Q3 2021 Imax Corp Earnings Call
Good day, ladies and gentlemen, do you have currently on hold 40, IMAX Corporation's third quarter 2021 earnings conference call.
Waiting to go awry with additional participants and she'll be starting shortly thank you for your patience and please continue to hold.
[music].
Good day and welcome to the IMAX Corporation third quarter 2021 earnings Conference call.
Today's conference is being recorded.
I will now turn the conference over to Mr. Brett Harris. Please go ahead Sir.
Thank you good morning, everybody and thank you for joining us on today's third quarter earnings conference call on the call today to review the financial results are rich Galperin, Chief Executive Officer, and Joe Sparacio, Our interim Chief Financial Officer, Megan Colligan, President IMAX Entertainment, and Rob Lister Chief Legal officer.
Also joining us today.
Today's conference call is being webcast in its entirety on our website a replay of the webcast will be made available shortly after the call. In addition, the full text of our third quarter earnings press release, and the slide presentation have been posted on the Investor Relations section of our website at.
At the conclusion of this call our historical Excel model will be posted to the website as well I'd like to remind you of the following information regarding forward looking statements today's call as well as the accompanying slide deck may include statements that are forward looking and that they pertain to future results or outcomes. These forward looking statements are subject to risks and uncertainties that could cause actual.
<unk> future results or occurrences to differ.
Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes any forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information future events or otherwise during today's call references references may be made to certain non.
Non-GAAP financial measures discussion of management's use of these measures and the definition of these measures as well as a reconciliation to non-GAAP financial measures, including adjusted net loss adjusted EPS and adjusted EBITDA as defined by our credit facility are contained in this morning's press release and in our earnings materials, which are available on the Investor Relations page on our web.
Site that IMAX dot com with that let me now turn the call over to Mr. Richard California Rich.
Thanks, Brett and good morning, everyone. Thank you for joining us today, it's exciting to be speaking to you on the heels of a record breaking weekend with June and opening that underscored the differentiation of IMAX.
Film is a brilliant showcase for our technology shot with our cameras and made for our screens we use.
Scored a biggest October global opening of all time, capturing an outsized 20% of the box office.
Domestic openings since 2019 at our highest domestic indexing since 2017, despite a day and date streaming release and have pushed us to our best month of October ever with more than $100 million and counting on track to be the eighth highest grossing.
Mud and IMAX is 50 year plus history. It is clear the global film industry has reached a turning point the movies or back IMAX is delivering global box office grosses in line with or above pre pandemic highs as consumers return to theaters around the.
World Hollywood Studios have recommitted to exclusive theatrical releases for their biggest blockbuster movies and a slate is kicking into high gear with unprecedented pipeline of marquee tent poles to close out 2021 and throughout 2022.
The movie business has passed an enormous stress test.
But more than a year consumers had easy access to an expanding world of in home entertainment options and virtually no access to blockbuster entertainment and theaters.
Despite that massive disruption consumer demand for moviegoing remained strong as we've long believed more than 100 years of human behavior doesn't change that easily.
Cinemas have thrive across the advent of television the Internet and proliferation of mobile devices, because the theatrical experience is the most immersive communal and accessible way to enjoy storytelling.
And the secular trends all favor IMAX from the blockbuster innovation of the films slate to the globalization of the theatrical experience the emphasis on premium out of home experiences. The 45 day theatrical window and the rise in local language filmmaking around.
The world.
Today I'd like to discuss why IMAX is very well positioned to capitalize as the industry recovery accelerates our strategic overview of the entertainment landscape and positive trends driving box office momentum and our results for the third quarter, which demonstrate our.
Differentiated business model strategy and growing consumer demand.
As I've said the evolution of the global film industry is taking shape in ways that uniquely benefit IMAX and our market share.
IMAX is in the blockbuster business.
And blockbusters will grow their dominance as more mid tier films moved to the streaming platforms, 90% of IMAX annual Global box office is driven by the top 30 releases and 60% is driven by the top 10.
We also stand to gain from the compressed forward demand, we're seeing with the shorter 45 day windows.
Given the even bigger emphasis on opening weekend and IMAX run will be even more significant for studios and consumers.
And IMAX release helps create a global event around there Phil.
<unk> recognized that IMAX is a window unto itself, we create value across the entire chain for blockbusters for launch marketing to downstream windows to ancillary revenue.
For instance, Sony moved the domestic release of Venom two up two weeks in large part to secure an IMAX release.
The film was an enormous success at the box office with IMAX driving 9% other films domestic debut growths on only 1% of the screens. We've also accelerated our strategy to diversify our content portfolio with local language film, making forging deeper partnerships.
With studios and filmmakers in Japan and China.
