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July 27, 2021 at 4:05 PM EDT

IMAX Corporation Reports Second Quarter 2021 Results

HIGHLIGHTS
- IMAX delivered strong year-over-year growth in Total Revenue and Global Box Office, driven by the initial return of Hollywood blockbuster releases and a significant rebound in the domestic box office
- The Company continued to improve its operating results, reporting its best Gross Margin of the pandemic era, and third consecutive quarter of positive EBITDA as the recovery of the global film industry gains momentum
- The IMAX Global Network is now 90% open - the highest level since the onset of the pandemic - with capacity limitations continuing to ease in many key markets worldwide
- IMAX expects to benefit from the robust Hollywood film slate, with major tentpole releases scheduled to arrive in theaters at least every two weeks beginning early September

NEW YORK, July 27, 2021 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX) today reported financial results for the second quarter of 2021, including significant improvement in operating results and year-over-year growth in total revenue and global box office — demonstrating strong demand for The IMAX Experience® as theaters continue to reopen around the world.

"IMAX is helping to lead the global recovery of the film industry and is uniquely positioned to benefit immediately as cinemas reopen, the Hollywood blockbuster film slate restarts, and audiences return to theaters worldwide," said Richard L. Gelfond, CEO of IMAX Corporation. "We continue to demonstrate that an IMAX release is a window unto itself, proven to draw moviegoers to the theaters, drive premium revenue, and launch event films into the ecosystem."

"IMAX delivered continued progress in operating results, demonstrating growing momentum for the Company. Thanks to our asset-lite model, we capitalized on strong year-over-year growth in revenue and global box office to achieve another quarter of improved profitability."

"Most encouragingly, the domestic box office is showing the same signs of pent-up demand for moviegoing we've seen throughout Asia and other key markets — with each successive major tentpole release delivering an incrementally stronger debut."

"We believe the table is set for a dramatic rebound for blockbuster moviegoing beginning this fall and throughout 2022, as a powerful slate of Hollywood tentpoles representing many of the biggest global franchises in entertainment arrives in theaters worldwide."

IMAX reported second quarter 2021 revenues of $51.0 million, gross margin of $25.6 million, and a net loss attributable to common shareholders of ($9.2) million, or ($0.16) per diluted share. The Company delivered its best quarterly gross margin and Adjusted EPS(1) of the pandemic era, as well as its third consecutive quarter of positive EBITDA(1), as Hollywood blockbuster releases returned and drove a significant rebound of the domestic box office. IMAX second quarter 2021 net loss attributable to common shareholders reflects the ongoing impact of COVID-19 on the Company's network and includes a non-cash valuation allowance to reduce the value of deferred tax assets of $3.0 million or $0.05 per share.

(1)     Non-GAAP Financial Measure

Second Quarter Financial Highlights



Three Months Ended




June 30,


In millions of U.S. Dollars, except per share data


2021



2020



YoY %

Change


Total Revenue


$

51.0



$

8.9




475.4

%














Gross Margin (margin loss)


$

25.6



$

(7.7)




433.0

%

Gross Margin (%)



50.2

%



(86.8)

%


















Net Loss attributable to common shareholders


$

(9.2)



$

(26.0)




64.5

%

Diluted Net Loss per share attributable to common shareholders


$

(0.16)



$

(0.44)




63.6

%

Adjusted Net Loss attributable to common shareholders(1)


$

(7.0)



$

(26.1)




73.2

%

Adjusted Net Loss per share attributable to common shareholders(1)


$

(0.12)



$

(0.44)




72.7

%














Adjusted EBITDA per Credit Facility attributable to common shareholders(1)


$

8.7



$

(18.5)




147.3

%

Adjusted EBITDA Margin attributable to common shareholders (%) (1)



20.6

%



(219.3)

%



109.4

%

_______________

(1)     Non-GAAP Financial Measure


Note: For the definition and reconciliations of reported results to non-GAAP financial results, please refer to the discussion of non-GAAP financial measures at the end of this earnings release.

