IMAX Corporation Conference Summary Industry Overview - The theatrical exhibition industry, particularly in North America, is facing challenges, with a reported 14% decline in box office revenue for North American exhibitors quarter to date [2] - IMAX, however, is experiencing a record year, projecting $1.2 billion in box office revenue, with a quarter-to-date revenue of approximately $270 million, up 40% from the previous year [1][2] Key Points and Arguments IMAX's Unique Positioning - IMAX has successfully pivoted to a global content strategy, with one-third of its box office revenue coming from foreign language films [2] - The company is focusing on premium experiences, which are in high demand post-pandemic, leading to a 40% increase in market share compared to pre-pandemic levels [8] - IMAX's Filmed For IMAX program is gaining traction, with 11 films already committed for 2026, indicating strong demand from filmmakers [9][11] Box Office Performance - IMAX's share of the domestic box office for blockbuster films has increased from 10% to 15% this year [13] - The company has successfully managed scheduling conflicts between studios, ensuring optimal release dates for films [14] Local Language Content Growth - Local language films have grown from approximately 10% of IMAX's box office pre-pandemic to around 33% in 2023, with expectations to reach 40% in the coming years [36][39] Streaming and Theatrical Dynamics - The competition for blockbuster slots has intensified with the entry of streaming services like Apple and Amazon into theatrical releases [19] - IMAX is adopting a pragmatic approach to the hybrid model of streaming and theatrical releases, collaborating with streaming platforms to enhance box office performance [20][23] Market Expansion Opportunities - IMAX is about 50% penetrated in its total addressable market, with significant growth potential in underpenetrated regions like Western Europe and the Middle East [30][32] - The company has seen rapid growth in Japan and Australia, with new theater signings and increased box office performance [31] Capital Allocation Strategy - IMAX employs two models for theaters: equipment sales and joint ventures, with a preference for joint ventures in high-revenue markets like Japan [40][41] Content Diversification - IMAX is exploring diverse content types, including concerts and live events, which have proven successful in attracting new audiences [47][48] AI Integration - IMAX is leveraging AI to enhance business operations, improve programming decisions, and monitor theater performance in real-time [51][52] Other Important Insights - The company is optimistic about upcoming films, particularly "Odyssey," which is the first film shot entirely with IMAX cameras, and anticipates strong performance from "Avatar" and the new Star Wars film [56][57] - Despite a strong second quarter, IMAX's stock experienced a decline due to market perceptions focused on North American exhibitors, highlighting a disconnect between IMAX's performance and investor sentiment [37][38] This summary encapsulates the key insights from the IMAX conference, highlighting the company's strategic positioning, growth opportunities, and market dynamics.

Core Insights - IMAX's total revenue for the quarter ending June 2025 reached $91.68 million, reflecting a 3.1% increase from the previous year [4] International Revenue Breakdown - Latin America contributed $2.15 million, representing 2.35% of total revenue, which was a -10.79% surprise compared to the estimate of $2.41 million [5] - Asia excluding Greater China generated $9.31 million, accounting for 10.16% of total revenue, with a -36.31% surprise against the projected $14.62 million [6] - Western Europe accounted for $14.11 million, or 15.39% of total revenue, showing a +62.21% surprise compared to the expected $8.7 million [7] - The Rest of the World contributed $3.55 million, making up 3.87% of total revenue, with a -15.32% surprise against the estimate of $4.19 million [8] - Greater China represented $17.68 million, or 19.28% of total revenue, with a -31.03% surprise compared to the expected $25.63 million [9] - Canada generated $2.49 million, constituting 2.72% of total revenue, showing a +17.64% surprise against the projected $2.12 million [10] Future Revenue Forecasts - Analysts expect IMAX to report total revenue of $98.67 million in the current fiscal quarter, indicating a 7.9% increase from the prior year [12] - For the full year, total revenue is projected at $400.95 million, marking a 13.8% increase compared to last year [13]

Core Insights - IMAX Corporation reported second-quarter 2025 adjusted earnings of 26 cents per share, exceeding the Zacks Consensus Estimate by 36.84% and reflecting a year-over-year increase of 44.4% [2][10] - Total revenues reached $91.7 million, surpassing the Zacks Consensus Estimate by 0.62% and showing a 3.1% year-over-year growth [2][10] Revenue Breakdown - Image Enhancement & Maintenance Services and Technology Sales saw declines of 2.6% and 7.7% year over year, totaling $50.8 million and $18.8 million, respectively [3] - Technology Rentals and Finance Income increased significantly by 36.1% and 24.4%, reaching $19.1 million and $2.8 million, respectively [3] - Content Solutions revenues decreased by 0.7% year over year to $33.9 million [3] - Technology Products and Services revenues rose by 9.3% year over year to $55.6 million [4] Box Office Performance - The second-quarter box office, including booking fees in China, totaled $281 million, marking a 40.5% year-over-year increase, driven by a record number of films released in IMAX format [6] Operating Metrics - Gross margin expanded by 910 basis points to 58.5%, with adjusted EBITDA increasing by 36.6% year over year [10][11] - Selling, general & administrative expenses decreased by 6% year over year to $35.3 million, while research & development expenses fell by 24.1% to $1.54 million [12] Network Growth - IMAX installed 36 systems in Q2 2025, compared to 24 systems in Q2 2024, bringing the total to 1,821 IMAX Systems operating in 89 countries and territories [8] - The company estimates a worldwide commercial multiplex addressable market of 3,619 locations, with a current market penetration of 48% [9] Financial Position - As of June 30, 2025, IMAX had available liquidity of $416 million, including $109 million in cash and cash equivalents [14] - Total debt, excluding deferred financing costs, was $280 million [14] Future Guidance - IMAX anticipates a record box office of over $1.2 billion in 2025, with an adjusted EBITDA margin exceeding 40% and plans to install 150 to 160 systems [17]

Financial Performance - IMAX Corporation reported quarterly earnings of 26 cents per share, exceeding the analyst consensus estimate of 21 cents per share [1] - Quarterly sales were reported at $91.68 million, which fell short of the analyst consensus estimate of $92.51 million [1] Business Drivers - The CEO of IMAX highlighted strong network growth, record box office performance in North America, and significant market share gains due to an increase in releases filmed with IMAX technology [2] - A total of 57 IMAX locations were opened worldwide, indicating robust network expansion [2] - System sales are reportedly pacing well ahead of 2024, suggesting positive momentum for the company [2] Stock Performance and Analyst Ratings - Following the earnings announcement, IMAX shares increased by 1% to $28.57 [2] - Rosenblatt analyst Steve Frankel maintained a Buy rating on IMAX and raised the price target from $35 to $37 [5] - Benchmark analyst Mike Hickey also maintained a Buy rating and increased the price target from $30 to $32 [5]

Core Insights - IMAX Corporation reported record domestic box office results for Q2 2025, achieving a 41% year-over-year increase in global box office and maintaining an adjusted EBITDA margin exceeding 42% for the second consecutive quarter [1][2] Installation and Network Expansion - Management raised full-year 2025 system installation guidance to 150-160 systems due to surging demand, with a replenished backlog and robust installation visibility through 2027 [2][4] - System installations grew 50% year-over-year with 36 new installations, particularly in France, the Netherlands, and Japan, which achieved their largest single-year growth [3][4] - The company signed 124 new and upgraded systems year to date, nearly matching the total signings for all of 2024 in just six months [3][4] Box Office Performance - IMAX achieved its highest-grossing domestic box office quarter ever, capturing a 3.6% share of the global box office with less than 1% of active movie screens, and market shares of 5.3% in the U.S. and 6% in China [5] - Major releases like "Mission Impossible: The Final Reckoning" and "F1: The Movie" allowed IMAX to capture over 20% of opening weekend box office receipts, outperforming the average opening-weekend share of about 15% for recent major releases [6][7] Profitability and Financial Performance - Gross profit increased by 22% year-over-year to $54 million, with a consolidated gross margin of 58%, driven by box office outperformance and a high-margin revenue mix [8] - Year-to-date operating cash flow rose 25% year-over-year to just over $30 million, while adjusted EBITDA margin climbed to 42.6%, up 780 basis points year-over-year [8][9] - Incremental box office revenue beyond $250 million per quarter converts to EBITDA and cash at about an 85% rate, indicating strong cash flow generation potential [9] Future Outlook - Management projects adjusted EBITDA margin in the low-forties percent range for the full year and anticipates a record number of "film for IMAX" titles secured, supporting confidence in sustained global box office and installation growth [10]