And the results have been fantastic.
Very happy to share with you that IMAX has set a new company record for yearly local language box office with $165 million and counting we are excited to continue down this path given the untapped potential of local film industries in Russia, India and South Korea.
And the return of a full Hollywood slate next year.
While we've seen a little.
Traction among our exhibition partners IMAX is well insulated from this threat and could EBIT benefit from it.
Screens operate and a top performing multiplexers across key box office markets. For example, in North America, 80% to 90% of our annual box office is generated and the top 20% of Multiplexes and.
And as we saw with AMC and Regal acquisition of Prime Los Angeles locations consolidation can create new opportunities for IMAX theaters and high value locations.
Finally, the strength of our business underscores the value of our global brands. We've continued to grow our IMAX enhanced in home entertainment licensing business throughout 2021, we've grown our multifaceted partnership with Sony adding more studio titles.
And expanding on to Sony Bravia Tvs in the UK and Japan.
We're in productive conversations with leading global streaming platforms, which are very interested and exclusive IMAX expanded aspect ratio too.
Gain a competitive edge the expansion of IMAX enhanced to major streaming services could be a strategic turning point as we seek to enter the hull.
Turning to the state of global Moviegoing, IMAX and the entire industry is in great shape.
This month, we've already surpassed our IMAX record for the best month of October ever at the Global box office, and we still have a weekend to go which includes the debut of no time to die in China, We're on track to surpass $115 million in global box office in.
October making us among our best top 10 months of all time in fact will do almost as much business in October as we did in each of both the first and second quarters of this year.
In September our monthly growth was right in line with our pre pandemic September totals from 2017 to 2019, we even eclipse the strong September of 2019, which was our best full year ever at the box office each success of relief.
<unk> has demonstrated the comeback of the box office in new ways to surprise hit free Guy had impressive led at the box office performed very well in China, where IMAX has accounted for more than 13% of the box office and helped us establish a new franchise for Disney with it.
Sequel already announce Shane key emerged as the highest grossing films of 2021 at the domestic box office and lifted IMAX to its biggest September weekend of all time during its debut Sony.
Sony's venom sequel, shattered expectations with a $90 million domestic.
Domestic openings, including $8 million across IMAX screens in North America.
No time to die the first bond film shot with IMAX cameras has earned $34 million globally in the IMAX network, so far demonstrating how broadly the recovery is spreading the film delivered IMAX its biggest opening for a bond films ever in 24 countries.
Worldwide in such diverse markets as the U K and Japan, Hong Kong in Italy, South Africa in Ecuador, and its international holds surpassed many recent bond films.
Additionally, older audiences turned out for the film globally.
Spike fears that they would stay at home.
June also shot with our cameras has earned $29 million in the IMAX Global network to date and demonstrated the marketing power of our films for IMAX release.
We captured 22, 5% of the opening weekend domestically, despite a day and date release on HBO, Max and 20% of last weekend globally.
Finally in China, IMAX, yet again delivered its best ever opening weekend for the National Day holiday led by the Battle of late change in which has earned more than $33 million again film for IMAX. The movie has already surpassed $780 million and Bob.
Office as one of the top grossing Chinese films of all time Free Guide June and then the weekend's release of no time to die have also comp fears that China is salary on IMAX IMAX Hollywood product.
There have been a number of unusual challenges for Hollywood releases in 2021.
There's been a backlog of Chinese local language films, which led the government to prioritize local titles over Hollywood ones hybrid streaming releases have unleashed widespread piracy and given how vocal the Chinese authorities have been protecting the theatrical window.
Resistance and admitting films widely available on the Internet does not come as a surprise and finally, we've seen cultural sensitivity around sell some films a consideration that doesn't generally impact more than 1% to two films a year. This year with many of the industry's issues.
<unk> now resolved, we're very optimistic about the slate ahead for the remainder of Q4 and 2022.
This year closes with Marvel's highly anticipated eternal opening next weekend, Ghostbusters afterlife, which earn raves that the recent cinema Con exhibitor conference the latest spiderman and the new installment of the matrix the unprecedented 2000.
22 slate includes Dcs that that man sequels to the flash and Aqua man and the introduction of Black atom starring Dwayne Johnson <unk>.
Three Marvel films, including new installments of Thor and Black Panther.
New franchise entries for Jurassic World mission impossible, and Transformers top gun Maverick shot with IMAX cameras and of course, the sequel to James Cameron's Avatar. The film that to this day remains the highest grossing IMAX film of all time the Uni.
The success of the first avatar and IMAX screens created a halo effect for the company boosting installation activity and accelerating the growth in our network and its initial release avatar generated $240 million in box office on less than 200.
IMAX screens.
