Q1 2024 IMAX Corp Earnings Call
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Operator: Good day, and thank you for standing by. Welcome to the IMAX Corporation Earnings Conference Call for Q1 2024.
Speaker Change: Good day, and thank you for standing by and welcome to the Q1 2020 for IMAX Corporation Earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Jennifer Horsley, Head of Investor Relations. Please go ahead.
Speaker Change: You will then hear an automated message advised them that your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your Speaker, Jennifer Horsley head of Investor Relations. Please go ahead.
Jennifer Horsley: Good morning, and thank you for joining us for IMAX's first quarter 2024 earnings conference call. On the call today to review the financial results are Rich Gelfond, Chief Executive Officer, and Natasha Fernandes, our Chief Financial Officer. Rob Lister, Chief Legal Officer, is also joining us today.
Jennifer Horsley: Good morning, and thank you for joining us for Imax's first quarter 2024 earnings conference call on the call today to review the financial results are rich <unk>, Chief Executive Officer, and Natasha Fernandez, Our Chief Financial Officer, Rob Lister Chief Legal Officer is also joining us.
Jennifer Horsley: 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 earnings press release and the slide presentation has been posted in the Investor Relations section of our site. Our historical Excel model has been posted to the website as well.
Jennifer Horsley: Today today's conference call is being webcast in its entirety on our website.
Jennifer Horsley: Replay of the webcast will be made available shortly after the call. In addition, the full text of our earnings press release and the slide presentation have been posted on the Investor Relations section of our site, our historical excel model, especially for the website as well.
Jennifer Horsley: I would 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 pertain to future results or outcomes. These forward-looking statements are subject to risks and uncertainties that could cause our actual future results to not occur or to differ. Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results.
Jennifer Horsley: I would like to remind you 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 pertain to future results or outcomes. These forward looking statements are subject to risks and uncertainties that could cause our actual future results to not occur where currencies to differ.
Jennifer Horsley: Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes.
Jennifer Horsley: 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 may be made to certain non-GAAP financial measures. Discussion of management's use of these measures and the definition of these measures as well as the reconciliation to non-GAAP financial measures is contained in this morning's press release and our earnings materials, which are available on the investor relations page of our website at imax.com. With that, I now turn the call over to Mr. Richard Gelfond.
Jennifer Horsley: 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 may be made to certain non-GAAP financial measures.
Jennifer Horsley: Discussion of management's use of these measures and the definition of these measures as well as the reconciliation to non-GAAP financial measures are contained in this morning's press release and our earnings materials, which are available on the Investor Relations page of our website at IMAX Dot com with that let me now turn the call over to Mr. Richard.
Richard: Calpine rich.
Richard Lewis Gelfond: Thanks Jennifer and thanks everyone for joining today. Imax powers awe-inspiring experiences for audiences around the world. We partner end-to-end with the greatest filmmakers and creators working today to help them realize their visions to the fullest. Deployed at scale globally, we deliver Hollywood and international blockbusters, original documentaries, and immersive events across about 90 countries and territories worldwide. Our technology, our deep relationships with filmmakers, our global footprint, all of it combines to make IMAX a wholly differentiated platform, which is why we are a consistent winner in the media and global entertainment landscape. The company delivered solid results in the first quarter, thanks to a record-breaking surge in March that bodes well for another strong year ahead.
Richard: Thanks, Jennifer and thanks, everyone for joining today IMAX powers on inspiring experiences for audiences around the world, we partner and to end with the greatest filmmakers and creators working today to help them realize their visions to the fullest.
Richard: Its scale globally, we deliver at Hollywood and international Blockbusters original documentaries and immersive events across about 90 countries and territories worldwide, our technology, our deep relationships with filmmakers our global footprint all of that combines to make IMAX.
Richard: Our wholly differentiated platform, which is why we are a consistent winner in the media and global Entertainment landscape. The company delivered solid results in the first quarter. Thanks to a record breaking surge in March that bodes well for another strong year ahead.
Richard Lewis Gelfond: Year-to-date, we delivered another 17 signings globally, including agreements in growth markets like India, Thailand, and Turkey that further diversify our footprint. Our first quarter global box office of $261 million marks our third highest grossing Q1 ever, capped off by our best March ever, despite limited content owing to the strikes last year. Domestically, we delivered a remarkable 5.9% of the overall box office, our highest quarterly market share ever in North America, despite accounting for only 1% of the screen. I'm going to repeat that again, almost 6% of the domestic box office on only 1% of the screens. It's an incredible number.
Richard: Year to date, we delivered another 17 signings globally, including agreements in growth markets like India, Taiwan, and Turkey that further diversify our footprint, our first quarter global box office of $261 million.
Richard: Marks our third highest grossing Q1 ever capped off by our best March ever Despite limited content, owing to the strikes last year.
Richard: Domestically, we delivered a remarkable five 9% of the overall box office, our highest quarterly market share ever in North America, Despite accounting for only 1% of the screens.
Richard: To repeat that again, almost 6% of the war of the domestic box office on only 1% of the screens. That's an incredible number and we drove strong profitability, including gross profit margin of 59% and total adjusted EBITDA margin of 40% our Q1 results.
Richard Lewis Gelfond: And we drove strong profitability, including a gross profit margin of 59% and a total adjusted EBITDA margin of 40%. Our Q1 results are consistent with the full year guidance we issued earlier this year. From the beginning, we've said that 2024 will be better at the box office than many pundits predicted. In the wake of Dune II and Godzilla Kong, the world is coming around to our point of view. And as we've said before, we expect 2025 to be a strong growth year. Our momentum is fueled by a virtuous cycle in our business.
Richard: Our consistent with our full year guidance.
Richard: We issued earlier this year.
Richard: From the beginning we've said that 2024 will be better at the box office than many pundits predicted in the wake of June two and gotten silicon the world is coming around to our point of view and as we've said before we expect 2025 to be a strong growth here.
Richard: Momentum is fueled by a virtuous cycle in our business global Moviegoing is shifting rapidly to IMAX as a result, our global box office market share in index are all at near time highs and this is fueling sales activity, particularly in the rest of the world High Psa markets.
Richard Lewis Gelfond: Global moviegoing is shifting rapidly to IMAX as a result of global box office, market share, and indexing are all at near-time highs, and this is fueling sales activity, particularly in the rest of the world, and high PSA markets, where we're prioritizing our network growth. Studios and filmmakers see this and lean into Imax, filming with Imax cameras, leading with Imax exclusive events and partnerships, and making the Imax platform a centerpiece of their marketing.
Richard: Where we're prioritizing our network growth studios and filmmakers see this in a lean and timex filming with IMAX cameras, leading with IMAX exclusive events and partnerships and making the IMAX platform a centerpiece of their marketing.
Richard Lewis Gelfond: This was evident at the recent CinemaCon movie conference, where Imax was heavily featured in studio presentations, trailers, and filmmaker remarks. As Marvel chief Kevin Feige said from the stage at the Disney presentation, what IMAX does to get people out of their homes and into their theaters is second to none. Creators, content owners, and brands beyond Hollywood and across the spectrum see this and want to work with IMAX, yielding opportunities to open our content aperture across music, gaming, sports, live events, and more.
Richard: This was evident at the recent cinema movie Conference, where IMAX was heavily featured and studio presentations trail and filmmaker remarks.
Richard: <unk> Marvel Chief Kevin <unk> said from the stage at the Disney presentation, what IMAX does to get people out of their homes and into your theaters is second to none.
Richard: Creators content owners and brands beyond Hollywood and across the spectrum see this and want to work with IMAX, yielding opportunities to open our content aperture across music gaming sports live events and more local language films and music experiences.
Richard Lewis Gelfond: Local language films and music experiences have been a strong contributor to our results year to date, and this diversifying content portfolio across all inspiring experiences from gaming franchises to sports leagues to live global events further strengthens our differentiated offering for consumers. The wheel continues to turn and accelerate, which is why we're very confident in our ability to drive future growth for the company. Today I'd like to offer updates on, number one, our global network and, number two, our content slate. I'll then hand it over to Natasha to go through our financial results before taking your questions.
Richard: <unk> had been a strong contributor to our results year to date, and it's diversifying content portfolio across all inspiring experiences from gaming franchises to sports leagues to LIBOR global events further strengthen strengthens our differentiated offering for consumers.
Richard: The wheel continues to turn and accelerate which is why we're very confident in our ability to drive future growth for the company today I'd like to offer updates on number one our global network and number two our content slate I'll, then hand, it over to Natasha to go through our financial results.
Natasha Fernandes: Before taking your questions.
Richard Lewis Gelfond: First, 2023 was a strong year for IMAX network growth, in which we levered off our box office momentum to achieve significant gains in sales activity and network growth. We also further diversified our footprint of the 128 system installs we completed in 23, and IMAX records 61 were in international markets outside of North America and China. The rest of the world opportunity for IMAX is very strong, but the IMAX network is only 33% penetrated in these markets.
Natasha Fernandes: First 2023 was a strong year for IMAX network growth and which we levered off of our box office momentum to achieve significant gains and sales activity and network growth. We also further diversified our footprint of the 128 system installs we completed in.
Natasha Fernandes: 23, and IMAX record 61 were in international markets outside of North America, and China. The rest of the world opportunity for IMAX is very strong the IMAX network is only 33% penetrated in these markets. Despite a slower start for the global box office.
Richard Lewis Gelfond: Despite a slower start for the Global Box Office this year, we've kept up the momentum, delivering a flurry of system signings in key markets year-to-date. We completed agreements for new systems in a diverse collection of markets, including India, Thailand, Turkey, and China this year, and we have further significant agreements on the immediate horizon, with the slate strengthening in the second half of 24 and an extremely promising outlook in 25 and 26.
Natasha Fernandes: This year, we've kept up the momentum delivering a flurry of system signings in key markets year to date, we completed agreements for new systems, and a diverse collection of markets, including India, Thailand, Turkey, and China. This year.
Natasha Fernandes: And we have further significant agreements in the immediate horizon.
Natasha Fernandes: With the slight strengthening in the second half of 'twenty four.
Natasha Fernandes: Extremely promising outlook at 25, and 26, we expect sales activity and installations to accelerate.
Richard Lewis Gelfond: We expect sales activity and installations to accelerate. Turning to the outlook for our content portfolio, it is indeed very promising. Dude Part 2 and Godzilla Kong, both IMAX titles, provided a jolt to the global box office and demonstrated also two very positive trends. First, demand for moviegoing in the marketplace is strong, and the 24th slate holds more promise than many have predicted. And second, quite simply, consumers recognize that Imax is a superior experience.
Natasha Fernandes: Turning to the outlook for our content portfolio. It is indeed very promising.
Natasha Fernandes: Part two and Godzilla Kang both film for IMAX titles provided a jolt to the global box office and demonstrated also two very positive trends.
