Imax Earnings: Strong Box Office Rebound Bodes Well for a Full-Year Return to 2019 Box Office Levels

Imax IMAX recently posted a slightly better-than-expected start to 2023 with first-quarter revenue and EBITDA coming in ahead of FactSet consensus. Quarterly box office grosses jumped by 58% as the Chinese market rebounded due to the lack of COVID-19-related restrictions. As a result, the Chinese Imax box office came in only 7% below the same quarter in 2019. As total box office grosses set a record for the first quarter, Imax is well on its way to meeting management’s guidance for 2023 total box office to hit 2019 levels at $1.1 billion. We are maintaining our $19 fair value estimate.

Total revenue expanded by 45% to $87 million as the first quarter last year was impacted by COVID-19-related closures across China. Imax box office grosses of $273.4 million came in 7% above the same quarter in 2019. The U.S. box office grew 25% to $79 million and was 10% ahead of 2019. The quarter benefited from a stronger slate, including Avatar: The Way of Water, which added $109 million globally in 2023. The slate for the remainder of 2023 appears to be very deep with the Mission Impossible sequel, the penultimate Fast and Furious film, an Indiana Jones sequel, Dune Part 2, and five superheroes films.

China generated $98 million at the box office for Imax, up 97% year over year. Management noted that the market started to normalize toward the end of the quarter. Avatar: The Way of Water helped in the quarter as 18 of the 20 highest-grossing theaters were Imax, and it is the second-highest-grossing Imax film in China of all time. The Wandering Earth 2 also set records as the highest-grossing local language film for Imax China and third-highest overall. The firm’s focus on local language content continues to pay off as The Wandering Earth 2 was filmed for Imax and was the tenth-highest-grossing film in China of all-time. We expect that local language will become more important to Imax over time if the Chinese government’s approval process for Hollywood films remains erratic.