And in March of this year IMAX captured 30% of the box office on only 1% of the screens with the rerelease of Avatar and China, demonstrating how strong the brand association remains between IMAX theaters, and James Cameron's Epic Avatar 13 years.
Later, we are excited for this franchise to return with another three movies over the coming years.
Now, let's talk about our strong Q3 results recent box office momentum as reflected in our results for the third quarter, which demonstrates strong consistent progress not only toward recovery, but in recovery. The company delivered its best results in nearly two years.
Across several key metrics, including adjusted EBITDA adjusted EPS gross margins revenue and global box office in fact, IMAX recorded its fourth consecutive quarter of positive EBITDA and its third consecutive quarter of a $100 million plus in <unk>.
Box office had its strongest quarter at the box office since 2019 during the quarter, we repurchased four 6 million of IMAX shares of IMAX stock and $5 million worth of IMAX, China stock, while we wanted to be aggressive and opportunistic we're somewhat <unk>.
Strain by black outs during the quarter.
Yes.
To conclude with momentum in our business and across the industry. We are cementing our strong long term strategic position, we command the only global out of home platform for premium blockbuster entertainment with a diversified footprint across 85 countries and territories world.
Why we have a flexible asset light business model and we are.
And in demand global brand beloved by audiences worldwide critical to filmmakers and studios and ripe for new business opportunities. We believe we have reached a very positive inflection point for IMAX and a global film industry theaters are open the pipeline of blockbuster content.
<unk> is falling and audiences are returning and record numbers, we look forward to strengthening our position as one of the world's Premier Entertainment experiences. Thanks again to all of you for joining us today with that I'll turn it over to our interim CFO Joe Sparacio.
Thanks, Rich and good morning, everyone as rich mentioned in the release of exclusive theatrical franchise films and growing consumer demand drove another quarter of sequential improvement across key financial metrics.
We continue to expect this momentum and we'll be going to build as our fans increasingly adapt to the pandemic and the cadence of franchise film releases builds into what could be an excellent 2022.
Moreover, our results benefited from our global asset light licensing business, which is characterized by low fixed costs and high incremental normalized margins.
We ended the quarter with $193 million in cash and $241 million of debt.
When combined with the $300 million available under our credit facility and $18 million available under our IMAX, China working capital loan.
$511 million of available liquidity.
During the quarter, we purchased $4 6 million or 317000 shares at $14 52.
Of IMAX stock in.
<unk> 5 million or $3 6 million shares at $1 44, 10, 90, Hong Kong dollars per share of IMAX, China stock.
We intend to be opportunistic in repurchasing shares when we view our stock price is disconnected from the underlying fundamentals of the business.
Subject as always to our blackout windows.
As I discuss the third quarter. Please remember year over year results reflect that in Q3 2020 much of our network was reopening with limited content available for exhibition.
Third quarter 2021 revenue increased to $56 6 million from $37 3 million in 2020.
Adjusted EBITDA increased to $13 1 million versus a slight EBITDA loss of 300000 in the year ago period and.
An adjusted EPS loss improved to eight <unk> per share from <unk> 75 per share in comparison to the year ago period.
In the third quarter the company took a further noncash valuation allowance.
Charge of $4 3 million or <unk> <unk> per share against the value of deferred tax assets recorded in the period as a result of the pandemic related uncertainty accounting rules prevent us from carrying deferred tax assets in certain tax jurisdictions.
IMAX technology network revenue increased to $25 6 million in the third quarter from $11 4 million in Q3 2020. The continued global reopening of the company's network and return a major Hollywood franchise titles, particularly in the U S and <unk>.
International markets drove box office of $142 million versus $70 million in Q3 of 2020.
Gross margins for this business were $10 9 million, which increased from 600000 in Q3 2020, largely due to higher box office, driven revenue and the operating leverage inherent in our business model.
IMAX technology sales and maintenance revenue for the third quarter increased 27 to $2 $27 7 million from $23 7 million due to an increase in maintenance revenue commensurate with the continuing reopening of the network and that was partially offset by <unk>.
Your IMAX system installations.
This quarter, we installed 14, new IMAX systems.
Six of which were sales or Sts.
In comparison, we installed 18, new IMAX systems in Q3 of last year, which included nine sales arrest Tls.
Gross margins for this business increased to $14 9 million compared to $9 4 million on higher revenue.
SG&A, excluding stock based compensation increased 15% to $22 7 million in the quarter as compared to $19 $7 million in the comparable comparable period last year the.
The increase in SG&A, excluding stock based comp was driven by the increased business activity associated with the continued reopening of the Companys Global network.
In the third quarter, we spent $4 million on capital expenditures.
