Imax Earnings: Return of Moviegoers to Theaters Underpins Very Strong Results

During the third quarter, Imax IMAX theaters achieved their second-highest gross box office sales in the company’s history, with the growing number of Imax theaters and a strong movie slate responsible. The high box office sales led to a huge jump in revenue and profitability relative to recent quarters. While quarter-to-quarter results will continue to be influenced by movie releases and macroeconomic conditions, we expect the attraction to Imax screens for a moviegoing experience will continue. We’re raising our fair value estimate to $21 per share from $19, leaving the stock modestly undervalued.

Total revenue was up 51% year over year to $104 million, driven primarily by much higher box office gross sales for Imax’s partners. Gross box office sales of $347 million were up 96% year over year, with Oppenheimer accounting for about half of it. The Imax slate appears strong in the fourth quarter and 2024 as well, so we don’t expect this quarter to be a complete outlier. Several Marvel movies, including The Marvels, Deadpool 3, and Captain America: Brave New World are set to be released within the next year. Although a longer actors’ strike in the United States could push back some of the scheduled releases and affect the timing of Imax revenue, we don’t anticipate any change to what the company will ultimately receive from this slate.

With a high level of fixed costs, margins and profitability skyrocketed in the third quarter. Gross profit was up 98% year over year, and adjusted EBITDA was up 174%, reflecting gross margin expansion of about 14 percentage points, to over 60%, and EBITDA margin expansion of about 20 percentage points, to over 43%. With recent sales results representing a normalized level, in our view, following a few years of pandemic-related disruptions, we think margins around these levels will be durable. We expect Imax’s box office grosses to set a record in 2023 and then generally continue to head up each year.