Second Quarter and June Year-to-Date Segment Results(1)



IMAX Technology
Network



IMAX Technology Sales and
Maintenance




























In millions of U.S. Dollars


Revenue



Gross Margin

(Margin Loss)

Gross Margin %



Revenue



Gross Margin



Gross Margin %


2Q21


$

19.7



$

8.7




44.0

%


$

28.7




$

16.1




56.1

%

2Q20


0.4




(6.5)



N/A



4.6





0.2




4.9

%

% change


N/A




232.5

%







522.7

%



N/A
































YTD 2Q21


$

40.0



$

18.8




47.0

%


$

45.7




$

23.2




50.7

%

YTD 2Q20



17.0




(3.7)




(21.8)

%



19.7





5.0




25.1

%

% change



134.9

%



606.9

%







131.9

%




368.0

%





_______________

(1)     Please refer to the Company's Form 10-Q for the period ended June 30, 2021 for additional segment information.

IMAX Technology Network

  • IMAX Technology Network revenues increased to $19.7 million in the second quarter of 2021, compared to $0.4 million in the prior-year period when substantially all of the theaters in the IMAX network were closed. The continued reopening of the Company's network, particularly in the US, and strong performance of Hollywood releases drove the increase in gross box office and revenue.
  • Gross margin for the IMAX Technology Network of $8.7 million in the second quarter of 2021 increased by more than $15 million as improved box office performance drove higher revenue.

IMAX Technology Sales and Maintenance

  • IMAX Technology Sales and Maintenance revenues increased to $28.7 million in the second quarter of 2021, compared with $4.6 million in the prior year period. The increase in revenue was the result of a larger number of IMAX theater system installations and higher IMAX Maintenance sales associated with the continued reopening of the Company's global network.
  • Total gross margin for IMAX Technology Sales and Maintenance increased to $16.1 million compared to $0.2 million in the prior year period. The increase in gross margin was the result of a higher level of theater system installations and maintenance revenue partially offset by increased costs associated with an increased level of business activity.

Cash Balances and Outstanding Debt

Total cash and cash equivalents as of June 30, 2021 were $214.1 million. Total debt, excluding deferred financing costs was $241.0 million as of June 30, 2021.

Share Count and Capital Return

The weighted average basic and diluted shares outstanding in the second quarter of 2021 increased 1% to 59.4 million, compared to 58.8 million in the second quarter of 2020. During the second quarter of 2021, the Company did not repurchase any shares. A total of $89.4 million remains available under the Company's outstanding share repurchase authorization, which was extended an additional year through to June 2022.

Supplemental Materials

For more information about the Company's results, please refer to the IMAX Investor Relations website located at investors.imax.com.

Investor Relations Website and Social Media

On a weekly basis, the Company posts quarter-to-date box office results on the IMAX Investor Relations website located at investors.imax.com. The Company expects to provide such updates on Friday of each week, although the Company may change this timing without notice. Results will be displayed with a one-week lag.

The Company may post additional information on the Company's corporate and Investor Relations website which may be material to investors. Accordingly, investors, media and others interested in the Company should monitor the Company's website in addition to the Company's press releases, SEC filings and public conference calls and webcasts, for additional information about the Company.

Conference Call

The Company will host a conference call today at 4:30PM ET to discuss its second quarter 2021 financial results. This call is being webcast by PGI and can be accessed at investors.imax.com. To access the call via telephone, interested parties in the US and Canada should dial (800) 437-2398 approximately 5 to 10 minutes before the call begins. Other international callers should dial (647) 792-1240. The conference ID for the call is 8107291. A replay of the call will be available via webcast at investors.imax.com or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 8107291.