<unk> 3 million invested in equipment for joint revenue sharing theatres.
We believe our third quarter results demonstrate that our business has reached a turning point.
<unk> returned in large numbers to our network studios have recommitted to exclusive theatrical releases for IMAX friendly blockbusters in our superior asset light business model is delivering.
All of our key metrics.
With that I will turn the call back over to the operator for Q&A.
Thank you.
Ladies and gentlemen, if you would like to ask a question at this time. Please press star one on your telephone keypad.
Thank you.
And we are taking our first question from Eric Wold with B Riley Securities. Please go ahead.
Thank you good morning, guys.
Rich can you.
You talked about what happened last time was with avatar.
Back in <unk> in terms of your increase in demand for IMAX systems and accelerating.
Installations, I guess can you talk about the pace of discussions.
Right now in inhibitors around designing given the strength in recovery that film slate coming up and then given that we're mostly in a new build.
Environment now versus kind of the retrofit environment that was back bandwidth with the original avatar, how much opportunity is there to accelerate installations over the next 12 months if.
Do you want to get ahead of that slate.
Sure the box of is going to premium. So there's obviously a lot of incentive as exhibitors returned to normal around the world to gear up their networks with IMAX whoever I think at the moment, it's too early to forecast how quickly that pace, while I'm full we're kind of working through it.
Right now, we're working on putting together or twenty-two budget and obviously one of the key inputs and that is how quickly people will sign up for new theaters and how quickly they will open those theaters funding.
Fundamentals are there for that as you say <unk>.
Experienced the avatar effect in many ways, but I think I'm really going to have to defer until the end of the year call to give you some concrete data.
Understood and then lastly.
Yeah.
China insured to reopen for more Hollywood films has it gone accounts come the backlog and the other issues you talked about.
How do you manage the.
Kind of different content preferences between kind of the larger cities versus maybe the the lower tier cities in terms of Hollywood versus local language continent does that become.
Sticking point kind of a new negotiations with the studios discussion of the studios in terms of how many screens or they're allocated.
Well first of all one of the really good things and it's coincidental little satisfy design is that the best times of the year in China are different and the best times of the year in the U S. So for example in the U S. You think of the summer time or you think of Christmas time in church.
Many you think about.
Chinese new year, which is late January early February typically think about the national holiday, which is in October. So the blockbuster seasons are complimentary. They don't they don't end up on top of each other within China itself and the top one O two tier cities.
There is a stronger preference for Hollywood content than there is in tier two three and then in tier three four and five cities. So as a general matter the local language films perform better in the lower tier cities and the western films.
Perform somewhat better in the top tier cities. So when we split the network can we program, we generally take that preference.
Into mine when we when we decided let's release and when however, like everything in the movie business. It's also a film by films preference. So if there is a film like Avatar, which was so universally we love in China, I don't think we make that kind of cheer distinction, but for a small.
Hollywood films, and Ora significant Chinese local language film available there are by the way Japanese language film in Japan, or Korea in Korea wherever it is we would.
We would have to balance that so you have these general rules, but you also take into account the specific titles.
Perfect. Thanks for us.
Thanks, Eric.
We take our next question comes keeping count.
<unk>. Please go ahead.
Thank you and maybe just first on IMAX enhanced you mentioned some productive conversation. So I was wondering if you could give us any idea on maybe what the timing may look like for something a bit more strategic and I guess, the Disney plus an H B O Max or some of those most critical services. So any comments you could make on your really.
Asian chips with with those studios or services, specifically I think would be helpful. And then secondly, do not be if we had this great opening weekend, but even that is maybe a bit of a ynyshir products.
Quite as family friendly. So just wondering if you could comment half a turn all those tracking if you've seen any presale data I've heard some things, but curious to kind of get your view on how it looks like that's tracking preopening. Thank you.
Sure. So let me start with enhanced his you know.
But just for the benefit of others, who may not know enhanced is a technology that we've developed which.
Basically helps up Reds movies on big screen Tvs in the hall, so after a theatrical window when you're want to watch.
A movie in your home and has makes the movie look better and.
One of the primary examples today is our relationship with Saudi.
Where Sony licenses, it's technology for its large screen Tvs Sony also.
<unk> is involved on the films side with US an uprising. The films. So they are compatible with it system compatible with enhanced and.
It's going pretty well for us so far.
Joe you can correctly, a breath, but I think of the seven largest television manufacturers in the world were in four of them already so we made subtraction kind of below the radar screen, it's done pretty well.
Cause of that traction.
Frankly, because of Ims's overall success in the IMAX brand.
We have had a number of discussions over the last couple of years with significant parties weather on the manufacturing side or the streaming side or the studio side and there are enough of them out there right now where we feel pretty good that.