Market Overview - The market capitalization of major US stocks shows varied performance, with Oracle at 762.30 billion, Mastercard at 321.36 billion, and Visa at 770.15 billion, reflecting increases of +0.66%, +0.86%, and +0.68% respectively [3] - Exxon Mobil's market cap is 679.53 billion, with a slight decrease of -0.98%, while Johnson & Johnson and Netflix show minor changes of -0.08% and -0.05% respectively [3] - Companies like Wells Fargo and Cisco have market caps of 270.15 billion and 279.59 billion, with respective increases of +0.98% and -0.58% [3] Notable Stock Movements - T-Mobile US Inc experienced a significant increase of +6.20%, reaching a market cap of 272.19 billion [3] - General Electric and Coca-Cola saw market caps of 285.05 billion and 298.76 billion, with increases of +0.37% and +0.91% respectively [3] - Companies like Disney and Goldman Sachs have market caps of 229.06 billion and 221.80 billion, with slight changes of +0.01% and -0.60% [3] Sector Performance - The technology sector shows mixed results, with Intel at 991.05 billion, down -3.28%, while AMD increased by +2.46% to 254.92 billion [5] - The consumer goods sector is represented by companies like Procter & Gamble and Coca-Cola, with market caps of 371.68 billion and 298.76 billion, showing slight increases [3][4] - The energy sector, represented by Exxon Mobil and Chevron, shows varied performance, with Exxon down -0.98% and Chevron up +0.66% [3] Summary of Key Companies - Oracle's market cap stands at 762.30 billion, reflecting a positive trend [3] - Mastercard and Visa show strong performance with market caps of 321.36 billion and 770.15 billion, both increasing [3] - Companies like Pfizer and Comcast have market caps of 1579.81 billion and 1332.00 billion, with Pfizer showing minimal change and Comcast down -3.16% [4][5]

Financial Data and Key Metrics Changes - IMAX reported strong financial results for Q2 2025, with installation growth of 50%, box office growth of over 40%, and an adjusted EBITDA margin of 43% [6][23] - Revenues for Q2 reached $92 million, up from $89 million in the prior year, with a gross margin of $54 million, reflecting a 58% margin and over 900 basis points improvement year over year [24][25] - Adjusted EBITDA for Q2 was $39 million, an increase of $8 million or 26% year over year, resulting in a strong adjusted EBITDA margin of 42.6% [29][30] Business Line Data and Key Metrics Changes - Content Solutions revenues were $34 million, reflecting significant growth in IMAX box office of over 40%, while Technology Products and Services revenues were $56 million, up 9% year over year [25][26] - The quarter saw strong growth in installations, with 36 systems installed compared to 24 in the prior year, indicating robust demand from exhibitors [27][28] Market Data and Key Metrics Changes - IMAX achieved a global market share of 3.6% on less than 1% of screens, with a remarkable 5.3% share of the domestic box office and 6% share of China's box office [25][26] - The company is on track to meet or exceed its guidance for the full year, including box office and system installations expected to be between 150 and 160 [24][30] Company Strategy and Development Direction - IMAX is focused on increasing its global market share and ensuring that IMAX is the platform of choice for filmmakers, with a strategy to deliver films designed for IMAX screens [7][11] - The company is expanding its network with significant installations planned in key markets, including France, The Netherlands, and Japan, indicating a strong growth trajectory [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth model, citing strong demand for IMAX systems and a robust film slate for 2026 and beyond [12][32] - The company anticipates continued growth in cash flow and profitability, supported by a strong capital position and strategic partnerships with exhibitors [31][30] Other Important Information - IMAX's recent agreement with Regal will expand its presence in Manhattan and LA, highlighting the company's commitment to growth in North America [13] - The company is also making progress in strengthening its capital structure with an expanded credit facility, increasing liquidity and reflecting confidence in its business momentum [31] Q&A Session Summary Question: Future of Film for IMAX - Management does not foresee a future where all films are film for IMAX, emphasizing the need for special content that demands such treatment [36][38] Question: Competitive Threat from PLF Screens - Management views the potential joint marketing of PLF screens by US theater chains as more of an opportunity to partner rather than a competitive threat, citing strong brand relationships and technology superiority [39][41] Question: Pricing Strategy - Management believes that the IMAX consumer is willing to pay a premium for a premium experience, and does not see lower pricing as a significant factor affecting demand [64][68] Question: Local Language Content - Local language content has increased to around 40% of box office, and management sees it as a key part of their content diversity strategy [54][56] Question: Cash Flow Conversion - Management expects cash flow to continue to grow, with positive dynamics driven by box office expansion and joint revenue sharing arrangements [30][100]

Core Insights - Imax reported a significant increase in profits and revenue, surpassing Wall Street expectations with a 19% year-on-year rise in global box office and achieving its highest domestic quarter grossing $143 million [1][4]. Group 1: Financial Performance - Net income surged 139% to $12.2 million for the three months ended in June, with revenue increasing by 3% to $91.7 million [4]. - Imax continues to project a global box office of $1.2 billion by 2025 [4]. Group 2: Market Position and Strategy - The company achieved at least 10% of the domestic opening on seven consecutive "filmed for Imax" releases this summer, with a 20% share for key titles [2]. - Imax has signed for 124 new and upgraded systems worldwide year-to-date, indicating strong growth in network expansion [4]. Group 3: Industry Trends - The fundamentals of Imax's business are strong, with record box office performance in North America and increased market share due to more releases filmed with Imax technology [5]. - Consumer preference is shifting towards premium theatrical experiences, and studios are increasingly incorporating Imax formats into their marketing strategies for major releases [5].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents IMAX Corporation's unaudited condensed consolidated financial statements and notes for periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) This section details the company's financial position, including assets, liabilities, and equity, as of June 30, 2025 and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $868,582 | $830,398 | | Total Liabilities | $463,509 | $452,183 | | Total Shareholders' Equity | $404,382 | $377,535 | - Total assets increased by **$38.2 million** from December 31, 2024, to June 30, 2025, primarily driven by increases in cash and cash equivalents, accounts receivable, and property, plant and equipment[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section presents the company's revenues, gross margin, and net income for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $91,684 | $88,961 | $178,351 | $168,084 | | Gross Margin | $53,602 | $43,927 | $106,778 | $90,816 | | Income from Operations| $14,346 | $2,872 | $31,080 | $14,939 | | Net Income | $12,235 | $5,073 | $20,385 | $10,493 | | Net Income Attributable to Common Shareholders | $11,255 | $3,583 | $13,582 | $6,857 | | Basic EPS | $0.21 | $0.07 | $0.25 | $0.13 | | Diluted EPS | $0.20 | $0.07 | $0.25 | $0.13 | - Revenues increased by 3% for the three months and 6% for the six months ended June 30, 2025, compared to the prior year periods. Gross margin saw significant increases of **22%** and **18%** for the three and six months, respectively[15](index=15&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section outlines the company's net income and other comprehensive income