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October 28, 2021 at 7:00 AM EDT

IMAX Corporation Reports Third Quarter 2021 Results

HIGHLIGHTS
- IMAX reaches turning point at global box office -- breaking record for highest grossing month of October, delivering September grosses above 2019, and generating $142 million (+100% YoY) in Global Box Office for the Third Quarter
- The Company delivers strongest Global Box Office, Revenue, and Gross Margin since 2019, with blockbusters and consumers returning to cinemas in force and studios recommitting to exclusive theatrical releases
- IMAX continues to improve operating results demonstrating the strength of its global asset-lite licensing model and ability to capitalize on box office momentum
- The Company is well-positioned to benefit from the continued evolution of the theatrical marketplace, including increased globalization of the box office, further emphasis on tentpole releases, and compressed demand of 45-day theatrical window
- IMAX expects accelerating pipeline of blockbusters set for exclusive theatrical release to further build consumer momentum worldwide, with a wealth of franchise tentpole films slated in Q4 of 2021 and 2022

NEW YORK, Oct. 28, 2021 /PRNewswire/ -- IMAX Corporation (NYSE: IMAX) today reported financial results for the third quarter of 2021, including: its strongest Global Box Office, Revenue, and Gross Margin in the pandemic era; a sharp reduction in net loss attributable to common shareholders from ($47.2) to ($8.4) million, reported loss per share from ($0.80) to ($0.14), and adjusted loss per share from ($0.75) to ($0.08); and solid improvement in adjusted EBITDA which increased from ($0.3) to $13.1 million — demonstrating a significant turning point in the global box office with pent up consumer demand for The IMAX Experience® continuing to gain momentum as theaters reopen around the world.

"The third quarter was a major turning point for IMAX. We delivered over $142 million in Global Box Office, a clear sign of significant pent up consumer demand with momentum accelerating into a pre-pandemic September performance and all-time Company record in October, which is on track to be one of the top ten months in the company's history," said Richard L. Gelfond, CEO of IMAX Corporation. "The power of the IMAX theatrical window for blockbuster films is clear as we continue to draw moviegoers to the theaters, gain market share, and grow our relationships with local exhibitors, studios, and filmmakers."

"IMAX's asset-lite model again proved to be a strong differentiator, helping us to deliver year-over-year growth in revenue and achieve another quarter of improved operating results. These results are also reflected in our balance sheet, where our excess liquidity provides security and capital allocation flexibility."

"As anticipated, the domestic market continued its recovery with sequential growth in box office. Local language box office was also a strong performer which already eclipsed our record breaking 2019 local language box office. We are seeing greater confidence in the overall slate as well, as the IMAX-friendly franchise-heavy schedule has solidified through 2022."

"We feel confident that the table is set for a continued rebound in domestic and international blockbuster moviegoing which is reflected in our decision to opportunistically repurchase shares. With solid operating momentum, strong market share and multiple tentpole films set to be released in the remainder Q4 and 2022, IMAX is well positioned to deliver and strengthen our position as one of the world's premier entertainment experience."

Third Quarter Financial Highlights



Three Months Ended




September 30,


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


2021



2020



YoY %

Change


Total Revenue


$

56.6



$

37.3




51.9

%














Gross Margin


$

27.5



$

3.8




617.9

%

Gross Margin (%)



48.6

%



10.3

%


















Net Loss attributable to common shareholders


$

(8.4)



$

(47.2)




82.3

%

Diluted Net Loss per share attributable to common shareholders


$

(0.14)



$

(0.80)




82.5

%

Adjusted Net Loss attributable to common shareholders(1)


$

(5.0)



$

(44.6)




88.7

%

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


$

(0.08)



$

(0.75)




89.3

%














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


$

13.1



$

(0.3)



N/A


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



26.3

%



(0.8)

%


N/A





_______________



(1)

Non-GAAP Financial Measure. See the discussion at the end of this earnings release for a description of these non-GAAP financial measures and reconciliations to the most comparable GAAP amounts.

 

 

Third Quarter and September 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 %


3Q21


$

25.6



$

10.9




42.7

%


$

27.7




$

14.9




53.8

%

3Q20


11.4




0.6




5.2

%


23.7





9.4




39.6

%

% change



125.3

%


N/A








17.1

%




58.8

%































YTD 3Q21


$

65.5



$

29.7




45.3

%


$

73.4




$

38.1




51.9

%

YTD 3Q20



28.4




(3.1)




(11.0)

%



43.4





14.3




33.0

%

% change



131.1

%


N/A








69.2

%




165.6

%








_______________



(1)

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

 

IMAX Technology Network

  • IMAX Technology Network revenues increased to $25.6 million in the third quarter of 2021, compared to $11.4 million in the prior-year period. 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 $10.9 million in the third quarter of 2021 increased by more than $10 million as improved box office performance drove higher revenue and margin expansion.