Some of them, including maybe some larger ones are likely to come to fruition.
You can't guests about deals but.
My Best guess would be by the end of the year I would think something.
There could be some significant developments in that area you asked specifically about some of the streaming services you mentioned Disney plus you mentioned.
<unk> H B O Max obviously, there's Netflix and Amazon and others and included in the discussions that are referred to our discussions with some of the larger streaming services, but again, we will have to see.
A lot of land and it's hard to predict when things get done completely.
In terms of do and obviously as you mentioned the results were.
We're beyond our expectations, we did 20% of the world as we mentioned in a script and.
Kind of major markets like the us and China or 1% of the screens, but and a lot of other places.
Fraction of 1% of the screens so the indexing there.
It's phenomenal.
In terms of a turtles, we tend to do very well with Marvel films in general.
I think.
We feel that that film with a theatrical window around it is go in and perform well, we don't have numbers, but Marvel films in general perform well and they tend to do specifically very well in IMAX I don't think you'll see dune type indexing because.
The director of June Danville.
Filmed it specifically for IMAX and basically said to audiences go see it in IMAX, that's the way I want to see it all clearly Zhao is very close to IMAX, we did nomad land.
Has been in our in our headquarters imply this she's certainly.
Is pushing the IMAX version of the release.
So we have we have high expectations towards Megan what do you want to add to that.
What.
Would expect that it would do very well.
Clearly is an O towards filmmaker and.
Speak very well about the format and.
Shot the film with the expectation that being.
That is best seen in IMAX and speaks to that very clearly.
And I think on a relative basis.
Should be expected to do very well in our apartment.
Great. Thank you.
Thank you.
And we take our next question from an ex yeah quite Ronnie with the J P. Marking please go ahead.
Hi, Thank you I, just circling back here commentary about indexing and how else can get I'm curious what do you see as sort of the run rate I guess posts pandemic and you probably don't see 10 levels cause like you mentioned that was shot in IMAX cameras to skate very favorably, but I would assume you would probably see.
Higher than Prepandemic, just given the nature of the films that are coming out and that the consumers want that kind of experience.
So just curious if you have any thoughts on how we should think about that going forward.
And my second question is yes.
Following up on your commentary on Hollywood films in China, I think he said Q4 is looking better.
Do we think we can get back to kind of a normal run right at the Hollywood films in China, though at some point, whether it's 22 or beyond.
Sure. Your first one you first question first about indexing.
Which is that although dune was kind of the best case, we've seen in a while IMAX came out of the pandemic with increased market share not only in the United States, but.
Many of our international territories and.
If you look at and China as one example.
Our index, saying there is up significantly it was like in the.
Blow choose in terms of the National box office for the whole country, 2% to 3% and it's about a percentage higher than it was before the pandemic and the United States. We did 12.5% of bond on the opening weekend, which is very good indexing typically.
Max movies more indepth on opening weekend, and the tennis percent range.
We just talked about June being at the 20th% range, obviously, the Nolan movies typically over it gets very much some of that is because of our camera program and shooting films.
With IMS DNA are with Nymex cameras, and I'm going to answer. Your second question, then I'm going to ask Megan to fill in a little bit about our camera program and why they are more films being shot in IMAX and how that's helping our indexing, but the other point of indexing I think is after spending time sitting at home and Ah.
Dammit watching television screaming cable whatever it is I think when you have an opportunity to leave the home and it is a couple of extra dollars I think you want something very different than what you typically can get in the hall and I think that's really fueling a lot of that higher indexing on your second question with regards.
To China as I mentioned during the prepared remarks, there were a lot of things going on in China in terms of Hollywood films, not getting it at the same rate and the two biggest in my mind, where there was a backlog of Chinese films. So.
They had to run off their own films before they were going to let a lot of new films Z and the second was the day and date experiment during the pandemic and the degree of piracy.
During that experiment made this economic for the Chinese government to let films.
In theatrically that are already sort of play so heavily on torrent sites in China or in.
In illegally purchased so.
As you know they are starting to lurk more films, there we talked about doing getting an bond getting in.
I think.
I've heard that spiderman is.
To get an I've heard outside sources say, they think that it will happen again, it's a poor fewer guests select <expletive>, but I would think that 22 will look something like a normal year in China, because the impediments that existed and 21.
Are in the process of going away.
So with that I'd like Megan to give you some context for a second about why more films are being shot with IMAX counters or with IMS DNA.
So.
I think we talked about it before but just to clarify there is.
We have a certified imac camera program the top of the line cameras at every camera house.
And has an imac.
Camera that any filmmaker is capable of using.
Early discussions with top tier filmmakers and we are a very dense discussions with filmmakers that are making the kind of movie that we would like to be.