for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $12,235 | $5,073 | $20,385 | $10,493 | | Other Comprehensive Income (Loss), net of tax | $2,572 | $(784) | $3,299 | $(2,177) | | Comprehensive Income | $14,807 | $4,289 | $23,684 | $8,316 | | Comprehensive Income Attributable to Common Shareholders | $13,658 | $2,930 | $16,591 | $4,965 | - Other comprehensive income significantly improved, moving from a loss in 2024 to a gain in 2025 for both the three and six-month periods, primarily due to unrealized net gains from cash flow hedging instruments[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section details the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $30,181 | $24,070 | | Net Cash Used in Investing Activities | $(22,048) | $(15,638) | | Net Cash Provided by Financing Activities | $480 | $6,609 | | Increase in Cash and Cash Equivalents | $8,659 | $15,352 | | Cash and Cash Equivalents, End of Period | $109,251 | $91,552 | - Net cash provided by operating activities increased by **$6.1 million**, while net cash used in investing activities increased by **$6.4 million**, primarily due to higher investments in equipment for joint revenue sharing arrangements[20](index=20&type=chunk)[295](index=295&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024) This section presents changes in the company's total shareholders' equity for the three and six months ended June 30, 2025 and 2024 | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Shareholders' Equity | $404,382 | $342,305 | $404,382 | $342,305 | | Capital Stock, end of period | $415,142 | $394,493 | $415,142 | $394,493 | | Accumulated Deficit, end of period | $(261,261) | $(293,889) | $(261,261) | $(293,889) | - Total shareholders' equity increased significantly from the prior year, driven by net income attributable to common shareholders and positive other comprehensive income[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) This note describes the accounting principles, consolidation policies, and judgments used in preparing the financial statements - IMAX Corporation prepares financial statements in accordance with U.S. GAAP and SEC rules, with interim results not necessarily indicative of full-year performance[24](index=24&type=chunk) - The Company consolidates five of its ten film production VIEs, where it is the primary beneficiary, and uses the equity method for the other five[27](index=27&type=chunk) **Total assets and liabilities of consolidated VIEs (in thousands):** | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets of consolidated VIEs | $1,787 | $1,459 | | Total liabilities of consolidated VIEs | $362 | $246 | [2. New Accounting Standards and Accounting Changes](index=13&type=section&id=2.%20New%20Accounting%20Standards%20and%20Accounting%20Changes) This note discusses recently issued accounting standards and their potential impact on the company's financial reporting - FASB ASU No. 2023-09, 'Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 31, 2024, requires consistent categories and greater disaggregation of income tax information[33](index=33&type=chunk) - FASB ASU No. 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, expands disclosures about specific expense categories[34](index=34&type=chunk) [3. Receivables](index=13&type=section&id=3.%20Receivables) This note details the company's accounts receivable, credit risk management, and allowance for credit losses - The Company's ability to collect receivables depends on theater operators' viability, influenced by consumer behavior and economic conditions. Management mitigates credit risk through initial evaluations and regular monitoring[36](index=36&type=chunk)[37](index=37&type=chunk) **Allowance for Credit Losses Related to Accounts Receivable (in thousands):** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Beginning Balance | $13,174 | $15,956 | $13,278 | $15,977 | | Current Period Provision (Reversal), net | $172 | $78 | $335 | $71 | | Ending Balance | $13,274 | $15,826 | $13,274 | $15,826 | - Allowance for credit losses related to net investment in leases decreased by **$0.2 million** for both three and six months ended June 30, 2025, while financed sale receivables decreased by **$0.1 million** and **$0.3 million**, respectively[54](index=54&type=chunk) [4. Lease Arrangements](index=23&type=section&id=4.%20Lease%20Arrangements) This note describes the company's sales-type leases and joint revenue sharing arrangements, including expected lease payments - IMAX provides systems through sales-type leases and joint revenue sharing arrangements (JRSAs), with JRSAs typically involving rent based on contingent box office receipts[58](index=58&type=chunk)[59](index=59&type=chunk) **Expected Lease Payments for Sales-Type Leases (in thousands):** | Year | Amount | | :--- | :----- | | 2025 (six months remaining) | $1,619 | | 2026 | $3,258 | | 2027 | $3,163 | | 2028 | $3,017 | | 2029 | $3,017 | | Thereafter | $16,129 | | **Total** | **$30,203** | [5. Inventories](index=24&type=section&id=5.%20Inventories) This note provides a breakdown of inventory categories and discusses inventory write-downs for the reported periods **Inventories (in thousands):** | Category | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :---------------- | | Raw materials | $31,181 | $29,162 | | Work-in-process | $1,871 | $1,611 | | Finished goods | $3,647 | $2,067 | | **Total** | **$36,699** | **$32,840** | - Inventories increased by **$3.8 million** from December 31, 2024, to June 30, 2025. Write-downs of **$0.1 million** and **$0.2 million** were recorded for the three and six months ended June 30, 2025, respectively[63](index=63&type=chunk)[64](index=64&type=chunk) [6. Borrowings](index=24&type=section&id=6.%20Borrowings) This note details the company's revolving credit facility, convertible notes, and other borrowing arrangements [Revolving Credit Facility Borrowings, Net](index=24&type=section&id=Revolving%20Credit%20Facility%20Borrowings%2C%20Net) This section outlines the company's revolving credit facility, including outstanding borrowings and recent amendments **Revolving Credit Facility Borrowings, Net (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Wells Fargo Credit Facility borrowings | $48,000 | $37,000 | | Unamortized debt issuance costs | $(453) | $(644) | | **Total** | **$47,547** | **$36,356** | - Borrowings under the Credit Facility increased to **$48.0 million** as of June 30, 2025, from **$37.0 million** at December 31, 2024, with an effective interest rate of **6.17%** for the three and six months ended June 30, 2025[69](index=69&type=chunk) - On July 14, 2025, the Company entered into a New Credit Agreement, increasing revolving borrowing capacity to **$375.0 million** and extending maturity to July 14, 2030[71](index=71&type=chunk)[73](index=73&type=chunk) [Convertible Notes and Other Borrowings, Net](index=28&type=section&id=Convertible%20Notes%20and%20Other%20Borrowings%2C%20Net) This section details the company's convertible senior notes and other long-term debt obligations **Convertible Notes and Other Borrowings, Net (in thousands):** | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Convertible Notes | $230,000 | $230,000 | | Unamortized discounts and debt issuance costs | $(1,112) | $(1,864) | | Federal Economic Development Loan, net | $1,586 | $1,765 | | **Total** | **$230,474** | **$229,901** | - The Company has **$230.0 million** of **0.500%** Convertible Senior Notes due April 1, 2026, recorded as a liability net of discounts and debt issuance costs[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [7. Commitments, Contingencies and Guarantees](index=29&type=section&id=7.%20Commitments%2C%20Contingencies%20and%20Guarantees) This note describes the company's legal proceedings, indemnifications, and other contractual commitments and contingencies - The Company is involved in ongoing legal proceedings, including an arbitration award against EML/E-City for **$11.3 million** plus daily interest, which it continues to pursue enforcement for[89](index=89&type=chunk) - The Company provides indemnifications to directors/officers and counterparties in various agreements, with maximum potential liability often limited to the system purchase price in lease/sale agreements[92](index=92&type=chunk)[93](index=93&type=chunk) [8. Condensed Consolidated Statements of Operations – Supplemental Information](index=31&type=section&id=8.%20Condensed%20Consolidated%20Statements%20of%20Operations%20%E2%80%93%20Supplemental%20Information) This note provides supplemental details on selling expenses, employee retention credits, and joint revenue sharing arrangement revenue **Selling Expenses (in thousands):** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales Commissions | $409 | $489 | $655 | $676 | | Marketing and Other | $4,156 | $4,841 | $6,977 | $8,022 | | **Total** | **$4,565** | **$5,330** | **$7,632** | **$8,698** | - The Company recognized **$3.8 million** in Employee Retention Credit (ERC) benefits for the three and six months ended June 30, 2025, reducing Selling, General and Administrative Expenses (**$2.5 million**) and Costs and Expenses Applicable to Revenues (**$1.3 million**)[100](index=100&type=chunk) - Revenue from Joint Revenue Sharing Arrangements (JRSAs) totaled **$18.7 million** and **$37.9 million** for the three and six months ended June 30, 2025, respectively, an increase from the prior year[102](index=102&type=chunk) [9. Condensed Consolidated Statements of Cash Flows – Supplemental Information](index=34&type=section&id=9.