IMAX Technology Sales and Maintenance

  • IMAX Technology Sales and Maintenance revenues increased to $27.7 million in the third quarter of 2021, compared with $23.7 million in the prior year period. The increase in revenue was the result of higher IMAX Maintenance revenue associated with the continued reopening of the Company's global network offset by a fewer number of IMAX theater system installations.
  • Total gross margin for IMAX Technology Sales and Maintenance increased to $14.9 million compared to $9.4 million in the prior year period. The increase in gross margin was the result of higher maintenance revenue partially offset by an increase in associated costs as a result of a return to more normal business activities.

Cash Balances and Outstanding Debt
Total cash and cash equivalents as of September 30, 2021 were $193.0 million. Total debt, excluding deferred financing costs was $241.0 million as of September 30, 2021.

Share Count and Capital Return
The weighted average basic and diluted shares outstanding in the third quarter of 2021 increased to 59.2 million, compared to 58.9 million in the third quarter of 2020. During the third quarter of 2021, the Company repurchased 317 thousand of its shares at an average price of $14.53 for a total of $4.6 million. IMAX China repurchased 3.6 million shares at an average price of $1.40 per share for a total of $5 million. A total of $84.8 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 8:30AM ET to discuss its third 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 1560158. 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 1560158.

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 September 30, 2021, there were 1,664 IMAX theater systems (1,580 commercial multiplexes, 12 commercial destinations, 72 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 "HK.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 September 30,


Theater System Signings:


2021



2020


New IMAX Theater Systems:









Sales and sales-type lease arrangements



4




8


Hybrid joint revenue sharing arrangements







Traditional joint revenue sharing arrangements



5





         Total new IMAX theaters Systems



9




8


Upgrades of IMAX theater systems



2




2


   Total IMAX Theater System signings



11




10













Three Months

Ended September 30,


Theater System Installations:


2021



2020


New IMAX Theater Systems:









Sales and sales-type lease arrangements



6




9


Hybrid joint revenue sharing lease arrangements



2




1


Traditional joint revenue sharing arrangements



6




8


         Total new IMAX Theater Systems



14




18


Upgrades of IMAX theater systems



3




5


   Total IMAX Theater System installations



17




23













September 30,


Theater System Backlog:


2021



2020


Sales and sales-type lease arrangements



182




193


Hybrid joint revenue sharing arrangements



139




146


Traditional joint revenue sharing arrangements



185

(1)



206

(1)

Total Theater System backlog



506

(2)



545

(3)












September 30,


Theater Network:


2021



2020


Commercial Multiplex Theaters









   Sales and sales-type lease arrangements



676




661


   Hybrid joint revenue sharing lease arrangements



144




139


   Traditional joint revenue sharing lease arrangements



760




742


Total Commercial Multiplex Theaters



1,580




1,542


   Commercial Destination Theaters



12




13


   Institutional Theaters



72




77


Total Theater network(4)



1,664




1,632





_______________



(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 148 new IMAX with Laser projection system configurations and 90 upgrades of existing locations to IMAX with Laser projection system configurations.



(3)

Includes 155 new IMAX with Laser projection system configurations and 92 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



Nine Months Ended





September 30,



September 30,





2021



2020



2021



2020


Revenues

















Technology sales


$

13,160



$

15,753



$

34,508



$

24,102


Image enhancement and maintenance services



30,588




14,589




76,914




39,109


Technology rentals



10,219




4,473




26,708




10,307


Finance income



2,635




2,441




8,181




7,495






56,602




37,256




146,311




81,013


Costs and expenses applicable to revenues

















Technology sales



6,230




9,222




17,779




15,637


Image enhancement and maintenance services



16,461




16,989




38,582




42,049


Technology rentals



6,424




7,216




19,579




22,100






29,115




33,427




75,940




79,786


Gross margin



27,487




3,829




70,371




1,227


Selling, general and administrative expenses



28,377




24,815




82,393




83,247


Research and development



2,025




1,130




5,696




4,562


Amortization of intangibles



1,255




1,349




3,586




4,014


Credit loss (reversal) expense, net



(3,317)




3,925




(4,884)




15,582


Asset impairments












1,151


Legal judgment and arbitration awards









(1,770)





Loss from operations



(853)




(27,390)




(14,650)




(107,329)


Realized and unrealized investment gains (losses)



30




1,575




5,311




(939)


Retirement benefits non-service expense



(117)




(186)




(347)




(432)


Interest income



538




586




1,680




1,842


Interest expense



(1,540)




(2,391)




(5,534)




(4,620)


Loss before taxes



(1,942)




(27,806)




(13,540)




(111,478)


Income tax expense



(4,402)