Using our certified cameras very early on so for instance next year. We have 10 movies that are shot with our cameras one of which was shot with film cameras. Jordan killed was shot with IMAX film cameras the difference in that process.
You can imagine hi online is significant for one people are thinking about IMAX from the start thinking about how they shoot for our screen. There are talking about it from the moment there on set and they're also.
They are engaging with audiences.
Right at the outset and audiences are really smart and and really connected to the top tier filmmakers and top tier material and fans want to see films in the way that filmmakers wanted to see it and said that connectivity in that connection.
Massive impact and that differentiation has massive impact for us and.
So I think you're going to see it.
Especially next year I think we're going to see a real increase in the way consumers are connecting with our brands.
Has this program really takes off and next year will be.
As I said, a massive year you are talking about three.
Three different Marvel movies that are shot with our cameras, you're talking about top does now Greg.
They said.
You have.
Black Panther, and Thor and Dr. Strange.
And we're also doing pre with MGM. So it's a real diversification of the type that studios were working with as well and so it really creates a diversified slate for us a lot of different filmmakers that we're working with a lot of different types of films and it and it starts to really frightening the face of the imac.
Dan.
Thank you very much.
Thank you.
And we take our next question from Eric Handler went to M Cam pie.
Please go ahead.
Good morning, and thanks for the question Richard Wonder if you could talk about.
How the <unk>.
Lineup disappearing for next year for international films that are going to have.
The IMAX DNA embedded in there and how that number my compared to what you're seeing in 2021.
We.
Jumping on that.
If you don't mind, we have that.
Really robust program.
And we're excited about next year in terms that that program.
We have a French down.
That has IMAX DNA.
For the first time that was shot with our cameras.
We have a Chinese films that will be coming out we believe he can never stayed necessarily but we think it will be coming out for the new year that was shot with our cameras the Chinese new year, and we have a program that we are doing with touhou that has.
Five picture deal for.
Japanese films. So we're really very focused on local language titles and continuing our efforts.
Locally to ensure that we are.
Serving our audience is in the country that we.
That we are continuing to grow in and looking at the best filmmakers in the.
With local language titles and that program has been very successful and we continue to educate filmmakers around the world about this program.
Think of China, specifically, Eric I don't have it at my fingertips and as we noticed this call. We just set a low client which.
Record, but there are <unk>.
Many many films in China that were involved in at this point and then go into we're also looking at different projects and newer markets site Korea, and India as well. So I think we've kind of lead the way and identify local language content.
You'll see us continue to double down on that.
Very helpful. Just as a follow up question you touched a little bit on this earlier, but.
As you're talking with theater owners about new deal signings.
Are you getting a sense is there any sort of gating factor that is.
Preventing more deals being signs at this point or how is how is sort of the pipeline of deal activity progressing at this point.
Well I mean, I have to remind everybody on the call and it's kind of remarkable that's during the pandemic last year. When the world was shut down we signed about 65, new system simply installed about 75. This systems when the world was close so.
There was a level of activity going on wall things were still shut down it's picked up a bit now there are a number of things going on we have a number of signings during the quarter. We've got some that are contingent that we haven't announced yet.
But I think.
The discussion we had around the avatar of that that I think the higher indexing that imax's doing versus regular cinema. The push the premium the move to blockbuster nation. The move to globalization I think we will see you all those manifest themselves in the next couple of months has.
As people start looking at their clients for 22.
Thank you very much.
Thank you.
And we take our next question from my kicking with Benchmark Company. Please go ahead.
A rich congrats.
Congrats on the quarter.
See the street.
Box office.
Two questions one.
Jeremy.
Did you give some perspective.
On your fourth quarter.
Inflation.
Yeah, I think Mike will be.
No.
To be fairly consistent.
What we've experienced last year.
Okay, just need tourism seasonality.
Three activity.
Typically the fourth quarter good quarter for us.
Pollution basis.
Right now things you should be able to be true.
Really confused.
Okay. Good.
The.
Next question real Chunky soon curious your view.
China.
So how do you sort of 19.
Zero tolerance.
<unk> I guess in terms of combat Covid.
Just wondering how.
Important you think that's been.
In terms of driving performance at the box office with China.
And.
Obviously have implications when you travel safety.
Uh-huh.
Curious if you think big.
The.
Strategies team of the country sort of back off that.
Yes, they can 16.
What implications.
For your box office in China industry overall.
I think the world has come.
Come up in general with a different policy, which is learning to live with Covid in some way. So obviously players like the U S.
There isn't a zero tolerance, but of the movies of oath.
Quite well.
It's all in the head pilot was going to say it on I apologize, but.
