Imax second-quarter profits drop to US$1.8 million, revenues slip three per cent

TORONTO – Imax Corp.’s earnings came in far short of analyst expectations in the second quarter as the giant screen company experienced “disappointing” results from a slate of films including box-office dud “Sucker Punch.”

Imax (TSX:IMX) said its results were also impacted by higher investments in its business as it reported Thursday a profit of US$1.8 million, or three cents per share, in the three-month period ended June 30. That compared to earnings of $13.3 million or 20 cents per share a year earlier.

Shares in the Toronto-based company plunged $3.43 or almost 15 per cent to $19.74 in afternoon trading on the Toronto Stock Exchange.

Adjusted profits, which exclude stock compensation variables and tax provisions, fell to seven cents per share, well below analyst estimates of 20 cents per share, according to Thomson Reuters. Revenues increased three per cent to $57.2 million from $55.6 million.

“While looking back over the last six months, it appears that there were fewer blockbuster titles that are consistent with our brand than in the same period last year,” said chief executive Richard Gelfond in a release.

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Many of those box-office flops fell during the first quarter when both “I Am Number Four” and “Mars Needs Moms” failed to live up to studio expectations.

However, “Sucker Punch” proved to be another title that stalled out of the gates when it was released in late March, cutting into Imax’s April schedule.

The company did not specifically name which movies it considered “disappointing” in the quarter. Other films in the period included “Pirates of the Caribbean: On Stranger Tides” and “Fast Five.”

“While the quarter did not live up to our financial expectations, more fundamental to the long-term value of our business is the fact that we have signed 153 theatre deals year-to-date, are installing theatres at a rapid rate and are sitting on a record backlog of close to 300 IMAX theatre systems,” Gelfond said.

Imax signed 52 theatre installations in the quarter compared to 57 in the second quarter of 2010. However, so far this year it has signed 153 installations compared to 98 a year earlier.

Gelfond provided some reassurance that the summer movie slate, part of its third quarter, is delivering strong results.

“Imax fans around the globe have come out in record numbers to experience the latest Transformers and Harry Potter franchise instalments,” he said.

“As a result, the third quarter is off to a strong start with $88 million of box office generated in the first three and a half weeks, which compares to $98 million in all of last year’s third quarter.”