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Imax CEO Expects Moviegoing Surge When China Theaters Reopen; Q4 Earnings Beat Estimates

Jill Goldsmith
·3-min read

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UPDATED with details from call: Imax CEO Rich Gelfond said he expects to see a surge in moviegoing in China as people want to get out and about once the coronovirus in controlled. It’s what happened in 2003 after the SARS epidemic, he noted on a conference call with investors Wednesday to discuss quarterly earnings.

Imax’s fourth-quarter earnings – pre-coronovirus – beat Wall Street’s fourth-quarter financial estimates earlier in the day.

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Imax has significant exposure in China but is growing rapidly around the world. Over 70% of its theaters are in international markets. It’s currently got 1,529 commercial theaters worldwide and sees that potentially expanding to 3,300 locations. Gelfond said current growth plans are focused on Japan, the Middle East, Southeast Asia and South America; on more deals with filmmakers to shoot with Imax cameras; on new kinds of event programming in theaters around the world; and on selling equipment to the home.

But China overshadowed the call and there wasn’t much to say given the lack of visibility.

“We are clearly facing headwinds in China. We are grateful that all our employees are accounted for and healthy. At this time, all theaters in the country remain closed [but] before the closures, the China business was performing well and had strong momentum following a very successful 2019,” Gelfond said.

Imax ended the year with 702 locations there, up 13%, and a box office tally of $366 million, up 9% and about a third of its total of $1.1 billion.

“Overall. we are encouraged by the long-term trajectory in China. The coronavirus is a serious short-term challenge [but] we see it as a rare, out-of-the-ordinary event that will pass and business will rebound once the situation normalizes … We remain long term as excited about China as we have ever been.”

But Gelfond said it’s impossible to predict when the theaters will reopen. “There are a lot of issues, not just the slowdown of the infection but getting infrastructure back and what government policies are, and certainly we are not smart enough to predict that.” He noted small positives recently like the fact that the number of cures have outpaced new infections and the virus continues to be mostly contained in the area of Wuhan city and Hubei province.

For markets where moviegoing is possible, Gelfond is upbeat about the 2020 slate (from Marvel’s Black Widow and The Eternals to Fast and Furious 9, to a Venom sequel and a Dune adaptation) and ecstatic about 2021. Next year features four Marvel titles, including a Thor and a Spider-Man, Jurassic World 3, Mission Impossible 7 and Avatar 2, a sequel to the highest-grossing Imax movie ever.

Investors seemed to look at the bright side. The stock was up more than 4% in after-hours trading.

Imax on Wednesday reported adjusted net earnings per share of 35 cents, up 35% from the year before and higher than the 30 cents anticipated. Revenue rose 14% to $124.3 million, also topping forecasts.

Imax is headquartered in New York, Toronto and Los Angeles, with offices in London, Dublin, Tokyo, and Shanghai. A subsidiary, Imax China Holding, trades on the Hong Kong Stock Exchange.

As of December 31, 2019, there were 1,624 Imax theater systems (1,529 commercial multiplexes, 14 commercial destinations, 81 institutional) operating in 81 countries and territories.

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