October.
<unk> is one of the best months in our history. So obviously with Covid still existing the box offices bounce back really strong and I think.
People are going to movies to enroll in our restaurants and sporting events. So I don't think tub closure here or there are.
The disease still existing is.
Materially ruining the box office in any way that we can proceed you write China has a different approach, which is zero tolerance and what they do is if there's an outbreak in a certain region.
I'll close all those theaters in that region.
But generally it's been for one or two weeks at just as quickly as they close it they open it up and.
Again.
It's just part of the landscape there so even though we delivered the best National holiday.
Numbers 35 million for battle of life changes.
There were theaters clothes that I know of theaters, but reopened that and there are theaters closed now and there are theatres that reopened it's generally and.
5% or less of the theaters in our network. So I just don't think it's had a material impact on me.
It's kind of a different variation of the rest of the world learning to live with Covid, obviously, among the vaccinated people mostly.
But I don't think whether they switch off their policy or change prominent is going to have a material impact on our box office.
Alright.
The last question for you.
The U S here.
Sort of passed her.
Vaccine mandates for theaters.
Concert the other venue.
I think that goes lies or early November.
Just curious your thoughts on obviously.
Pretty strong.
Explanation right.
<unk>.
POW impactful.
That policy could be for your theaters or your screen there.
And also wondering.
If you could see this sort of policy worked itself into other counties sort of course state.
Thank you.
Well.
Would take me a long time to go through our 85 countries and give you a fulsome answer but I can tell you in New York you have to show that even vaccinated to getting to a theater.
If you just look at our results over the last couple of months with a vaccine mandate to go to the theater isn't quite strong. So I guess more people get vaccinated and they are required to be vaccinated to go to the theater that should have a positive impact I think we saw in other countries during the <unk>.
<unk> of those mandates it took a slight bit of time for transition.
Until people learn to get the apps and learn to use a mutt.
I don't think I don't think that's going to make a material difference.
Thanks Rich goodbye.
Thank you and we take our next question from chapter Fine on Macrame. Please go ahead [laughter].
Hey, this is Aaron on for Chen Thanks for taking my question for the past couple of years, and especially to the pandemic you guys have been.
Doing a good job focusing on controlling costs and so strong as note this quarter.
As the recovery continues how should we think about expenses and margins in 2022 things.
Yeah, I mean, I think you're going to see them go off to some extent there have been.
When this first happened because we are a global company, we had dealt with Covid and other territories before most people did so we were able to act react very quickly very decisively and we did that and we drove our costs are way down obviously, we are a company that understands.
Return on investment and understands that happy days are here again, let's start throwing money out the windows will never managed ourselves that way, we never well on the other hand.
Things like marketing, where there are opportunities right now and you look at our over in that I mean, one of the reasons we over in depth on June as we didn't really terrific. Our marketing department that are terrific job marketing to move.
Again for the rest of the quarter, we have things like Ghostbusters Spiderman matrix humming marketing as an ordinary part of how you promote a movie. So I think you will see some of our.
Some of our costs go back to 2019 levels were in the middle of the budget right now but.
The amount of money, we spent basically being close is going to increase.
Great. Thank you that's helpful. As a quick follow up for me some exhibitors have talked about being pushed pressing power you just.
Just curious if this is a trend you've seen as well.
Okay.
It's interesting because I had red I don't know, if it's true, but that at Lincoln square tickets for dune where $26.
So that was if that is true that was clearly AMC is the operator, they're testing that and that's.
About 20%, 25% higher than normal.
Mr. <unk> suggested to me that especially.
With IMAX, where the experiences so differentiated and especially in the earlier ones in the movies is so much demand and the opening weekend in the opening days so.
IMAX doesn't set the pricing our exhibitor partners do and it's completely up to them, but it wouldn't surprise me given the amount of movies next year, the demand and the specific demand for IMAX that people test it out.
I think there is an opportunity there, but again, it's it's not what we can control.
Got it thank you.
Thank you and can we take our next question from Jim Gosh with Barrington, We hatch. Please go ahead.
Thanks, and good morning.
Yes, I would like to start with the opportunities with your traditional IMAX Amex Museum content in terms of expanding demand for.
For streaming services and sexual content.
Services are you seeing any renewed opportunity there that might give you some incremental profits and you might tie. It also into the conversation you just had about.
[noise] IMAX cameras to do those deals involve any participation in the aftermarket for the totally exclusive.
To the theatrical sector.
Okay.
Well in answer to your first question.
The camera program apply to documentaries and I think that there are a lot of opportunities in the documentary state.
I think for a number of reasons.
One.
I think the.
Proliferation has been.
The description program that a lot of our exhibition partners has supported.
