Big-screen pioneer Imax said Thursday that it recorded a net non-cash provision of $6.9 million, or $0.12 per share, due to an increase in reserves given the uncertainty of collecting receivables in Russia. With the Russia-Ukraine war ongoing, sanctions and boycotts underway include all major studios pulling releases from Russia.
“This provision was taken in an exercise of caution due to the ongoing conflict in Ukraine and covers substantially all of the company’s net receivable exposure in the Russian market,” the company said as part of its first-quarter earnings report. Over the past five years, Russia has represented about 3% on average of Imax’s annual global box office.
The provision squeezed earnings. Net losses of $13.6 million narrowed from $14.8 million the year before but would have been considerably less.
Revenue surged 55% to $60 million from about $39 million primarily from The Batman, Spider-Man: No Way Home and local-language title The Battle at Lake Changjin II over the Chinese New Year. Total gross box office was $173 million versus $110 million.
CEO Rich Gelfond sees the box office on a one-way trajectory up given the slate including “Filmed For Imax” releases like Doctor Strange in the Multiverse of Madness, Top Gun: Maverick, Jurassic World Dominion and Lightyear. He’s particularly up on James Cameron’s Avatar: The Way of Water coming in December given that the first Avatar ended up being Imax’s top-grossing film ever. On a call with Wall Streeters, Gelfond said Imax has set up a special internal Avatar task force across divisions from technology to distribution and marketing to capitalize on the next installment.
“The last one we got caught off guard. We had less than 300 theaters. We are going to be ahead of the curve on that,” he said.
There was lots of interest in China, given Imax’s significant footprint in that country. The market is challenged by shutdowns from the government’s no-Covid policy. Gelfond said open theaters have gone from 50% at the end of March to 65% now. He said his team there believes Shanghai will open in the next couple of weeks.
The industry has noted that it’s been increasingly difficult for U.S. studios to move into China. Gelfond said Covid is a big part of that and once the pandemic eases, “I don’t think it’s going to be a long-term issue there.”
He also continued to beat the drum that day-and-date releasing is over and done with as studios acknowledge it’s a model that didn’t really work. NATO chief John Fithian declared that outright in speech this week at CinemaCon, the annual confab that hosts studios and exhibitors for days of presentations and meetings.
“There was this existential threat hanging over the movie business for a long time that, given the chance, they [studios] were going to move it to streaming,” Gelfond said. “And they had their chance, and it didn’t work.”
As for the stand-alone streamers, he said: “I would not be surprised, I would predict, that some of the streamers start to go to theatrical windows for some of their films.”