per Credit Facility." As allowed by the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Accordingly, this non-GAAP financial measure is presented to allow a more comprehensive analysis of the Company's operating performance and to provide additional information with respect to the Company's compliance against its Credit Agreement requirements in the current period, if applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry to evaluate, assess and benchmark the Company's results.
EBITDA is defined as net (loss) income excluding (i) interest expense, net of interest income; (ii) income tax (benefit) expense; and (iii) depreciation and amortization, including film asset amortization. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) gain (loss) in fair value of equity investment; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) gain (loss) from equity accounted investment; (v) exit costs, restructuring charges and associated impairments; (vi) legal arbitration award; and (vii) executive transition costs.
Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the condensed consolidated statements of cash flows). Cash provided by operating activities consist of net (loss) income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented below.
These non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered as a substitute for, or superior to, the comparable GAAP amounts. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measures is presented below.
For the Three Months Ended June 30, 2020
For the Three Months Ended June 30, 2019
Attributable to Less: Attributable to Less:
Non-controlling Non-controlling
Interests and Attributable to Attributable to Interests and Attributable to Attributable to
Common Non-controlling Common Common Non-controlling Common
Shareholders Interests Shareholders Shareholders Interests Shareholders
(In thousands of U.S.
Dollars)
Reported net loss
$ (30,047)
$ (4,080)
$ (25,967)
$ 13,836
$ 2,439
$ 11,397
Add (subtract):
Income tax (benefit)
expense (10,248) 638 (10,886) 5,308 1,187 4,121
Interest expense, net of
interest income 524 (96) 620 64 (140) 204
Depreciation and
amortization, including
film asset amortization 11,930 1,049 10,881 15,593 1,177 14,416
EBITDA
$ (27,841)
$ (2,489)
$ (25,352)
$ 34,801
$ 4,663
$ 30,138
Share-based and other
non-cash compensation 6,541 299 6,242 7,186 228 6,958
(Gain) Loss in fair
value of equity
investment (2,025) (612) (1,413) 4,544 1,443 3,101
Write-downs, including
asset impairments and
credit loss expense 3,843 1,815 2,028 1,169 84 1,085
Loss from equity
accounted investments 138 138
Adjusted EBITDA per
Credit Facility
$ (19,482)
$ (987)
$ (18,495)
$ 47,838
$ 6,418
$ 41,420
Revenues attributable to
common shareholders(2) 8,855 421 8,434 104,797 10,216 94,581
Adjusted EBITDA margin
attributable to common % % % % % %
shareholders (220.0) (234.7) (219.3) 45.6 62.8 43.8
For the Twelve Months Ended June 30, 2020 (1) For the Twelve Months Ended June 30, 2019 (1)
--- ---
Attributable to Less: Attributable to Less:
Non-controlling Non-controlling
Interests and Attributable to Attributable to Interests and Attributable to Attributable to
Common Non-controlling Common Common Non-controlling Common
Shareholders Interests Shareholders Shareholders Interests Shareholders
(In thousands of U.S.
Dollars)
Reported net loss
$ (57,210)
$ (9,093)
$ (48,117)
$ 37,596
$ 11,220
$ 26,376
Add (subtract):
Income tax expense 13,069 6,707 6,362 10,386 3,737 6,649
Interest expense, net of
interest income 922 (424) 1,346 392 63 329
Depreciation and
amortization, including
film asset amortization 60,865 4,897 55,968 59,207 5,372 53,835
EBITDA
$ 17,646
$ 2,087
$ 15,559
$ 107,581
$ 20,392
$ 87,189
Share-based and other
non-cash compensation 22,710 730 21,980 23,513 527 22,986
Loss in fair value of
equity investment 978 274 704 2,053 652 1,401
Write-downs, including
asset impairments and
credit loss expense 23,404 5,420 17,984 5,518 1,827 3,691
Loss from equity
accounted investments 304 304 409 409
Exit costs,
restructuring charges
and associated
impairments 9,234 9,234
Legal arbitration award 4,237 4,237
Executive transition
costs 2,994 2,994
Adjusted EBITDA per
Credit Facility
$ 65,042
$ 8,511
$ 56,531
$ 155,539
$ 23,398
$ 132,141
Revenues attributable to
common shareholders(2) 254,426 21,697 232,729 376,067 39,905 336,162
Adjusted EBITDA margin
attributable to common % % % % % %
shareholders 25.6 39.2 24.3 41.4 58.6 39.3
_____________
(1) Senior Secured Net Leverage Ratio
calculated using twelve months ended Adjusted
EBITDA per Credit Facility. During the second
quarter, the Company entered into the
Amendment to the Credit Facility Agreement
which provides for, among other things, the
suspension of the Senior Secured Net Leverage
Ratio financial covenant through the first
quarter of 2021.
