* Adjusted EPS $0.53 vs year-earlier loss $0.06
* Revenue up 120 pct at $72.8 mln
* Hikes 2010 theater installation forecast
* Stock falls more than 5 pct, analysts say profit-taking
(Adds analyst and chief executive comments, stock prices.
Figures in U.S. dollars unless noted)
By Susan Taylor
OTTAWA, April 29 Big-screen movie company Imax
Corp IMX.TO IMAX.O posted a market-beating profit on
Thursday and said it will accelerate its expansion plans, as it
benefits from a growing appetite for such 3D blockbusters as
"Avatar" and "Alice in Wonderland."
Imax, which has transformed its business to digital
projection from large-format film, said that, based on recent
deals, it expects to install more theater systems in 2010 than
it previously forecast.
Despite the strong results and sturdy growth prospects,
Imax shares dropped more than 5 percent, which analysts
attributed to profit-taking after a recent run-up by the
"It's an example of sell on the news. The stock's had a
massive run here in the last quarter," said Piper Jaffray
analyst James Marsh.
"Investors have been served up with a buffet of good news:
international screen install growth, programming deals with
Warner Brothers, a box office outperformance. So it's been a
great quarter, which was obviously evident in the results."
Imax, which opened its first theater in 1970, said it
earned $26.6 million, or 40 cents a share, in the first
quarter, compared with a year-earlier loss of $2.6 million, or
6 cents a share.
Excluding stock-based compensation, its profit was 53 cents
Analysts, on average, had expected earnings of 37 cents a
share before items, according to Thomson Reuters I/B/E/S.
"The results were far better than I expected and I think
that Imax is poised for a very strong year," said Brigantine
Advisors analyst Steven Frankel.
Revenue more than doubled to a record $72.8 million from
$33.1 million, beating analysts' estimates of $67 million, as
more theaters showed popular Imax films.
Film revenue in the quarter was up 275 percent to $29.3
million as gross box office receipts -- of which Imax gets a
share -- soared to $232 million from $28 million.
"I thought the strength was really across the board, from
revenue to EBITDA, all the way down to EPS. It was a
high-quality quarter," said Marsh. "I thought the most
surprising thing was just the improvement in gross margins."
Gross margin rose to $48.3 million, or 66 percent of
revenue, from $14.2 million, or 43 percent of revenue.
Imax said it now expects to install 40 to 45
revenue-sharing theaters from its backlog this year, up from a
previous estimate of 35 to 40. It also expects to install 15 to
20 new sale and lease systems, up from a previous estimate of
10 to 15.
The company signed contracts for 41 theater systems in the
first quarter, compared with three in the year-prior period and
35 in all of fiscal 2009. It has closed a further 13 theater
system deals since the quarter ended on March 31.
To date, second-quarter gross box office is $30 million, a
78 percent jump over a year earlier.
"I think this will be another strong quarter for us in film
box office," Chief Executive Officer Rich Gelfond said in an
"The first (quarter) was dominated by two movies, which
were "Avatar" and "Alice", which played for a long time and
played very well. In this quarter we have more blockbusters
that will play for shorter periods of time."
The second-quarter slate includes "Iron Man 2", "Shrek
Forever After", "Toy Story 3" and "The Twilight Saga: Eclipse."
Toronto-based Imax announced a deal on Wednesday with
Warner Brothers to release up to 20 movies in Imax format
through 2013, including "Harry Potter and the Deathly Hallows"
parts one and two, "Happy Feet 2", "Batman 3" and "Superman".
Imax shares fell 5.1 percent to $19.25 on Nasdaq and 5.4
percent to C$19.37 on the Toronto Stock Exchange on Thursday.
The stock price has nearly doubled from the start of the year.
(Additional reporting by Scott Anderson in Toronto; editing by