Natasha Fernandes: First demand for movie going in the marketplace is strong and the 24 slate holds more promise than many had predicted.
Natasha Fernandes: And second quite simply consumers recognize that IMAX is a superior experience. The stories people want to see and hear our in IMAX and we are fast becoming appointment viewing for the biggest cinematic events.
Richard Lewis Gelfond: The stories people want to see and hear are in IMAX, and we are fast becoming appointment viewing for the biggest cinematic events. Oppenheimer, a film Christopher Nolan conceived and filmed very specifically for IMAX, won eight Academy Awards and cost $190 million at the IMAX box office, entering our top five releases of all time. Dune Part 2 is now a top 10 release of all time, with more than $143 million in global box office receipts to date. We generated a stunning 21% of the film's total gross. In the wake of Oppenheimer, we released a limited number of 70mm prints of Dune Part 2, which earned sellouts for weeks on end.
Natasha Fernandes: Oppenheimer a film Christopher Nolan can see and film very specifically for IMAX, One eight Academy awards and crossed the $190 million in IMAX box office entering our top five releases of all time.
Natasha Fernandes: Due in part to is now a top 10 release of all time with more than $143 million in global box office to date, we generated a stunning 21% of the films total gross in the wake of Oppenheimer. We released a limited number of 70 millimeter prints.
Natasha Fernandes: Due in part to which earn sellouts for weeks on it.
Richard Lewis Gelfond: Imax 70mm film, the absolute gold standard of cinema with up to 18K resolution, is surging in popularity, and we will continue to capitalize on this next with film prints for the highly anticipated Joker sequel coming out this October. Godzilla Kong has also performed very well for IMAX.
Natasha Fernandes: IMAX 70 millimeter film the absolute gold standard of cinema with up to 18 K resolution is surging in popularity and we will continue to capitalize on this next with film prints for the highly anticipated Joker sequel coming out this October.
Natasha Fernandes: Silicon has also preserved.
Natasha Fernandes: <unk> very well for IMAX.
Richard Lewis Gelfond: We delivered 11% of the film's domestic opening, even though our entire film network, including top-tier locations in New York and Los Angeles, continued to play and perform very well with Dune, which we're still playing that week. IMAX releases offer the best possible cinematic experience, and as a result, IMAX for IMAX is a coveted point of distinction for filmmakers and a significant driver of box office and index. More than ever, the IMAX experience is as much about content creation as it is about content delivery.
Natasha Fernandes: We delivered 11% of the films domestic opening.
Natasha Fernandes: Even though our entire film network, including top tier locations in New York and Los Angeles continue to play and perform very well with June which we're still planning that we can fill.
Natasha Fernandes: <unk> film for IMAX releases offer the best possible cinematic experience and as a result film for IMAX is a coverage point of distinction for filmmakers and a significant driver of box office and indexing.
Natasha Fernandes: More than ever the IMAX experience as much of it as much about contact creation as it is about content delivery, we carve out or you have more films in production shooting with IMAX cameras that at any point in our history.
Richard Lewis Gelfond: We currently have more films in production shooting with IMAX cameras than at any point in our history. Next year, we have an unprecedented run in which every IMAX release from May through September will be filmed with IMAX cameras. That includes Mission Impossible 8, two Marvel films, the forthcoming Formula One film starring Brad Pitt from Top Gun Maverick director Joe Kuczynski, Superman from DC, How to Train Your Dragon, and many more.
Natasha Fernandes: Next year, we have an unprecedented run in which every IMAX release from May through September we filmed with IMAX cameras.
Natasha Fernandes: That includes mission impossible eight two Marvel films, the forthcoming Formula One film starring Brad Pitt from top gun Maverick Director, Joe Kaczynski, Superman from DC, how to train your Dragon and many more and earlier in 'twenty five we'll have the new project from.
Richard Lewis Gelfond: And earlier in 25, we'll have the new project from Michael B. Jordan and Black Panther director Ryan Kugler, which is shooting with Imax film cameras, as well as the JJ Abrams produced Imax film, Flowervale Street. As I've said, our slate is significantly committed for most of the year in 2025. And 2026 looks perhaps even stronger with carryover from Avatar 3, as well as new installments of Avengers, Star Wars, Batman, Super Mario Brothers, Toy Story, and Wicked, along with our expanding portfolio of local language, documentaries, and events.
Natasha Fernandes: Michael B, Jordan and Black Panther direct Orion Kugler, which is shooting with IMAX film cameras as well as the J J Abrams produced IMAX shot flower Vale stream.
Speaker Change: As I've said, our slate is significantly committed for most of the year in 2025.
Natasha Fernandes: And 2026 looks perhaps even stronger with carryover from avatar three as well as new installments of Avengers Star Wars, Batman Superman Brothers Toy story, and Wicked, along with our expanding portfolio of local language documentaries.
Natasha Fernandes: And events experiences.
Richard Lewis Gelfond: Even for releases not filmed with IMAX cameras, we are seeing filmmakers and studios lean more heavily into the IMAX platform. For instance, Disney has made IMAX a centerpiece of its promotional campaign for Kingdom of the Planet of the Apes, a promising title coming out shortly, including prominent IMAX placement in advertising during major events like the NCAA tournament. And we'll see a similar focus in Warner Brothers' campaign for Furiosa as it rolls out.
Natasha Fernandes: Even for releases not filmed with IMAX cameras, we are seeing filmmakers and studios lean more heavily into the IMAX platform for instance, Disney has made IMAX a centerpiece of its promotional campaign for kingdom of the planet of the apes are promising title.
Natasha Fernandes: Coming out shortly including prominent IMAX placement and advertising during major events like the Ncw tournament, and we will see a similar focus and Warner brothers campaign for <unk> as it rolls out.
Richard Lewis Gelfond: Our success continues to yield opportunities to open our content aperture and expand further beyond Hollywood blockbusters. On May 17th, we released the first new IMAX original documentary under our revamped strategy, The Blue Angels, produced in partnership with J.J. Abrams and Glenn Powell. This film very much represents our aspiration to create dockbusters. It was shot by the same team behind Top Gun Maverick, and its aerial footage rivals anything in that mega-hit.
Natasha Fernandes: Our success continues to yield opportunities to open our content aperture and expand further beyond Hollywood blockbusters.
Natasha Fernandes: On May 17th we released the first new IMAX original documentary Andre our revamped strategy. The Blue Angels produced in partnership with J, J Abrams and Glenn Pal.
Natasha Fernandes: This film very much represents our aspiration to create Doc Busters. It was shot by the same team behind top gun Maverick and its aerial footage rivals anything and that Mega hit.
Richard Lewis Gelfond: And it will roll out in a new, extremely advantageous model for us, with a one-week exclusive engagement across our commercial network domestically and its select international markets, availability thereafter on Amazon Prime Video, to which we sold the streaming rights, and later on 24, or early 25, a 45-minute version of the film will release in our institutional theater. We have several more original Dockbusters in our pipeline, including the upcoming Stormbound with producer Adam McKay.
Natasha Fernandes: And it will rollout of the new extremely advantageous model for us with a one week exclusive engagement across our commercial network domestically and in select international markets.
Natasha Fernandes: Availability thereafter on Amazon Prime video to which we sold the streaming rights and later in 2000 and for early 'twenty five a 45 minute version of the film were released in our institutional theaters, we have several more original dock clusters in our pipeline, including the up coming Stormbound.
Natasha Fernandes: With producer Adam Mckay.
Richard Lewis Gelfond: We also partnered with Amazon to make the launch platform for Jonathan Snowden's new series, Fallout, with a seven-city IMAX-exclusive premiere screening event. Fallout is topping the streaming charts and has emerged as one of Amazon Prime Video's best performing series of all time. We'll have an IMAX exclusive run and live concert event for the forthcoming Disney Plus release, The Beach Boys, a documentary from legendary filmmaker Frank Marshall. The release will continue to build our recent momentum in music with Q1's Queen Rock Montreal and Andre 3000 Experience.
Natasha Fernandes: We also partner with Amazon to make the launch platform for Jonathan Snoland, New series fallout with a seventh city IMAX exclusive premiere screening event.
Natasha Fernandes: Fallout as tapping the streaming charts and has emerged as one of the Amazon Prime videos best performing series of all time.
Natasha Fernandes: We will have an IMAX exclusive run at live concert event for the forthcoming Disney plus released the Beach Boys a documentary from legendary filmmaker Frank Marshall. The release will continue to build our recent momentum in music with Q1's, Queen Rock Montreal and Andre 3000.
Natasha Fernandes: Experiences.
Richard Lewis Gelfond: Queen alone grossed more than $5.5 million in IMAX and was subsequently licensed by Disney Plus as an IMAX Enhanced Exclusive in the home. And IMAX was the exclusive premiere partner for this month's concert event for BTS's Suga, which earned $2 million in Imax box office for two showtimes in select theaters.
Natasha Fernandes: <unk> alone gross more than $5 $5 million in IMAX and was subsequently licensed by Disney plus as an IMAX enhanced exclusive in the home and IMAX was the exclusive premier.
Natasha Fernandes: Partner for this month's concert event for Bts is sugar, which earned $2 million in IMAX box office for two showtime's in select theaters.
Richard Lewis Gelfond: To close, Imax continued to drive positive momentum in the first quarter, setting the table for a very promising period which will continue. Let's be clear, the only premium entertainment platform with our filmmaker relationships, global scale, and patented technology is Imax. We continue to drive global network growth with an eye towards expansion into underpenetrated markets where moviegoing is strong and increasing. A diversified content strategy with Hollywood and local language blockbusters, Imax documentaries, and new events and experiences is delivering great results.
Natasha Fernandes: To close IMAX continued to drive positive momentum in the first quarter setting the table for a very promising period, which will continue.
Natasha Fernandes: Be clear the only premium entertainment platform with our filmmaker relationships global scale and patented technology designed Max.
Natasha Fernandes: We continue to drive global network growth with an eye towards expansion into Underpenetrated markets, where moviegoing is strong and increasing our diversified content strategy with Hollywood of local language blockbusters, IMAX documentaries, and new events and experiences is delivering great results.
Richard Lewis Gelfond: Q1 was among our best of all time at the global box office. Audience demand for Imax is feeding box office growth, which in turn is yielding network growth. We are in a great position to use our increased market power to accelerate growth and margin expansion with a remarkably good slate for 2025 and 2026. We look forward to continuing to deliver results in our business and for our shareholders. Thank you again. And with that, I'll turn it to you, Natasha.
Natasha Fernandes: <unk> Q1 was among our best of all time at the global box office audience demand for IMAX is feeding box office growth, which in turn is.
Natasha Fernandes: Yielding network growth.
Natasha Fernandes: We are in a great position to use our increased market power to accelerate growth and margin expansion with a remarkably good slate and 25% in 2006, we look forward to continuing to work.
