By Mike Caggeso
Associate Editor
Shares of IMAX Corp. (IMAX) rocketed more than 62% Friday after the company announced a deal that will install 100 digital projection systems in AMC Entertainment Inc. theaters across North America.
Ontario-based IMAX is known for its large-format, color-and-sound-enhanced films specially filmed for presentation on large screens that are usually owned by third parties.
However, this deal doubles IMAX’s North American venues and guarantees regular airing of its films, amounting to an estimated $30 million to $35 million in additional cash flow [as measured by earnings before interest, taxes, depreciation and amortization, or EBITDA], IMAX Chief Executive Officer Bradley J. Wechsler said during a conference call.
“Partnering with AMC in a theater deal of this size and scope is a transformational moment for our company from both a financial and strategic perspective,” Wechsler and Co-Chairman Richard L. Gelfond said in a statement.
The first 50 IMAX systems of the deal premiere in July 2008 [summer move blockbuster season, anyone?] in 24 of the 33 selected markets – all major metropolitan areas. Another 25 will rollout in 2009, and the remaining 25 in 2010.
Before this deal, some investors may have been wondering when IMAX was going to deliver on its big promises.
The company said its $7.5 million (19 cents a share) loss in the third quarter was the result of $1.6 million poured into research and development and 18 additional theater deals signed last quarter.
The AMC deal represents perhaps the last chance investors have to get in early on IMAX if (and that “if” is as big as an IMAX screen) the large-screen craze takes off in the next few years.
Even if IMAX’s earnings don’t explode like this deal suggests, its long-term prospects are still exciting. This year, the company inked two separate development deals in China – a 10-screen deal with Wanda Cinema Line Co. [China’s fastest-expanding multiplex developer] and a five-screen deal with Hong Kong-based Lark International.
“It is astonishing that in the 10 years since we built our first screen there, China has become our second-biggest territory, not just within Asia but anywhere in the world,” Don Savant, managing director of IMAX’s Asia Pacific division, told Variety.
News and Related Story Links:
- Bloomberg:
Imax Soars on Plan to Install 100 3-D Systems for AMC. - Toronto Star:
Investors missing the big picture on Imax success at the box office. - Variety:
Asian tiger roars as Hollywood listens. - Wikipedia:
EBITDA. - HollywoodReporter.com:
Wanda Cinema Opens 100th Screen in China.