(2)
Three months ended June 30, 2020 Three months ended June 30, 2019 12 months ended June 30, 2020 12 months ended June 30, 2019
Total revenues
$ 8,855
$ 104,797
$ 254,426
$ 376,067
Greater China
revenues
$ 1,393
$ 32,575
$ 71,700
$ 125,289
Non-controlling
interest % % %
ownership %
percentage(3) 30.19 31.36 30.26 31.85
Deduction for non-
controlling
interest share of
revenues (421) (10,216) (21,697) (39,905)
Revenues
attributable to
common
shareholders
$ 8,434
$ 94,581
$ 232,729
$ 336,162
(3) Weighted average
ownership percentage for
change in non-controlling
interest share
IMAX CORPORATION
Adjusted Net (Loss) Income Attributable to Common Shareholders and Adjusted Diluted Per Share Calculations
(In thousands of U.S. dollars)
(Unaudited)
Three Months Ended Three Months Ended
June 30, 2020 June 30, 2019
(In thousands of U.S.
dollars, except per share
amounts) Net Loss Diluted EPS Net Income Diluted EPS
Reported net (loss) income
attributable to common
shareholders $
(25,967) $
(0.44) $
11,397 $
0.19
Adjustments(1):
Share-based compensation 6,168 0.10 $
6,799 0.11
Change in the fair value of equity
securities (1,413) (0.02) 3,101 0.05
COVID-19 government relief benefits (3,151) (0.05)
Tax Impact on items listed above (857) (0.01) (1,604) (0.03)
Income tax effects related to the
removal of the indefinitely
reinvested assertion on the
historical earnings of certain
subsidiaries (841) (0.02)
Adjusted net (loss)
income(1) $
(26,061) $
(0.44) $
19,693 $
0.32
Weighted average basic shares
outstanding 58,808 61,331
Weighted average diluted shares
outstanding 58,808 61,507
(1) Reflects amounts attributable to non-
controlling interests.
Six Months Ended Six Months Ended
June 30, 2020 June 30, 2019
(In thousands of U.S.
dollars, except per share
amounts) Net Income Diluted EPS Net Income Diluted EPS
Reported net (loss) income
attributable to common
shareholders $
(75,321) $
(1.26) $
19,662 $
0.32
Adjustments(1):
Share-based compensation 10,243 0.17 $
11,076 0.18
Exit costs, restructuring
charges and associated
impairments 850 0.01
Change in the fair value of
equity securities 1,752 0.03 1,401 0.03
COVID-19 government relief
benefits (3,151) (0.05)
Tax impact on items listed
above (1,195) (0.02) (2,484) (0.04)
Income tax effects related
to the removal of the
indefinitely reinvested
assertion on the
historical earnings of
certain subsidiaries 12,885 0.21
Adjusted net (loss)
income(1) $
(54,787) $
(0.92) $
30,505 $
0.50
Weighted average basic
shares outstanding 59,613 61,354
Weighted average diluted
shares outstanding 59,613 61,525
(1) Reflects amounts attributable to non-
controlling interests.
Free Cash Flow:
Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
Net cash used in operating activities
$ (26,846)
$ (20,880)
Net cash used in investing activities (3,010) (5,723)
Free cash flow
$ (29,856)
$ (26,603)
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SOURCE IMAX Corporation
