IMAX China Reports Half-Year 2019 Financial Results

GREATER CHINA HIGHLIGHTS

(Note: Percentage and other changes refer to first-half 2018 unless otherwise noted)

• Achieved record IMAX China box office of US$236 million, up 24% year-on-year and 35% in RMB terms in mainland China.
• Record revenue of $59.3 million, up 15% driven by box office growth and strong indexing across both Hollywood and Chinese language titles.
• Record adjusted net income of US$24.9 million, up 17%, demonstrating operating leverage from our network effect.
• Greater China same-store sales box office grew 9% year-on-year, and 17% in RMB terms in mainland China.
• The IMAX network reached 662 systems as of June 30, 2019, with an additional 298 systems in backlog, including a 40-theatre deal recently signed with CGV featuring IMAX with Laser® projection system.
• Approval of interim dividend for the first half of 2019 of approximately US$7 million (US$0.02 per share).

SHANGHAI, July 31, 2019 /PRNewswire/ -- IMAX China Holding, Inc. ("IMAX China" or the "Company", HKG: 1970) today reported first half 2019 Greater China revenue of US$59.3 million, up 15.1% year-over-year, primarily driven by strong growth in our network business. Gross profit of US$41.0 million represented 69.3% of revenue. Adjusted profit for the first half of 2019 came in at US$24.9 million, up 17.0%, compared to the first half last year, demonstrating the inherent operating leverage from our network effect. Adjusted profit margin of 42.0% was up 70 basis points compared to the prior year period. For adjustments to profit for the period and a full detail of financial results, please refer to the corporate filing posted with the Hong Kong Stock Exchange or to the earnings results posted on the Investor Relations section of the IMAX China web site (http://www.imax.cn/investor). 

"IMAX China delivered record box office, revenue and adjusted net income in the first half, affirming the strength of our business model and long-term strategy in the market. Thanks to strong execution, we grew market share and enhanced our position in the ecosystem as the premiere destination for blockbuster entertainment," said Richard L. Gelfond, Chairman of IMAX China.

Network Update

The Company continued to see strong demand for new IMAX theatres in the first half of 2019. The Company signed agreements for 51 theater systems in the first half of 2019, up from 34 in prior year period. This brings total backlog as of June 30, 2019 to 298 theater systems, including a 40-theatre agreement recently announced with CGV, the largest in scale with them in China since our partnership began in 2010 and predominantly featuring IMAX with Laser® projection system.

"Our powerful end-to-end technology, refined local programming strategy and data-driven marketing are creating strong demand for The IMAX Experience® among our network partners, and served as the catalyst for the landmark 40-theatre deal we signed with CGV in the quarter," said Mr. Gelfond.

The Company also installed 30 new and upgraded theatre systems in the first half of 2019, up from 25 installations in the first half of 2018. As of June 30, 2019, there were 662 systems in the IMAX theatre network in Greater China, of which 647 were in commercial multiplexes. Currently 328 of these theaters operate under full revenue sharing arrangements, 100 under hybrid revenue sharing arrangements and 234 operate under sales arrangements. 

Box Office Update 

The compelling mix of Hollywood and local-language blockbusters drove a 24% increase in IMAX China gross box office to US$236 million in the first half of 2019, up from US$190 million in the prior-year period. Our refined programming strategy and increasing consumer recognition as the 'go-to' destination for blockbusters led to a 35% year-over-year growth in our mainland China box office.

"We hold a privileged position in the Chinese entertainment ecosystem, and our unique technology, expanding network, and ongoing focus on Hollywood and local language blockbusters will continue to strengthen our industry leadership in China and create value for our shareholders," said Mr. Gelfond.

IMAX China Dividend

IMAX China today announced that its Board of Directors approved the payment of an interim cash dividend of approximately US$7 million or US$0.02 per share.

Greater China Key Metrics

Conference Call

The Company will host a conference call today at 8:00 AM Hong Kong Time to discuss its half-year 2019 financial results. To access the call via telephone, interested parties in the US and Canada should dial (866) 548-4713 approximately 5 to 10 minutes before the call begins. Hong Kong callers should dial 800-961-105 and other international callers should dial (647) 484-0477. The conference ID for the call is 5096691. A replay of the call will be available via webcast at www.imax.cn/investor/l-en or via telephone by dialing (888) 203-1112 (US and Canada), or (647) 436-0148 (international). The Conference ID for the telephone replay is 5096691.

About IMAX China

IMAX China is a subsidiary of IMAX Corporation, and is incorporated under the laws of Cayman Islands. IMAX China was established by IMAX Corporation specifically to oversee the expansion of IMAX's business throughout Greater China. IMAX China trades on the Hong Kong Stock Exchange under the stock code "HK.1970."

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 theatres 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 June 30, 2019, there were 1,541 IMAX theater systems (1,445 commercial multiplexes, 15 commercial destinations, 81 institutional) operating in 81 countries. On Oct. 8, 2015, shares of IMAX China, a subsidiary of IMAX Corp., began trading on the Hong Kong Stock Exchange under the stock code "HK.1970."

IMAX®, IMAX® 3D, IMAX DMR®, Experience It In IMAX®, An IMAX 3D Experience®, The IMAX Experience®, IMAX Is Believing® and IMAX nXos® are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).

This press release contains forward looking statements that are based on IMAX Corporation and IMAX China 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. Important factors that could affect these statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business and technology strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of business, operations and technology, plans and references to the future success of IMAX Corporation, IMAX China or any other consolidated subsidiaries of IMAX Corporation (each, a "Group Member", and collectively, "IMAX Group") and expectations regarding the future operating, financial or technological results of any Group Member. These forward-looking statements are based on certain assumptions and analyses made by the IMAX Group 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 any Group Member is subject to a number of risks and uncertainties, including, but not limited to, 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 IMAX Group's growth and operations in China; the performance of IMAX DMR films; the signing of 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 any Group Member operates; competitive actions by other companies; the failure to respond to change and advancements in digital technology; one Group Member's largest customer accounting for a significant portion of its revenue and backlog; 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 a Group Member; risks related to cyber-security; risks related to any Group Member's inability to protect its intellectual property; general economic, market or business conditions; the failure to convert theater system backlog into revenue; changes in laws or regulations; the failure to fully realize the projected cost savings and benefits from any Group Member's restructuring initiative; and other factors, many of which are beyond the control of any Group Member. These factors, other risks and uncertainties and financial details are discussed in IMAX Corporation's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.