Q3 2024 IMAX Corp Earnings Call

Speaker Change: Good day and thank you for standing by. Welcome to the Q3 2024 I'm Max Corporation's earnings call.

Speaker Change: 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 1-1 on your telephone. You will then hear an automated message advising you that your hand is raised.

Speaker Change: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Jennifer Horsley head of Investor Relations for IMAX. Jennifer, you have the floor.

Jennifer Horsley: Good afternoon and thank you for joining us for IMAX's third quarter 2024 earnings conference call.

Jennifer Horsley: On the call today to review the financial results or rich gale fun, chief executive officer in Natasha Fernandes, our chief financial officer.

Rob Lister, Chief Legal Officer, is also joining us today.

Jennifer Horsley: Today's conference call is being webcast in its entirety on our website.

Jennifer Horsley: 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 have been posted on the investor-relation section of our site. Our historical Excel model is posted to the website as well.

Jennifer Horsley: I would like to remind you of the following information regarding Ford-looking statements.

Jennifer Horsley: Today's call, as well as the accompanying slide deck, may include statements that are forward-looking, and that pertains 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 occurrences to differ.

Please refer to our SEC filings for 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-gap 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-gap financial measures are contained in this afternoon's press release and our earnings materials.

Speaker Change: and I'm Dr. F. Richard Gelfond, which are available on the Investor Relations page of our website at onmx.com.

Speaker Change: with that. Let me now turn the call over to Mr. Richard Gelfond. Rich.

Richard Gelfond: Thanks, Jennifer. Thanks everyone for joining today. I'm at just setting the table. What we believe to be a new sustained year on a growth over the next several years.

Movie going has rebounded after the Hollywood strikes, ahead of a phenomenal slate in 2025 and 2026.

Richard Gelfond: Exhibitor demand for IMACs is surging with systems sales and installations significantly outpacing 2023.

Richard Gelfond: We expect 2025 to be our best year ever at the global box office with more than $1.2 billion and I'm at Scroas' Worldwide.

Richard Gelfond: The fundamental measures of growth in our business, just in installations, signings, and the content pipeline are all strong. And this came to the fore in the third quarter.

Richard Gelfond: We'd be consensus estimates with adjusted EBITDA of $39 million at a 42% margin.

Richard Gelfond: and EPS of 35 cents.

Richard Gelfond: Feeding the Street by over 50%.

We've already installed 100 systems worldwide, yeted me, including one of our best third quarters ever. We now track into the high-imbed installation guidance, which we raised last quarter, to be between 130 and 150 systems this year.

Richard Gelfond: We signed agreements for 119 IMAT systems worldwide year-to-day, on track to deliver more than 129, we completed in 2023.

Richard Gelfond: We delivered one of our best third quarters ever at the Global Box Officers.

Richard Gelfond: Driven by domestic box offers that exceeded 2019 by 45%. These results are noted, given the tough comp versus open-hymer in 2023, due to 3.

Network Expansion Offset Pots off his saltiness, further demonstrating a diversified revenue base and flexible asset life business model. More than anything we're focused on the future.

Richard Gelfond: The 25 and 26 slaves look as strong as we've ever seen with releases from the biggest filmmakers and most successful franchises from Avatar to Avengers.

Richard Gelfond: 2025 alone, both at least 14 film Prime Excellencies worldwide, Hollywood and local language films shot without cameras, specifically for our screens. We typically index much higher with these titles.

Richard Gelfond: and I was reporting were very excited to be working with our longstanding partners, Christopher Nolan and Emma Thomas, on the release of their net film in July 2026.

Richard Gelfond: and I pleased to share that Chris will be utilizing new IMF technology in the making of the film never before used equipment that our teams have been developing throughout this past year.

and filmmakers and studios lean into our technology. Movie Go is worldwide drive our global box office and market share and exhibitors install more of our systems to meet consumer demand.

Richard Gelfond: and Influencer Great Content will only accelerate these trends and we look forward to executing the deliver results for our business and our shareholders.

Richard Gelfond: Today I'd like to offer updates on the opportunity we see ahead in our global network and our content sleep. Then I'll hand it over to Natasha before we both take your questions.

Richard Gelfond: First Momentum continue to build in our global network with strong installations and sales activity in the third quarter.

We completed 49 installations in the third quarter alone, compared to 30 for the same period in 2023. Only made progress in priority markets around the world with findings in France, Australia and Saudi Arabia.

Our recent agreement with movie, Saudi Arabia's largest exhibitor, Princess in business with the worktop exhibitors in the kingdom.

Totti movies go as continued embrace a variety of IMAX content from Hoppenheimer, the bad boys who work the Indian and Japanese titles.

and we are pursuing our first local language project in SOTI which will make the IMAX platform even more attractive to local exhibitors.

