Imax Corporation First Quarter Earnings Offer Hint Of Strong Year Ahead

May. 1.12 | About: IMAX Corporation (IMAX)

Last week, Imax Corporation (NYSE:IMAX) reported first quarter earnings. First quarter revenue was $55.6 million, which is an increase from the $45.2 million reported in last year's first quarter. Earnings per share were reported as $0.06, versus $0.04 last year. Earnings per share fell short of the $0.07 targeted by analysts on Yahoo Finance. Box office revenue for the quarter was $121.7 million. The first quarter of 2011 saw the company bring in revenue of $62.3 million.

During the first quarter earnings call, the company also provided a supplemental document. In the document, the company briefly discussed their new laser technology. Here are some highlights on the technology:

· Held demonstrations with three movie studios and 20 exhibitors.

· Sound system has eight discrete channels, compared to a current five.

· Uses less power than current technology.

· Is more cost efficient for companies using new laser technology.

· Offers greater brightness and a clearer picture.

The company will roll out this new laser technology in 2013 with a scheduled release in the second half of next year.

In the first quarter, Imax installed sixteen new theaters (8 joint revenue and 8 sales lease). The current schedule has the company installing 17-21 in the second quarter. For fiscal 2012, the company expects to open 95-100. The company ended 2011 with 497 theaters installed. The current estimates are to have 589-594 theaters by the end of fiscal 2012.

China has continued to be a strong point for this growing international company. Imax had 88 theaters open in China (also includes Hong Kong, Taiwan, and Macau) at the end of fiscal 2011. The backlog for theaters to be installed in China is 217. The company expects full penetration of 400 Imax theaters in China. During fiscal 2011, Imax released two Chinese movies, and ten American films in the country of China. The per screen average of $1.7 million in China is higher than screens in America.

China's movie industry continues to grow. In 2011, the country saw 791 Chinese movies produced, compared to 526 in 2010. The company will release "Chinese Zodiac" later in Asia on Imax screens.

Analysts are expecting earnings per share of $0.24 for the current June second quarter. Full year earnings are projected to be $0.98 for 2012. The following year has targeted earnings per share of $1.17. The company has now missed meeting analysts' expected earnings per share three of the last four quarters. The other quarter saw the company meeting analysts' targeted earnings per share.

April's results, which will be included in the second quarter, are off to a strong start. The company said during the earnings release that April's first three weeks saw box office sales up 500%. Strong performances from "Titanic 3D" and "The Hunger Games" will contribute strong numbers to the second quarter and when paired with "The Avengers", "Dark Shadows", and "Men in Black 3", the second quarter could blow away earnings estimates. Recently, Imax brought "The Hunger Games" back into theaters for an extra week. This move once again showed how smart Imax is and how it will continue to maximize as much box office revenue as possible. The company was one of many to benefit from the worldwide success of "The Hunger Games".

Imax will likely see a lift in its share price this week as we head into the opening weekend of "The Avengers". "The Avengers" is a true blockbuster movie and its already strong international results will carry into this weekend in the United States. The company continues to add to its already strong 2012 lineup, including the announcement of the newest James Bond movie, "Skyfall", being added to the lineup.

Shares of Imax trade at $23.97 and are still a recommended buy for me. At the beginning of the year, I selected Imax as one of my top ten stock picks with a price target of $35. I have owned shares of Imax since it traded around $4 and it continues to be one of my top holdings. I recommend looking at shares of Imax while they are under $25. The company has an amazing movie lineup for 2012 and shareholders should finally be rewarded at the end of the year.

Disclosure: I am long IMAX.