Q3 2019 Earnings Call
Good day and welcome to the IMAX third quarter 2019 earnings Conference call. All participants are currently in a listen only mode. Following the presentation. We will conduct a question and answer session entered the question in queue. Please press star one at any time as a reminder, today's conference is being recorded at this time I would like to turn the call.
Brent over to Mr., Steven Davis, and head of Investor Relations. Sir. Please go ahead.
Thank you very.
Good morning, Thank you for joining us today third quarter 2019 earnings conference call.
On the call today to review the financial results are rich Gelfond, Chief Executive Officer, and Patrick Fine Chief Financial Officer [noise].
Megan call against President IMAX Entertainment, and Rob list or Chief Legal officer are also joining us today.
Today's conference call is being webcast its entirety our website a replay of the webcast will be made available shortly after the call.
In addition.
Thanks to our third quarter earnings press release, and a slide presentation accompanying today's call at this posted on the Investor Relations section of our website.
At the conclusion of this call our historical and selling model will be posted the website as well.
I would like to remind you of the falling information regarding forward looking statements.
Our comments and answers to questions on this call as well as the company bite.
May include statements that are forward looking and that they pertain to future results or outcomes.
Future results are occurrences may differ materially from these forward looking statements.
Please refer to our SEC filings from for detailed discussion of some other factors that could affect our future results and outcomes.
During today's call references may be made to certain non-GAAP financial measures as defined by regulation G. The Securities and Exchange Commission.
Discussion of management's use of these measures and the definition of these measures as well as reconciliations to non-GAAP financial measures, including adjusted net income adjusted EPS and adjusted EBITDA as defined by our credit facility are contained in this mornings press release.
That let me now turn the call over to Mr. rich rich.
Thank you Stephen good morning, everyone.
Thanks to our continued focus on execution.
Again delivered a strong financial performance of third quarter with results demonstrate the inherent operating leverage in our model.
On slide four we have the highlights for the quarter, which include 19% growth and global box office as we outpaced the industry. The dynamic portfolio of Hollywood Walk block just Spider man barred from home Lion King Hobson Shaw and local language has.
Like the Chinese animates mass no job and weathering with you in Japan.
9% growth in our commercial theatre network as we continue to diversify our global footprint.
5% grows then right.
26% gross and adjusted EBITDA, reflecting our ongoing cost discipline.
50% increase and adjusted earnings per share.
We're on track for a strong fourth quarter and how long a record breaking here as we look at June 2020, slate, which features more blockbusters that ever film size.
Well the strong momentum in our core business, we tend to do this for new opportunities for growth, including IMAX enhance our strategic initiative to capitalize on demand for IMAX content in the home.
Hi, there experimentation with new content and experiences to drive increased utilization across our network.
[noise] on slide five the IMAX ecosystem, you'll see our continued ability to deliver impressive results.
Of the unique privileged position, we've built in his ecosystem consumers seek out the IMAX experience for immersive blockbuster entertainment, whether its audience is turning out at record numbers are Joker Chinese movies always driving best ever box office over the national holiday or music fans around the world.
All seeking out our recent product that was kinda west.
Studios value IMAX says the Mark about must see Phil had a powerful partner in marketing and driving by solving their biggest solutions.
The world's best filmmakers are increasingly using our and and technology to bring their creativity to loans to life, which I'll discuss in a moment.
Exhibitors relying on theatres to provide maybe my experience that drives taking pricing and volume we're seeing greater has been hurt demand I've actually plays well, the possibly 350 systems installed or contracts that had a significant number of installs projected for the fourth quarter.
And finally streaming services offer strong new opportunities for us we've seen an opportunity to bring streaming content into IMAX theaters and high that's top 10 streaming platforms as well do when we premiered Amazon studios, our animals and our UK theaters next week as well.
He begins to launch high last enhance our new initiatives to bring IMAX digitally remastered content into the home I'm on select scribble platforms, and the U.S. Europe and Asia.
Hi, this is among the broadest out of home distribution platforms in the World as you will see on slide 16, we continue to grow our footprints with overall, so less work growth of 5% on a year over year agents importantly, we're diversifying as well assigning so caught.