We see an opportunity to expand IMF's Saudi footprint from the 10 currently in operation to at least 50 in the years ahead.

Around the World Conversations with Existing and New Exhibitions Partners are robust. Already in the fourth quarter, we've completed agreements with partners in Australia, Japan and Latin America.

and in the wake of our landmark deal with Wanda Film, we're seeing encouraging signs of progress at the Chinese Bot's Office.

Richard Gelfond: China has led the rest of the world in 2024, but as we look ahead, we have reasoned for optimism.

Next year's Hollywood slate is more consistent with the diversity of tent poles and franchises that have historically resonated with Chinese audiences.

As Damon Shuddib by this weekend, then of the Milaestans and Alien Romus, which delivered greater IMF stock-suffers in China than it did in the US. There is still a market for distinctive Hollywood films there.

A local language slate next year looks promising starting with Chinese New Year, which is set to feature big blockbuster titles initially slated for this year.

and China is in the process of rolling out an economic stimulus package, the bolster consumer confidence in the economy.

We saw progress during the October National Holiday where our daily box office returns and markets here grew year-over-year despite a relatively soft slate.

China also offers fertile testing ground as we open our architecture with new imaxi events and experiences.

Richard Gelfond: We are live streaming the 2024 League of Legends World Championship and online multiplayer battle video game, which is among the world's largest esports.

across more than 70 IMF locations in China. League of Legends is published by Tencent Owens, Riot Games, and Tencent is also a major investor in really holding our partners that own Wanda Film.

Richard Gelfond: Our streaming and consumer technology division is testing a new proprietary technology with the potential to rapidly expand our connected live network without the considerable capex necessary to wire our locations.

We successfully tested this technology with our cellar presentation of the NDA finals in Hong Kong and Taiwan early this year.

and we see an opportunity to efficiently scale our global connected network. I will continue to explore unique live events as we enter the new year.

We've seen strong momentum across our content portfolio and pipeline. While many initially paid 20, 24th as a recovery year, the global box office is showing encouraging signs of progress sooner than many anticipated.

Richard Gelfond: We delivered more than $83 million with their tool and Wolverine alone.

That's more than a 50% better than any previous installment in the franchise and good for our fifth highest marble title of all time.

Last weekend, Venom the last dance of film Prime Actually's delivered a strong international opening led by China resulting in one of our best ever October debut globally.

Richard Gelfond: and we strategically managed to admit we're accommodated to the verse promising slate of ten polls this Thanksgiving and through the holidays including gladiator two, with him, Melana and we'll fall for the Lion King.

It's a great on-ramp for what looks set to be a very special year ahead.

Every I'm actually currently scheduled for May through September is filmed with I'm X-Camers. That includes Mission Impossible A, Margo's Thunderbolts, F1 and Superman Legacy.

The strong consistent slate concludes with Avatar 3, the follow-up to our highest grossing films of all time.

Richard Gelfond: 226, it's solved with Avatar Carrier and includes new installments of major franchises, including avengers, Star Wars.

The Batman, Super Mario Brothers and Toy Story alongside our outstanding portfolio of local language, documentaries and events.

I'm Ed Thowers on Sparring Experience.

Richard Gelfond: We are opening our content aperture to deliver new experiences for audiences and drive capacity utilization of our network.

We recently hired our first Chief Content Officer to coordinate our content portfolio across Hollywood, local language, docs, live and new events and experiences.

and finds in our strategy as our portfolio grows the more than 100 experiences per year.

We've had successors this year with a more consistent pipeline of experiences beyond first run theatrical releases. The only quadruple the output of the previous year.

That includes a balanced mix of music, including Queen Rocks, Montgiol, at a recent concert hit in South Korea. I am Hero, which is now our highest-grossing local language title of any time in that market.

Documentaries both original flight blue angels and through distribution partnership with companies including Netflix and Nat Geo.

as well as library content events. Most notably, our partnership with 824 to release one of their iconic films each month during an underutilized weekday.

We also continue to push the envelope and experimentation with new experiences like the Paris Olympics opening ceremony and League of Legends.

We remain in talks with NBC Universal on additional sports and entertainment events, as well as tonight's launch.

of Amazon Prime's new concert film with hip-hop artists, Megan Lee Stallion, which builds on a successful launch of Prime's Hip Series fallout earlier this year.

To close, we are building momentum at the right time for our business. With our system installations and sales activity ahead of expectations, years to date, and at 24th slate that on balance has delivered. Consumers continue to prove that.

When there are awe-inspiring events that fully capitalize on the IMF experience, they will show up.

and we have a full lot of more promising slate over the next two years and beyond than we've ever seen. We continue to believe we are entering a very exciting time for our business. And 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 over to Natasha.