About IMAX Corporation 

IMAX, an innovator in entertainment technology, combines proprietary software, architecture and equipment to create experiences that take you beyond the edge of your seat to a world you've never imagined. Top filmmakers and studios are utilizing IMAX theaters to connect with audiences in extraordinary ways, and, as such, IMAX's network is among the most important and successful theatrical distribution platforms for major event films around the globe.

IMAX is headquartered in New York, Toronto, and Los Angeles, with additional offices in London, Dublin, Tokyo, and Shanghai. As of June 30, 2021, there were 1,654 IMAX theater systems (1,569 commercial multiplexes, 12 commercial destinations, 73 institutional) operating in 85 countries and territories. Shares of IMAX China Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong Kong Stock Exchange under the stock code "1970."

IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In IMAX®, The IMAX Experience®, An IMAX Experience®, An IMAX 3D Experience®, IMAX DMR®, DMR®, IMAX nXos® and Films to the Fullest®, are trademarks and trade names of the Company or its subsidiaries that are registered or otherwise protected under laws of various jurisdictions. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Instagram (https://www.instagram.com/imax), Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

For additional information please contact:

Investors:
IMAX Corporation, New York
Brett Harriss
212-821-0187
bharriss@IMAX.com 

Media:
IMAX Corporation, New York
Mark Jafar
212-821-0102
mjafar@imax.com 

Forward-Looking Statements

This earnings release contains forward looking statements that are based on IMAX management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. These forward-looking statements include, but are not limited to, references to business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, future capital expenditures (including the amount and nature thereof), industry prospects and consumer behavior,  plans and references to the future success of IMAX Corporation together with its consolidated subsidiaries (the "Company") and expectations regarding the Company's future operating, financial and technological results. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of the Company is subject to a number of risks and uncertainties, including, but not limited to, risks related to the adverse impact of the COVID-19 pandemic; risks associated with investments and operations in foreign jurisdictions and any future international expansion, including those related to economic, political and regulatory policies of local governments and laws and policies of the United States and Canada; risks related to the Company's growth and operations in China; the performance of IMAX DMR® films; the signing of IMAX Theater System agreements; conditions, changes and developments in the commercial exhibition industry; risks related to currency fluctuations; the potential impact of increased competition in the markets within which the Company operates, including competitive actions by other companies; the failure to respond to change and advancements in digital technology; risks relating to recent consolidation among commercial exhibitors and studios; risks related to new business initiatives; conditions in the in-home and out-of-home entertainment industries; the opportunities (or lack thereof) that may be presented to and pursued by the Company; risks related to cyber-security and data privacy; risks related to the Company's inability to protect the Company's intellectual property; risks related to the Company's indebtedness and compliance with its debt agreements; general economic, market or business conditions; the failure to convert IMAX Theater System backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any of the Company's restructuring initiatives; any statements of belief and any statements of assumptions underlying any of the foregoing; other factors and risks outlined in our periodic filings with the SEC; and other factors, many of which are beyond the control of the Company. Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and actual results or anticipated developments by the Company may not be realized, and even if substantially realized, may not have the expected consequences to, or effects on, the Company. These factors, other risks and uncertainties and financial details are discussed in IMAX's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Primary Reporting Groups

The Company has the following reportable segments: (i) IMAX DMR; (ii) Joint Revenue Sharing Arrangements; (iii) IMAX Systems, (iv) IMAX Maintenance; (v) Other Theater Business; (vi) New Business Initiatives; (vii) Film Distribution; and (viii) Film Post-Production. The Company organizes its reportable segments into the following four categories, identified by the nature of the product sold or service provided:

(i)     

IMAX Technology Network, which earns revenue based on contingent box office receipts and includes the IMAX DMR segment and contingent rent from the Joint Revenue Sharing Arrangement ("JRSA") segment;



(ii)   

IMAX Technology Sales and Maintenance, which includes results from the IMAX Systems, IMAX Maintenance and Other Theater Business segments, as well as fixed revenues from the JRSA segment;



(iii) 

New Business Initiatives, which is a segment that includes activities related to the exploration of new lines of business and new initiatives outside of the Company's core business; and



(iv)  

Film Distribution and Post-Production, which includes activities related to the licensing of film content, the distribution of films primarily for the Company's institutional theater partners (through the Film Distribution segment) and the provision of film post-production and quality control services (through the Film Post-Production segment).