At a new theaters in India, Japan, and Malaysia, the United States, the impending in France, and the Middle East switched continues to emerge is one of our fastest growing at highest grossing opportunities.
The recently completed a 12 theater deal with AMC.
And he and the Saudi sovereign wealth funds in Saudi Arabia, where we now have to commercial theaters in operations and another 18 in backlog.
We believe that this represents a significant box office opportunity our two existing theaters in Saudi Arabia, among our top five gross in theaters in the world in 2019.
Just as we capitalized on the vast opportunity in China years, though we saw US we see saw him as a smaller fit very promising mark.
And there continues to be increasing demand globally for IMAX theaters, which hits that which we expect will only increase blockbuster life's Star Wars December .
Before moving to the next slide I want to comment on the 2020 film slate and the significant expansion of the use of IMAX cameras 2020.
The 2020 slate continues to take shape I want to building at offering that very much plays to our strengths. The year begins with the carryover from Star Wars the rises skywalker.
Feature comic book features comic book franchise, there like birds afraid and it seems man visceral action films like Godzilla breakfast hogs and the next installment of fast and furious then to Marvel films Black with all of these hurdles and visually ambitious tent poles like Milan.
Well I imagine version of Disney.
2020, well leasehold that type of genre of films that historically play on our now.
Most importantly, we anticipate setting a new record, but the number of titles film that I've asked what some of the most eagerly awaited releases on the year, including no times just die the 25th installment of the bottom franchise, Daniel Craig last out of as something.
By Wonder woman that again to reiterate these are filmed with IMAX cameras Wonder woman 19 really for the sequel to the DC films Smash hit.
Chris Nolan lateness side by at [laughter] and in China. This still Chinatown, three which headlines our Chinese new year slate. Additionally, we are working on a strategic initiative.
For IMAX, DNA, it's where slate I certifying top of the line digital cameras, so shouldn't IMAX when paired with our proprietary post production technology.
Already 2020, Tentpole releases, including Paramount Haka Maverick will be certified as filmed it is under the program with more to calm had some as a result, we will release at least five filmed with IMAX titles next year, a new record.
Why is this important [noise].
Historically when filmmakers use our cameras, we capture a greater share of the box office since Chris Nolan is watershed views of our that's cabinets, but too in the dark Knight. So this year's record shattering Avenger is endgame 16 IMAX blockbusters.
I have been film using our cameras from 2008 to two that 19, our domestic opening weekend indexing for Chris Olin's last smell, we'll leave it in IMAX done her was an incredible 23% despite IMAX accounted for less than five.
Sent a total screens as I mentioned earlier is nets film his IMAX theaters next year.
General leases film then is it provides studios with a powerful marketing hook, our filmmaking partners kept behind our technology and social media and the press and our fast turn out in a big way.
That's a big part of the reason why we're excited about 2020 site and the opportunity to bring more filmmakers tour and had pets knowledge again, putting them back to 2008, we've had 16 bells and next year, we have at least spot.
Furthermore, Tad historical perspective does a slate discussion since 1980 domestic.
Box office is only declined nine times and for an average of just 3%.
More recently, the domestic box office and set a new record and nine of the last 15 years. The long term trends in a box office a favorable when you consider it the factor of it is not growing network, our global slate and the number of films using IMAX cameras, we are positive.
On the 20 Swanton slate.
Moving on to China on slide seven a strong momentum continues in the second happily with mainland China IMAX boss I'm 20 for 7% in local currency term year to date through October seven after the national holiday compared to 3% growth for China.
Overall box office.
With only 1% of the strains IMAX is far outpacing the industry and gain market share.
[noise] I box office was up over 160%, marking a best ever National day holiday performance in China, but all three top grossing films like country My people, the captain and the clients being available in IMAX theaters.
Our performance in local language films moves from straight the strength, thanks to our flexible programming strategy.
Third quarter Chinese animated head no job now the second highest grossing in China's film history reached more than $35 million at our greater China box office, we recently crossed more than 100 million hundred $1 million of total Chinese local language box office.