Thanks, Rich, and good afternoon, everyone. Q3 demonstrated once again the resiliency and our business as we delivered strong results while managing through some top-line headwinds, including the challenging compared to last year's record off-an-hyper performance.

I just a DVD that came in at 39 million and a margin of 42 percent above our high 30 percent full year guidance.

System installations are accelerating and outpacing our normal seasonality with 49 systems in the quarter, and increase a 63% year over year.

As a result, installations are now tracking to come in at the high end of our full-year guidance range of 130 to 150 systems as rich highlighted.

At the same time, profitability and cash flows remain strong. We delivered EPS of 26 cents, an increase of 18 percent year over year, and operating cash flows of 35 million, an increase of 21 percent year over year.

Overall, our results reflected our growing business momentum and management's continued focus on efficiencies and operating expense reductions.

Looking forward to table is set for accelerating revenue and profitability from the combination of our growing network footprint and an improving Hollywood and local language box office late.

In addition to expecting over 1.2 billion in IMX box office in 2025, we also expect our box office to continue this upwards growth trajectory over the next several years given our strong position in the industry, the promising Hollywood box office slate that we either have scheduled or have visibility into as well as our expected network growth.

The bottom line picture improves further as the operating leverage that comes with higher box office and scale increases.

Richard Gelfond: and we look to increase the utilization by bringing other content onto our platform and deploying more digital marketing initiatives while also working to scale our streaming consumer and technology business.

As Rich indicated, we are entering a very exciting time for our business, and I would add for our financial growth prospects.

3.3 Performance Results on most measures came in ahead of consensus expectations and reflect good execution by the team.

We delivered revenue of 91.5 million. Within that, content solutions revenues of 30 million reflects our third highest Q3 box office of all time on various temple content.

Richard Gelfond: Both Deadpool and Wolverine.

and Alien Romulus delivered the highest eye max opening weekend box office in the respective franchise history. And in China, while Hollywood film performance has been uneven, we have captured on average a 16% share of box office across Hollywood titles year to date, including Alien Romulus and Godzilla Kong.

and the United States, where both titles delivered more IMX box office in China than in domestic or rest of the world.

Richard Gelfond: Year over year revenues from content solutions declined 32% driven by the mix of content and the compared to the prior year that was powered by the record setting box office from often high-mur.

Turning to technology products and services.

Revenue of 58 million, grew 3% driven by strong system installation growth that more than offset the lower box office related rental revenues resulting from the global content mix.

Overall, system installations and signings both provide insight to the strong demand we are experiencing in advance of the highly anticipated 2025 and 2026 box office rates, which we anticipate will drive our network growth further.

During the quarter we completed 49 system installations, up 63% over Q3, 2023, which puts us at 88 installations the year to date September, a growth of 49% year over year. As of today we have completed over 100 system installations.

Richard Gelfond: The United States are up to 119 through yesterday on track to exceed 129 a full year, 2023.

Richard Gelfond: Within New System signings, the mix continues to lead towards rest of world, comprising 67% of the Q3 year to date new system signings.

Gross margin of 56% was below the prior year of 60% given the lower box office compared to the record-sending Oppenheimer Field Quarter of 2023. However, we had good results across expense areas that offset this headwind or challenging

Richard Gelfond: SG&A excluding stock base compensation was 26 million, a 16% improvement year over year, driven by benefits from our ongoing expense initiatives, as well as timing of expenses and other certain adjustments.

R&D was also better year over year reflecting the capitalization of the investment into our new state-of-the-art film cameras, which have moved out of development upon achieving technical feasibility.

Richard Gelfond: In addition, bad debt provisions improved year-over-year reflecting improvements in working capital, specifically collection from an exhibition customer that also helped propel us to a good cash flow result.

Overall, the third quarter total consolidated adjusted Eda of 39 million with that strong 42% margin, particularly considering the mix of content in the quarter.

Leslie, adjusted EPS for the quarter.

with 35 cents consistent with last year's same quarter record. Within that, Q3 adjusted tax rate was 13%, which is below our mid-20 statutory rate, driven by the jurisdictional mix of profits that led to a decrease in our evaluation allowance.

This result reflects the benefits of the actions we took last quarter, which has led in part to an improvement in our effective tax rate in 2024 relative to prior years.

Turning to cashflow in the balance sheet.

We had strong operating cash flow in Q3 of 35 million, up 21% from the prior year, leading to 59 million through 9 months, a growth of 9% year over year, and already equaling 23 full year operating cash flow.

I am pleased to see the continued progress and growth in our cash flows. The higher year over year operating cash flow reflects an improvement in working capital, including an increasing collection.

