Imax announced a sharp decline in its second quarter earnings on Tuesday, and in falling well short of expectations the announcement also sent the company's share price down in morning trading.
Citing a weak film slate and continued expansion, IMAX announced $1.8 million in net earnings for Q2, down 87 percent from $13.3 million in the same frame last year. The earnings per share were just 35 percent of what was expected.
“While the quarter did not live up to our financial expectations, more fundamental to the long-term value of our business is the fact that we have signed 153 theatre deals year-to-date, are installing theatres at a rapid rate and are sitting on a record backlog of close to 300 IMAX theatre systems,” said IMAX Chief Executive Officer, Richard L. Gelfond.
Those 153 deals are up from 98 last year, and Gelfond said Imax expects to install 120 to 130 new theaters this year, which is slightly above expectations. Yet Imax's expansion still depends on box office performance, which has not been strong this year.
While revenues rose from $55.5 million a year ago to $57.2 million this year, both film revenue and box office from premastering Hollywood movies were lower than a year ago.
Gelfond cited a weak crop of films this year, and said the numbers are already starting to improve with “Transformers: Dark of the Moon” and “Harry Potter and the Deathly Hallows Part 2” breaking box office records. Q3 box office is already at $88 million as compared to the $98 million from last year.
Imax has also secured big titles for next year in “The Dark Night Rises,” “The Hobbit” and “Amazing Spiderman.”
Still, investors have been down on Imax this week. The company’s shares sank 13 percent on Monday due to concerns that its popularity was declining. After the earnings report, shares plummeted 14.74 percent to 20.82 as of 11:47 ET.