In 2019, marking our best annual performance ever up 11% over the same period in 2018 and accounted for an increasing mix of our total checking the box office to over 30%.
In summary, well there optimize local programming strategy I wouldn't blockbusters, representing a higher share of the overall market. We believe that we are well positioned for sustainable market share gains in China.
With strong execution and financial results in our core business. We're also looking at future growth drivers and exploring ways to further monetize demand for the IMAX experience as illustrated on slide eight.
Through our enhanced licensing initiative, we are working to bring on that's digitally remastered content into the home.
We believe that we can extract even greater value from our core business capitalizing on our content portfolio and brand on home entertainment devices and platforms.
Example, this fall we launched IMAX enhance streaming content on Fandango now in the U.S., Iraq, Sutent TV and Europe Fandango down recently became the first streaming service in the world to offer a Marvel title in the home in this case Spider Man bar.
From home as an IMAX enhance title, which includes exclusive IMAX expanded aspect ratio DMR and our proprietary audiocodes. This creates an opportunity so expand our ecosystem and add new high quality revenue through licensing strengths.
Furthermore, the strength of our brand technology and creative relationships provides an opportunity to create new experiences and try to increase utilization across our network.
Earlier this year, we conducted successful test with radio heads Thom Yorke and celebrated director Paul Thomas Anderson on the short for film Adam.
And with the brand Soundgarden the ban Soundgarden on a concert Phil just last weekend. We premiered a limited run piece from caught in west in conjunction with his new album Jesus is king.
The 30 minute piece right in select showings alongside our regularly scheduled blockbusters selling out shows in 24 cities worldwide and capturing more than a million dollars and global box office.
Furthermore, the project growth drove considerable buzz in the press across social media and would pace, making young fans expanding our brand into new cultural territory, and exposing new audiences, who the IMAX experience. It also demonstrated our ability to launch a global.
That beyond movies.
In fact since announcing the caught a project we've been approached with numerous opportunities from creators across the cultural spectrum, who don't want to work on our platform.
In conclusion, Hi, last delivered strong results in the door third quarter and we believe that we're building on this a men momentum moving into the fourth quarter as we close out a record breaking year as our 2020 slate take shape will have at least five leases film and I guess.
Thanks to a strategic initiative to inject more IMAX DNA into our slate.
We are driving greater demand for the IMAX experience throughout the entertainment ecosystem, where the powerful blunt brand and technology uniquely position to deliver value creators and consumers studios and distributors.
When you add to that the global scale of our network. We believe that we are well position to capitalize on the change at hand, and the entertainment industry and we are confident in our ability to continue to improve revenue generation margin product profile return metrics and a strong overall.
All.
Financial performance.
With that I would like to now pass the call the patch it for a review of our financial results. Patrick. Thank you rich. Good morning, everyone I'm pleased to share a third quarter results with you today, which reflect our continued execution any inherent operating leverage in our model with a 5% growth in revenue and continued cost discipline.
Driving driving a 26% increase in adjusted EBITDA at a 50% increase in adjusted EPS for today's call, let's begin with a review of our box office performance, followed by an update on installations in the quarter as well as their review of signings in backlog then we will discuss our financial results for the quarter and our balance.
She finally, we'll close guidance for the fourth quarter and full year 2019.
Let's start with our IMAX Global box office detailed on slide 10 of the earnings presentation.
In the quarter, we delivered 246 million in IMAX Global box office represent you gave 40 million or 19% increase and clearly illustrating the geographic diversification of our global network.
40% increase in international box office, excluding China led the year over year growth as well as a 23% increase domestic box office.
Slightly lower box office in greater China, which was down 2% was driven by a slower September in advance of the National holiday, We had only two films one of which was a documentary.
Moreover, box office rebounded driven by our strong performance during the national holiday in China.
Turning to slide 11 year to date through September IMAX Global box office of 867 million exceeds the prior year by 9% and we expect a strong fourth quarter.
Strong performance throughout our global network contribute to the year to date box office growth.
Including greater China.
Up 27% local currency were 17% us dollars and other international growth up 14%.
Specifically, we delivered attractive growth in Asia Pacific, We're Japan was up 26%.
