IMAX Building Optimistic Anticipation

IMAX Corporation (USA) (NYSE: IMAX) reported its fourth-quarter results ahead of the conservative expectations, with revenues significantly beating the estimate, although declining year-on-year.

Barrington’s James C. Goss maintains an Outperform rating on the company, with a price target of $40.

Solid Results

IMAX reported its revenue for Q4 at $106.9 million, meaningfully beating the estimate. “The main variance was in equipment and product sales that were greater than expected as the screen additions of 166 topped our forecast,” the analyst mentioned.

Although the share of new builds has been rising, which is favorable for joint revenue sharing models, the number of sales-type lease openings have also been significant.

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Global IMAX Box Office came in at $246.5 million, in line with the estimate, while the EBITDA for Q4 stood at $36.9 million, meaningfully above the estimate, although representing a decline from the year ago period.

The EPS for the quarter was also ahead of the estimate at $0.22, although below the year ago quarter.

“The backlog of 498 theatres as of December 31, mostly in international markets, was down from 547 at the end of September, but up 34 period from the 372 in backlog in the year-ago period,” Goss stated.

Optimistic Anticipation

In addition, installation activity remained robust, with exhibitors wanting to increase their IMAX offering ahead of the 2017 film slate. The company’s screen base stood at 1,215 at year end 2016, across 75 countries.

“Anticipation for the 2017 film slate and high consumer interest in the IMAX brand give management confidence in a robust pipeline of future expansion. The company provided guidance for 2017 openings of 150–155 screens, a majority using the joint revenue sharing or hybrid models as exhibitors seek to add IMAX auditoriums in advance of increased traffic expectations in 2017 and 2018,” the analyst added.

At last check, shares of IMAX were up 4.65 percent at $32.60.