 

 

IMAX Network and Backlog






Three Months

Ended June 30,



Theater System Signings:


2021




2020



New IMAX Theater Systems:











  Sales and sales-type lease arrangements



3





12



  Hybrid joint revenue sharing arrangements







17



  Traditional joint revenue sharing arrangements



3







    Total new IMAX theaters Systems



6





29



Upgrades of IMAX theater systems



2







   Total IMAX Theater System signings



8





29
















Three Months

Ended June 30,



Theater System Installations:


2021




2020



New IMAX Theater Systems:











   Sales and sales-type lease arrangements



9





2



   Hybrid joint revenue sharing lease arrangements



2





1



   Traditional joint revenue sharing arrangements



4







     Total new IMAX Theater Systems



15





3



Upgrades of IMAX theater systems



1







   Total IMAX Theater System installations



16





3
















June 30,



Theater System Backlog:


2021




2020



Sales and sales-type lease arrangements



185





190



Hybrid joint revenue sharing arrangements



142





154



Traditional joint revenue sharing arrangements



187


(1)



215


(1)

Total Theater System backlog



514


(2)



559


(3)














June 30,



Theater Network:


2021




2020



Commercial Multiplex Theaters











Sales and sales-type lease arrangements



672





659



Hybrid joint revenue sharing lease arrangements



143





138



Traditional joint revenue sharing lease arrangements



754





730



Total Commercial Multiplex Theaters



1,569





1,527



Commercial Destination Theaters



12





13



Institutional Theaters



73





75



Total Theater network(4)



1,654





1,615



_______________

(1)

Includes 44 IMAX Theater Systems where the customer has the option to convert from a joint revenue sharing arrangement to a sales arrangement (2020 — 46).



(2)

Includes 146 new IMAX with Laser projection system configurations and 91 upgrades of existing locations to IMAX with Laser projection system configurations.



(3)

Includes 154 new IMAX with Laser projection system configurations and 94 upgrades of existing locations to IMAX with Laser projection system configurations.



(4)

Period-to-period changes are reported net of the effect of permanently closed theaters.


 

 

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except per share amounts)
(Unaudited)







Three Months Ended



Six Months Ended





June 30,



June 30,





2021



2020



2021



2020


Revenues

















Technology sales


$

15,173



$

2,687



$

21,348



$

8,349


Image enhancement and maintenance services



24,711




3,799




46,326




24,520


Technology rentals



8,130




(137)




16,489




5,834


Finance income



2,941




2,506




5,546




5,054






50,955




8,855




89,709




43,757


Costs and expenses applicable to revenues

















Technology sales



6,496




2,546




11,549




6,415


Image enhancement and maintenance services



12,357




7,244




22,121




25,060


Technology rentals



6,499




6,753




13,155




14,884






25,352




16,543




46,825




46,359


Gross margin (margin loss)



25,603




(7,688)




42,884




(2,602)


Selling, general and administrative expenses



28,807




29,796




54,016




58,432


Research and development



2,200




1,232




3,671




3,432


Amortization of intangibles



1,190




1,344




2,331




2,665


Credit loss (reversal) expense, net



(1,872)




1,440




(1,567)




11,657


Asset impairments












1,151


Legal judgment and arbitration awards



(1,770)







(1,770)






Loss from operations



(2,952)




(41,500)




(13,797)




(79,939)


Realized and unrealized investment gains (losses)



33




2,025




5,281




(2,514)


Retirement benefits non-service expense



(116)




(130)




(230)




(246)


