Are People Going Back To The Movies? Here's What IMAX Earnings Say

A major investing theme in 2021 is the rise of reopening stocks. Investors are often hunting for companies that could benefit from post-pandemic growth and pent-up demand. One industry that's often mentioned is movie theaters.

What Happened: Move theater company Imax Corp IMAX reported third-quarter revenue of $56.6 million Thursday, up 52% year-over-year. The figure came in slightly lower than analysts’ $57-million estimate.

The company reported a gross margin of 48.6%, which was its highest since 2019.

The overall global box office for Imax was $142 million, up 100% year-over-year and the third straight quarter of $100 million or more in box office. 

“It is clear the global film industry has reached a turning point: the movies are back,” Imax CEO Rich Gelford said.

Gelford called the third quarter a major turning point for the company.

The third quarter was Imax’s best in the pandemic era for global box office, revenue and gross margins.

What’s Next: The company believes it is set up well for the continued momentum of theater attendance and several blockbuster movies slated in the fourth quarter.

The company’s September box office set pandemic records and October saw all-time company records being set. Gelford said the company is on track to have one of its best 10-month stretches in company history.

“With solid operating momentum, strong market share and multiple tentpole films set to be released in the remainder of Q4 and 2022, IMAX is well positioned to deliver and strengthen our position as one of the world’s premier entertainment experience,” Gelford said.

Since the close of the third quarter, Imax reported its best October ever thanks to the release of “Dune.” The movie had $17.8 million in Imax box office in its opening weekend, including $9 million (22.5% of movie’s total) in North America. This marked the largest percentage of a domestic release since 2017.

Imax had fourth-quarter revenue of $56 million last year and posted revenue of over $100 million in each of the comparable quarters prior to that. The next quarter could be a very important one for Imax as it looks to carry momentum.

Related Link: AMC Entertainment Q2 Earnings Takeaways: Transformation Quarter But Not Out Of The Woods 

Other Theater Stocks To Watch: The strong report from Imax on Thursday could be a foreshadowing event for other movie theater stocks. Those companies could report strong quarterly figures and also highlight the strong October that is being seen industrywide.

AMC Entertainment Holdings AMC reported strong results for “Venom: Let There Be Carnage,” which was the second biggest domestic opening for an October movie ever.

AMC also reported strong sales for “No Time To Die” in international territories.

The company saw 2.4 million moviegoers in the U.S. during the weekend of Sep. 30 through Oct. 3. Globally, the company’s 3.9 million moviegoers during the weekend set a post-reopening record.

“The success of these two new blockbuster movies, and of our theatres both at home and abroad, demonstrates the huge pent-up demand we see in moviegoers who are ever so eager to return to the movie theaters,” AMC CEO Adam Aron said.

The strong results followed up a record-breaking Labor Day weekend featuring “Shang-Chi and the Legend of the 10 Rings.”

AMC saw Labor Day attendance ahead of pre-pandemic 2019 levels, with over 2 million moviegoers in the U.S.

AMC reported second-quarter financial results on Aug. 9 and should be reporting third quarter results in early November.

Cinemark Holdings Inc CNK has not been as vocal with September and October figures from the record-breaking movie titles. 

The company is scheduled to report third-quarter financial results on Nov. 5 before the market open. Cinemark has beat revenue estimates from analysts in each of the last three quarters, including the $294.7 million seen in the second quarter.

IMAX Price Action: IMAX shares were down 0.63% Thursday afternoon at $20.56.