Richard Gelfond: Our couple position remains very strong at 105 million in cash and 280 million of deaths, excluding deferred financing costs.

Richard Gelfond: 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 cap to call leading to a 37 dollar per share conversion price.

Richard Gelfond: Our current available liquidity is over 410 million, which includes 309 million in available boring capacity under the company's various revolving facilities.

Richard Gelfond: While we are building up our cash and liquidity positions, we are also using our available capital to invest in the business, having spent 30 million on cap X year to date with 22 million of that in growth cap X.

This will continue in Q4, our historically highest growth cap experience given the higher waiting of system installations to the end of the year.

We view this positively as it will strengthen our ability to achieve higher levels of box office and in turn revenue incrementality, particularly as we head into the next several years, with good visibility into what is expected to be strong content sleep.

and we continue to focus on more direct, shareholder returns, having done 18 million in IMX share repurchases a year to date, including IMX China.

Repurchases were weighted toward the first quarter when our share price was significantly pressured following the Hollywood strikes.

Richard Gelfond: T-Cincle.

Our mode has never been as wide or deep. Our global scale is unmatched and growing. Our relationships with studios and filmmakers have never been stronger and very content available for distribution of our platform has never been greater and is expanding and our technology solution for exhibitors is unequaled.

Our accelerating signings and installation growth driven by the demand for the IMAX experience by consumers reflects our position of strength as we enter this extremely promising box office period.

At the same time, we continue to see opportunity in new revenue streams to contribute to our growth and drive greater capacity utilization of our global network, especially when you consider that one point of utilization can drive 75 to 100 million in additional box office.

Given the strength of our business model to tailwind in the market, and our focus on executing on the opportunities before us, we continue to believe I'm acts of poised to deliver strong growth, expanding margins, and increase cash flow for years to come. With that, I will turn the call over to the operator for Q&A.

Thank you. At this time we will conduct the question and answer session.

As a reminder to ask a question, you will need to press star-1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star-1-1 again. Please stand by while we compile the Q&A rocket.

Our first question comes from Eric Hamler with Raw Capital. Eric, please go ahead with your question.

Eric Hamler: Thank you very much and good afternoon. Rich, it's no surprise at least two theatre operators. The content cycle looks really good for the next two years.

Even with that being known as we get closer than this year, are you starting to hear, are you starting to get more phone calls from these fear operators that they'd like to maybe accelerate the installation case for your systems?

Well, I mean, Eric, I think you could look at the empirical data where this last quarter we had significantly more installs than a year ago and even our guidance on the call today, where we got it to the upper end of the range. So, eat.

I wouldn't get the phone calls, but I certainly read the data and the data shows that that's true and on the other hand, as you saw our signings so likely to run higher than last year, so also there seems to be an increase pick up in signings.

So I think just based on the results we were reported today, that's true.

Richard Gelfond: LL

Richard Gelfond: Um...

I'm sure you saw the news earlier this week. Comment and it was Bloomberg had it but you're talking to Netflix about maybe doing exclusive with the Narnia movie that's being made there.

What if anything you could say with regards to that movie or just maybe, you know, how your conversations are going these days with with streamers and what they're trying to do.

In fact, as you know, um...

Director, film makers, studios, or all leaning into the IMAX experience in a kind of another level than we've seen before, and as you know as well we've tried different models.

I'm in the past whether it's early release or exclusive content or all kinds of things. So I won't comment on that specific.

Richard Gelfond: Story in anyway, but I would say that you know we're always innovating and always looking for new approaches to event decides in content.

Richard Gelfond: here.

and bye for our next question.

Speaker Change: Our next question comes from Chad Bignan with McGuire.

Speaker Change: Chad, start!

Thank you very much. Thanks for taking my question as results.

You've noted the healthy number of films for 25 with IMAX DNA and obviously your global box office outlook.

Can you talk a little bit more about the spacing of 25 given that I'm XDNA have a slightly longer runtime and then also related. How does the slate look in China in 25?

Worth Wile to note there. Thank you.

Speaker Change: Sure, so I'm...

You're quite right, it's a little bit of an embarrassment of riches.

Speaker Change: Between...

May and September, the end of September, we don't have any slots available. Every single slot is filled. And for the year, you know, it's as tight as...

I've ever seen it in terms of available times.

I class problem as you mentioned a lot of the films were made with IMAX cameras with IMAX DNA.

as a matter of fact next year, 14 of our films.

with Shotwood IMAX cameras and a number internationally to not just domestically.

You know when you look at 26th

Speaker Change: to the extent of number of been announced already. It's incredibly encouraging. I think if you want to look.

at a trend that I've seen developed in the last six months or a year. It's that people are discussing movies way farther out than they did years ago. So that's a matter of fact, you know, for 27 and even 28, we've been approached about a lot of high profile films, I think.