Interest income



559




891




1,142




1,256


Interest expense



(1,690)




(1,581)




(3,994)




(2,229)


Loss before taxes



(4,166)




(40,295)




(11,598)




(83,672)


Income tax (expense) benefit



(1,946)




10,248




(5,014)




(5,257)


Equity in losses of investees, net of tax











(529)


Net Loss



(6,112)




(30,047)




(16,612)




(89,458)


Less: Net (income) loss attributable to non-controlling interests



(3,099)




4,080




(7,439)




14,137


Net loss attributable to common shareholders


$

(9,211)



$

(25,967)



$

(24,051)



$

(75,321)


Net loss per share attributable to common shareholders -

      basic and diluted:














Net loss per share — basic and diluted


$

(0.16)



$

(0.44)



$

(0.41)



$

(1.26)




















Weighted average number of shares outstanding (000's):


















Basic



59,367




58,808




59,190




59,613



Fully Diluted



59,367




58,808




59,190




59,613


Additional Disclosure:

















Depreciation and amortization


$

12,994



$

11,764



$

25,671



$

26,883


 

 

IMAX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except share amounts)
(Unaudited)






June 30,



December 31,




2021



2020


Assets









Cash and cash equivalents


$

214,125



$

317,379


Accounts receivable, net



68,755




56,300


Financing receivables, net



133,221




131,810


Variable consideration receivables, net



41,596




40,526


Inventories



37,299




39,580


Prepaid expenses



11,892




10,420


Film assets, net



5,387




5,777


Property, plant and equipment, net



265,517




277,397


Investment in equity securities



1,089




13,633


Other assets



20,330




21,673


Deferred income tax assets, net



18,720




17,983


Goodwill



39,027




39,027


Other intangible assets, net



24,932




26,245


Total assets


$

881,890



$

997,750


Liabilities









Accounts payable


$

15,206



$

20,837


Accrued and other liabilities



91,557




99,354


Revolving credit facility borrowings, net



9,544




305,676


Convertible notes, net



222,888





Deferred revenue



87,489




87,982


Deferred income tax liabilities



19,681




19,134


Total liabilities



446,365




532,983


Commitments and contingencies









Non-controlling interests



766




759


Shareholders' equity









Capital stock common shares — no par value. Authorized — unlimited number.









59,396,411 issued and 59,395,909 outstanding (December 31, 2020 — 58,921,731 issued and 58,921,008 outstanding)



415,857




407,031


Less: Treasury stock, 502 shares at cost (December 31, 2020 — 723)



(8)




(11)


Other equity



160,658




180,330


Accumulated deficit



(226,900)




(202,849)


Accumulated other comprehensive income



1,062




988


Total shareholders' equity attributable to common shareholders



350,669




385,489


Non-controlling interests



84,090




78,519


Total shareholders' equity



434,759




464,008


Total liabilities and shareholders' equity


$

881,890



$

997,750


 

 

IMAX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)






Six Months Ended




June 30,




2021



2020


Operating Activities











Net loss


$


(16,612)



$


(89,458)


Adjustments to reconcile net loss to cash used in operating activities:











Depreciation and amortization




25,671





26,883


Amortization of deferred financing costs




1,008





299


Credit loss (reversal) expense, net




(1,567)





11,657


Write-downs




462





6,806


Deferred income tax expense




33





(4,878)


Share-based and other non-cash compensation




12,332





10,850


Unrealized foreign currency exchange (gain) loss




(490)





312


Realized and unrealized investment (gains) losses




(5,281)





2,514


Equity in losses of investees








529


Changes in assets and liabilities:











Accounts receivable




(11,049)





36,971


Inventories




1,867





(16,887)


Film assets




(5,808)





(4,057)


Deferred revenue




(447)





9,799


Changes in other operating assets and liabilities




(17,135)





(12,220)


Net cash used in operating activities




(17,016)





(20,880)