Europe , where experience accelerated growth in France, and Germany, which were up 31% and 40%, respectively and in Finland, where new theater recorded almost 2 million in box office in just the first 10 months of operations.
Finally, as rich alluded to we saw exceptional performance the middle east principally due to Saudi Arabia, where we see attractive near term growth opportunities.
A significant backlog in Saudi Arabia will bring us to 20 theaters there in the next couple of years.
We're pleased to report that our box office momentum has continued into the month of October through Tuesday, We produced 76 million in box office with Terminator four versus Ferrari frozen to Jumanji and Star Wars still yet to be released.
Next let's turn to our network expansion detailed on slide 12.
During the third quarter, our sales team delivered 30 signings, including eight upgrades, we installed 39 systems in the quarter, consisting of 30, new installations and nine upgraded systems versus 37 installs in the prior year, consisting of 36, new installs and want to upgrade [laughter] as a result, we.
Exited the third quarter 2019 with backlog of 607 systems.
Shifting our ability to replenish our systems pipeline with new signings during a robust period of installs so.
The new installs in the current quarter consisted of 14 sales type.
12, jvs and for hybrids compared to 15 sales type 15, Jvs and six hybrids in the prior prior year.
It should be noted that one of 14 sales type installs in the quarter was the xenon system that we redeployed into a new location, which is a great use the asset and appropriately came with a lower margin profile that a new system.
The nine upgrades in the quarter, we're all jvs and the one upgrade installment prior year was also a JV.
Now, let's turn to our financial results on slide 13.
Total revenue in the third quarter increased by 4 million or 5% to 86 point Fourmillion driven principally by strong topline growth of 18% in our network business as well as higher other revenue, partially offset by lower theater business revenue, which I will address in the segment discussion later.
We generated 47 million of gross profit an increase of 5 million or 12%, which resulted in a roughly 310 basis point improvement in gross margin to 55%.
Important drivers of expanded margins included higher network revenue on a 19% increase in box office lower new business Cogs driven by the absence of VR in this segment in 2019.
As well as an increased contribution IMAX enhanced with minimal cost.
Up 88% well adjusted net income was 13 million or 21 cents per share up 50% from the prior year.
Adjusted EBITDA for the quarter came in at 32 million up 26% compared to the prior year.
Producing 570 basis points of adjusted EBITDA margin expansion to 41.4% compared to 35.7% in the prior year.
Now drilling into our segment performance on slide 14 in our network business revenue growth of 18% resulted from a 19% increase in box office, which benefited from a 40% increase in international ex China.
And a 9% increase in our theaters in the commercial network.
Also we installed two fewer hybrid systems during the quarter.
The average revenue per new sales type installed 1.2 million compared to 1.3 million in the prior year.
The geographical mix of systems installed result in a lower average revenue per hybrid in the quarter.
Now, let's turn to capital and liquidity on Slide 15, we ended the quarter with 103 million in cash of which 83 million is an IMAX China.
In the quarter, we repurchased approximately 47000 shares at an average pricing $20.35 rate total just less than 1 million.
Next China repurchased approximately 1 million shares for the quarter for a total of approximately $2 million, which increased our share of IMAX, China as earnings.
Lastly, on slide 16, we ever full year 2019 guidance elements, which we're refining.
There's no change to our annual box office guidance. So we continue to expect low double digit growth versus full year 2018 and through October we were up 11%.
In terms of new theaters in Q4, we're expecting totaled 29 revenue generating STL.
Additionally, we are expected to install 28, new jvs and seven hybrids.
In terms of upgrades in Q4, we're expecting a total of 35 inclusive of the 35 upgrades or 10, IMAX with laser system upgrades with sales type structures with revenue and margin similar to a new STL.
In summary, a little less new theaters little more upgrades, but no change in our expected revenue in the quarter.
To wrap it up our results for the quarter were strong with top with topline growth and margin expansion, yielding the attractive operating leverage inherent in our model, we expect to deliver even stronger performance in Q4.
Thank you Sir.
Again, Please press star one to ask a question.