Studios and filmmakers are understanding.

that I'm actually released as kind of like...

Beachfront property if you want to reserve a place you've really got to do it very early and we talk a lot about our theater backlog and what that means.

about future earnings. We don't.

Talk as much about our film back, logger, what that means.

from Future earnings. But I think as you look out into the future and you talk about discounting future cash flows to the extent there's more certainty in terms of the inner backlog and our film backlog you should imply a lower discount rate and that's a very good thing for our business which is solved.

I think that's one reason that we're so optimistic.

and in China we've just heard about a number of films that have been approved to get in and some matter of fact right before this call Natasha was mentioning some of them to me something that turned it over to her to see if she has some of those names.

Hi, Chad. Yes, so we actually, in addition to the Hollywood, so you think about the strength of the Hollywood slate and those getting in, which this year, most of them got into China on top of that creation of the Gods Park 2 has been approved for Chinese New Year, as well, a writer's Odyssey, which is film for IMAX into the Summer section of the year. And so, and there's a few more also that have been announced. So I think that that's good visibility. I mean, it's pretty early for Chinese New Year titles to get announced, and I think that gives us...

the essentially the confidence that China will provide a more balanced, genre-flight next year.

Great, thank you very much both and then...

Thinking about higher box office revenues in 25 Natasha, I know you've...

Speaker Change: You've given some margin to targets for the overall business. I think it's in the high 30s year to day year at 39.2. Can you just kind of help us think about the operating leverage?

Speaker Change: in the content solutions, you know, business if or both businesses for that matter if the box office delivers as expected for 25.

I mean, you're very familiar with our models so you know that when we start to hit

Very high levels of box office, anywhere 250 plus, then you start to experience incrementality into our model. And so that box office not only are we receiving payment from the studios, but then obviously from exhibitors as well, for the performance of our locations. And so that creates incrementality in the model. And then you couple that with the mix of our installations that we do throughout the year, we're doing.

As we mentioned in our prepare-grim marks, our installations are tracking stronger this year and we're guiding towards the higher end of the range and so more larger system footprint also will give us that higher box office performance as well. And I think you couple that together with the way that we've been managing the business from an operational perspective and that's where you start to think about.

Speaker Change: Halby, Eva D'Amarge, and continue to grow and exceeds over the 40% mark.

Speaker Change: Thank you very much.

Speaker Change: and bye for our next question.

Speaker Change: Our next question comes from David Karnowski of JP Morgan. David, go ahead with your question.

David Karnowski: I thank you. Richard, I wanted to be going to expand a bit on the recent performance of IMAX in China, and maybe there's just an exhibition there, generally.

It looks like here numbers and maybe the latter in the year is 10, over 40% in the recent quarter over the summer. Is this economic? Is this film quality or other factors? I don't know what you hear from your staff on the ground there.

Yeah, I think we think it's a combination of things David. So obviously the economy overall has been pretty weak this year in China and you notice recently the new government.

and measures that are taken effect, monetary policy towards the real estate.

Speaker Change: and the sector of fiscal policy and again it's hard.

Enough to predict a company, let alone a country, but it looks like some of these things you're certainly designed to focus.

Speaker Change: on the consumer.

You know, as you know, Fox Office and the movie this is very important to the Chinese government because almost all of the 80,000 screens are a lot of them anchor big real estate developments. And I think one of the focuses of the government is to get people to go to malls and to do shopping and help the domestic economy.

Speaker Change: So clearly that was one part of it, because I think Natasha said before that the kinds of films being released and how close they were a warrant to the IMF genre played a role. I still think there's a little bit of a COVID hangover.

Because a lot of the films were released in 23, but last films were released in 24. On the bright side, a lot of films that you wouldn't have expected to get into China, unlike Deadpool and Joker, which I just don't fit the typically more conservative profile of gotten in.

Speaker Change: Sight think that's a signal that the government wants more films in and it's part of their overall policy. And as Natasha just said a minute ago they've dated a lot of local language films for next year, which they don't typically do that far out.

Speaker Change: So, um...

You know, predicting movies like predicting stocks, you know, not a very exact science. But when we, and we're just in the process of going through our budget, but when we look at next year compared to this year, we think it will be significantly better than this year.

and then Natasha the SGAA has noted down 16% of the court in Richard Gelfond.

and some timing benefits, I don't know if you can quantify those, so we can get a sense of more of the underlying rate. And then just adding guidance right, I think about that arm d-line, kind of going forward, I wouldn't expect you to be negative enough, go forward basically.