Natasha Fernandes: Oliver results in our business and for our shareholders. Thank you again and with that I'll turn it to unit Tasha.
Natasha Fernandes: Thanks, Rich, and good morning, everyone. Imax's first quarter delivered a solid financial and operating performance and reflected a strong start to 2024. We exceeded market expectations on revenues, earnings per share, and total adjusted EBITDA. This includes a gross profit margin of 59% and a total adjusted EBITDA margin of 40.5%, and our results are consistent with our full year guidance. These are high-quality earnings that reflect the strength of our operating model, our cost discipline, and our ability to deliver consistent financial results.
Tasha: Thanks, Rich and good morning, everyone Imax's first quarter delivered a solid financial and operating performance and reflects the strong start to 2024, we exceeded market expectations on revenues earnings per share and total adjusted EBITDA.
Tasha: This includes a gross profit margin of 59% and total adjusted EBITDA margin of 45%.
Tasha: And our results are consistent with our full year guidance.
Tasha: These are high quality earnings that reflect the strength of our operating model, our cost discipline and our ability to deliver consistent financial results. We.
Natasha Fernandes: We are confident that our momentum will continue to build throughout the year and beyond. We ended the quarter with our highest ever growth in March box office and achieved a record monthly global market share of 6.6% on less than 1% of screens worldwide. Imax's Dune Part 2 box office dramatically demonstrated the benefits of filming with Imax cameras. Roughly 1 out of 5 tickets, or over 20% of the box office on the planet for Dune 2, came from Imax.
Tasha: We are confident that our momentum will continue to build throughout the year and beyond.
Tasha: We ended the quarter with our highest ever grossing March box office and achieved a record monthly global market share of six 6% on less than 1% of screens worldwide.
Tasha: IMAX is due in part to box office dramatically demonstrated the benefits of filmed with IMAX cameras, roughly one out of five tickets are over 20% of the box office on the planet for D into came from IMAX and we currently have more film for IMAX releases in production than ever before.
Natasha Fernandes: And we currently have more films for Imax releases in production than ever before. We continue to grow the IMAX global network, and we are unmatched in our scale and reach. And we continue to strategically grow and diversify our content portfolio across local language, documentaries, and alternative content to drive utilization. Increasing capacity utilization is an opportunity for our business. Just a one percentage point improvement in utilization of our global network could drive anywhere from $75 to $100 million in annual box office, depending on geographic mix and other factors, all of which results in high incremental profits.
Tasha: We continue to grow the IMAX Global network, and we are unmatched in our scale and reach.
Tasha: And we continue to strategically grow and diversify our content portfolio across local language documentaries and alternative content to drive utilization.
Tasha: Increasing capacity utilization is an opportunity for our business.
Tasha: A one percentage point improvement in utilization of our global network could drive anywhere from $75 million to $100 million in annual box office, depending on geographic mix and other factors all of which results in high incremental profit.
Natasha Fernandes: We believe there is significant runway to increase utilization as we continue to open our aperture to bring in more content in off-peak time periods, partner with filmmakers and studios to create a stronger Imax connection resulting in a higher market share, and use data to refine our programming strategy. Overall, we believe we can drive accelerating growth for years to come given our continuing network expansion, the increasing amount of Imax DNA in films, and growing consumer demand for Imax.
Tasha: We believe there is significant runway to increase the utilization as we continue to open our aperture to bring in more content in off peak time periods partner with filmmakers and studios to create a stronger IMAX connection, resulting in a higher market share and use data to refine our program.
Tasha: <unk> strategy.
Tasha: Overall, we believe we can drive accelerating growth for years to come given our continuing network expansion increasing amount of IMAX DNA in films and growing consumer demand for IMAX.
Natasha Fernandes: Turning now to our first quarter financial results, we are pleased with Q1 revenue of $79 million, driven by very strong end-of-quarter momentum. Content Solutions revenue grew 6% year over year, driven by incremental revenues from alternative content, including the Queen Rock Montreal concert film, coupled with strong box office from Dune and Godzilla Con. However, technology, product, and services revenues declined 16%, driven by a lower level of system renewals as the prior year had a larger one-time renewal and a lower mix of sales-type installations this year.
Tasha: Turning now to our first quarter financial results.
Tasha: We are pleased with Q1 revenue of $79 million driven by very strong end of quarter momentum.
Tasha: Content solutions revenue grew 6% year over year, driven by incremental revenues from alternative content, including the Queen Rock Montreal concert film coupled with strong box office from June and got Telecom.
Tasha: Technology product and services revenues declined 16% driven by a lower level of system renewals as the prior year had a large larger onetime renewal and a lower mix of sales type installations. This year. However, this is purely a mix dynamic as overall system installations grew 67% year over year.
Natasha Fernandes: However, this is purely a mixed dynamic as overall system installations grew 67% year over year. Growth margin was 59%, up 200 basis points year over year, reflecting improvement in the content solutions margin, driven by the mix of titles, including more alternative content and lower film marketing expenses. SG&A excluding stock-based compensation was $27 million and improved $2 million year-over-year, reflecting timing in marketing spend and benefits from our cost actions taken in the prior year. R&D expense was $2 million in the quarter, reflecting our continued investments in both the core business and streaming and consumer technology.
Tasha: <unk>.
Tasha: Gross margin was 59% up 200 basis points year over year, reflecting improvement in the content solutions margin driven by the mix of titles, including more alternative content and lower film marketing expenses.
Tasha: SG&A, excluding stock based compensation was $27 million and improved $2 million year over year, reflecting timing and marketing spend and benefits from our cost actions taken in the prior year.
Tasha: R&D expense was $2 million in the quarter, reflecting our continued investments in both the core business and streaming in consumer technology.
Tasha: Total consolidated adjusted EBITDA of 32 million with comparable to the prior year propelled by the strong margin performance from a profitability perspective total adjusted EBITDA margin was 45%, which was up from 37% in the prior year and is above our full year guidance of high <unk> percent.
Tasha: Yeah.
Tasha: Adjusted EPS in Q1 was 15%, which compares to the adjusted EPS of <unk> 16 in the year ago period, EPS continues to be impacted by a tax valuation allowance of approximately <unk>.
Natasha Fernandes: Total Consolidated Adjusted EBITDA of $32 million was comparable to the prior year, propelled by the strong margin performance. From a profitability perspective, the total Adjusted EBITDA margin was 40.5%, which was up from 37% in the prior year and is above our full-year guidance of high 30%. Adjusted EPS in Q1 was $0.15, which compares to an adjusted EPS of $0.16 in the year-ago period. However, EPS continues to be impacted by a tax valuation allowance of approximately $0.02.
Tasha: We expect the tax rate to normalize over the full year.
Tasha: Turning to our global network system installations, and signings remain key drivers of our long term growth in.
Tasha: In Q1, 2024, we completed 15 system installations up 67% over Q1 'twenty three.
Tasha: The installation, 80% were new locations and we're weighted to markets with higher per screen averages with eight of our installations coming in rest of world areas, including France, England, Indonesia, Saudi Arabia, and three in North America.
Tasha: Signings activity is also ramping up since the beginning of the year. We have signed deals for 17 system with eight coming in the first quarter and the rest around cinema Khan.
Natasha Fernandes: We expect the tax rate to normalize over the full year. Turning to our global network, system installations and signings remain key drivers of our long-term growth. In Q1 2024, we completed 15 system installations, up 67% over Q1 2023. Of the installations, 80% were in new locations and were weighted to markets with higher per screen averages, with eight of our installations coming in the rest of the world areas, including France, England, Indonesia, Saudi Arabia, and three in North America.
Tasha: Our fast start on installations and signings to date, along with our significant backlog of 442 systems at the end of Q1 gives us confidence in our network growth trajectory.
Tasha: Turning to cash flow and the balance sheet operating cash flow in Q1 was a use of $11 million compared to a source of $21 million in the prior year.
Tasha: The lower year over year operating cash flow reflects the timing of box office receipts. This year as box office strength came in March with Q4 January and February weaker due to strike impact versus the prior year. When Q1 box office strength came in January driven by Avatar, the way of water, whose box office.
Natasha Fernandes: Signing activity is also ramping up; since the beginning of the year, we have signed deals for 17 systems, with 8 coming in the first quarter and the rest around CinemaCon. Our fast start on installations and signings to date, along with our significant backlog of 442 systems at the end of Q1, gives us confidence in our network growth trajectory. Turning to cash flow on the balance sheet, operating cash flow in Q1 was a use of $11 million compared to a source of $21 million in the prior year.
Tasha: Straddle the end of 2022 and beginning of 2023.
Tasha: We expect the trends in cash flow to improve throughout the year driven by seasonality the improving box office slate and the related timing of collections.
Tasha: Our capital position remains very strong as we ended the quarter with $81 million in cash and $302 million in debt.
Tasha: Excluding deferred financing costs as a reminder, $230 million of our debt comes from our convertible senior notes due in 2026 that bear an interest rate of 5% per annum with a capped call leading to a $37 per share conversion price.
Natasha Fernandes: The lower year-over-year operating cash flow reflects the timing of box office receipts this year as box office strength came in March, with Q4 January and February weaker due to strike impacts, versus the prior year when Q1 box office strength came in January, driven by Avatar: The Way of Water, whose box office straddled the end of 2022 and the beginning of 2023.
Tasha: Our current available liquidity is approximately $367 million, which includes $286 million in available borrowing capacity under the company's various revolving facilities.
Tasha: From a capital allocation perspective, we opportunistically purchased $60 million of shares in key early Q1 at an average price of $13 99 at.
Operator: We expect the trends in cash flow to improve throughout the year, driven by seasonality, the improving box office late, and the related timing of collection. Our capital position remains very strong as we ended the quarter with $81 million in cash and $302 million in debt. As a reminder, $230 million of our debt comes from our convertible senior notes due in 2026 that bear an interest rate of 0.5% per annum, with a capped call leading to a $37 per share conversion price.
Tasha: At a time when the share price was impacted by the strike overhang.
Tasha: $151 million available under our share repurchase authorization.
Tasha: To conclude momentum is building from the growing demand for IMAX among consumers filmmakers studios and exhibitors and as we continue to grow our network and expand our content aperture, we expect our asset light highly incremental business model to deliver accelerating growth increasing.
Operator: Our current available liquidity is approximately $367 million, which includes $286 million in available borrowing capacity under the company's various revolving facilities. From a capital allocation perspective, we opportunistically purchased $16 million of shares in early Q1 at an average price of $13.99 at a time when the share price was impacted by the strike overhang. We have $151 million available under our share repurchase authorization. To conclude, momentum is building from the growing demand for IMAX among consumers, filmmakers, studios, and exhibitors.
Speaker Change: Cash flows and margin expansion with that I will turn the call over to the operator for Q&A.