Oh for just a moment to allow everyone opportunity to signal for questions.
Thank you very much and good morning.
Couple of quick things I guess, Patrick one can you maybe talk about.
Why you're sort of looking at the low end of your Ah.
New system installed range is this just a timing issue with new theaters being built or is there something.
Other going out and then I'll have a follow up question then after this.
So Eric I'm going to answer that there's absolutely nothing going on.
Exceeded and this year they met Ed but for next year, there online for more installs and it's really a one off situation.
Is looking now.
For the local films versus the Hollywood films.
Well as you know I'm, we're having an extremely good year in China on local currency basis were up almost 30% and box office up we changed our programming strategy well, we programming multiple Chinese films around the holiday times of year.
As we mentioned in October for the National Holiday, we were up 160% from where we were last year ticket prices are are strong in China, the local language films.
As I mentioned in the call were over $100 million. This year for the first time and it's a record.
For us so China I would say you know, it's a very good quarter and a lot of ways as you know, but year to date, China is probably the freida spot on a year over year basis and in IMAX overall, it's going very well.
Great and then but.
One other thing within that the how you're seeing the that the differential between your market share for the local language films versus the market share for the Hollywood films.
Well just.
If you think about our business being up close to 30% and total box office.
As rich mentioned some of it is better marketing some of that's with our partner Marianne a lot of is better film selection, where we've got more optionality.
Great. Thank you very much.
David Good morning, kind of kind of falling question one of them Eriksson for kinda like started and still talking I know I know rich you mentioned that nothing kind of a was behind the or the I'm going to shift in mix of installed this year, but they want to climb kind of going from more in line to exceeding well I guess looking looking out into 2020 I'm not looking for.
The exact guidance in terms of installs that maybe just a sense of.
You arms getting internal scheduling when they're supposed to go has there been any any shifts does original installed thoughts for 2020 tiny versus what you're seeing now, especially kind of what's been going on within China.
Well Eric we.
On that but the risk profile looks the same there's no there's no systemic risk that we see at all.
Okay, and there's another backlog and then superintendent systems I assume it's not evenly spread over the coming years, it's probably more more front weighted HM.
You can give some broad ideas going to how much of that back on news in the next couple of years.
We haven't scheduled it out that way our I put it's consistent with how the backlog has run off in the past than what we said is a fair amount runs off and three year and send them.
Again, we haven't schedule that but it's the same as it's been it's no so longer term as as a matter of fact and I don't want to make too much of this but because Saudi Arabia is a new market, that's coming online and then sort off a lot of building going on there some of that is more front end loaded.
Yes.
I think we said before Eric that we're gonna be opportunistic about it and we have been opportunistic we have approval to buy back a lot more as you know and as you also know over the last several years, we bought in hundreds and millions of dollars' worth of stock. So you know.
We have the fire power, we have the authorization what we think that's the right time, we'll do it.
Fair enough thanks rich.
Thanks next question comes from Alexia Quadrani with JP Morgan.
Hi, This is they will pan out in front of like yeah. Thanks for taking on class and I would just love to get more color on your slate in China. It seems to be a little more heavy Hollywood heavy between now and you are and.
What what's the outlook for Chinese new year. Besides the fact of 10 count three I believe there's going to be equally no job or at least that in the same universe with love your thoughts on how you might capitalize on this it sounds a lot. So thank you all adds to the new year part of it and then I'll ask Patrick made a comment on the fourth quarter, but.
We have three films for Chinese new year I'm, the only when I remember by name is the one you mentioned filmed with our cameras, but I think our team is feeling very good about Chinese new year and I'm. We think we had you know we checked out.
Again remember how these.
Kinda pivoted and strategy, we used to choose one and now we try and pick three that are all considers to be contender, but it's tough place and we think we've achieved that for a new years 2020 in terms of the rest of the year patch that or how that all hands I don't know if you could add color to that.
For the balance of years, we've got the Hollywood titles in terms of local language.
There's a question Mark around the title 800, which was originally planned to come out or the summer and now the expectation it will come out sometime in the fall, but we don't have a date for that yet so that could be a big swing factor that does more of the local language and the next year. It does as rich mentioned kick off with the new your holiday and we've got three titles detective Chinatown three.