Hi David, so the R&D, I'll address that first, your corrective, wouldn't be negative on a go forward basis. We generally typically do have R&D expense on each quarter.

Speaker Change: So for your run rates, as you think about them, I would be looking at an expense, and essentially, we just did our annual assessments of technical feasibility on our film camera project, and we achieved the milestones needed. And that's why you saw the credit in the quarter.

and I'm looking at SGNA. We actually had year over year. We had last year, we had the over $3 million of the transaction costs related to the privatization. And so, China privatization. And so, that's really what you're seeing in the most of the variants.

and I'm a year-over-year, so when you're thinking through a run rate, I mean our historical run rate is pretty predictive of the future. I wouldn't be thinking of it in any different manner, but I think we've gotten some...

Speaker Change: Real Wins on the operational efficiency side and then timing of expenditures, like there's still another quarter to go in the year, and so timing of expenditures sometimes we delay some of our expenditures on consultants or fees or marketing and see where we're landing for the year because we have the opportunity to make decisions that will help us strengthen our financials as we look year over year.

Speaker Change: Thank you.

Dan, bye for our next question.

Dan: Our next question comes from Omar Masias with Wells Fargo. Omar go ahead with your question.

Good evening and thank you for taking my question.

Speaker Change: which means first I noticed you just kept the 224, I got locked off this and changed that flat year over year despite three QV and impacted by China weakness and work you up towards the closed start.

with Joker and Venom. Are you getting to a confident one, chicken this guy and if there's any film that you excited and in port you that could potentially offset this lower side.

I mean, you know, this the third time I've said it, it's the movie business, pretty hard to predict.

Where things are going to come out.

but when you look at the year going forward.

We are incredibly excited about the Thanksgiving period around that. We've got gladiator and wicked and Volanna too, and wicked came out of the box really strong with pre-cells, which is not surprising. This avoid following for that IP, as you know, the show is played for a decade. It's a kind of property people that circled on their calendar and came out and bought a lot of tickets.

and then gladiator has taken a little while to catch up, but actually it's really come on strong recently and it starts then to Washington and it's big, the early buzz on it is extremely...

Good, the subject matter is very conducive to imacts and we're leaning in pretty hard on that as his paramount. So the studio that's leaning into the imacts of it all. And then Milana, you know, some people think that's going to be one of the highest grossing movies of the year. So we have the...

The ability around Thanksgiving.

from our programming to some extent, which movies are working and which aren't, you only commit typically for the first week or maybe two weeks.

Dan: and Sighting That Flexibility.

gives us a very good feeling about what's going on around the Thanksgiving time. You know, all the time their movies don't work.

but this time you know, out of that group I'm quite confident that that period is going to be very strong for us and then at the end of the year you have Mufasa and we have precedent for that so we can see the what the line king did and typically an eye back stare.

Pretty good numbers coming out of that. So, you know, with that said, you just not sure where it's going to end up, but we feel pretty good about our slate for the rest of the year.

and Natasha, you mentioned improvements in the past three years, you know, the nation of the country.

Can you elaborate some of the internal initial initiatives that you guys have put in place to drive your realization higher, what's the opportunity set from what we're going to standpoint at IMAX with the next few years. Thanks.

Speaker Change: Sheryl Marseille. We've been talking about alternative content for quite some time and we've actually made a lot of traction this year over prior years and the team's been...

Put together in a way that they are cynically working among the organization and within the organization, which

Dan: I think earlier this year we talked about the fact that we made some restructurings and team changes in order to create that efficiency in the organization. And so that team has been working really hard on not only, so blue angels stalk earlier this year, but then we've done lots of alternative content between the concert films.

and the Indian sports.

This week we're doing legal legends as well, which is new and in China and actually China's in the finals against a Korean team. And so I think we're looking at about the ability to do about 150 locations. And so thinking about what are all those opportunities and when you pull them together, coupled with different models. So not everything will be straight box office, getting the ability to say, okay, do you do flat seed deals as well and other types of models to make sure that In the end, regardless of where box office is, you're still strengthening your financials and giving yourself other opportunities to create returns and so.

and I think that's where we'll continue to spend time and then of course you would have heard in Richard's remarks as well that we've hired a Chief Content Officer and that vision is essentially to set the strategy for how do we create opportunities for ourselves on the content side and really make it an impact on that side. Which, over I'd also like to add.

Dan: You know, we're out in LA now that it's hard for me to see people who don't say, you know, wow, what about this beer? Wow, what about Kossum? You know, it's an amazing, all this alternative content coming out. But as you know, these things are really high, cap-X.

Kind of experiences and I-

Dan: I think they're really good and I think there's a future for them. But you know, I'm access, 1800 theaters.

