Giant screen operator IMAX has reported its latest results, with CEO Rich Gelfond telling analysts that its cinemas in China, a key market for the business, and other parts of Asia are starting to reopen.
“As theatres with IMAX systems reopen, our network will begin to generate incremental free cash flow with limited startup costs thanks to our flexible, asset light business model. We are already benefiting from the local programming and classic titles being shown in international markets. As a reminder typically two-thirds of our box office is earned outside North America,” said Gelfond.
He told analysts that this reopening translated into an actual 624 IMAX screens that were back in business in July which was 40 per cent of its overall screen count. This number broke down to 409 screens in China, 43 in North America (primarily in Canada) and 172 elsewhere around the world.
“By the end of August, our current expectation is that approximately 1,400 screens in 70 markets or 90 per cent of our global network will open in anticipation of Tenet‘s recently announced release date,” stated Gelfond who explained that they had adopted social distancing within its cinemas with 30 per cent capacity restrictions. IMAX is also asking its theatrical partners to insist on movie-goers wearing masks while in the complex.
IMAX used Q2 to sign new exhibition agreements with South Korea (9 theatres), Indonesia, Vietnam and Turkey.
As to its financials, total revenue in Q2 was $8.9 million down 92 per cent versus last year. The IMAX Technology Network reported a $6.5 million margin loss on essentially no revenue. The IMAX Technology sales and maintenance segment reported revenue of $4.6 million and a gross margin of $200,000 versus $15.4 million of gross margin in the previous year.
IMAX installed almost 100 screens during the quarter-year.
Gelfond summed up the difference between the cinema industry and restaurant trades: “The movie industry is interesting because in a restaurant, let’s say, if the capacity is 50 per cent you lose money. In the movie industry in a regular multiplex 20-to-25 per cent capacity is heroic and last year which was our highest box office ever our global capacity was about 10 per cent.”