(19,349)




(9,416)




(24,606)


Equity in losses of investees, net of tax





(1,329)







(1,858)


Net Loss



(6,344)




(48,484)




(22,956)




(137,942)


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



(2,034)




1,275




(9,473)




15,412


Net loss attributable to common shareholders


$

(8,378)



$

(47,209)



$

(32,429)



$

(122,530)


Net loss per share attributable to common shareholders -

      basic and diluted:














Net loss per share — basic and diluted


$

(0.14)



$

(0.80)



$

(0.55)



$

(2.06)




















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


















Basic



59,244




58,859




59,207




59,360



Fully Diluted



59,244




58,859




59,207




59,360


Additional Disclosure:

















Depreciation and amortization


$

14,899



$

13,816



$

40,570



$

40,699


 

 

IMAX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except share amounts)

(Unaudited)




September 30,



December 31,




2021



2020


Assets









Cash and cash equivalents


$

193,008



$

317,379


Accounts receivable, net



82,728




56,300


Financing receivables, net



135,202




131,810


Variable consideration receivables, net



42,540




40,526


Inventories



38,245




39,580


Prepaid expenses



11,863




10,420


Film assets, net



5,347




5,777


Property, plant and equipment, net



260,852




277,397


Investment in equity securities



1,089




13,633


Other assets



18,514




21,673


Deferred income tax assets, net



18,652




17,983


Goodwill



39,027




39,027


Other intangible assets, net



24,094




26,245


Total assets


$

871,161



$

997,750


Liabilities









Accounts payable


$

15,584



$

20,837


Accrued and other liabilities



98,272




99,354


Revolving credit facility borrowings, net



9,486




305,676


Convertible notes, net



223,265





Deferred revenue



86,442




87,982


Deferred income tax liabilities



17,642




19,134


Total liabilities



450,691




532,983


Commitments and contingencies









Non-controlling interests



760




759


Shareholders' equity









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









59,082,275 issued and 59,081,999 outstanding (December 31, 2020 — 58,921,731
issued and 58,921,008 outstanding)



413,531




407,031


Less: Treasury stock, 276 shares at cost (December 31, 2020 — 723)



(4)




(11)


Other equity



161,524




180,330


Statutory surplus reserve



3,932





Accumulated deficit



(241,440)




(202,849)


Accumulated other comprehensive (loss) income



(637)




988


Total shareholders' equity attributable to common shareholders



336,906




385,489


Non-controlling interests



82,804




78,519


Total shareholders' equity



419,710




464,008


Total liabilities and shareholders' equity


$

871,161



$

997,750


 

 

IMAX CORPORATION 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of dollars)

(Unaudited)




Nine Months Ended




September 30,




2021



2020


Operating Activities











Net loss


$


(22,956)



$


(137,942)


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











Depreciation and amortization




40,570





40,699


Amortization of deferred financing costs




1,749





595


Credit loss (reversal) expense, net




(4,884)





15,582


Write-downs




878





13,339


Deferred income tax (benefit) expense




(1,687)





23,142


Share-based and other non-cash compensation




18,558





16,345


Unrealized foreign currency exchange loss (gain)




555





(394)


Realized and unrealized investment (gains) losses




(5,311)





939


Equity in losses of investees








1,858


Changes in assets and liabilities:











Accounts receivable




(24,336)





30,350


Inventories




653





(10,278)


Film assets




(10,035)





(6,177)


Deferred revenue




(1,434)





5,233


Changes in other operating assets and liabilities




(11,902)





(24,109)


Net cash used in operating activities




(19,582)





(30,818)


Investing Activities











Purchase of property, plant and equipment




(2,353)





(658)


Investment in equipment for joint revenue sharing arrangements




(5,361)





(5,289)


Acquisition of other intangible assets




(3,399)





(1,661)


Proceeds from sale of equity investment




17,769






Net cash provided by (used in) investing activities




6,656





(7,608)


Financing Activities











Proceeds from issuance of convertible notes, net




223,675






Debt issuance costs related to convertible notes




(1,163)






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




(474)





(1,026)


Repurchase of common shares




(4,610)





(36,624)


Repurchase of common shares, IMAX China




(5,016)





(1,534)


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




(5,027)





(4,214)


Net cash (used in) provided by financing activities




(110,487)





233,509


Effects of exchange rate changes on cash




(958)





630


(Decrease) increase in cash and cash equivalents during period




(124,371)





195,713


Cash and cash equivalents, beginning of period




317,379





109,484


Cash and cash equivalents, end of period


$


193,008



$


305,197


 

 



Three Months Ended



Nine Months Ended




September 30,




September 30,


In millions of U.S. Dollars


2021



2020




2021




2020


Revenue



















IMAX Technology Network:



















