Core Viewpoint - IMAX Corporation has priced a private offering of $220 million in convertible senior notes, which are set to mature in 2030, with an interest rate of 0.75% per annum [1][2]. Summary by Sections Offering Details - The offering consists of $220 million aggregate principal amount of 0.75% convertible senior notes due 2030, with a settlement date scheduled for November 6, 2025 [1]. - An additional option for initial purchasers allows for the purchase of up to $30 million in principal amount of notes within 13 days of the initial issuance [1]. Interest and Conversion Terms - The notes will accrue interest at 0.75% per annum, payable semi-annually starting May 15, 2026, and maturing on November 15, 2030 [2]. - Noteholders can convert their notes under specific conditions before August 15, 2030, and at any time thereafter until the maturity date [2]. - The initial conversion rate is set at 23.5743 common shares per $1,000 principal amount, equating to an initial conversion price of approximately $42.42 per share, representing a 30% premium over the last reported sale price of $32.63 on November 3, 2025 [2]. Redemption and Repurchase Rights - The notes are redeemable at IMAX's option starting November 20, 2028, if the last reported sale price exceeds 130% of the conversion price for a specified period [3]. - In the event of a "fundamental change," noteholders may require IMAX to repurchase their notes for cash at the principal amount plus accrued interest [4]. Use of Proceeds - IMAX estimates net proceeds from the offering to be approximately $212 million, or $241.1 million if the additional notes option is fully exercised [5]. - The proceeds will be used to fund the refinancing of outstanding 2026 notes, capped call transactions, and for general corporate purposes [6][7]. Capped Call Transactions - IMAX has entered into capped call transactions to mitigate share dilution, with an initial cap price of $57.1025 per share, representing a 75% premium over the last reported sale price [13][14]. - These transactions are designed to offset potential cash payments required upon conversion of the notes [14]. Market Activity Implications - The unwinding of existing capped call transactions may lead to significant market activity, potentially affecting the market price of IMAX's common shares and the notes [10][11][15][16]. Company Overview - IMAX Corporation is a leader in entertainment technology, operating 1,829 IMAX systems across 89 countries as of September 30, 2025 [18][19].

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]