Actually had had done a lot too.
Support.
Documentaries, and we've seen a spike in commercial documentary tendon.
Prior to the pandemic and where.
U E imagine that.
<unk> going to commercial films and then on the third or fourth movie are taking in what.
What would be considered smaller fair.
And you are seeing a boost with movies like RBG, what should be my neighbor Apollo 11, and there was this theory.
Documentaries that did quite well in the theatrical space and we're interested in that and we're looking more towards 90 minute movies with 40 minute cut down so that we can support both our institutional theaters and and our commercial theaters.
Be able to play.
IMAX documentary content in both places and so we're looking to that as an opportunity for us.
And I think that there's also a greater interest in documentaries around the world.
But that does require a 90 minute running time and to be able to have those opportunities all over the world.
And then certainly the streaming services are very interested in this space and nearly every streaming service support.
A pretty healthy.
Has healthy documentary content on their service so.
Pretty robust.
The market for buying documentaries.
Documentaries.
It's something we're looking at it as something that we're keeping an eye out for it is a lot of very interesting content. We certainly are.
Oh really interesting partner for the highest.
Documentary filmmakers as a point of differentiation in the marketplace until we're pretty.
Achy and cheesy with what we decided to a.
A part of it but yes, I think in the in the next year or so you'll start to see it.
Taking a bigger physician in documentary.
Okay and in terms of the IMAX camera.
The benefit is to draw people to IMAX for the first rung box office, but you don't have an aftermarket.
Benefit in terms of any deals with the studios.
Yes, I mean, the way we negotiate the contract Jim I mean, the cameras are available for rent or we might contribute them for peace of the back end of the movie, but there's no general precedent to that it's just something will negotiate on a one off basis.
Okay and the one about.
About.
Jim.
<unk> sorry, we're running over there is one other person.
I'm happy to take the question all fine afterwards, or just running late so they are very tasteful.
Alright.
Thank you and we take our next question from Mike with Goldman Sachs. Please go ahead.
Hey, good morning, Thanks for squeezing me and I was just wondering if you could talk a little bit about.
Some of the key countries and geographies that.
That are contributing to network expansion gross and.
Whether or not that changes at all because of.
Demand for new screen, just because of.
Avatar or.
If.
Pandemic any of the demand for screen size change by geography. Thank you.
So I think as you as you know Mike our biggest potential growth areas are probably Japan, the middle East continue continue in China and.
The reason for that is because the performance is so strong so during the pandemic Japan's per screen average was $1.5 million. The second best per screen average with half of that which was Australia, the middle East, particularly Saudi Arabia.
And also UAE also has tremendous per screen averages and it's pretty much a a new market that's opening up as China, because our brand is so valuable and we are doing programming local language and Hollywood films.
It is also very strong. So if you ask you just to name the three markets that I think we will see.
The fastest rate of growth from it would be those.
Before the pandemic of we have been making progress and places like India Korea Southeast Asia Western Europe, starting in Latam.
And the answer there would be I think we have to wait to see how quickly those areas rebounds and what the.
What the exhibitors are thinking there and what their financial situation, but those are certainly ones will be we're making progress slowed by the pandemic and I would hope we could make progress there again.
Great. Thanks for squeezing marriage. Thanks.
Okay. No problem looking my contact will conclude today's Q&A session I wouldn't like to turn to call back over to rich count on any additional all closing remarks.
Sure. Thank you operator.
Certainly don't have to tell.
Anyone on this call from your own lives or as investors.
In our company it's been.
It's been a very difficult year, and a half on a global basis.
I keep getting asked over and over.
Or is it behind us is behind us.
I'm, a big believer in math and when you have the month of the quarter, We just had which is.
Was better than expectations have many places and I know the results and we met on revenue, but in fact, the revenue keeps kept going up were transparent every we give you are going up revenue. So yes, we met a target that kept going up and.
As I said, a number of times about October and you look at the slate and you look at the indexing and you look at every kind of operating matrix there is.
We're back and there's no other way to put it I mean.
Could there be something that happens that we don't we don't see there could have been before the pandemic. There was it was called the pandemic there could be after the pandemic, but as far as I see from my C. Running this company.
Instead of sitting around their offices talking about when things are going to open when movies are going to move in and if they're going to move we're sitting around our office figuring out how we're going to meet all the demands from the studios and filmmakers and the talent that wants their movies that I'm accent, we're figuring out how we're going to market them.
Figuring out how we're going to Squeezable all in and that's a high class problem and that feels very good for those of us at IMAX Ni I expect it to continue to translate into improved financial results going forward. So thank you very much.
Thank you this should conclude today's conference call and ladies and gentlemen, you may now disconnect.
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