We lost in Russia, and the rescue and right now that the market is enthusiastic about all three and similar to what we've done another Hollywood periods will have all three available and you will ride. The one that's doing the best Nymex. So we're optimistic heading into 2020 for the local slate.
Thank you very much.
Good morning, just a follow up on on this local language theme in China given the success here are you looking to.
Just show multiple films.
In more parts of the year other than that big holiday.
They're available seen sure and you know you also give me an opening a little bit to talk about it at not broader sense because the box office in China has been increasing over the years. So materially on this more money in China going in to production, which has higher qual.
Flooding production at all so they've been exploring new genres, such as Hum as which is the one from Earth.
The one that was highly successful squander wandering around and John So one radars with side by Inergize animation and because they've been so successful I think they're putting higher budgets and more into different genres, specifically like side by which does very well and I last so I think of deal.
Same time, when they have IMAX potential will play.
Towards.
Theaters that would be less capital intensive for you.
Sure Yeah as we've discussed we're certainly headed in that direction I think that's even reflected in are our most recent large deal that we do Tgv, where it's a mix of.
Partnership deals and also hybrid deals and what we're doing is we're looking at each opportunity each market each theater and deciding what the right risk allocation approaches and so over time, you'll see that our backlog and therefore, our mix of installs in China will start to skew more towards the hybrid structures and the sale structures.
Okay and then.
On this notion of certifying more cameras or the cameras that your certifying able to reproduce the full aspect ratio of.
Hi by Max.
Well remember there are different aspect ratios on different theaters and there are different cameras.
Megan maybe you want to give some color on our camera program.
Yes, you did the concept it.
We've ever.
When we are identifying the best in class camera that they were identifying gets me the blended and then operating system.
Got it allows for Oh, yeah on scope of by not to be utilized and it's really to increase the flexibility for filmmakers says that they're capable of using digital camera that they prefer.
And that we're working as the concierge service to be able to adapt any camera Q R.
And so that you are capable of achieving that fill aspect ratio. So the answer is yes.
Okay, great. Thank you.
Thank you our next question.
Hey, rich Patrick Congrats quirk. Thanks for taking my questions just a few I guess rates its hopeful you.
So as you know a lot of these programs are new Regals, there's only put in place a couple of months ago out, but we obviously have done some detailed analysis of them the AMC and stuff program, which has been around longer.
But we've been working when center, we're all in Europe for years with a very similar program. How we concluded that span positive, but I think to the extent any of these plans kind of provide there's not an exact word but it's similar to a subsidy or an incentive to go to IMAX. They see.
Seem to be working and they seem to be me moving people into the premium category. So early but so far feeling pretty positive.
Good Thanks, rich the I guess the next question. It's good to hear your enthusiasm for the 20 box office domestic.
Obviously, you pointed out a lot of.
The size of the individual films or perhaps if they're not that the usual fanboy suspects that you would think of driving the box office in prior years, how do you sort of strategize I guess.
On or what your growth you as for 20 for your total box office would be helpful. Thank you.
So in terms of growth units as I said I'm, we're still on our budget process. So I can't do that but you know I actually said I avoided saying that on this call that might as well do it now we don't correlate to being a north American exhibitor. So you know we've set our growth this year in box office.
Global he is going to be in the low double digits and that's not where in the North American box office is and I think you know a lot of people in the U.S. tend to look at box office through.
Hi, Matt I'm cameras, the next wonder woman.
Fixed cameras top gun IMAX cameras, China IMAX cameras as I said during my prepared comments and and the last more than 10 years. We've had 16 films and this year, we have at least five what he said I think it'll be more than that side, you know I think on those on the blockbusters that.
You know clearly identified you have a basis for IMAX significantly outperforming we also have a network growing close to 10% around the world and that provides a very good basis, yes, local language films doing significantly better for US Yeah, two key high ticket.
Box office markets growing rapidly and coming online, Japan, and Saudi Arabia.
And you know where we want we look at we have a different view and people looking at North American et cetera.