Investing Activities











Purchase of property, plant and equipment




(1,365)





(594)


Investment in equipment for joint revenue sharing arrangements




(2,397)





(3,908)


Acquisition of other intangible assets




(2,631)





(1,221)


Proceeds from sale of equity securities




17,769






Net cash provided by (used in) investing activities




11,376





(5,723)


Financing Activities











Proceeds from issuance of convertible notes, net




223,675






Debt issuance costs related to convertible notes




(242)






Purchase of capped calls related to convertible notes




(19,067)






Revolving credit facility borrowings




3,600





280,244


Repayments of revolving credit facility borrowings




(300,243)






Credit facility amendment fees paid




(32)





(959)


Repurchase of common shares








(36,624)


Repurchase of common shares, IMAX China








(1,532)


Treasury stock purchased for future settlement of restricted share units








(3,086)


Taxes withheld and paid on employee stock awards vested




(3,045)





(251)


Common shares issued - stock options exercised




883






Dividends paid to non-controlling interests




(2,099)





(2,118)


Net cash (used in) provided by financing activities




(96,570)





235,674


Effects of exchange rate changes on cash




(1,044)





431


(Decrease) increase in cash and cash equivalents during period




(103,254)





209,502


Cash and cash equivalents, beginning of period




317,379





109,484


Cash and cash equivalents, end of period


$


214,125



$


318,986


 

 



Three Months Ended



Six Months Ended




June 30,




June 30,


In millions of U.S. Dollars


2021



2020




2021




2020


Revenue



















IMAX Technology Network:



















IMAX DMR


$

11,793



$

546




$

23,737




$

11,175


Joint revenue sharing arrangements, contingent rent(1)



7,862




(137)





16,221





5,834





19,655




409





39,958





17,009


IMAX Technology Sales and Maintenance:



















IMAX Systems



15,982




4,549





21,881





10,237


Joint revenue sharing arrangements, fixed fees



1,002




369





2,740





1,139


IMAX Maintenance



11,235








20,141





7,370


Other Theater Business(2)



483




(309)





920





954





28,702




4,609





45,682





19,700


New Business Initiatives



648




632





1,316





1,110


Film Distribution and Post-Production



1,590




3,182





2,403





5,676





50,595




8,832





89,359





43,495


Other



360




23





350





262


Total revenues


$

50,955



$

8,855




$

89,709




$

43,757





















Gross Margin (Margin Loss)



















IMAX Technology Network:



















IMAX DMR(3)


$

6,861



$

(30)




$

15,112




$

4,413


Joint revenue sharing arrangements, contingent rent(3)



1,790




(6,501)





3,673





(8,119)





8,651




(6,531)





18,785





(3,706)


IMAX Technology Sales and Maintenance:



















IMAX Systems (3)



10,548




2,650





13,560





5,826


Joint revenue sharing arrangements, fixed fees(3)



347




48





503





227


IMAX Maintenance



5,075




(1,908)





8,898





(1,149)


Other Theater Business



142




(564)





205





46





16,112




226





23,166





4,950


New Business Initiatives



634




512





1,092





873


Film Distribution and Post-Production (3)(4)



606




(1,396)





581





(3,331)





26,003




(7,189)





43,624





(1,214)


Other



(400)




(499)





(740)





(1,388)


Total Segment Margin (Margin Loss)


$

25,603



$

(7,688)




$

42,884




$

(2,602)


_______________

(1)

For the three months ended June 30, 2020, the Company reported negative revenue due to the continued amortization of lessee incentives that are typically netted against lease revenues, which were abnormally low in the period due to the COVID-19 global pandemic.



(2)

Principally includes after-market sales of IMAX projection system parts and 3D glasses. The Company is reporting negative revenue for the three months ended June 30, 2020 due to an adjustment to prior period revenue.