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Supplemental%20Information) This note offers supplemental information on changes in operating assets and liabilities, and depreciation and amortization **Changes in Other Operating Assets and Liabilities (in thousands):** | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Financing receivables | $(911) | $3,554 | | Accounts payable | $11,694 | $(6,233) | | Accrued and other liabilities | $(15,506) | $(11,523) | | **Total** | **$(4,300)** | **$(19,086)** | **Depreciation and Amortization (in thousands):** | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Film assets | $9,529 | $13,867 | | Equipment supporting JRSAs | $11,378 | $11,495 | | Other intangible assets | $4,205 | $3,289 | | **Total** | **$30,809** | **$34,002** | [10. Income Taxes](index=35&type=section&id=10.%20Income%20Taxes) This note details the company's income tax expense, effective tax rates, and deferred tax assets and liabilities - For the three months ended June 30, 2025, the Company recorded an income tax expense of **$1.2 million** (effective tax rate of **8.9%**), compared to a tax benefit of **$4.0 million** in 2024[111](index=111&type=chunk) - For the six months ended June 30, 2025, income tax expense was **$8.5 million** (effective tax rate of **29.4%**), up from **$1.2 million** in 2024, reflecting an increase in valuation allowance and withholding taxes[112](index=112&type=chunk) - Net deferred income tax assets were **$13.6 million** as of June 30, 2025, and deferred tax liabilities were **$12.5 million**, primarily for foreign withholding taxes on non-repatriated earnings[114](index=114&type=chunk)[115](index=115&type=chunk) [11. Capital Stock and Reserves](index=36&type=section&id=11.%20Capital%20Stock%20and%20Reserves) This note discusses share-based compensation expense, share repurchase programs, and capital stock activity **Share-Based Compensation Expense (in thousands):** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Costs and expenses applicable to revenues | $305 | $247 | $596 | $475 | | Selling, general and administrative expenses | $6,862 | $6,506 | $11,582 | $10,843 | | Research and development | $190 | $110 | $384 | $221 | | **Total** | **$7,357** | **$6,863** | **$12,562** | **$11,539** | - The Board of Directors approved a **$100.0 million** increase and a one-year extension (through June 30, 2027) to the share repurchase program, bringing the total authorization to **$500.0 million**, with **$250.7 million** available as of June 30, 2025[127](index=127&type=chunk) - IMAX China repurchased **1,495,900** common shares for HKD **$11.3 million** (**$1.4 million**) during the three and six months ended June 30, 2025[131](index=131&type=chunk) [12. Revenue from Contracts with Customers](index=42&type=section&id=12.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates total revenues by segment and discusses variable consideration and deferred revenue **Total Revenues by Segment (in thousands):** | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Content Solutions | $33,965 | $35,076 | $68,214 | $69,089 | | Technology Products and Services | $55,639 | $50,898 | $106,232 | $94,048 | | All Other | $2,080 | $2,987 | $3,905 | $4,947 | | **Total** | **$91,684** | **$88,961** | **$178,351** | **$168,084** | - Revenues from Technology Sales included variable consideration of **$3.1 million** and **$6.4 million** for the three and six months ended June 30, 2025, respectively, a decrease from the prior year[139](index=139&type=chunk) - Deferred revenue recognized from the December 31, 2024 balance was **$10.8 million** and **$19.8 million** for the three and six months ended June 30, 2025, respectively[143](index=143&type=chunk) [13. Segment Reporting](index=44&type=section&id=13.%20Segment%20Reporting) This note provides financial information by operating segment, including gross margin and revenues by geographic area **Gross Margin by Segment (in thousands):** | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Content Solutions | $22,431 | $16,138 | $45,985 | $38,237 | | Technology Products and Services | $30,178 | $25,783 | $59,264 | $49,367 | | All Other | $993 | $2,006 | $1,529 | $3,212 | | **Total** | **$53,602** | **$43,927** | **$106,778** | **$90,816** | **Revenues by Geographic Area (in thousands):** | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $42,391 | $38,296 | $64,962 | $64,900 | | Greater China | $17,677 | $22,750 | $57,802 | $44,203 | | Western Europe | $14,112 | $10,508 | $21,665 | $24,699 | | Asia (excluding Greater China) | $9,312 | $9,587 | $18,603 | $18,713 | | Latin America | $2,150 | $2,258 | $4,107 | $3,718 | | Canada | $2,494 | $3,159 | $3,896 | $5,567 | | Rest of the World | $3,548 | $2,403 | $7,316 | $6,284 | | **Total** | **$91,684** | **$88,961** | **$178,351** | **$168,084** | [14. Employee's Pension and Postretirement Benefits](index=47&type=section&id=14.%20Employee's%20Pension%20and%20Postretirement%20Benefits) This note details the company's defined benefit pension plan and other postretirement benefit obligations - The Company has an unfunded defined benefit pension plan (SERP) for its CEO, Richard L. Gelfond, with a projected benefit obligation of **$19.4 million** as of June 30, 2025[155](index=155&type=chunk)[156](index=156&type=chunk) - The Executive Postretirement Benefit Plan and Canadian Employee Postretirement Plan had obligations of **$0.5 million** and **$0.8 million**, respectively, as of June 30, 2025[158](index=158&type=chunk)[159](index=159&type=chunk) - The Deferred Compensation Benefit Plan had a benefit obligation of **$4.3 million**, funded by a company-owned life insurance (COLI) asset with a fair value of **$3.7 million** as of June 30, 2025[161](index=161&type=chunk)[162](index=162&type=chunk) [15. Financial Instruments](index=48&type=section&id=15.%20Financial%20Instruments) This note describes the company's cash and cash equivalents, and its use of foreign currency forward contracts - Cash and cash equivalents totaled **$109.3 million** as of June 30, 2025, with **$100.9 million** held outside of Canada, including **$61.5 million** in the People's Republic of China[163](index=163&type=chunk) - The Company uses foreign currency forward contracts to manage foreign exchange rate risks, with a net unrealized gain of **$1.4 million** on outstanding contracts as of June 30, 2025[77](index=77&type=chunk)[168](index=168&type=chunk) **Fair Value of Derivatives in Foreign Exchange Contracts (in thousands):** | Balance Sheet Location | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Other assets | $1,430 | $0 | | Accrued and other liabilities | $(27) | $(2,029) | | **Total** | **$1,403** | **$(2,029)** | [16. Non-Controlling Interests](index=49&type=section&id=16.%20Non-Controlling%20Interests) This note details the company's non-controlling interest in IMAX China and its impact on net income - The Company indirectly owned **71.72%** of IMAX China as of June 30, 2025. The non-controlling interest balance was **$84.0 million**[172](index=172&type=chunk) - Net income attributable to non-controlling interests in IMAX China was **$1.0 million** and **$6.8 million** for the three and six months ended June 30, 2025, respectively[172](index=172&type=chunk) [17. Restructuring and Other Charges](index=49&type=section&id=17.