Tasha: Certainly as a reminder to ask a question. Please press star one one from your telephone.
Tasha: Please wait for your name to be announced to withdraw your question. Please press star one again, please standby will compile the Q&A roster.
Tasha: And one on the far first question it will come from Eric Wold of B Riley Securities. Your line is open.
Eric Christian Wold: Thank you good morning.
Eric Christian Wold: Couple of questions I guess first off.
Eric Christian Wold: Rich you talked obviously a lot about the.
Eric Christian Wold: The benefits of shooting with IMAX cameras, and having the greatest number of films in production with IMAX DNA, but you've ever had I guess.
Eric Christian Wold: I guess it won't be the maximum that you think you could do in your or that could be done through your network.
Operator: And as we continue to grow our network and expand our content aperture, we expect our asset-light, highly incremental business model to deliver accelerating growth, increasing cash flows, and margin expansion. With that, I will turn the call over to the operator for Q&A.
Eric Christian Wold: For films shot with IMAX cameras does this become.
Eric Christian Wold: Norm for studios looking to lock up.
Eric Christian Wold: IMAX windows, either by their choice to drive demand and the higher share or could this potentially become a requirement of yours that you need to see with IMAX cameras in order to reserve.
Operator: Certainly. As a reminder, to ask a question, please press star 11 from your telephone. Please wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And one moment for our first question, which will come from Eric Wold of B-Rally Securities. Your line is open.
Eric Christian Wold: Perfect.
Eric Christian Wold: IMAX windows.
Eric Christian Wold: So Eric there are two ways to shoot with IMAX cameras. One is with film cameras, which was what Chris Nolan did at Oppenheimer and the other way is with digital cameras, which is what <unk> did with deal so with digital cameras.
Eric Christian Wold: There really is no limit to the number of cameras or the ability.
Eric Christian Wold: Thank you. Good morning.
Richard Lewis Gelfond: A couple questions, I guess, I guess, first off, Rich, you talked obviously a lot about the benefits of shooting with IMAX cameras and having the greatest number of films in production with IMAX DNA that you've ever had. I guess, do you, I guess, what would be the maximum you think you could do in your, or that could be done through your network for films shot with IMAX cameras? Does this become the norm for studios looking to lock up IMAX windows, either by their choice to drive movie-going demand and a higher share, or could this potentially become a requirement of yours that you need to shoot with IMAX?
Eric Christian Wold: Make them available basically.
Eric Christian Wold: Built a set of attachments that work with a variety of digital cameras in all the major ones. So there is as.
Eric Christian Wold: As much as supply has filmmakers would need on the film side. There is a limited number of film cameras.
Eric Christian Wold: However, later this year.
Eric Christian Wold: We're going to release some more we've been.
Eric Christian Wold: Building some more of them. So this is just a guess but probably.
Eric Christian Wold: Pending on how big the production is whatever you could probably only do.
Eric Christian Wold: 304 film projects a year.
Eric Christian Wold: Along with unlimited number of digital projects.
Eric Christian Wold: Other constraint would just be you release schedule. So if you shoot with IMAX cameras.
Richard Lewis Gelfond: So Eric, there are two ways to shoot with Imax cameras. One is with film cameras, which was what Chris Nolan did at Oppenheimer. And the other way is with digital cameras, which is what Denis Villeneuve did with Dune. So with digital cameras, there really is no limit to the number of cameras or the ability to make them available. Basically.
Eric Christian Wold: A two week guaranteed release window.
Eric Christian Wold: You have to go through a period of time, let's say the summer, which is very popular there are a limited number of build slots that you could guarantee.
Richard Lewis Gelfond: We built a set of attachments that work with a variety of digital cameras and all the major ones. So there's, you know, as much a supply as filmmakers would need. On the film side, there's a limited number of film cameras. However, later this year, we're going to release some more, and we've been building some more of them.
Eric Christian Wold: Filmmakers.
Eric Christian Wold: But yes that.
Speaker Change: That was kind of your general question.
Eric Christian Wold: Directly answer it because there is no like.
Speaker Change: <unk> there is no answer like that it depends on the circumstances.
Eric Christian Wold: The other thing I would say is that we don't want every film filmed with IMAX cameras, so not to pick on it but it felt like sideways, which Paul Giamatti.
Richard Lewis Gelfond: So this is just a guess, but probably, you know, depending on how big the production is or whatever, you could probably only do three or four film projects a year, along with an unlimited number of digital projects. The other constraint would just be your release schedule. So if you shoot with Imax cameras, you get a two-week guaranteed release when, So you have to go through a period of time like, let's say, the summer, which is very popular, you know, there are a limited number of filming slots that you could guarantee to film. But, you know, that was kind of your general question. I know I didn't directly answer it directly because there is no, like, you know, 15. There's no answer like that. It depends on the circumstances.
Eric Christian Wold: As you know two people drinking wine and a wide body for a lot of the movie.
Eric Christian Wold: Not the kind of thing that's consistent with the IMAX brand. So the overlying factor is is it.
Eric Christian Wold: The right filmmaker and is it the right subject matter, where the camera is really good and enhance the look of it and we turned down many filmmakers who want a buildup with IMAX cameras, both because the cost that we don't think will benefit and also because we don't think thats worthy of an extended.
Eric Christian Wold: So I hope that's close to answering your question without giving you a number.
Speaker Change: Rich and I guess my last question.
Speaker Change: Can you update us on where you are.
Richard Lewis Gelfond: The other thing I would say is that we don't want every film filmed with Imax cameras. So, not to pick on it, but a film like Sideways, which Paul Giamatti did, which is, you know, two people drinking wine at a wine bar for a lot of the movie. You know, that's not the kind of thing that's consistent with the Imax brand. So the overlying factor is, you know, is it the right filmmaker and is it the right subject matter where the camera is really going to enhance the look of it?
Eric Christian Wold: <unk>.
Eric Christian Wold: And then in that operating segment you wouldn't do you think we start seeing an.
Rich: An inflection point in terms of.
Eric Christian Wold: That business is the overall contribution to revenues and profitability that somebody could see in the back half of this year or is that more of a $25 26 story.
Speaker Change: So just this past weekend was in Las Vegas and.
Speaker Change: What was formerly known as stable similarly.
Speaker Change: Now renamed IMAX consumer streaming technology.
Richard Lewis Gelfond: And we turned down many filmmakers who wanted to film it with Imax cameras, both because the content we don't think will benefit and also because, you know, we don't think it's worthy of an extended release. So I hope that's close to answering your question without giving you a nod.
Richard Lewis Gelfond: <unk> had a prominent place we had about 250 meetings, we were on several panels in the main ballroom, including with Disney plus on the panel to talk about our experiences.
Speaker Change: <unk> had a number of extremely positive meaning that we have a kind of a backlog of things that we think will happen within this year.
Richard Lewis Gelfond: Can you update us on where you are with SimWave and that operating segment? When do you think we will start seeing an inflection point in terms of that business's overall contribution to revenues and profitability? That's something we could see in the back half of this year.
Speaker Change: With that said, we remain very optimistic about the business I should add one thing as we added a product to it.
Richard Lewis Gelfond: I think briefly touched on but originally we talked about saving money for streaming services.
Operator: So, just this past weekend, Eric, NAB was in Las Vegas, and what was formerly known as SimWave, now renamed Imax Consumer Streaming Technology, had a prominent place. We had about 250 meetings. We were on several panels in the main ballroom, including with Disney Plus on the panel to talk about our experiences. We had a number of extremely positive meetings, and we have a kind of a backlog of things that we think will happen this year.
Operator: The more we can now develop.
Operator: People streaming to the streaming services and the broadcasters.
Jennifer Horsley: Mostly of sports content, where we could say for example, the NBA a lot of money and what their streaming to TNT or whatever their outlets. So there is a lot of demand as more products.
Operator: With that said, and we remain very optimistic about the business, I should add one thing. We added a product to it, which we, I think, briefly touched on. But originally, we talked about saving money on streaming services. We've developed it more where we can now develop people streaming to the streaming services and the broadcasters, so think mostly of sports content where we can save, for example, the NBA, a lot of money on what they're streaming to TNT or whatever their outlets are.
Operator: <unk> positive.
Operator: I can't predict when the other side, it's been assigned so im sure that frustrates, you and our investors and it frustrates me, but I think the business is going to be very good, but I just can't predict the timing.
Speaker Change: Perfect. Thanks rich.
Operator: And one moment for our next question.
Operator: And our next question will come from Omar Maher here.
Wells Fargo: Of Wells Fargo. Your line is open.
Operator: Yes.
Speaker Change: Good morning, guys and thank you for taking my questions.
Operator: Rich, maybe first IMAX delivered almost 6% of share from the total domestic box office in Q1, and the highest ever in North America. We've also talked about currently having the highest number of films in production with IMAX cameras Im just Justin Joel can you describe what the post pandemic shifts to the demand.
Operator: So, there's a lot of demand, there's more product, we remain positive, but I can't predict when the other side is going to sign. So, I'm sure that frustrates you and our investors, and it frustrates me, but I think the business is going to be very good, but I just can't predict the time.
Operator: For more premium experiences and the blockbuster gestation of cinema means for IMAX and how does this impact your market share potential in the runway you still haven't had just given.
Operator: In one moment for our next question, and our next question will come from Omar Mahias of Wells Fargo. Your line is open.
Omar J. Mejias Santiago: Morning, guys, and thank you for taking my questions. Rich, maybe first, IMAX delivered almost 6% of the share from the total domestic box office in Q1, the highest ever in North America. We've also talked about currently having the highest number of films in production with IMAX cameras. Just in general, can you describe what this post-pandemic shift to the demand for more premium experiences and the blockbusterization of cinema means for IMAX, and how does this impact your market share potential and the runway you still have ahead, just given all the trends that are sort of lining up in your favor?
Omar J. Mejias Santiago: All the trends that are sort of lining up.
Omar J. Mejias Santiago: In your favor.
Omar J. Mejias Santiago: So the blockbusters Asian cinema started well before the pandemic if you look at the statistics.
Omar J. Mejias Santiago: Plus just became a much bigger part of the box office years ago, I need to analyze it and see it going up and that probably has to do with things like streaming and other factors.
Omar J. Mejias Santiago: Wanted to go to the theater.
Omar J. Mejias Santiago: Big kinds of movies, and obviously, that's been a tailwind for IMAX for awhile.
Omar J. Mejias Santiago: Premium innovation trend has been more.
Omar J. Mejias Santiago: Pandemic ended and I think what's behind that is that people leave their homes. They want something that's more of a special one probably that was it was by bigger television screens and a variety of choice.
Richard Lewis Gelfond: So the blockbusterization of cinema started well before the pandemic. And if you look at the statistics, blockbusters became a much bigger part of the box office years ago, and you could analyze it and see it going up. And that probably had to do with things like streaming and other factors that, you know, people wanted to go to the theater for, you know, the big kinds of movies. And obviously, that's been a tailwind for Imax for a while.