(3)

IMAX DMR gross margin includes marketing costs of $1.5 million and 2.6 million, respectively, for the three and six months ended June 30, 2021 (2020 — $nil and $2.4 million, respectively). JRSA gross margin includes advertising, marketing and commission expense of $0.3 million and $1.1 million, respectively, for the three and six months ended June 30, 2021 (2020 — less than $0.1 million and $0.6 million, respectively). IMAX Systems gross margin includes marketing and commission costs of $0.4 million and $0.6 million, respectively, for the three and six months ended June 30, 2021 (2020 —$0.2 million and $0.4 million, respectively). Film Distribution segment gross margin includes marketing expense of $nil and less than $0.1 million, respectively, for the three and six months ended June 30, 2021, (2020 — less than $0.1 million and $0.2 million, respectively).



(4)

During the three and six months ended June 30, 2020, Film Distribution segment results include impairment losses of $2.2 million and $4.5 million, respectively, to write-down the carrying value of certain documentary and alternative content film assets due to a decrease in projected box office totals and related revenues based on management's regular quarterly recoverability assessments. No such charges incurred in the three and six months ended June 30, 2021.

 

IMAX CORPORATION
NON-GAAP FINANCIAL MEASURES
(in thousands of U.S. dollars)

In this release, the Company presents adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per basic and diluted share, EBITDA, Adjusted EBITDA per Credit Facility, Adjusted EBITDA margin, and free cash flow as supplemental measures of the Company's performance, which are not recognized under U.S. GAAP. Adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per basic and diluted share exclude, where applicable: (i) share-based compensation; (ii) COVID-19 government relief benefits, (iii) legal judgment and arbitration awards; (iv) realized and unrealized investment gains, as well as the related tax impact of these adjustments, and (v) income taxes resulting from management's decision to no longer indefinitely reinvest the historical earnings of certain foreign subsidiaries.

The Company believes that these non-GAAP financial measures are important supplemental measures that allow management and users of the Company's financial statements to view operating trends and analyze controllable operating performance on a comparable basis between periods without the after-tax impact of share-based compensation and certain unusual items included in net loss attributable to common shareholders. Although share-based compensation is an important aspect of the Company's employee and executive compensation packages, it is a non-cash expense and is excluded from certain internal business performance measures.

A reconciliation from net loss attributable to common shareholders and the associated per share amounts to adjusted net loss attributable to common shareholders and adjusted net loss attributable to common shareholders per diluted share is presented in the table below. Net loss attributable to common shareholders and the associated per share amounts are the most directly comparable GAAP measures because they reflect the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests.

In addition to the non-GAAP financial measures discussed above, management also uses "EBITDA," as such term is defined in the Company's Credit Agreement, and which is referred to herein as "Adjusted EBITDA per Credit Facility." As allowed by the Credit Agreement, Adjusted EBITDA per Credit Facility includes adjustments in addition to the exclusion of interest, taxes, depreciation and amortization. Adjusted EBITDA per Credit Facility measure is presented to allow a more comprehensive analysis of the Company's operating performance and to provide additional information with respect to the Company's compliance against its Credit Agreement requirements when applicable. In addition, the Company believes that Adjusted EBITDA per Credit Facility presents relevant and useful information widely used by analysts, investors and other interested parties in the Company's industry to evaluate, assess and benchmark the Company's results.

EBITDA is defined as net income or loss excluding (i) income tax expense or benefit; (ii) interest expense, net of interest income; and (iii) depreciation and amortization, including film asset amortization. Adjusted EBITDA per Credit Facility is defined as EBITDA excluding: (i) share-based and other non-cash compensation; (ii) realized and unrealized investment gains or losses; (iii) write-downs, net of recoveries, including asset impairments and credit loss expense; (iv) legal judgment and arbitration awards; and (v) the gain or loss from equity accounted investments.