%20Restructuring%20and%20Other%20Charges) This note outlines the restructuring and other charges incurred due to operational efficiency initiatives and asset sales - The Company incurred **$0.8 million** in restructuring and other charges for the three and six months ended June 30, 2025, related to operational efficiency initiatives, including workforce optimization (**$0.5 million**) and non-recurring fees for a 2024 internal asset sale (**$0.3 million**)[173](index=173&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on IMAX Corporation's financial condition and operational results for the periods ended June 30, 2025 and 2024 [Overview](index=53&type=section&id=OVERVIEW) This section provides a general description of IMAX's business, global network, and recent box office performance - IMAX is a global technology platform for entertainment, offering immersive content experiences through proprietary software, auditorium architecture, and specialized equipment[181](index=181&type=chunk) - As of June 30, 2025, the IMAX network comprised **1,821** systems in **89** countries, including **1,750** commercial multiplexes, an increase from **1,780** systems in the prior year[183](index=183&type=chunk) - The Company achieved a record box office of **$579.2 million** in the first half of 2025, a **24%** increase year-over-year, driven by **54** new films and strong performance from 'Filmed for IMAX' releases[187](index=187&type=chunk) [Sources of Revenue](index=55&type=section&id=SOURCES%20OF%20REVENUE) This section details IMAX's revenue sources, including content solutions, technology products, and other services [Content Solutions](index=57&type=section&id=Content%20Solutions) This section describes revenue from film remastering, distribution, and other content experiences like music and gaming events - The Content Solutions segment generates revenue primarily from Film Remastering and distribution, receiving an average of **12.5%** of box office, with a lower percentage in Greater China due to tax[192](index=192&type=chunk)[193](index=193&type=chunk) - Local language films generated over **$222 million** in box office in the first six months of 2025, representing **38%** of global box office, highlighted by 'Ne Zha 2' becoming the highest-grossing IMAX release in China[195](index=195&type=chunk) **New Films and Other Content Released to Global Network:** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hollywood film releases | 8 | 9 | 15 | 16 | | Local language film releases | 10 | 14 | 30 | 24 | | Other content experiences | 3 | 4 | 9 | 6 | | **Total** | **21** | **27** | **54** | **46** | [Film Remastering and Distribution](index=57&type=section&id=Film%20Remastering%20and%20Distribution) This section explains how IMAX enhances film quality and leverages the 'Filmed For IMAX' program for optimized content - IMAX Film Remastering digitally enhances image and sound quality for projection on IMAX screens, creating a unique IMAX version optimized for its proprietary systems[194](index=194&type=chunk) - The 'Filmed For IMAX' program enables filmmakers to optimize their creative vision for The IMAX Experience, resulting in higher market share for IMAX titles[195](index=195&type=chunk) [Other Content Solutions](index=60&type=section&id=Other%20Content%20Solutions) This section covers the distribution of large-format documentaries and expansion into new live IMAX events and experiences - The Company distributes large-format documentary feature films and is expanding into new IMAX events and experiences, including music, gaming, and sports, leveraging **266** connected locations for live events[202](index=202&type=chunk)[204](index=204&type=chunk) - Upcoming documentaries include 'The Lost Wolves of Yellowstone' (2025) and 'Stormbound,' 'Patrouille de France,' and 'The Elephant Odyssey' (2026)[202](index=202&type=chunk) [Technology Products and Services](index=62&type=section&id=Technology%20Products%20and%20Services) This section outlines revenue from IMAX System sales, leases, joint revenue sharing arrangements, and maintenance services - The Technology Products and Services segment earns revenue from the sale or lease of IMAX Systems and associated maintenance, with initial fees and ongoing consideration varying by arrangement[207](index=207&type=chunk)[208](index=208&type=chunk) - Joint Revenue Sharing Arrangements (JRSAs) are crucial for network expansion, allowing exhibitors to install IMAX Systems with lower upfront capital and providing recurring cash flows from box office receipts[216](index=216&type=chunk) - As of June 30, 2025, the Company had **899** locations under JRSAs in its global commercial multiplex network and **336** systems in backlog under JRSAs[216](index=216&type=chunk) [Sales and Sales-Type Lease Arrangements](index=62&type=section&id=Sales%20and%20Sales-Type%20Lease%20Arrangements) This section describes revenue recognition from initial fees, minimum payments, and contingent fees for system sales and leases - Revenue from sales and sales-type leases includes initial fees and the present value of future annual minimum payments and estimated contingent fees, recognized upon system installation[208](index=208&type=chunk) [Joint Revenue Sharing Arrangements](index=62&type=section&id=Joint%20Revenue%20Sharing%20Arrangements) This section explains traditional and hybrid joint revenue sharing arrangements and their role in network expansion - Traditional JRSAs involve the Company assuming equipment and installation costs, earning rent based on a percentage of contingent box office receipts[211](index=211&type=chunk) - Hybrid JRSAs require fixed upfront payments from customers (typically half of a sale transaction) and a percentage of contingent box office receipts (typically half of a traditional JRSA)[212](index=212&type=chunk) [IMAX Maintenance](index=64&type=section&id=IMAX%20Maintenance) This section details mandatory maintenance services and extended warranties provided to exhibitors for IMAX Systems - IMAX System arrangements include mandatory maintenance services and an extended warranty, with annual fees paid by exhibitors to ensure high quality standards[217](index=217&type=chunk) [All Other](index=64&type=section&id=All%20Other) This section covers the IMAX Enhanced program, delivering immersive experiences across streaming platforms and consumer devices - The 'All Other' segment includes the IMAX Enhanced program, which delivers The IMAX Experience across streaming platforms and consumer devices through real-time and on-demand content optimization, and device certification[218](index=218&type=chunk)[221](index=221&type=chunk) - As of June 30, 2025, over **15 million** IMAX Enhanced certified devices are in-market with partners like Sony Electronics, Hisense, TCL, LG, and Philips[221](index=221&type=chunk) [IMAX Network and Backlog](index=65&type=section&id=IMAX%20NETWORK%20AND%20BACKLOG) This section provides an overview of the global IMAX network, system backlog, and recent signings and installations [IMAX Network](index=65&type=section&id=IMAX%20Network) This section presents the number of IMAX systems by type and geographic location, along with market penetration **IMAX Network by Type and Geographic Location:** | Region | Commercial Multiplex (June 30, 2025) | Commercial Multiplex (June 30, 2024) | Total (June 30, 2025) | Total (June 30, 2024) | | :------------------------------------ | :----------------------------------- | :----------------------------------- | :-------------------- | :-------------------- | | United States | 375 | 364 | 403 | 392 | | Canada | 44 | 43 | 50 | 51 | | Greater China | 796 | 790 | 809 | 803 | | Asia (excluding Greater China) | 187 | 176 | 190 | 180 | | Western Europe | 142 | 129 | 153 | 141 | | Latin America | 62 | 61 | 70 | 69 | | Rest of the World | 144 | 142 | 146 | 144 | | **Total** | **1,750** | **1,705** | **1,821** | **1,780** | - The worldwide commercial multiplex addressable market is estimated at **3,619** locations, with IMAX having a **48%** penetration rate (**1,750** systems)[225](index=225&type=chunk) - **76%** of IMAX Systems in the global commercial multiplex network are located in international markets, which continue to drive the majority of revenues and GBO[225](index=225&type=chunk) [Backlog](index=67&type=section&id=Backlog) This section details the IMAX System backlog by arrangement type and geographic location, including new and upgraded systems **IMAX System Backlog by Arrangement Type and Geographic Location (June 30, 2025):** | Category | Traditional JRSA | Hybrid JRSA | Sales Arrangements | Total | | :-------------------- | :--------------- | :---------- | :----------------- | :---- | | Domestic Total | 119 | 2 | 10 | 131 | | International Total | 123 | 92 | 155 | 370 | | **Worldwide Total** | **242** | **94** | **165** | **501** | - The worldwide backlog of **501** systems includes **256** new IMAX Laser Systems and **145** upgrades to existing locations[233](index=233&type=chunk) - Approximately **74%** of IMAX System arrangements in backlog as of June 30, 2025, are scheduled for international markets[237](index=237&type=chunk) [Signings and Installations](index=69&type=section&id=Signings%20and%20Installations) This section reports on IMAX System signings and installations for the three and six months ended June 30, 2025 and 2024 **IMAX System Signings:** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales Arrangements | 15 | 25 | 34 | 30 | | Traditional JRSA | 13 | 62 | 89 | 65 | | **Total** | **28** | **87** | **123** | **95** | **IMAX System Installations:** | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales Arrangements | 13 | 10 | 26 | 15 | | Hybrid JRSA | 0 | 0 | 0 | 1 | | Traditional JRSA | 23 | 14 | 31 | 23 | | **Total** | **36** | **24** | **57** | **39** | [Results of Operations](index=69&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of the company's financial performance for the periods ended June 30, 2025 and 2024 [Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=69&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the