Richard Lewis Gelfond: Choices, but that's unmistakable.
Richard Lewis Gelfond: What the studio say, but also that you look at what they do.
Richard Lewis Gelfond: Leaning into IMAX and using our cameras and our DNA is clearly supports their belief that people will pay more and we will come out in greater numbers.
Richard Lewis Gelfond: The premiumization trend has been higher since the pandemic ended. And I think what's behind that is that people leave their homes; they want something that's more special, and probably that was influenced by bigger television screens and a variety of home choices. But that's unmistakable.
Richard Lewis Gelfond: Premium experience.
Speaker Change: Just have to add to that when you look at the numbers for June versus the <unk>.
Richard Lewis Gelfond: Which I would call kind of copycat IMAX theaters.
Richard Lewis Gelfond: I just had a larger share of what you call premium, but I divide into premium at a big premium.
Richard Lewis Gelfond: So I think all of those trends you talk about blockbusters Asian premium Asian.
Richard Lewis Gelfond: I mean, you look at what the studios say, but you also look at what they do, and leaning into Imax and using our cameras and our DNA clearly supports their belief that people will pay more and will come out in greater numbers for a, you know, a premium experience. And, you know, I just have to add that when you look at the numbers for Dune versus, you know, the PLS, which I call kind of copycat Imax theaters, you know, Imax had a larger share of, you know, what you call premium, but I divide it into premium and fake premium.
Richard Lewis Gelfond: That's creating this the software the films as well as the hardware I think thats all the way.
Richard Lewis Gelfond: Our backs that you are seeing manifest itself in signings and financial results.
Speaker Change: That's very helpful and maybe shifting to just the.
Richard Lewis Gelfond: The outperformance.
Richard Lewis Gelfond: Content solutions margins, which came in well ahead of expectations, you guys highlighted alternative content and and lower marketing spend can you maybe unpack some of the key drivers and some of the levers youre seeing from from the increased demand for our for IMAX and if you can talk about the economics of alternative content.
Richard Lewis Gelfond: So, I think all of those trends you talk about, blockbusterization, premiumization, you know, Imax creating the software, the films, as well as the hardware, I think that's the wind at our backs that you're seeing manifest itself in science and finance.
Speaker Change: And describe the opportunity for margin expansion there as you drive that vertical thank you.
Omar: Hi, Omar.
Richard Lewis Gelfond: I think we had a great.
Richard Lewis Gelfond: Start to the year with alternative content is the Queen rock events than we did in bandwidth Andre 3000, We also signed a deal with <unk> to do one Wednesday of months and bring out an iconic film from the library and all of that we are.
Omar J. Mejias Santiago: So, that's very helpful. And maybe shifting to just the outperformance on content solutions margins, which came in well ahead of expectations, as you guys highlighted. Alternative content and lower marketing spend. Can you maybe unpack some of the key drivers and some of the levers you're seeing from the increased demand for IMAX? And if you can talk about the economics of alternative content and describe the opportunity for margin expansion there as you drive that vertical, thank you. Bye. Omar
Omar J. Mejias Santiago: All of them run under different deal types, though obviously, we negotiate each one individually all with the opportunity to maximize.
Omar J. Mejias Santiago: Box office in that period. So when you think about it we're putting the content on a day of the week, where we get higher utilization and Thats, where youre getting your bigger returns because that becomes big mentality in your model. When you start to think about how can we increase box office on days when there is room because weekends or so.
Natasha Fernandes: Hi, Omar and Natasha. You know, we had a great start to the year with alternative content. We did the Queen Rock event. Then we did an event with Andre 3000.
Speaker Change: Called out you Didnt look at doing it and I think it was a <unk> lever at 80%, 80% utilization on that opening weekend. So you start to look at the midweek days and saying, what's the opportunity there and that's where ADT, Inc. Mentality fall through and which is what you saw in Q1 coming through on the margins and then of course, the lower marketing spend.
Natasha Fernandes: We've also signed a slate deal with A24 to do one Wednesday a month and bring out an iconic film from their library. And in all of that, we are all of them run under different deal types. So obviously, we negotiate each one individually, all with the opportunity to maximize box office in that period. So when you think about it, we're putting the content on a day of the week where we get higher utilization. And that's where you're getting bigger returns because that becomes the mentality in your model.
Natasha Fernandes: With respect to Q1, I mean June came out in March and so we put some marketing behind there, but <unk> had last year as the comparator you had avatar playing for.
Natasha Fernandes: <unk>.
Natasha Fernandes: Plus in Q1, and so you'd have a lot of marketing come through last year. So I think that there's opportunities in all of that and Richard talked about before on some of our prior calls about leverage in the system then.
Natasha Fernandes: Do we have opportunities and what Youre seeing is a lot of opportunities or studios department with IMAX with respect to marketing so that.
Natasha Fernandes: And you start to think about how we can increase box office on days when there's room because weekends are sold out. You look at June, and I think it was up for June. We were at 80, 80 percent utilization on that opening weekend.
Natasha Fernandes: All of the spend is not on that necessarily but we work together towards a joint effort to promote IMAX in the right way, especially when it comes down to using our film cameras and digital camera.
Speaker Change: Very helpful. Thank you guys.
Speaker Change: And one moment for our next question.
Natasha Fernandes: So you start to look at the midweek days and say, "what's the opportunity there?" And that's where you can see things mentally fall through, which is what you saw in Q1 coming through on the margins. And then, of course, the lower marketing spend with respect to Q1. I mean, June came out in March, and so we put some marketing behind there. But you had last year as the comparator; you had Avatar playing for a good six weeks plus in Q1.
Natasha Fernandes: And our next question will come from Eric Handler of Roth <unk>. Your line is open Eric.
Speaker Change: Good morning, and thank you for the question.
Natasha Fernandes: Richard Natasha.
Natasha Fernandes: When I look at the expense line for content solutions.
Natasha Fernandes: Mostly DMR cost you've really done a great job of keeping that line flat.
Natasha Fernandes: Over the last several years and even it's pretty much in line with where you were back in 2018.
Natasha Fernandes: This is despite having a lot more movies that you're putting into the system every year.
Natasha Fernandes: And so you have a lot of marketing that came through last year. So I think that there's opportunities in all of that. And Rich has talked about this before on some of our prior calls about leverage in the system and where we have opportunities. And what you're seeing is a lot of opportunities for studios to partner with IMAX with respect to marketing so that all of the spend is not on us necessarily. But we work together towards a joint effort to promote IMAX in the right way, especially when it comes down to using our film cameras and digital cameras.
Natasha Fernandes: And seemingly no inflation.
Natasha Fernandes: How sustainable is this.
Speaker Change: Hi, Eric if.
Natasha Fernandes: Do you think about we've talked about this before too.
Natasha Fernandes: The leverage in our in our model.
Natasha Fernandes: <unk>, we actually are using technology to <unk>.
Natasha Fernandes: Our master our films and to work through that process and so.
Natasha Fernandes: I think we mentioned it a while ago. We created this in the cloud processes, well that allows us to do especially local language titles in foreign titles.
Natasha Fernandes: Got it at a much more cost effective manner, and as well quicker and sell through all of those sort of improvements as well as incorporating AI, which we have in some of our profitable wells we're remastering.
Operator: And one moment for our next question, and our next question will come from Eric Handler of Roth MKM. Your line is open, Eric.
Natasha Fernandes: We are getting the opportunity to realize sustainable cost and actually reducing our cost per film as time goes on and then it goes back to my comment that I was just mentioning.
Operator: Good morning, and thank you for the question. Richard and Natasha, when I look at the expense line for content solutions, or mostly DMR costs, you've really done a great job of keeping that line flat over the last several years, and it's pretty much in line with where you were back in 2018. This is despite having a lot more movies that you're putting into the system every year and seemingly no inflation. How sustainable is this?
Eric Owen Handler: And there was.
Operator: Our ability to reduce our marketing cost as well and a better.
Operator: Better distributions in digital channels as opposed to friends, which historically was the predominant mode or marketing and now youre getting lots more opportunities to use digital surplus marketing as opposed to friends and so that's where you can get some cost savings as well.
Operator: Great and then as you look to do more <unk>.
Operator: <unk> events.
Operator: It's not unusual for various leagues to want to extract the greater pound of flesh.
Eric Owen Handler: Hi Eric. You know, we've talked about this before, too, the leverage in our business model is significant. We actually are using technology to remaster our films and to work through that process. And so, I think we mentioned it a while ago, but we created this in the cloud process as well.
Eric Owen Handler: When they put out their rights fees.
Eric Owen Handler: Are you able to keep your economic model.
Eric Owen Handler: The same like a movie with.
Eric Owen Handler: Sporting events.
Eric Owen Handler: He asked or Eric is that first of all we haven't really committed to doing a lot of sporting events things. We're testing a number of things, including the Olympics as you know, which we've announced recently we've done some tests with the NHL, we've done some soccer test.
Natasha Fernandes: That allows us to do, especially local language titles and foreign titles, in a much more cost-effective manner, and as well as quicker, and so through all of those sort of improvements, as well as incorporating AI, which we have in some of our processes as well for remastering, we are getting the opportunity to realize sustainable costs and actually reducing our costs for film as time goes on. And then it goes back to my comment that I was just mentioning in the prior answer, our ability to reduce our marketing costs as well and use better distribution.
Natasha Fernandes: We're reporting around now some things with basketball by the way not just in the U S. But in international territories. So it's too soon to say really what the margin profile will look like there, but I think it goes back a really important point, Natasha made which it's about capacity utilization.
Natasha Fernandes: IMAX is like the charge that was built for Easter Sunday, It's Pat but during the week days its not as packed in at different times of year, So when youre, putting content through our network at a time, where it's really.
Natasha Fernandes: So, using digital channels, as opposed to print, which historically was the predominant mode of marketing, and now you're getting lots more opportunities to use digital to push marketing as opposed to print. And so that's where you can get some cost savings as well.
Natasha Fernandes: Empty or or very slow.
Natasha Fernandes: At those times, it's extremely high margin, because we had no revenues, but how it affects our margin mix.
Natasha Fernandes: We're a long way for necessitate that.
Speaker Change: Great. Thank you.
Speaker Change: And one moment for our next question.
Eric Owen Handler: Great. And then, you know, as you look to do more sporting events, it's not unusual for various leagues to want to extract a greater pound of flesh when they put out their rights fees. Are you able to keep your economic model the same like a movie with sports?
Eric Owen Handler: Our next question will be coming from Chad Beynon.
Macquarie: Macquarie Your line is open.
Speaker Change: Good morning, nice quarter, Thanks for taking my question.
Eric Owen Handler: Good to see the dive.
