IMAX Looks To 2012 To Shake Off Disappointing 2011 Results

Feb.24.12 | About: IMAX Corporation (IMAX)

IMAX (NYSE:IMAX) shares traded up 4.5% today despite an earnings miss for the most recent quarter and full fiscal 2011 year. The increase came from investors optimistic about what IMAX has in store for 2012.

For the second year in a row, IMAX signed over 200 theaters. The total number signed in fiscal 2011 was 209. The commercial network of theaters grew 33% for the year. A record number of 170 theaters were installed for the year for the company. During the most recent fourth quarter, 26 theaters were signed under IMAX agreements. The company installed 57 during the fourth quarter, which is a record for IMAX. As of December 31, IMAX had 497 commercial IMAX theaters. Also in the IMAX library is 20 commercial destination locations and 117 institutional screens. The backlog at the end of the year remains at 263 theaters. IMAX expects to install 95-100 screens in 2012, including 12-17 in the first quarter.

The fourth-quarter earnings came in at $0.14 per share from $66.7 million in revenue. Film revenue for the quarter was $18.1 million, compared with $18.0 during the fourth quarter of 2010. The highlight of the quarter was Ghost Protocol, which helped IMAX maintain an average box office of $221,600 per screen for the quarter. Revenue from joint revenue sharing theaters was $8.4 million, which was an increase from the $7.8 million in the prior-year period. The joint revenue sharing theaters have continued to make up the majority of new signings for IMAX and lead to higher revenue for the company. Of the 497 IMAX theaters, 257 now operate under the joint-revenue model.

For 2012, IMAX is focusing on South America, Western Europe and India. China and parts of Asia were a success in 2011 for the company and the continued international expansion is powering the company. Four IMAX theaters are coming to Brazil in the first half of 2012. Similar to how China has shown Chinese movies on IMAX screens, IMAX is hoping to break into the Bollywood scene in India. In December, IMAX did announce the signing of seven theaters in China and two in Indonesia.

In my top 10 stock list article, I recommended buying shares for three key reasons:

  1. Strong 2012 Lineup
  2. China Expansion and Backlog
  3. Exclusive Deals

1.The strong lineup continues with the announcement of the newest James Bond movie, "Skyfall," being added to the 2012 lineup of IMAX movies. The celebration of the 50th anniversary of James Bond movies will take place in the fall of 2012. Skyfall will open internationally on IMAX screens October 26, and in the United States on November 9. In my most recent IMAX article, I noted that both "The Hunger Games" and "The Avengers" had been added to an already promising 2012 IMAX lineup.

2. The earnings call showed that the expansion into China has helped earnings. Also several movies are being released internationally on IMAX screens in their native countries. The biggest positive for IMAX in China was the recently announced deal that would make more films from the United States available in China. Currently there is a cap of 20 films, but now China will allow 14 additional movies in 3D or IMAX format to be shown on screens in the country.

3. Mission Impossible: "Ghost Protocol" made $53 million on IMAX screens and was shown on IMAX screens five days before the movie went into wide release. To date, all the movies being shown on IMAX screens will be released on IMAX the same day as other theaters. I think there will be a movie that gets added to the lineup that releases early on IMAX. Movie companies had to see "Ghost Protocol's" amazing numbers.

Trading at $25.08 at the time this article was written puts shares almost perfectly in the middle of their 52-week range. Shares have traded from $12.57-$38.00 in the last 365 days. I recommended buying shares of IMAX at the beginning of 2012 at $18.33 in my annual top 10 stocks list. Shares have returned 36% since that article and I think they have plenty more room to run with an exciting list of 2012 films and a new enhanced international expansion path.

Disclosure: I am long IMAX.