company's financial results, including net income, revenues, and expenses, for the three months ended June 30, 2025 and 2024 [Net Income and Adjusted Net Income Attributable to Common Shareholders](index=69&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income%20Attributable%20to%20Common%20Shareholders) This section presents net income and adjusted net income attributable to common shareholders for the three months ended June 30 **Net Income and Adjusted Net Income Attributable to Common Shareholders (3 Months Ended June 30):** | Metric (in thousands, except per share) | 2025 Net Income | 2025 Per Diluted Share | 2024 Net Income | 2024 Per Diluted Share | | :------------------------------------ | :-------------- | :--------------------- | :-------------- | :--------------------- | | Net income attributable to common shareholders | $11,255 | $0.20 | $3,583 | $0.07 | | Adjusted net income attributable to common shareholders | $14,607 | $0.26 | $9,746 | $0.18 | [Revenues and Gross Margin](index=70&type=section&id=Revenues%20and%20Gross%20Margin) This section details the company's revenues and gross margin by segment for the three months ended June 30, 2025 and 2024 - Revenues increased by **$2.7 million** (**3%**) and gross margin by **$9.7 million** (**22%**) for the three months ended June 30, 2025, driven by higher installations and stronger IMAX box office[246](index=246&type=chunk) **Revenue and Gross Margin by Segment (3 Months Ended June 30):** | Segment | 2025 Revenue | 2024 Revenue | 2025 Gross Margin | 2024 Gross Margin | 2025 Gross Margin % | 2024 Gross Margin % | | :------------------------------------ | :----------- | :----------- | :---------------- | :---------------- | :------------------ | :------------------ | | Content Solutions | $33,965 | $35,076 | $22,431 | $16,138 | 66% | 46% | | Technology Products and Services | $55,639 | $50,898 | $30,178 | $25,783 | 54% | 51% | | All Other | $2,080 | $2,987 | $993 | $2,006 | 48% | 67% | | **Total** | **$91,684** | **$88,961** | **$53,602** | **$43,927** | **58%** | **49%** | [Content Solutions](index=70&type=section&id=Content%20Solutions) This section analyzes Content Solutions revenue, gross margin, and IMAX box office performance for the three months ended June 30 - Content Solutions revenue decreased by **$1.1 million** (**3%**), but gross margin increased by **$6.3 million** (**39%**) for the three months ended June 30, 2025[249](index=249&type=chunk) - IMAX box office for the quarter totaled **$281.1 million**, a **41%** increase year-over-year, driven by Hollywood films like 'Mission: Impossible - The Final Reckoning' and 'Sinners'[250](index=250&type=chunk) - Gross margin percentage for Content Solutions increased to **66%** from **46%** in the prior year, reflecting higher box office and a lower mix of self-produced content[252](index=252&type=chunk) [Technology Products and Services](index=72&type=section&id=Technology%20Products%20and%20Services) This section analyzes Technology Products and Services revenue, gross margin, and system installations for the three months ended June 30 - Technology Products and Services revenue increased by **$4.7 million** (**9%**) and gross margin by **$4.4 million** (**17%**) for the three months ended June 30, 2025[254](index=254&type=chunk) - Rental revenues increased by **$5.1 million**, as IMAX GBO from JRSAs rose by **$24.1 million** to **$125.1 million** in Q2 2025[254](index=254&type=chunk) **IMAX Systems Installed and Revenue Recognized (3 Months Ended June 30):** | Category | 2025 Number of Systems | 2025 Revenue (in thousands) | 2024 Number of Systems | 2024 Revenue (in thousands) | | :-------------------- | :--------------------- | :-------------------------- | :--------------------- | :-------------------------- | | New IMAX Systems | 11 | $11,206 | 8 | $7,649 | | Upgraded IMAX Systems | 2 | $1,878 | 2 | $2,926 | | **Total** | **13** | **$13,084** | **10** | **$10,575** | [All Other](index=72&type=section&id=All%20Other) This section analyzes the revenue and gross margin performance of the 'All Other' segment for the three months ended June 30 - All Other revenue and gross margin decreased by **$0.9 million** and **$1.0 million**, respectively, for the three months ended June 30, 2025, primarily reflecting results from Streaming and Consumer Technology[256](index=256&type=chunk) [Selling, General and Administrative Expenses](index=72&type=section&id=Selling%20General%20and%20Administrative%20Expenses) This section details selling, general and administrative expenses, including share-based compensation, for the three months ended June 30 **Selling, General and Administrative Expenses (3 Months Ended June 30):** | Metric (in thousands) | 2025 | 2024 | Variance ($) | Variance (%) | | :------------------------------------ | :--- | :--- | :----------- | :----------- | | Total SG&A Expenses | $35,302 | $37,564 | $(2,262) | (6%) | | Less: Share-based compensation | $(6,862) | $(6,506) | $(356) | (5%) | | **Total Adjusted SG&A Expenses** | **$28,440** | **$31,058** | **$(2,618)** | **(8%)** | - Lower SG&A expenses reflect management's focus on operational efficiencies and workforce reductions, partially offset by higher annual incentive compensation costs[258](index=258&type=chunk) [Research and Development](index=73&type=section&id=Research%20and%20Development) This section analyzes research and development expenses, highlighting factors contributing to changes for the three months ended June 30 - Research and Development expenses decreased to **$1.5 million** from **$2.0 million** year-over-year, primarily due to the capitalization of film camera costs in 2024[259](index=259&type=chunk) [Credit Loss (Reversal) Expense, Net](index=73&type=section&id=Credit%20Loss%20(Reversal)%20Expense%2C%20Net) This section discusses the credit loss reversal or expense, net, reflecting collection performance for the three months ended June 30 - The Company recorded a credit loss reversal of **$0.2 million** for the three months ended June 30, 2025, compared to an expense of **$0.1 million** in the prior year, due to improved collections from stronger box office performance[260](index=260&type=chunk)[261](index=261&type=chunk) [Interest Expense and Interest Income](index=73&type=section&id=Interest%20Expense%20and%20Interest%20Income) This section details interest expense and interest income, including factors influencing changes for the three months ended June 30 - Interest expense decreased by **$0.4 million** (**16%**) to **$1.9 million**, primarily due to lower borrowings under the Credit Facility. Interest income increased to **$1.1 million** from **$0.6 million**[263](index=263&type=chunk) [Income Taxes](index=73&type=section&id=Income%20Taxes) This section analyzes income tax expense and effective tax rates for the three months ended June 30, including significant tax benefits - Income tax expense was **$1.2 million** (**8.9%** effective rate) for the three months ended June 30, 2025, compared to a **$4.0 million** tax benefit in 2024, which included a **$7.7 million** net tax benefit from an internal asset sale[264](index=264&type=chunk)[265](index=265&type=chunk) [Non-Controlling Interests](index=74&type=section&id=Non-Controlling%20Interests) This section discusses net income attributable to non-controlling interests, primarily from IMAX China, for the three months ended June 30 - Net income attributable to non-controlling interests decreased by **$0.5 million** to **$1.0 million**, primarily due to lower revenues from sales arrangements and renewals in Greater China[266](index=266&type=chunk) [Restructuring and Other Charges](index=74&type=section&id=Restructuring%20and%20Other%20Charges) This section details restructuring and other charges related to organizational optimization and non-recurring fees for the three months ended June 30 - Restructuring and other charges totaled **$0.8 million** for the three months ended June 30, 2025, related to organizational optimization and non-recurring fees from a 2024 internal asset sale[267](index=267&type=chunk) [Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=74&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section analyzes the company's financial results, including net income, revenues, and expenses, for the six months ended June 30, 2025 and 2024 [Net Income and Adjusted Net Income Attributable to Common Shareholders](index=74&type=section&id=Net%20Income%20and%20Adjusted%20Net%20Income%20Attributable%20to%20Common%20Shareholders) This section presents net income and adjusted net income attributable to common shareholders for the six months ended June 30 **Net Income and Adjusted Net Income Attributable to Common Shareholders (6 Months Ended June 30):** | Metric (in thousands, except per share) | 2025 Net Income | 2025 Per Diluted Share | 2024 Net Income | 2024 Per Diluted Share | | :------------------------------------ | :-------------- | :--------------------- | :-------------- | :--------------------- | | Net income attributable to common shareholders | $13,582 | $0.25 | $6,857 | $0.13 | | Adjusted net income attributable to common shareholders | $21,785 | $0.40 | $17,688 | $0.33 | [Revenues and Gross Margin](index=74&type=section&id=Revenues%20and%20Gross%20Margin) This section details the company's revenues and gross margin by segment for the six months ended June 30, 2025 and 2024 - Revenues increased by **$10.3 million** (**6%**) and gross margin by **$16.0 million** (**18%**) for the six months ended June 30, 2025, driven by higher installations and strong box office performance during Chinese New Year and summer Hollywood releases[269](index=269&type=chunk) **Revenue and Gross Margin by Segment (6 Months Ended June 30):** | Segment | 2025 Revenue | 2024 Revenue | 2025 Gross Margin | 2024 Gross Margin | 2025 Gross Margin % | 2024 Gross Margin % | | :------------------------------------ | :----------- | :----------- | :---------------- | :---------------- | :------------------ | :------------------ | | Content Solutions | $68,214 | $69,089 | $45,985 | $38,237 | 67% | 55% | | Technology Products and Services | $106,232 | $94,048 | $59,264 | $49,367 | 56% | 52% | | All Other | $3,905 | $4,947 | $1,529 | $3,212 | 39% | 65% | | **Total** | **$178,351** | **$168,084** | **$106,778** | **$90,816** | **60%** | **54%** | [Content Solutions](index=74&type=section&id=Content%20Solutions) This section analyzes Content Solutions revenue, gross margin, and IMAX box office performance for the six months ended June 30 - Content Solutions revenue decreased by **$0.9 million** (**1%**), but gross margin increased by **$7.7 million** (**20%**) for the six months ended June 30, 2025[273](index=273&type=chunk) - IMAX box office for the period totaled **$579.2 million**, a **24%** increase year-over-year, driven by local language films, particularly 'Ne Zha 2' (**$166 million**) in China[274](index=274&type=chunk) - Gross margin percentage for Content Solutions increased to **67%** from **55%** in the prior year, reflecting higher box office and a lower mix of self-produced content[276](index=276&type=chunk) [Technology Products and Services](index=76&type=section&id=Technology%20Products%20and%20Services) This section analyzes Technology Products and Services revenue, gross margin, and system installations for the six months ended June 30 - Technology Products and Services revenue increased by **$12.2 million** (**13%**) and gross margin by **$9.9 million** (**20%**) for the six months ended June 30, 2025[279](index=279&type=chunk) - Rental revenues increased by **$5.2 million**, driven by IMAX GBO from JRSAs rising by **$38.8 million** to **$265.2 million**[280](index=280&type=chunk) **IMAX Systems Installed and Revenue Recognized (6 Months Ended June 30):** | Category | 2025 Number of Systems | 2025 Revenue (in thousands) | 2024 Number of Systems | 2024 Revenue (in thousands) | | :-------------------- | :--------------------- | :-------------------------- | :--------------------- | :-------------------------- | | New IMAX Systems | 23 | $20,330 | 13 | $11,511 | | Upgraded IMAX Systems | 3 | $3,338 | 3 | $4,303 | | **Total** | **26** | **$23,668** | **16** | **$15,814** | [All Other](index=78&type=section&id=All%20Other) This section analyzes the revenue and gross margin performance of the 'All Other' segment for the six months ended June 30 - All Other revenue and gross margin decreased by **$1.0 million** and **$1.7 million**, respectively, for the six months ended June 30, 2025, primarily reflecting results from Streaming and Consumer Technology[282](index=282&type=chunk) [Selling, General and Administrative Expenses](index=78&type=section&id=Selling%20General%20and%20Administrative%20Expenses) This section details selling, general and administrative expenses, including share-based compensation, for the six months ended June 30 **Selling, General and Administrative Expenses (6 Months Ended June 30):** | Metric (in thousands) | 2025 | 2024 | Variance ($) | Variance (%) | | :------------------------------------ | :--- | :--- | :----------- | :----------- | | Total SG&A Expenses | $68,764 | $68,821 | $(57) | (0%) | | Less: Share-based compensation | $(11,582) | $(10,843) | $(739) | (7%) | | **Total Adjusted SG&A Expenses** | **$57,182** | **$57,978** | **$(796)** | **(1%)** | - SG&A expenses remained relatively flat year-over-year, reflecting operational efficiencies and workforce reductions, partially offset by higher annual incentive compensation costs[284](index=284&type=chunk) [Research and Development](index=78&type=section&id=Research%20and%20Development) This section analyzes research and development expenses, highlighting factors contributing to changes for the six months ended June 30 - Research and Development expenses decreased by **$1.4 million** (**32%**) to **$2.9 million**, primarily due to the capitalization of film camera costs in 2024[285](index=285&type=chunk) [Credit Loss (Reversal) Expense, Net](index=78&type=section&id=Credit%20Loss%20(Reversal)%20Expense%2C%20Net) This section discusses the credit loss reversal or expense, net, reflecting collection performance for the six months ended June 30 - The Company recorded a credit loss reversal of **$0.3 million** for the six months ended June 30, 2025, compared to an expense of **$0.2 million** in the prior year, due to improved collections from stronger box office performance[286](index=286&type=chunk)[287](index=287&type=chunk) [Interest Expense and Interest Income](index=80&type=section&id=Interest%20Expense%20and%20Interest%20Income) This section details interest expense and interest income, including factors influencing changes for the six months ended June 30 - Interest expense decreased by **$0.5 million** (**12%**) to **$3.7 million**, primarily due to lower borrowings under the Credit Facility. Interest income increased to **$1.7 million** from **$1.1 million**[290](index=290&type=chunk) [Income Taxes](index=80&type=section&id=Income%20Taxes) This section analyzes income tax expense and effective tax rates for the six months ended June 30, including significant tax benefits - Income tax expense was **$8.5 million** (**29.4%** effective rate) for the six months ended June 30, 2025, compared to **$1.2 million** in 2024, reflecting an increase in valuation allowance and withholding taxes[291](index=291&type=chunk) [Non-Controlling Interests](index=80&type=section&id=Non-Controlling%20Interests) This section discusses net income attributable to non-controlling interests, primarily from IMAX China, for the six months ended June 30 - Net income attributable to non-controlling interests increased by **$3.2 million** to **$6.8 million**, reflecting a higher level of IMAX box office earned in Greater China[292](index=292&type=chunk) [Restructuring and Other Charges](index=80&type=section&id=Restructuring%20and%20Other%20Charges) This section details restructuring and other charges related to organizational optimization and non-recurring fees for the six months ended June 30 - Restructuring and other charges totaled **$0.8 million** for the six months ended June 30, 2025, related to organizational optimization and non-recurring fees from a 2024 internal asset sale[293](index=293&type=chunk) [Cash Flows for the Six Months Ended June 30, 2025 and 2024](index=80&type=section&id=CASH%20FLOWS%20FOR%20THE%20SIX%20MONTHS%20ENDED%20JUNE%2030%2C%202025%20AND%202024) This section analyzes the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 **Cash Flows (in thousands):** | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Operating activities | $30,181 | $24,070 | | Investing activities | $(22,048) | $(15,638) | | Financing activities | $480 | $6,609 | | Effect of exchange rate changes on cash | $46 | $311 | | **Net change in cash** | **$8,659** | **$15,352** | - Net cash provided by operating activities increased by **$6.1 million**, primarily due to higher net income, partially offset by decreased cash from working capital expenditures[295](index=295&type=chunk) - Net cash used in investing activities increased by **$6.4 million**, mainly due to increased investment in equipment for JRSAs and capital expenditures[295](index=295&type=chunk) [Liquidity and Capital Resources](index=82&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's principal liquidity sources and its ability to fund anticipated operating and capital requirements - As of June 30, 2025, principal liquidity sources included **$109.3 million** in cash and cash equivalents, anticipated collection of receivables, and available borrowing capacity of **$252.0 million** under the Credit Agreement, **$26.5 million** under the Bank of China Facility, and **$27.9 million** under the HSBC China Facility[297](index=297&type=chunk)[298](index=298&type=chunk) - The Company expects to have sufficient capital and liquidity to fund anticipated operating needs and capital requirements for the next