Eric Owen Handler: The diversification of global box office, but I wanted to focus on China.
Richard Lewis Gelfond: The answer, Eric, is that, first of all, we haven't really committed to doing a lot of sporting event things. We're testing a number of things, including the Olympics, as you know, which we announced recently. We've done some tests with the NHL. We've done some soccer tests. We're flirting around now with basketball, by the way, not just in the U.S. but in international territories.
Richard Lewis Gelfond: We're just hearing and seeing.
Richard Lewis Gelfond: A lot of softness in the market just taking a little longer for the consumer to recover and there are certain restrictions.
Richard Lewis Gelfond: For corporations and just from a consumer standpoint.
Speaker Change: Can you talk about the.
Richard Lewis Gelfond: The outlook for the rest of the year in that market are you starting to see good demand when other local product or.
Richard Lewis Gelfond: So it's too soon to say really what the margin profile will look like there, but I think it goes back to a really important point Natasha made, which is about capacity utilization. So, you know, IMAX is like the church that was built for Easter Sunday. You know, it's packed, but during the weekdays, it's not as packed, and at different times of the year. So, when you're putting content through our network at a time when it's really, you know, empty or very slow, you know, at those times, it's extremely high margin because you have no revenues. But how it affects our margin mix, you know, we're a long way from assessing that. Great, thank you.
Richard Lewis Gelfond: I'm, just kind of product that fits well with the consumer is there or is this something that.
Richard Lewis Gelfond: That could continue with the consumer.
Richard Lewis Gelfond: So I think you have to separate the question into two parts. One is the macro issues in China and the other is the release schedule. So in 2023, China.
Richard Lewis Gelfond: Even though it had just opened up from the pandemic.
Richard Lewis Gelfond: In the film and the film side had a very good year. Despite the fact that the economy was.
Richard Lewis Gelfond: Quite challenged there in one of the few bright spots in the Chinese economy was the film sector and it's a matter of fact IMAX had a pretty good year in 'twenty three is even though.
Operator: And one moment for our next question. Our next question will be coming from Chad Beynon of Macquarie. Your line is open.
Chad C. Beynon: It was not far off our best year as excellent in 'twenty three 'twenty. So I have no question that the audience will be there and there is appetite for fill in.
Operator: Morning. A nice quarter. Thanks for taking my question. It's good to see the diversification of the global box office, but I wanted to focus on China. You know, we're just hearing and seeing a lot of softness in the market, just taking a little longer for the consumer to recover. And there are certain restrictions for corporations and just from a consumer standpoint. Can you talk about, you know, the outlook for the rest of the year in that market?
Operator: I'm less worried that I think people are in other sectors of the economy like real estate for example.
Operator: In terms of 2020 for the issues a little bit more film driven and I would say in the first quarter, our Chinese new year was fine, but the year before was the record.
Operator: Much less to do with the economy than to deal with the film so that trend that was available and much more U S. So now getting into China and got it and then the last couple of years. So for most of the films in our foreseeable future they've already been submit.
Operator: Are you starting to see good demand for either local products or, you know, just kind of product that hits well with the consumer? Is there, or is this something that could continue with the consumer? Thanks.
Operator: Submitted and accepted and then there is which of the logo phones what are they going to be.
Chad C. Beynon: So I think you have to separate the question into two parts. One is the macro issues in China, and the other is the talent gap. So in 2023, China, even though it had just opened up to the film side, had a very good year, despite the fact that the economy was quite challenged there. And one of the few bright spots in the Chinese economy was the film sector. As a matter of fact, IMAX had a pretty good year in 23, as you know, and it was not far off our best year, actually, in 23.
Chad C. Beynon: We have a lot of visibility into the industry, which is positive we don't have as much visibility into the specific builds and how they'll play.
Chad C. Beynon: Again, I'd, rather say the answer is X dollars, but I think it depends on how the films perform but I don't see any particular impediments in China that would prevent that from behaving the way as the rest of the world to us.
Speaker Change: Perfect. Thanks, Rich and then on the capital allocation $40 million spent on buybacks at good prices. So.
Chad C. Beynon: Great to see that being done rich what are you seeing in just the overall M&A market. When you talk to different Tech partners. When you go to some of these conferences that you talked about with some way or are there still tuck in opportunities or from a capital allocation should we just kind of focus on the convert capped call and.
Chad C. Beynon: So I have no question that the audience will be there, and there's an appetite for film, and I'm less worried that I think people are in other sectors of the economy, like real estate, for example. In terms of 2024, the issue is a little bit more film-driven, and I would say, you know, in the first quarter, our Chinese New Year was fine, but the year before was a record, and that had much less to do with the economy than to do with the film selection that was available.
Chad C. Beynon: Incremental buybacks.
Chad C. Beynon: So I don't think part of our strategy. At this time is really to do a significant acquisition of any store I would not really looking at that.
Chad C. Beynon: And I think the biggest reason is we have what we think is a really strong model and that showed in 2003. It shows the first quarter and I think as I.
Chad C. Beynon: And much more U.S. films are now getting in, and have been in the last couple of years. So for most of the films in our foreseeable future, they've already been submitted and accepted. And then there's which local films and when are they going to be released? And, you know, we don't have a lot of visibility in the industry, which is positive. We don't have as much visibility into the specific films and how they'll perform.
Chad C. Beynon: Talked about in my prepared remarks, 25, 26 aren't going to be.
Speaker Change: Awesome and at the same time, we're expanding our aperture for content, we play whether it's documentaries or alternative content and using our platform and more ways. So we have obviously a lot more signings so the theatre network.
Chad C. Beynon: So we have a lot of faith in the ability of our company to generate improved cash flow and improve earnings. So I don't think youll see us veering off the only caveat I would give you is maybe we would do something that fills in a small way. So if we found something.
Chad C. Beynon: So I, you know, again, I'd rather say the answer is X dollars, but I think it depends on how the films perform. But I don't see any particular impediments in China that would prevent it from behaving in the ways the rest of the world would.
Chad C. Beynon: That could help similarly, where we found something that could help some of our.
Richard Lewis Gelfond: Perfect. Thanks, Rich. And then on capital allocation, $40 million spent on buybacks at good prices. So it's certainly great to see that being done. Rich, what are you seeing in just the overall M&A market when you talk to different tech partners, when you go to some of these conferences that you talked about with SimWave? Are there still tuck-in opportunities, or from a capital allocation perspective, should we just kind of focus on, you know, the convert cap call and incremental buyback?
Richard Lewis Gelfond: Core strategies, that's something we would think about but I think otherwise it will be continue to invest in our joint venture arrangements, which have extremely good IRR profile as you know and.
Richard Lewis Gelfond: We'll be opportunistic about buying our stock.
Richard Lewis Gelfond: Thank you very much I appreciate it.
Richard Lewis Gelfond: And one moment for our next question.
Richard Lewis Gelfond: Okay.
Richard Lewis Gelfond: Okay.
Richard Lewis Gelfond: And our next question will come in will be coming from Steven elastic.
Richard Lewis Gelfond: Goldman Sachs. Your line is open.
Speaker Change: Hey, great. Thanks for taking the questions rich on local language I think local language at $55 million in box in the first quarter can you maybe update us on how youre expecting see local language scale over the course of the year just given how the release slate stands today and then any notable updates on maybe the slate looking ahead into the <unk>.
Chad C. Beynon: So I don't think part of our strategy at this time is really to do a significant acquisition of any sort, and we're not really looking at that. And I think the biggest reason is we have what we think is a really strong model, and that showed in twenty-three, it showed in the first quarter, and I think, you know, as I talked about in my prepared remarks, twenty five and twenty six are going to be awesome.
Chad C. Beynon: 25 and beyond.
Speaker Change: Yes so.
Chad C. Beynon: I think we feel pretty good about our local language initiative.
Chad C. Beynon: I would hope they'll be better box office than it was last year to give you like kind of a snapshot in time, Steven I think it was last week, we were playing five local language films, we have one from Indonesia.
Chad C. Beynon: And at the same time, you know, we're expanding the range of content we play, whether it's documentaries or alternative content and using our platform in more ways. So we obviously have a lot more signings, so the theater network will grow. So we have a lot of faith in the ability of our company to generate improved cash flow and improve earnings. So, I don't think you'll see us veering off. The only caveat I would give you is, you know, maybe we could do something that fills in in a small way.
Chad C. Beynon: Two in India, one in Korea, and one or two in Japan.
Chad C. Beynon: And maybe we had something in China I'm not even sure. So it is just a regular part of our business, while we kind of looked at it a little bit differently than the Hollywood business with the Hollywood business is more a blockbuster driven so if you ask me what are the big titles in 25 or 26 I can tell you what they are.
Chad C. Beynon: Maybe even be able to do a close forecast, but for local language films. It's more of a portfolio approach for us which is Natasha I were both talking about increasing utilization of the theatre network.
Chad C. Beynon: So, if we found something that could help Sim Wave, or we found something that could help some of our core strategies, that's something we would think about. But I think, otherwise, it will be, you know, continue to invest in our joint venture arrangements, which have an extremely good IRR profile, as you know, and when we will be opportunistic about buying them.
Chad C. Beynon: Yes.
Chad C. Beynon: Just being that additive.
Chad C. Beynon: The slate other than obviously like Chinese films in China, Our Japanese films in Japan. So we don't really have that same kind of visibility into the next.
Chad C. Beynon: Next year.
Chad C. Beynon: The year after because our approach is somewhat different in a way.
Richard Lewis Gelfond: Thank you very much. I appreciate it. And one moment for our next question.
Speaker Change: The bigger films the Hollywood films is more like.
Operator: And our next question will be coming from Steven Laszczyk of Coleman-Sachs. Your line is open. Hey, great. Thanks for taking the questions. Rich on local language, I think.
Richard Lewis Gelfond: Elephant hunting, whereas the other local language films are more tactical on filling in gaps in the schedule, but I would say we're investing in that.
Stephen Neild Laszczyk: We are part of our strategic goal is to continue to develop that and I haven't seen anything in terms of obstacles in the way of accomplishing that.
Operator: I think we feel pretty good about our local language initiative. You know, I would hope it would do better at the box office than it did last year. To give you kind of a snapshot in time, Steven, I think it was last week we were playing five local language films. We had one from Indonesia, two in India, one in Korea, and one or two in Japan. And maybe we had something in China. I'm not even sure.
Speaker Change: Got it.
Speaker Change: And one moment for our next question.
Operator: Youre getting on the new reserves.
Operator: Okay.
Operator: And our next question will come from Mike Hickey of the benchmark company.
Operator: Mike Hickey.
Speaker Change: Hey, rich Natasha Jennifer Thanks for.
Speaker Change: Cleanup questions here and congratulations on a great quarter.
Operator: I guess.
Operator: Thinking about rates here Hollywood collaboration obviously you guys are.
