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IMAX Gets Through a Tough Quarter, Sees Better Times Ahead

Image source: Getty Images.

Big-screen theater specialist IMAX (NYSE:IMAX) counts on having plenty of quality entertainment to deliver to its patrons, and that can leave the company vulnerable to the ups and downs of Hollywood and other content providers. That hasn't been any problem at all for IMAX recently, given the dramatic success of blockbusters like the latest Star Wars installment. Coming into Wednesday's second-quarter financial report, though, IMAX investors were prepared for a downturn in the company's fortunes. IMAX managed to avoid the worst of that drop-off, but it will still have to work hard for the rest of the year to live up to 2015's results.

Let's look more closely at how IMAX did and whether it can keep up the pace in future quarters.

IMAX throttles down

IMAX's second-quarter results weren't as bad as many had feared, but they still represented substantial declines from year-ago levels. Revenue fell 14% to $91.7 million, outpacing the 19% drop most investors had expected the company to post. Adjusted net income fell by more than half, to $12.1 million, but that worked out to adjusted earnings of $0.18 per share, and that beat the consensus forecast by a penny.

Looking more closely at IMAX's financials, you can see several signs of sluggishness from the theater chain. Revenue from sales and sales-type leases managed to inch upward by less than 1%, and ongoing rent, fees, and other revenue from IMAX systems boosted the entire segment by about 3%. Theater system maintenance sales also climbed a healthy 8%, but joint revenue sharing arrangements saw sales get crushed by almost a quarter. Film-related...