Sitting throughout the world and not only do we show movies but we show awe-inspiring experiences and alternative content. And I've had a much lower capital cost and entry point. So I think over time you'll see us really benefit in terms of utilization from that diversification and content.

This is very helpful guys, thank you very much.

Our next question comes from David Joyce with support research partners. David, go ahead with your question.

Thank you. The system sales revenue was a very simple thing. The system rentals were down.

Do you still have basically like Nostig US to win the strategy and play? Because one of them quicker in the event that these theaters are looking to accelerate their being on the IMX network.

Speaker Change: Hi, David. I think a mix between the systems of still are strategy. However, as you look at the slate in the next few years, I mean, is there an opportunity to install more JVs and therefore get a higher return on the rentals side? That is an opportunity before us. And also, when you're thinking about different countries and the operators that exist in those countries and their balance sheets, I mean, as you know, our balance sheet is very strong and we have the ability to put up the capital for that higher return. And I think that's where we have some opportunity before us. And yes, you're going to have Eddon's lows, like this quarter where the rentals revenue was lower, because box office was lower. But then you have other quarters, like last year's Oppenheimer, first.

Dan: Porter this year with Dune. Of course we have Avatar next year and the film for IMAX late next year and so I really think you got to look at it in the full portfolio approach of an annual view and look at how strong the rentals revenue can perform for us and really give us that in-out performance and in-per-mentality in the model.

Dan: and I'm glad you're here.

Dan: and bye for our next question.

Our next question comes from Patrick Scholl was bearington research. Patrick, please go ahead with your question.

Patrick Scholl: Hi, good afternoon.

and it's kind of a question on new screen installations. I was wondering if there's any sort of lag between a new screen install and getting to a ramp up in box office. I was wondering if there was any care.

Patrick Scholl: and the difference is across countries.

Speaker Change: There actually is.

We've done some research and how quickly.

Things ramp up because obviously when you first open, there's some opening kind of publicity around it and there is a seasoning period for theaters between when they open and when they hit.

on their point, but they're widely...

I'm differentiated in parts of the world and even within.

Territories, you know what the particular locations are. So we have it and we look at it but frankly there are no meaningful trends that I can give you other than to say that you know when things open it takes a little while until they hit their peak performance.

Okay, as heavy notes at time frame, shortening after the pandemic.

We haven't really done research in that direction.

Speaker Change: So I can't say...

But you know, I could surely say when people open.

Around a major movie at a time like that so many people see it that it really accelerates the word amount and shortens it some hoping you'll ask what in the fourth quarter you then next year all the promising content that that period will get shorter but I haven't studied it empirically.

Ok, thank you.

Our next question comes from Stephen Lazzett, who is with Goldman Sachs. Stephen Go ahead with his question.

Great, thanks for taking the questions, too. If I could, a first on local language, maybe for Rich, could you have seen some of the medium-term outlook for the local language film supply? What are you hearing from from your key partners out in some of the ski international markets in terms of their production plans? Where do you see film supply today? In some of the markets, and where do you think it can get to over the next few years? And then second, maybe on catbex for Natasha, I think growth catbex came in around 12 million in the quarter. Thank you, mentioned. The install calendar being a little back and waited with for Q. Any more context you could add on for Q growth catbex, and then.

Perhaps anything on 25 is we think about you executing against the installation pipeline. Next year.

Speaker Change: Thank you.

Speaker Change: Shogi.

Steven has you know, last year was around local language.

Speaker Change: was around 20%.

Upper our total box office.

This year it's marginally lower but in the same kind of ballpark and I might guess it's the reason it's a little bit lower It's because the Chinese box office

was some more challenge. This year and again as we go into next year, will we expect a more real bus?

Chinese box office I would think it would settle around that 20% level or higher. There's a lot of activity.

Speaker Change: going on with studios.

and Phil Makers from around the world.

We continue to have new countries.

Opening Up Soap.

I think I might have mentioned in my speech, but we had this film called I.M. Hero in Korea, concert film, which was just did exceptionally well. And I think when you have kind of those new territories, and the new one, all say really boosts.

The amount of inquiry that comes in them.

We're in France now, we're working on actually an original production that's likely to release only in imacts and then elsewhere.

Speaker Change: So, you know, I really don't feel

you know better or worse for it if it's...

and I think it'll continue its trend. So in 1919, I'm guessing I think it was less than half. What it was as a percentage, Stephen as it was in 23 and I think that trend will continue.

I see you on the K-PAC side.

Speaker Change: Here today we're about about 20 million for growth capex and I think if you looked at historical pre-pendemic years we range somewhere between 30 to 40 million historically and I think that's where the opportunity is that we do have the strong balance sheet that I talked about earlier and the ability to get higher returns as well especially when you look at the slate as it stands right now and so we do have the ability to do that. The other part is we as we look at towards next year if you looked at historical patterns of installations we generally have a historical mix of about 50, 50 we've stayed pretty strong to that but there are years that could weigh more heavily to JV capex it really depends on who.

