IMAX Corp. (IMAX) reported strong financial results for the second quarter of 2014. Both the top and the bottom line outpaced the respective Zacks Consensus Estimate. Quarterly total revenue was $79.1 million, down 3.1% year over year, but surpassed the Zacks Consensus Estimate of $76 million.
Quarterly GAAP net income was $13.3 million or 19 cent per share compared with $11.8 million or 18 cents per share in the year-ago quarter. Second-quarter earnings per share of 19 cents also exceeded the Zacks Consensus Estimate by a penny.
Quarterly gross margin came in at 60.4% against 53.4% in the prior-year quarter. Operating margin stood at 24.5% compared with 21.3% in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) stood at $32.8 million.
In the first half of 2014, IMAX generated around $35.3 million of cash from operations against a little over $8 million in the year-ago period. Free cash flow in the reported period was $6.9 million compared with a negative $9.6 million in the prior-year period. At the end of the first half of 2014, IMAX had $75.1 million of cash and cash equivalents and no outstanding debt against $29.6 million of cash and no outstanding debt, at the end of 2013.
Segment Wise Results
Sales and Sales-type leases: Quarterly total revenue was $14.5 million, down 15.2% year over year. In the reported quarter, the company installed 11 new theater systems and upgraded 4 digital systems in existing locations.
Joint-revenue sharing arrangement: Quarterly total revenue stood at $19.4 million, up 6% year over year. During the reported quarter, IMAX installed 19 new theaters. Notably, the company had 408 theatres operating under joint revenue-sharing arrangements as of Jun 30, 2014 as against 336 theatres a year ago.
Production and IMAX DMR (Digital Re-Mastering): Quarterly total revenue was $24.1 million, down 7.3% year over year. The average global DMR box office per screen in the second quarter of 2014 was $299,800 compared with $353,300 in the prior-year quarter.
Category wise Results
In the second quarter of 2014, revenues from Equipments and product sales totaled $19.5 million, down 4.2% year over year. Services revenues were $39.7 million, down 4.3% from the prior-year quarter. Rental revenues were $17.9 million, up 0.1% year over year. Finance Income came in at $2.1 million, up 1.8% year over year.
Network Growth Statistics
In the quarter under review, the company signed 20 new theaters compared with 25 in the prior-year quarter. Total theater signing, at the end of the reported quarter was 24 against 34 at the end of the prior-year quarter.
In the second quarter, IMAX installed 30 new theaters compared with 29 in the prior-year quarter. Total theater installation, at the end of the reported quarter, was 34 against 30 at the end of the year-ago quarter. As of Jun 30, 2014, total theaters in backlog were 419 compared with 284 at the end of the same quarter of the previous year. Total IMAX theater network was 868 compared with 767 a year earlier.
Other Stocks to Consider
IMAX currently carries a Zacks Rank Ran #4 (Sell). Other better-ranked stocks in the broader media and broadcasting industry include Media general Inc. (MEG), Nexstar Broadcasting Group Inc. (NXST) and SIRIUS XM Radio Inc. (SIRI). All three stocks current carry a Zacks Rank #2 (Buy).
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