IMAX Lags on Q1 Earnings, Revs

IMAX Corp. (IMAX) reported weak financial results for the first quarter of 2014. Both the top and the bottom line fell below the respective Zacks Consensus Estimate. Quarterly total revenue was $48.2 million, down 3% year over year, also fell short of the Zacks Consensus Estimate of $50 million.

Quarterly GAAP net income was $0.6 million or 1cent per share compared with $2.9 million or 4 cents per share in the year-ago quarter. First-quarter earnings per share of 1 cent also lagged the Zacks Consensus Estimate of 2 cents.

Quarterly gross margin came in at 54.8% against 52.7% in the prior-year quarter. Operating margin stood at 1.7% compared with 9.5% in the year-ago quarter.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) stood at $12.6 million. IMAX also reported first-quarter 2014 per screen average of $197,000 compared with $212,900 in the prior-year quarter.

In the first quarter of 2014, IMAX generated around $13.9 million of cash from operations against a negative $1 million in the year-ago quarter. Free cash flow in the reported quarter was $0.2 million compared with a negative $13.8 million in the prior-year quarter.

At the end of the first quarter of 2014, IMAX had $29.7 million of cash and cash equivalents and no outstanding debt against $29.6 million of cash and no outstanding debt, at the end of 2013.

Segment Wise Results

Sales and Sales-type leases: Quarterly total revenue was $4.5 million, down 54.1% year over year. In the reported quarter, the company installed 3 new theater systems and upgraded 2 digital systems in existing locations.

Joint-revenue sharing arrangement: Quarterly total revenue was $10.9 million, up 16% year over year. During the quarter, IMAX installed 5 new theaters. The company had 388 theatres operating under joint revenue-sharing arrangements as of Mar 31, 2014 as against 319 theatres a year ago.

Production and IMAX DMR (Digital Re-Mastering): Quarterly total revenue was $15.2 million, up 5.6% year over year.

Category Results

In the first quarter of 2014, revenues from Equipments and product sales totaled $6.4 million, down 40.5% year over year. Services revenues were $28.9 million, up 8.3% from the prior-year quarter. Rental revenues were $10.8 million, up 8.2% year over year. Finance Income came in at $2.2 million, up 9.9% year over year.

Network Growth Statistics

In the quarter under review, the company signed 35 new theaters compared with 17 in the prior-year quarter. Total theater signing, at the end of the reported quarter was 36 against 25 at the end of the prior-year quarter.

In the first quarter, IMAX installed 8 new theaters compared with 10 in the prior-year quarter. Total theater installation, at the end of the reported quarter, was 10 against 17 at the end of the year-ago quarter.

As of Dec 31, 2013, total theaters in backlog were 407 against 276 at the end of 2012. As of Mar 31, 2014, total IMAX theater network stood at 431 compared with 283 at the end of the same quarter of the prior-year.

Other Stocks to Consider

IMAX currently carries a Zacks Rank Ran #3 (Hold). Other better-ranked stocks in the movie industry include Digital Cinema Destinations Corp. (DCIN), Lions Gate Entertainment Corp. (LGF) and The Walt Disney Co. (DIS). While Lions Gate currently has a Zacks Rank #1 (Strong Buy), both Digital Cinema and Walt Disney carry a Zacks Rank #2 (Buy).

Read the Full Research Report on DCIN
Read the Full Research Report on IMAX
Read the Full Research Report on LGF
Read the Full Research Report on DIS


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