IMAX Showing Strong Summer Demand

| About: IMAX Corporation (IMAX)
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It's amazing what an investor can find out by visiting a company's website. IMAX actually gives updates on the revenue numbers that each movie is bringing in YTD. I'll save everyone the time and report those numbers here.

Fast Five - $11 million U.S., $1 million globally (read here)
Thor - $11.4 million U.S., $6 million globally (read here)
Kung Fu Panda 2 - $6 million globally. Limited U.S. release (read here)
Pirates of the Caribbean: On Stranger Tides - $18 million U.S., $20 million globally (read here)
Super 8 - $4.1 million U.S., $0.2 million globally (read here)

So far this quarter, we’re at about $77.7 million (no updates available for “Into the Wild”). Current Wall Street revenue estimates are at $70.43 million. Looks to be close, right? That is, until you notice that the quarter ends in three weeks.

Looking at the final few weeks in the quarter, IMAX’s lineup includes Super 8, Cars 2 and Transformers 3. Super 8 will be featured globally for another week. After its two week run, we move into the family realm with Cars 2 for a week. The original Cars movie had an opening weekend of $60 million in the U.S. Finally, we’ll have two short days of Transformers 3, where the franchise’s second film generated over $100 million in its opening weekend. IMAX brings in anywhere from 5-20% of total box office figures depending on the film, number of theaters, and other outside factors.

Looking at the numbers above, IMAX could generate a milestone $100 million in revenue this quarter. This is inline with Avatar's numbers (Q4 generated $101 million) and shows that growth remains viable within the IMAX model, and that the Avatar figures weren’t a one-time occurrence. With revenue numbers looking to be higher than current estimates, we may see the Street revise those numbers as well as the EPS estimates.

The story gets brighter when we look at U.S. vs. global numbers. As shown above, Pirates' numbers overseas outdid the domestic box office. This is where a great deal of growth remains. IMAX continues to tap into China, India and Russia, which are commanding theater averages of $60,000 vs. $30,000 in the U.S. In the past quarter, IMAX came to an agreement with a Chinese distributor for an additional 75 theaters in future years. Based on these numbers, IMAX increased its theater openings from 30% to 40% in 2011.

The current backlog from IMAX’s first quarter press release (Click here to read) stated that as of March 31, 2011, there were “a record 283 theatre systems (for comparison there are about 300 in the U.S. today), including 125 systems under joint revenue sharing arrangements and 158 systems under sales and sales-type lease arrangements, five of which were systems designated for digital upgrades.”

The great thing about the IMAX model is that the company really doesn’t have any major competitors in the marketplace. RealD (NYSE:RLD) is a growing 3D entertainment company with a different revenue model. IMAX gets its profits by splitting ticket prices with Regal Entertainment (NYSE:RGC), Cinemark (NYSE:CNK) and other theater companies based on the more expensive and technologically advanced ticket. IMAX has a big lead in luxury movie attendance, with no major competitor at its heels to date. So what are the risks?

For one thing, IMAX doesn’t control its own destiny, as the movie market needs to consistently bring in movie goers as well as dollars. This year has seen a pick-up in movie revenue after a slow start, where IMAX reported a tepid quarter based on a weak movie slate. Looking into the distant future, we have The Dark Knight Rises next summer and the Avatar sequels in 2014 and 2015. And if these films are anything like their predecessors, I think we’ll have a few more good years of IMAX technology to look forward to.

Disclosure: I am long IMAX.