IMAX(IMAX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION 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 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 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] Condensed Consolidated Statements of Operations 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] Condensed Consolidated Statements of Comprehensive Income 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] Condensed Consolidated Statements of Cash Flows 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][295] Condensed Consolidated Statements of Shareholders' Equity 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] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation 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] - 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] 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 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] - 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] 3. Receivables 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][37] 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] 4. Lease Arrangements 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][59] 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 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][64] 6. Borrowings This note details the company's revolving credit facility, convertible notes, and other borrowing arrangements Revolving Credit Facility Borrowings, Net 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] - 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][73] Convertible Notes and Other Borrowings, Net 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][84][85] 7. Commitments, Contingencies and Guarantees 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] - 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][93] 8. Condensed Consolidated Statements of Operations – Supplemental Information 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] - 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] 9. Condensed Consolidated Statements of Cash Flows – Supplemental Information 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 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] - 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] - 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][115] 11. Capital Stock and Reserves 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] - 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] 12. Revenue from Contracts with Customers 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] - 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] 13. Segment Reporting 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 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][156] - 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][159] - 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][162] 15. Financial Instruments 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] - 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][168] 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 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] - 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] 17. Restructuring and Other Charges 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - 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] - 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] Sources of Revenue This section details IMAX's revenue sources, including content solutions, technology products, and other services Content Solutions 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][193] - 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] 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 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] - 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] Other Content Solutions 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][204] - Upcoming documentaries include 'The Lost Wolves of Yellowstone' (2025) and 'Stormbound,' 'Patrouille de France,' and 'The Elephant Odyssey' (2026)[202] Technology Products and Services 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][208] - 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] - 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] Sales and Sales-Type Lease Arrangements 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] Joint Revenue Sharing Arrangements 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] - 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] IMAX Maintenance 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] All Other 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][221] - 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] IMAX Network and Backlog This section provides an overview of the global IMAX network, system backlog, and recent signings and installations IMAX Network 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] - 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] 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] - Approximately 74% of IMAX System arrangements in backlog as of June 30, 2025, are scheduled for international markets[237] Signings and Installations 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 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 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 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 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] 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 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] - 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] - 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] Technology Products and Services 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] - 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] 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 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 $1.0 million, respectively, for the three months ended June 30, 2025, primarily reflecting results from Streaming and Consumer Technology[256] Selling, General and Administrative Expenses This section details selling, general and administrative expenses, including share-based compensation, for the three months ended June 30 Selling, General and Administrative Expenses (3 Months Ended June 30): | Metric (in thousands) | 2025 | 2024 | Variance ($) | 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] Research and Development 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] Credit Loss (Reversal) Expense, Net 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][261] Interest Expense and Interest Income 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] Income Taxes 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][265] Non-Controlling Interests 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] Restructuring and Other Charges 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] Results of Operations for the Six Months Ended June 30, 2025 and 2024 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 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 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] 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 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] - 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] - 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] Technology Products and Services 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] - Rental revenues increased by $5.2 million, driven by IMAX GBO from JRSAs rising by $38.8 million to $265.2 million[280] 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 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 $1.7 million, respectively, for the six months ended June 30, 2025, primarily reflecting results from Streaming and Consumer Technology[282] Selling, General and Administrative Expenses This section details selling, general and administrative expenses, including share-based compensation, for the six months ended June 30 Selling, General and Administrative Expenses (6 Months Ended June 30): | Metric (in thousands) | 2025 | 2024 | Variance ($) | 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] Research and Development 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] Credit Loss (Reversal) Expense, Net 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][287] Interest Expense and Interest Income 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] Income Taxes 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] Non-Controlling Interests 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] Restructuring and Other Charges 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] Cash Flows for the Six Months Ended June 30, 2025 and 2024 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] - Net cash used in investing activities increased by $6.4 million, mainly due to increased investment in equipment for JRSAs and capital expenditures[295] Liquidity and Capital Resources 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][298] - The Company expects to have sufficient capital and liquidity to fund anticipated operating needs and capital requirements for the next twelve months[301] Off-Balance Sheet Arrangements 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] Critical Accounting Estimates 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] Recently Issued Accounting Standards 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] Non-GAAP Financial Measures 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][310][313][314] 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 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 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] - 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] - 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][327] Interest Rate Risk Management 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] - 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] Item 4. Controls and Procedures 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 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][335] Changes in Internal Control Over Financial Reporting 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] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - IMAX Corporation did not repurchase any common shares under its program during the three months ended June 30, 2025[344] - IMAX China repurchased 1,495,900 shares during the three months ended June 30, 2025, under a renewed general mandate from its shareholders[346] Item 5. Other Information 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] Item 6. Exhibits 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] 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]