I imagine the two bartels, they're coming out next year to pits are as it is they have somebody movies, including Milan.
You know, we just think of sites pretty good next year.
Okay. Thanks, guys.
Good morning.
Wondering Richard just mentioned Disney Pixar Marvel I'm wondering about the concentration of Hollywood power and Disney and now it doesn't mean facts and at the extent that you've always been very.
Relationship focus has that concentration weren't your benefit or is.
As is.
They have dominated in the blockbuster space and the movie space in general or is that hurt you in anyway.
<unk>.
Mostly positive Jim because we have such that relationship with them, we're fully integrated and several leases in our marketing efforts and I know you've seen some of the marketing that came out around and game and some of the other physiological releases I think the integration of our two organization.
Yes, a box office point of view has been a real positive, but again that kind of a headline I think especially in 2020, you need some parts through that.
Tells me that show.
They're cameras.
You know those wrong on the though so I think about 19.
Cluster business as you said, they're an important part we love working with them, but I think that's to be a little bit more spread out in 2020, and you know that's fine too we have wonderful relationship with Warner Brothers, and Sony Paramount with Universal you know I think.
Yeah, I think it's good wasn't where it's what we're not tied to that.
Okay.
And I noticed there was a comment that upgrade timex with laser was sort of running a bit higher relative to new installs and I'm wondering if you talked about the value of laser is it more in terms of cost quality and therefore dumb.
In for saying films that the IMAX on the IMAX screens are there other specific issues that are driving that continued rollout.
The theaters versus the DNA and those theaters that have converted to laser and I think there could be more there and one reason there couldn't be more as we haven't really marketed heavily around the laser we've kinda love word of mouth and the image speak for itself and going forward starting up in 22.
Tony will be marketing, a little bit more aggressively around plays and so I think like you would expect to ultimately it comes down to that differentiation leading to lessen seats.
Okay, and then finally.
And I'm wondering and I think the DMR costs have gone down as it's been use marci can have a fast turnaround.
So I'm wondering are you happy with how things are working at this stage and I've asked.
Probably over the years about the notion of split screen. When you do I have only one week stay with the that wakes blockbuster.
Is there any more inclination or receptivity to doing something like that either in terms of the screens or the screens during the week as time has gone on.
So to your first question, Jim about Ali happy with the way Kinda, though the slate has fallen the answer is yes, we've used our position in the ecosystem now relationships with filmmakers and studios to try and optimize the schedule for us.
No one asterisk on that would be people, who film with our cameras where are we over index I think that's where I'm going to try and carve out more screen time for them. So historically with Chris Olin films, we've done that and I think you'll as there are more films film without cameras, you'll see us pretax.
Those filmmakers more both relationship reasons and because we believe it will be in our economic interests in terms of split screens, we've done more of that internationally and we have in the past 10, it's worked out I'm pretty well for us, especially a couple of film that are more likely play too.
PGIM kind of audience you run out in the day time in more than our movie later in the day I think than the U.S., there's still resistance to that by the studios. So we would certainly be open to doing more of that but that's not really the model, they're falling I think another thing you might see.
It's more a carve outs for us so as not worldwide network continues.
It gets bigger we probably can carve out a certain number of screens I'm to show something else in particularly on the second week, and we think that fine tuning might help outgrow the box office.
Okay.
Thanks very much.
I'm currently showing no further questions in the queue I'd now like to turn it back over to IMAX for closing remarks.
Thank you operator, and thank you. Thank you all for listening in on our call. Tom as you know we delivered a very solid quarter I'm, we sort of promise that we would control costs over the last couple of years and I think we've done a very good job doing that I think with the box office increase and the revenue and.
Chris you've seen more of that flow down to the bottom line.
You know we think this year, it's going to turn out to be a record year for us with the fourth quarter coming up capped off by Star Wars, and you know 2020, particularly because of the IMAX cameras in the IMAX DNA and the growth in the network, we feel very good about where we're going and were experimenting with.
A few newer ideas in IMAX enhanced and trying to fantasize different content. The early results. There are quite positive. So we think the business going very well and we thank all of you for your support.
Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.