Speaker Change: We're rolling out with from an exhibit or site which locations or countries, geographic places in the world and the ability to look at where do we want to spend our dollars? And I know we've had this conversation before, but it's about...

What's the place you want to spend your dollar? Is it in a region that can give you a higher per screen average or a lower and what do you focus on? And so our teams and we've talked about our theater team, they do a bi-weekly call, they really think through and plan it out as much as they can to be able to say what's going to give us the most return and try and work with exhibitors to push those forward and I think.

That's where we've delivered and we continue to and I'm confident we'll continue.

Speaker Change: Great, thank you both.

Our next question comes from Mike Hickey with the benchmark company. Mike, go ahead with your question.

Mike Hickey: Thank you. He rich Natasha Jennifer Greg Horsley, thanks for taking our questions.

Mike Hickey: 25-guide. I think it's pretty much exactly the same, but you threw in the 1.2 billion Natasha. Was that your original assumption when you guided revenue growth to be high single digit in 2025 or is that changed?

Speaker Change: Hi Mike, we actually didn't give out a guide for next year's box office. When we did the look through guidance earlier this year, we just commented on high single digits for revenue growth.

Speaker Change: that revenue growth was based on a holistic view of our entire P&L. And I think that's where we look at the different lovers. And right now, we feel confident in giving out the 1.2 billion, I'm sure, that at a later date, we'll come back with other guidance metrics as we do each year.

Okay, great. I guess the next question, Rich, more superhero, indeed, on a panel time, you've probably heard that, but sort of popped up here again recently and I know adventures.

Speaker Change: Other sort of superhero fanboy film experiences are, have been important and will be important when you think about growth in 26 and 27. So how are you thinking about that genre? I guess in particular, and what offsets you have if it is week of the has been historically.

I mean, when you look at our schedule for the next two years

You know what's been announced so far, you have um

Speaker Change: June 3, you have the new Christopher Nolan movie, you have Formula 1, none of those involved superheroes except for the directors who are all superheroes.

Speaker Change: but I'm...

I just think you have our alternative content, local language, I don't think we're over emphasizing superheroes.

Death of the Superhero and Fatigue was has already been proven wrong. You look at Deadpool and how well.

That did, I think, you know, what caused the previous

Superhero fatigue was probably streaming which contributed so much content not in all along with the movies so we're coming out at that time the market was flooded with content but I think the slate is really well balanced.

going forward and you'll I've spent a lot of time.

with our studio partners and our film makers.

and you know, going in to our forecast, going forward and our optimism is I think these films are going to perform extremely well. You know, this is always one or two that don't work because it's the movie business and not everything. We're inspired.

Speaker Change: I don't believe this.

Speaker Change: Superhero fatigue right now. I mean, as a matter of fact, let's go in to Thanksgiving where I'm incredibly.

you know, optimistic where you have your wicked and moana and you have gladiator none of those.

are superheroes and let's move on to the flies or something. I don't think he's a superhero either. So I just don't think that's a real issue.

Speaker Change: and Chris Fernandes, Jennifer Nolan, and he had some new tech. Are those the new cameras that are now going out into the field or is that something else?

I think we're going to have to wait until he wants to talk about it.

Speaker Change: Ok thanks, Richard. Take care of that.

Alright thank you.

Speaker Change: This concludes the question answer session. I would now like to turn it over to Rich Gelfond, the closing remarks.

Richard Gelfond: I don't know a lot to say other than I think the quarter really demonstrated.

Something we talk about all the time.

Richard Gelfond: which is some.

Speaker Change: Revenue diversification.

You know, we diversified around the world and sources of revenues so you know, China didn't have a great third quarter but North America had a really good.

Speaker Change: Third quarter.

Speaker Change: You know, I think we talk about diversification in terms of different...

Speaker Change: Kines of cotton.

Speaker Change: Coming in, so some things that perform very well or in the mix are legal legends, the Olympics.

the all kinds of different music.

Content, our documentary, Blue Angels was very successful, for us.

this year of Siphic, you know, that's another kind of diversification. And I think throughout that our brand continues to gain resonance in our market share, generally keeps going up and our indexing does very well.

So I feel really good about it. I said too many times, 25 and 26.

Look really strong. I think this quarter and the spotlight on diversification also. I'd say in-stalls.

Speaker Change: High number of installs.

You know, there's lots of ways we're diversified. So I think the more people understand about our company and the revenue sources, you'll people will understand our growth story. Anyway, thank you.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.