Steven Bruce Frankel: So it's just a regular part of our business. But we kind of look at it a little bit differently than the Hollywood business because the Hollywood business is more blockbuster driven. So if you ask me, you know, what are the big titles in 25 or 26, I can tell you what they are and, you know, maybe even be able to do a close forecast.
Steven Bruce Frankel: Okay.
Steven Bruce Frankel: Oppenheimer.
Steven Bruce Frankel: And part two and it seems like it's pretty clear you've got.
Steven Bruce Frankel: Heavy influence with your cameras and tack on them.
Steven Bruce Frankel: On the slate that matters for 'twenty, five 'twenty, six and I think obviously great share performance.
Steven Bruce Frankel: You had in the quarter in North America.
Steven Bruce Frankel: I guess just thinking about.
Steven Bruce Frankel: The opportunity you see rich outside of <unk>.
Richard Lewis Gelfond: But for local language films, it's more of a portfolio approach for us, which is, as Natasha and I were both talking about, increasing utilization of the theater network. And, you know, just being that additive to the slate other than, obviously, Chinese films in China or Japanese films in Japan. So we don't really have the same kind of visibility into next year or the year after because our approach is somewhat different.
Richard Lewis Gelfond: Maybe your domestic market with Hollywood blockbusters, obviously, those serve a global market, but thinking about local language.
Richard Lewis Gelfond: And maybe the opportunity to use more of your cameras.
Richard Lewis Gelfond: And Jack.
Richard Lewis Gelfond: With some of those films and I guess, you just said it's difficult to kind of pick the winners.
Richard Lewis Gelfond: But maybe you can do that I'm not sure, but just sort of curious the opportunity. There that can help you share performance in sort of a bridge to where you are in North America.
Richard Lewis Gelfond: And then the second question would be on just how obvious it is I guess on 'twenty five 'twenty six and your influence on the film slate and Youre likely share of that slate.
Richard Lewis Gelfond: In a way, the bigger films, the Hollywood films, are more like elephant hunting, whereas the other local language films are more tactical and filling in gaps in the schedule. But I would say we're investing in that. And part of our strategic goal is to continue to develop that. And I haven't seen anything in terms of obstacles in the way of accomplishing that.
Richard Lewis Gelfond: When should we see.
Richard Lewis Gelfond: More about all of the crew you've seen on.
Richard Lewis Gelfond: System signings and installations I guess, just with the backdrop here of <unk> signings that look like they're down year over year and I think you said, it's picked up but just sort of curious how.
Operator: And our next question will come from Mike Hickey of the Benchmark Company. Mike Hickey, you're live.
Michael Joseph Hickey: System signings and installation should pace into that pretty profound 'twenty five 'twenty six opportunity led by IMAX. Thanks, guys.
Operator: Hey Rich, Natasha, Jennifer, thanks for taking our questions here and congratulations on a great quarter. I guess just thinking about your Hollywood collaboration, obviously you guys are... Unnailing it, Oppenheimer. Unknown Attendee, Aaron Lister, Robert Lister, Michael Hickey, Steven Frankel, Unknown Attendee, Maybe your domestic market with Hollywood blockbusters, obviously those serve a global market, but thinking about local languages, and maybe the opportunity to use more of your cameras, and Chad, with some of those films. And I guess you just said it's difficult to kind of pick the winners. [inaudible]
Speaker Change: So I'm going to answer your second one first and then go back to your first question.
Speaker Change: But you should not get the feeling that signings or installations.
Operator: Lower.
Operator: The quarter is a period of time and as we've said in our remarks, we have 17 instead.
Operator: Install 17th signings.
Operator: Exactly 70, net installs also but we have 17 signings through today, but the level of activity is very high and I am not somewhat.
Operator: Predict things, but I think it is.
Operator: In the coming weeks Youre going to see a fair amount more coming so that whatever the quarter. Since there is no indication that signings has slowed down and it's a matter of fact cutting out a cinema com. There is a lot of activity as much as I've seen and I think thats largely driven by buy things Youre talking about the 25.
Michael Joseph Hickey: So, I'm going to answer your second question first and then go back to your first question, but you should not get the feeling that signings or installations are slower. I mean, a quarter is a period of time, and as we said in our remarks, we have 17 installations and 17 signings. In fact, we have 17 installations also, but we have 17 signings through today. But the level of activity is very high, and I'm not someone who predicts things, but I think in the coming weeks, you're going to see a fair amount more.
Michael Joseph Hickey: Slide 26 flavor filmmakers leaning in heavily studios leaning in heavily marketing leaning in heavily.
Michael Joseph Hickey: I would think a number of those.
Michael Joseph Hickey: <unk>, whether it's signing whether it's market share whether it's installs.
Michael Joseph Hickey: So, whatever the quarter says, there's no indication that signings will slow down, and, as a matter of fact, coming out of CinemaCon, there's a lot of activity, as much as I've seen, especially as we approach the 25 incredible slate with lots of IMX DNA in it. So, I think that's all I have added to it, and I think that's going to create a lot of momentum around our business. You're going into a slate in 25 and 26 that looks remarkable with tons of Imax DNA in it. So to make it simple, I mean, that should influence the trajectory of our whole business.
Michael Joseph Hickey: Actually.
Michael Joseph Hickey: As we approach the two.
Michael Joseph Hickey: One five.
Michael Joseph Hickey: Incredible slate.
Michael Joseph Hickey: Lots of IMAX DNA in it so I think that's that's all additive and I think that's going to create a lot of and BARDA.
Michael Joseph Hickey: Momentum around our business.
Michael Joseph Hickey: I'd like to remind everyone, but I'm sure.
Michael Joseph Hickey: If you go backwards in time, you are cutting out of a pandemic and the writers strike.
Michael Joseph Hickey: Go forward in time, you're going it slated in 'twenty five and 'twenty six.
Michael Joseph Hickey: Arguable with tons of IMAX DNA, so, making it simple I mean that should influence the trajectory of our whole business as to your first question about using IMAX technology and cameras.
Richard Lewis Gelfond: As to your first question about using Imax technology and cameras and our DNA in international projects, I'm glad you asked that question. Because, in fact, yesterday, I was on a call with Daniel Manwaring, our CEO of China, and I actually didn't realize this, but we have six films now being filmed in China using Imax cameras. And I think he said he thought three would be released this year and three would be released next year on our call.
Richard Lewis Gelfond: In our DNA and international projects I'm glad you asked that question because in fact yesterday I was on a call with Daniel man wearing our CECO China.
Richard Lewis Gelfond: I didn't realize this but we have six films now being filmed in China, using IMAX cameras and I think he said he thought three would release this year and <unk> next year on our call.
Richard Lewis Gelfond: And again, you know, we're in negotiations with a few people in India about using our cameras in other areas, so the world is small enough that they saw the results coming out of where Imax DNA is involved, and certainly they're interested in doing that, on a global basis. And, you know, we didn't really give you a color for just kind of a non-quantitative column.
Richard Lewis Gelfond: Awesome.
Richard Lewis Gelfond: Again, we're in negotiations with a few people in India about using our cameras.
Richard Lewis Gelfond: In other areas of the world is small enough where they saw the results.
Richard Lewis Gelfond: Coming out of where IMAX DNA is involved and certainly they are interested in doing that.
Richard Lewis Gelfond: On a global basis.
Richard Lewis Gelfond: We didn't really give any color.
Richard Lewis Gelfond: We're just putting on quantitative color, but coming out of cinema Con we had an IMAX CEO forum.
Operator: But coming out of CinemaCon, we had an Imax CEO forum, and I think this is important. Not just from studios but from filmmakers on kind of a global basis, the level of interest and inquiries has really spiked. So if I showed you my call sheet or our incoming inquiry list and the names of the filmmakers who are interested in doing different things, that's really increased dramatically. And that becomes really important because it's not only the studios who are saying it's part of our strategy, but it's the talent, and as you know, talent has a lot of influence.
Operator: And I think this is important.
Operator: Not just from studios, but from filmmakers on kind of a global basis.
Operator: The level of interest and inquiries has really spiked so.
Operator: If I showed you my call Sidney.
Operator: Equally blessed the day and so the filmmakers about doing different things.
Operator: That's really increased dramatically and that becomes really important because it's not only the studios who are staying as part of our strategy, but it's the talent.
Operator: As you know the talent has a lot of endpoints not just in Hollywood.
Operator: And one moment for our next question, and our next question comes from Jim Goss of Barrington Research. Your line is open.
Operator: And so a lot of other places so I think.
James Charles Goss: The trends.
James Charles Goss: Both financial trends that artistic trends are definitely spilling over on a global basis.
James Charles Goss: Thank you rich.
James Charles Goss: And one moment our next question.
Operator: And our next question comes from Jim Goss of Barrington Research. Your line is open.
James Charles Goss: Thanks. Rich, you've talked about your broadened view of what you feel can work on IMAX screens, and especially in terms of the IMAX cameras. And I'm wondering how you, and you've also talked about interplaying with a greater variety of content creators, and I'm wondering how you navigate and make those decisions, because I know you're very selective in that, in terms of who you decide to work with and what you think might fit. And is some of this being targeted then to screen time during the week as alternative content rather than just, you know, things that will go on the weekend displays?
James Charles Goss: Thanks.
James Charles Goss: Rich you've talked about the euro broadened view of what you feel can work.
James Charles Goss: Max screens and.
James Charles Goss: Especially in terms of the IMAX cameras and I'm wondering how you and you've also talked about.
James Charles Goss: Interplay with greater variety of content creators and I'm wondering how you navigate.
James Charles Goss: And make those decisions as I know youre very selective on that.
James Charles Goss: In terms of could you decided to work with and what you think might fit and is some of this being targeted them to the.
James Charles Goss: Screen time during the week as alternative content rather than <unk>.
James Charles Goss: Just.
James Charles Goss: Things that will go on the weekend <unk>.
Richard Lewis Gelfond: Yeah, Jim, absolutely. I think Natasha, you know, spoke a little bit about some of that. So, as she mentioned, our partnership with A24 is aimed to go out on Wednesdays. I mean, right now, we're in the middle of a discussion where there's a very exciting project, but it releases on a weekend when we have a really big film release, and we're declining to do that project because it's not really incremental. So, you know, we're much more focused on capacity utilization and filling things in on the off days.
James Charles Goss: Displays.
Richard Lewis Gelfond: Yes, absolutely I think Natasha spoke a little bit about some of that so as she mentioned our partnership with 824 is aimed to go out on Wednesday.
Richard Lewis Gelfond: I mean right now we're in the middle of a discussion where there is a very exciting project.
Richard Lewis Gelfond: The leases on a weekend and we have a really big film release, our declining to do that project, because it's not really incremental.
Richard Lewis Gelfond: No.