IMAX DMR


$

15,701



$

6,886




$

39,438




$

18,061


Joint Revenue Sharing Arrangements, contingent rent



9,887




4,473





26,108





10,307





25,588




11,359





65,546





28,368


IMAX Technology Sales and Maintenance:



















IMAX Systems



13,236




17,437





35,117





27,674


Joint Revenue Sharing Arrangements, fixed fees



1,036




57





3,776





1,196


IMAX Maintenance



13,055




5,855





33,196





13,225


Other Theater Business(1)



363




307





1,283





1,261





27,690




23,656





73,372





43,356


New Business Initiatives



1,238




378





2,554





1,488


Film Distribution and Post-Production



1,598




1,865





4,001





7,541





56,114




37,258





145,473





80,753


Other



488




(2)





838





260


Total revenues


$

56,602



$

37,256




$

146,311




$

81,013





















Gross Margin (Margin Loss)



















IMAX Technology Network:



















IMAX DMR(2)


$

7,293



$

3,079




$

22,405




$

7,492


Joint Revenue Sharing Arrangements, contingent rent(2)



3,626




(2,491)





7,299





(10,610)





10,919




588





29,704





(3,118)


IMAX Technology Sales and Maintenance:



















IMAX Systems (2)



8,086




8,671





21,646





14,497


Joint Revenue Sharing Arrangements, fixed fees(2)



280




(117)





783





110


IMAX Maintenance



6,462




794





15,360





(355)


Other Theater Business



64




31





269





77





14,892




9,379





38,058





14,329


New Business Initiatives



1,189




372





2,281





1,245


Film Distribution and Post-Production (2)(3)



416




(6,061)





997





(9,392)





27,416




4,278





71,040





3,064


Other



71




(449)





(669)





(1,837)


Total Segment Margin (Margin Loss)


$

27,487



$

3,829




$

70,371




$

1,227





_______________



(1)

Principally includes after-market sales of IMAX projection system parts and 3D glasses.



(2)

IMAX DMR gross margin includes marketing costs of $3.2 million and $5.8 million, respectively, for the three and nine months ended September 30, 2021 (2020 — $0.4 million and $2.8 million, respectively). JRSA gross margin includes advertising, marketing and commission expense of $0.8 million and $1.9 million, respectively, for the three and nine months ended September 30, 2021 (2020 — $0.7 million and $1.3 million, respectively). IMAX Systems gross margin includes marketing and commission costs of $0.3 million and $0.9 million, respectively, for the three and nine months ended September 30, 2021 (2020 — $0.6 million and $1.0 million, respectively). Film Distribution segment gross margin includes marketing expense of $nil and less than $0.1 million, respectively, for the three and nine months ended September 30, 2021 (2020 — $0.2 million and $0.4 million, respectively).



(3)

During the three and nine months ended September 30, 2020, Film Distribution segment results include impairment losses of $5.4 million and $9.9 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 nine months ended September 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 or losses, 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 September 30, 2021 (1)



For the Three Months Ended September 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


$


(6,344)



$


2,034



$


(8,378)



$


(48,484)



$


(1,275)



$


(47,209)


Add (subtract):































Income tax expense (benefit)




4,402





634





3,768





19,349





(503)





19,852


Interest expense, net of interest income




261





(90)





351





1,509





(81)





1,590


Depreciation and amortization, including film asset
   amortization




14,899





1,723





13,176





13,816





1,182





12,634


Amortization of deferred financing costs(2)




741









741





296









296


EBITDA


$


13,959



$


4,301



$


9,658



$


(13,514)



$


(677)



$


(12,837)


Share-based and other non-cash compensation




6,226





233





5,993





5,495





292





5,203


Realized and unrealized investment gains




(30)









(30)





(1,575)





(484)





(1,091)


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




(2,901)





(381)





(2,520)





10,458





3,324





7,134


Loss from equity accounted investment
















1,329









1,329


Adjusted EBITDA per Credit Facility


$


17,254



$


4,153



$


13,101



$


2,193



$


2,455



$


(262)


Revenues attributable to common

   shareholders(3)




56,602





6,699





49,903





37,256





5,825





31,431


Adjusted EBITDA margin attributable to common

   shareholders




30.5

%




62.0

%




26.3

%




5.9

%




42.1

%




(0.8)

%


































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



For the Twelve Months Ended September 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


$


(42,500)



$


11,174



$


(53,674)



$


(116,590)



$


(12,231)



$


(104,359)


Add (subtract):































Income tax expense




11,314





3,209





8,105





29,388





5,549





23,839


Interest expense, net of interest income




3,642





(355)





3,997





2,564





(388)





2,952


Depreciation and amortization, including film asset
   amortization




52,575





5,009





47,566





58,553





4,737





53,816


Amortization of deferred financing costs(2)




2,056