It’s a rough time to be in the movie exhibition business — especially for a niche company requiring giant, expensive equipment. Imax reported its third-quarter 2020 financials on Thursday, and while the company drew more revenue than expected, the Q3 net loss was a worse-than-anticipated $47.2 million.
Wall Street had forecast a loss of 30 cents per share on $29.68 million in revenue, according to consensus estimate compiled by Yahoo Finance. Imax actually reported a loss of 75 cents per share on $37.3 million in revenue.
While boosted by local-language titles in Asian markets, that Q3 revenue figure was down 56.9% from the comparable quarter in 2019. Last year, Imax earned $9 million, or 21 cents per share.
The Q3 2020 big miss on a per-share basis is the result of a decision to take one-time charges related to ongoing uncertainty around the coronavirus pandemic. Imax would have reported a loss of $0.35 per share without those items.
The bulk of the one-time charges was an allowance against prepaid taxes. There were also additional write-downs on documentary films given the uncertainty on when theatres will fully reopen.
In the second quarter of 2020, Imax lost 44 cents per share as revenue declined 92% from Q2 2019. Clearly, the coronavirus pandemic has ravaged the movie-theatre business.
“As the only global theatrical platform for blockbuster entertainment, our experience around the world has proven that audiences will enthusiastically return to the movies where theaters are open and they feel safe. As they do return, they are coming back to Imax — underscoring the enduring strength of our brand and the power of The Imax Experience,” Imax CEO, Richard L. Gelfond said in remarks accompanying the Q3 financials. “With continued box office revenues from our strong local language slate and revenues from theater installations, the company estimates our average monthly cash flow will be approximately break-even through the first quarter of 2021.”
Gelfond is pretty stoked about the possibility for recovery in China — a gigantic player in the box office world.
“Our multi-year strategic effort to geographically diversify our business is paying off, as our strong local language slate continues to partially offset the lack of Hollywood releases in the market. From the year’s No. 1 global box office release in China, ‘The Eight Hundred’ — the first commercial Asian film shot entirely with Imax cameras — to Japan’s record-breaking ‘Demon Slayer,’ we believe that Imax is poised to benefit from the impressive resurgence of the Asian film market. Imax has no fewer than 10 local language releases in the fourth quarter of 2020, with the promising Chinese New Year box office period on its heels in February,” he continued. “Imax remains well-positioned to manage through the continued recovery of the global film industry as cinemas await the return of Hollywood tentpoles. We have a significant financial runway with $305 million of cash on our balance sheet at the end of the third quarter.”
Earlier this month, the struggling Imax furloughed 150 employees.
Imax stock closed Wednesday afternoon at $11.79 per share. The stock opened down — approximately 3% — on Thursday after the earnings call.