A reconciliation of net loss attributable to common shareholders, which is the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA per Credit Facility is presented in the table below. Net loss attributable to common shareholders is the most directly comparable GAAP measure because it reflects the earnings relevant to the Company's shareholders, rather than the earnings attributable to non-controlling interests.

Free cash flow is defined as cash provided by operating activities minus cash used in investing activities (from the Condensed Consolidated Statements of Cash Flows). Cash provided by operating activities consist of net (loss) income, plus depreciation and amortization, plus the change in deferred income taxes, plus other non-cash items, plus changes in working capital, less investment in film assets, plus other changes in operating assets and liabilities. Cash used in investing activities includes capital expenditures, acquisitions and other cash used in investing activities. Management views free cash flow, a non-GAAP measure, as a measure of the Company's after-tax cash flow available to reduce debt, add to cash balances, and fund other financing activities. Free cash flow does not represent residual cash flow available for discretionary expenditures. A reconciliation of cash provided by operating activities to free cash flow is presented below.

These non-GAAP measures may not be comparable to similarly titled amounts reported by other companies. Additionally, the non-GAAP financial measures used by the Company should not be considered as a substitute for, or superior to, the comparable GAAP amounts.

Adjusted EBITDA per Credit Facility




For the Three Months Ended June 30, 2021 (1)



For the Three Months Ended June 30, 2020 (1)




Attributable to
Non-controlling



Less:






Attributable to
Non-controlling



Less:







Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to




Common



Non-controlling



Common



Common



Non-controlling



Common




Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)































Reported net loss


$


(6,112)



$


3,099



$


(9,211)



$


(30,047)



$


(4,080)



$


(25,967)


Add (subtract):































Income tax expense (benefit)




1,946





884





1,062





(10,248)





638





(10,886)


Interest expense, net of interest income




432





(89)





521





524





(96)





620


Depreciation and amortization, including film asset amortization




12,994





1,038





11,956





11,764





1,049





10,715


Amortization of deferred financing costs(2)




699









699





166









166


EBITDA


$


9,959



$


4,932



$


5,027



$


(27,841)



$


(2,489)



$


(25,352)


Share-based and other non-cash compensation




6,911





345





6,566





6,541





299





6,242


Unrealized investment gains




(33)









(33)





(2,025)





(612)





(1,413)


(Recoveries) write-downs, including asset impairments and credit loss expense




(1,623)





(575)





(1,048)





3,843





1,815





2,028


Legal judgment and arbitration awards




(1,770)









(1,770)














Adjusted EBITDA per Credit Facility


$


13,444



$


4,702



$


8,742



$


(19,482)



$


(987)



$


(18,495)


Revenues attributable to common shareholders(3)




50,955





8,421





42,534





8,855





421





8,434


Adjusted EBITDA margin attributable to common shareholders




26.4

%




55.8

%




20.6

%




-220.0

%




-234.4

%




-219.3

%


































For the Twelve Months Ended June 30, 2021 (1)



For the Twelve Months Ended June 30, 2020 (1)




Attributable to
Non-controlling



Less:






Attributable to
Non-controlling



Less:







Interests and



Attributable to



Attributable to



Interests and



Attributable to



Attributable to




Common



Non-controlling



Common



Common



Non-controlling



Common




Shareholders



Interests



Shareholders



Shareholders



Interests



Shareholders


(In thousands of U.S. Dollars)































Reported net loss


$


(84,640)



$


7,865



$


(92,505)



$


(57,210)



$


(9,093)



$


(48,117)


Add (subtract):































Income tax expense




26,261





2,072





24,189





13,069





6,707





6,362


Interest expense, net of interest income




4,890





(346)





5,236





922





(424)





1,346


Depreciation and amortization, including film asset amortization




51,492





4,468





47,024





60,300





4,897





55,403


Amortization of deferred financing costs(2)




1,611









1,611





565









565


EBITDA


$


(386)



$


14,059



$


(14,445)



$


17,646



$


2,087



$


15,559


Share-based and other non-cash compensation