Richard Lewis Gelfond: Much more focused on capacity utilization filling things and on the off days and when we discuss.
Richard Lewis Gelfond: And when we discuss alternative content with our counterparties, frequently, that's the discussion that these are the days that are available. And we would consider, and I actually don't remember which days, but like Andre 3000 was released on a weekday. This weekend, we're partially doing on our network a film called Challengers, but we did select premieres, I think, on Tuesday night, and Zendaya, the star, showed up at an IMAX theater to do that.
Richard Lewis Gelfond: Alternative content with.
Richard Lewis Gelfond: Our counterparties frequently that's the discussion that these are the days that are available we would consider.
Richard Lewis Gelfond: I actually don't remember, which stages, but like Andre 3000 was really has done a weekday this weekend were partially doing in our network.
Richard Lewis Gelfond: Film called challengers.
Richard Lewis Gelfond: We get select premiers I think got it on Tuesday night, and Zen dire to start showing up in an IMAX theater to do that.
Richard Lewis Gelfond: And, you know, things like the Beach Boys concert with Disney Plus that we're doing. So that's definitely the way we're positioning it, not to be competitive with our core blockbuster project but to use our platform in a complementary way to fill in the utilization gaps.
Richard Lewis Gelfond: Things like the Beach Boys concert with Disney plus that we're doing so that's definitely the way we're positioning it is not to be competitive with our core blockbuster projects, but to use our platform and a top momentum way to filling the utilization gaps.
James Charles Goss: And there was a time when the studios weren't so fond of your cutting back on some of their showings during the week in favor of anything else. But I gather you're making more headway in terms of your ability to control your screen usage and offer them what you think is appropriate.
James Charles Goss: And there was a time the studios weren't so fond of you're cutting back on some of their showings during the week.
James Charles Goss: In favor of anything else, so I gather you're making more headway in terms of your ability to control your screen usage and offer them. What do you think is appropriate.
Richard Lewis Gelfond: It was, you know them. Jim, you know, every negotiation in life is based on supply and demand and leverage and lots of factors. And I think, you know, I got to stop and say we get almost six percent of the North American box office on one percent of the screen. So you can understand that's made studios a little bit more flexible in terms of their willingness to let us program something else on a Tuesday night.
James Charles Goss: Yes.
Richard Lewis Gelfond: Jim.
Richard Lewis Gelfond: Every negotiation on light is based on supply and demand and leverage a lots of factors that I think.
Richard Lewis Gelfond: I mean, I got to stop and say, we get almost 6% of the North American box office on 1% of the screens. So you can understand Thats made studio is a little bit more flexible in terms of their willingness to let us programs something else on a Tuesday night, it's made us maybe a little more careful when we can.
Richard Lewis Gelfond: And it's made us maybe a little more careful when we give away this lot. So instead of what we would have said, we promise you 100 percent of the network for two weeks. We're carving out exceptions in advance to facilitate alternative content and documentaries. We're affirmatively doing that.
Richard Lewis Gelfond: Give away the slot. So instead on what are we would've said, we promise you 100% of the network for two weeks, we're carving out exceptions and advanced facilitate the alternative content in the document says, we're affirmatively, making that effort.
James Charles Goss: Okay, and last thing, congratulations on that 5.9%. Very impressive.
Speaker Change: Okay, and lastly, congratulations on that 5.9% very impressive you clearly have had continuing success versus the dearth of product maybe broad more broadly.
Richard Lewis Gelfond: You clearly have had continuing success versus the Darth of product, maybe brought more broadly. As 2025 and 2026 come into play, and you have an increased supply of films, you'll have greater film strength, but you also have greater competition. And I think Mike was bringing this up a little bit already, but just how should we frame our expectations in that more competitive but more robust environment?
Richard Lewis Gelfond: As 22025 and 2026.
Richard Lewis Gelfond: Come into play and you have increased.
Richard Lewis Gelfond: At least we're expecting an increased.
Richard Lewis Gelfond: Supply of films.
Richard Lewis Gelfond: So youll have greater film strength, but you also have greater competition and I think Mike was bringing this up a little bit already but just how should we frame our expectations in that more.
Richard Lewis Gelfond: Competitive, but more robust environment.
James Charles Goss: I mean, I think you should assume that we'll have better financial performance. That's what we assume. I think, you know, it's, you know, as they said, we don't have many holes in the whole year for 2025 and 2026. And that doesn't include the supplemental content, which we've been discussing and widening our aperture. So I think at the moment, we feel extremely good.
Richard Lewis Gelfond: Maybe I think you should assume that we'll have better financial performance, that's what we assume I think.
James Charles Goss: As I've said.
James Charles Goss: Many holes in the whole year for 2025 and 2020.
James Charles Goss: And that doesn't include the supplemental deck, which we've been discussing and widening our aperture. So I think that at the moment, we feel extremely good.
Richard Lewis Gelfond: Okay, that's great. Thank you very much. Thank you, Jim.
Richard Lewis Gelfond: Okay.
Speaker Change: That's great. Thank you very much thank you Jim.
Operator: And one moment for our next question. And our last question will be coming from Steven Frankel of Rosenblatt Securities. Your line is open. Good morning, and thanks for the opportunity to give me our. I'll be quick. You know, you tried to consult
Speaker Change: And one moment for our next question.
Operator: And our last question will be coming from Steven Frankel of Rosenblatt Securities. Your line is open.
Steven Bruce Frankel: Good morning, and thanks for the opportunity given the hour I'll be quick.
Steven Bruce Frankel: You tried to consolidate the China.
Steven Bruce Frankel: A way to save money, maybe detail for us since that didn't happen, where you can pull cost out of that operation without sacrificing opportunities.
Operator: Well, you know, good question, Steven. In fact, we've been doing that. So we just moved our office in Shanghai, our headquarters, into half the space and half the rent. And it's one of our strategic goals to manage costs there. We, you know, we brought in our IR effort there and saved some costs in the financial area. You know, kind of across the board, we've been looking at what opportunities that presents.
Operator: Well good question, Steve and in fact, we've been doing that so we just moved our office in Shanghai, our headquarters into half the space and have the rent and it's one of our strategic goals.
Operator: Managed cost there.
Operator: We.
Operator: We brought in our IR effort, there and save some costs in the financial area.
Operator: Kind of across the board, we've been looking at what opportunities that presents.
Operator: And you didn't ask this, but I'll address it. You know, because we've gotten the question, you know, are we going to try and privatize it again? And we can't go back until much later this year. But we haven't made a decision yet about what to do. I think it'll depend on China's financial performance, you know, what Imax's liquidity looks like, and then, you know, how the Chinese shareholders feel about it. I will make a decision just reminding everyone that it didn't have to do.
Operator: I asked this but I'll try.
Operator: Because we've gotten the question are we going to try it and privatize it again and we can't go back until much later this year, but we haven't made a decision yet what to do I think it'll depend on China's financial performance.
Operator: You know what imax's liquidity looks like.
Operator: And then how the Chinese shareholders feel about it I will make a decision just reminding everyone that wasn't.
Operator: It would be nice if we could do it. But even though we didn't get it done in the way we wanted, we've realized some of those savings along the way by being strategic about how we manage our costs.
Operator: To do that was it would be nice if we could do it but even though we didn't get it done and the way we want it we've realized some of those savings along the way by being strategic about how we manage our costs there.
Steven Bruce Frankel: Yes, it is, Steve. Actually, in our 17 signings here today, we actually have two new customers, one in India and one in Turkey. And so, as we look at our strategy to continue to expand in the rest of the world, we are thinking through not only which countries we can expand in but who are the partners we can expand with, and getting new opportunities from new partners is a great way to expand as well.
Speaker Change: Great and then sales efforts are now concentrated on areas outside of.
Steven Bruce Frankel: China true.
Steven Bruce Frankel: That's another opportunity I assume.
Steven Bruce Frankel: Yes, it is Steve actually in our 17 signings year to date, we actually have two new customers one in India and one in Turkey, and so as you look at our strategy to continue to expand in rest of world regions. We are thinking through not only which countries we can expand in but.
Steven Bruce Frankel: The partners, we can expand with and getting new opportunities from.
Steven Bruce Frankel: From new partners.
Steven Bruce Frankel: Great way to expand as well.
Natasha Fernandes: And I'm showing no further questions. I would now like to turn the conference back to management for closing remarks.
Speaker Change: Great. Thank you so much.
Natasha Fernandes: And I'm showing no further questions I would now like to turn the conference back to management for closing remarks.
Richard Lewis Gelfond: Thank you, operator, and thank you for joining us. I mean, this year was predicted to be a way down year, but we didn't agree with that. The first two months, obviously, were challenging. But March was just incredible. And I think, you know, starting this quarter.
Speaker Change: Thank you operator, and thank you for joining us.
Richard Lewis Gelfond: I mean this year was predicted to be a way down year, we didn't agree with that the first two months obviously.
Richard Lewis Gelfond: More challenging but March was just incredible and I think.
Richard Lewis Gelfond: Starting this quarter.
Operator: We're very much on budget for what we see for the second quarter. And, you know, I think if people line up this year's content versus last year's, it really isn't a weaker year, at least for Imax than it was. And we remain, you know, consistent with how we felt about this year at the beginning of the year. And I think when you look into the rest of the year, Joker, Deadpool, Despicable Me, a lot of other things, there's a lot of good stuff to come.
Operator: Very much on budget for what we see for the second quarter and I.
Operator: I think if people line up this year is content versus last years. It really is not a weaker year at least for IMAX that was that would remain.
Operator: Consistent with how we felt about this year at the beginning of the year.
Operator: When you look into.
Operator: Rest of the year, Joe that Google Despicable me.
Operator: A lot of other things.
Operator: There's a lot of good stuff to come and as I said stay tuned on the signings front, there's a lot of activity there.
Operator: And as I said, you know, stay tuned on the signings front. There's a lot of activity there. And when you look into 25 and 26, I think there's a lot to be excited about. And without getting hyperbolic about it, you know, morale at Imax and seeing it from the inside, we feel we're extremely well positioned. And we think that, you know, people falsely think we're like an exhibitor, but if you look at what our MOPS office is, and you look at what our margins are, and you look at what our balance sheet looks like, I think we continue to deliver. And I think that'll be more and more visible as we move forward. Thank you all for joining us.
Operator: Look into 'twenty five 'twenty six I think there is a lot to be excited about and without getting too hyperbolic about it.
Operator: Morale at IMAX.
Operator: And from the inside we feel we're extremely well positioned and we think that people falsely thing.
Operator: Unlike an exhibitor, but youll look at what our box offices.
Operator: Margins are and what our balance sheet looks like I think we continue to deliver and I think that will be more and more visible as we move forward. Thank you all for joining us.
Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Okay.
Operator: And this concludes today's conference call. Thank you for participating you may now disconnect.
Operator: Okay.
Operator: [music].