twelve months[301](index=301&type=chunk) [Off-Balance Sheet Arrangements](index=82&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) This section confirms the absence of material off-balance sheet arrangements impacting the company's financial condition - There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on the Company's financial condition[302](index=302&type=chunk) [Critical Accounting Estimates](index=82&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section highlights the significant judgments, assumptions, and estimates made in preparing the financial statements - The preparation of financial statements requires management to make judgments, assumptions, and estimates that affect reported amounts, which are based on historical experience and future expectations[303](index=303&type=chunk) [Recently Issued Accounting Standards](index=83&type=section&id=RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) This section refers to Note 2 for a discussion of recently issued accounting standards and their potential impact - Refer to Note 2 of the Condensed Consolidated Financial Statements for a discussion of recently issued accounting standards and their impact[305](index=305&type=chunk) [Non-GAAP Financial Measures](index=83&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) This section presents non-GAAP financial measures to provide supplemental insights into operating trends and performance - The Company presents non-GAAP financial measures, including Adjusted net income attributable to common shareholders, EBITDA, Adjusted EBITDA per Credit Facility, and Adjusted Selling, general and administrative expenses, to provide supplemental insights into operating trends and performance[306](index=306&type=chunk)[310](index=310&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) **Adjusted EBITDA per Credit Facility (in thousands):** | Metric | 3 Months Ended June 30, 2025 | 12 Months Ended June 30, 2025 | | :------------------------------------ | :--------------------------- | :---------------------------- | | Reported net income | $12,235 | $42,594 | | EBITDA | $30,142 | $122,069 | | Share-based and other non-cash compensation | $7,492 | $24,222 | | Restructuring and other charges | $786 | $4,592 | | **Adjusted EBITDA per Credit Facility - attributable to common shareholders** | **$36,686** | **$134,513** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=87&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, including foreign currency and interest rate fluctuations, and its management strategies [Foreign Exchange Rate Risk](index=87&type=section&id=Foreign%20Exchange%20Rate%20Risk) This section discusses the company's exposure to foreign currency risk and its use of forward contracts as cash flow hedges - The Company is exposed to foreign currency risk as a majority of revenue is in U.S. Dollars, while significant costs are in Canadian Dollars, and box office receipts are generated in **89** countries[322](index=322&type=chunk) - Foreign currency net gain of **$0.2 million** and net loss of **$0.2 million** were recorded for the three and six months ended June 30, 2025, respectively[325](index=325&type=chunk) - The Company uses foreign currency forward contracts as cash flow hedges, with a notional value of **$51.3 million** as of June 30, 2025, to manage volatility[326](index=326&type=chunk)[327](index=327&type=chunk) [Interest Rate Risk Management](index=88&type=section&id=Interest%20Rate%20Risk%20Management) This section explains how changes in interest rates affect the company's earnings and its management of variable-rate debt - The Company's earnings are affected by changes in interest rates on cash and variable-rate borrowings under its Credit Facility[330](index=330&type=chunk) - Variable rate debt instruments represented **10%** of total liabilities as of June 30, 2025. A hypothetical **10%** increase in interest rates would increase interest expense by **$0.3 million** and interest income by **$0.3 million**[332](index=332&type=chunk) [Item 4. Controls and Procedures](index=88&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=88&type=section&id=EVALUATION%20OF%20DISCLOSURE%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - The Company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[334](index=334&type=chunk)[335](index=335&type=chunk) [Changes in Internal Control Over Financial Reporting](index=89&type=section&id=CHANGES%20IN%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) This section states no material changes occurred in internal control over financial reporting during the three months ended June 30, 2025 - There were no changes in the Company's internal control over financial reporting during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect it[336](index=336&type=chunk) [PART II. OTHER INFORMATION](index=90&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=90&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 7 of the financial statements for detailed information regarding ongoing legal proceedings - Information regarding legal proceedings is detailed in Note 7 of the Notes to Condensed Consolidated Financial Statements[338](index=338&type=chunk) [Item 1A. Risk Factors](index=90&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing potential adverse effects of tariffs, trade barriers, and retaliatory government countermeasures - The Company's business may be materially adversely affected by the imposition of tariffs and other trade barriers and retaliatory countermeasures by the U.S. and other governments[340](index=340&type=chunk) - Uncertainty about global trade relationships may increase market volatility, currency exchange rate fluctuations, and economic instability, potentially impacting consumer discretionary income and box office receipts[341](index=341&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase program, including increased authorization and activity by IMAX Corporation and IMAX China - The Board of Directors approved a **$100.0 million** increase and a one-year extension (through June 30, 2027) to the share repurchase program, bringing the total authorization to **$500.0 million**, with **$250.7 million** available as of June 30, 2025[343](index=343&type=chunk) - IMAX Corporation did not repurchase any common shares under its program during the three months ended June 30, 2025[344](index=344&type=chunk) - IMAX China repurchased **1,495,900** shares during the three months ended June 30, 2025, under a renewed general mandate from its shareholders[346](index=346&type=chunk) [Item 5. Other Information](index=92&type=section&id=Item%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading arrangement by the Chief Legal Officer for the sale of common shares and stock options - Robert D. Lister, Chief Legal Officer, entered into a Rule 10b5-1 trading arrangement on June 11, 2025, for the sale of up to **70,143** common shares, including **50,143** stock options expiring in March 2026[347](index=347&type=chunk) [Item 6. Exhibits](index=93&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including employment agreements, certifications, and XBRL documents - The exhibits include employment agreements for key executives, certifications pursuant to the Sarbanes-Oxley Act, and Inline XBRL documents[349](index=349&type=chunk) [Signatures](index=94&type=section&id=Signatures) This section contains the signatures of the Chief Financial Officer and Senior Vice-President, Finance & Controller, certifying the report - The report is signed by Natasha Fernandes, Chief Financial Officer & Executive Vice President, and Jose Zlatar, Senior Vice-President, Finance & Controller, on July 24, 2025[354](index=354&type=chunk)

Financial Performance & Guidance - IMAX reported a 24% year-over-year growth in global box office, reaching $579 million in the first half of 2025[87] - The company's total adjusted EBITDA margin was 426% in the first half of 2025[87] - IMAX projects full-year 2025 box office to exceed $12 billion[31] - The company anticipates installing 150-160 systems in 2025, an increase from the initial guidance of 145-160[31] - IMAX expects a total adjusted EBITDA margin in the low 40s for 2025[31] Network Growth & Expansion - The IMAX commercial network has a footprint of 1,750 systems across 89 countries and territories[11] - The company has a significant backlog of 501 IMAX systems[11] - International expansion, excluding Greater China, has seen over 28% network growth since 2019[14] Content & Programming - IMAX anticipates a record of over 14 Filmed for IMAX titles in 2025[11] - Local language content is growing, with over 60 titles expected in 2025[77] - First half 2025 IMAX local language box office is already over 50% higher than FY 2024[73] Capital Allocation - IMAX has repurchased 19% of its outstanding shares since 2020[11] - The company's share repurchase authorization was increased in June 2025, with $251 million available under the program[108]