IMAX Corp. (IMAX), the operator of giant- screen movie theatres, reported 2Q earnings down 87 percent from $13.3 million to $1.8 million year-over-year, Reuters reported.
It was the biggest drop in almost three years, after the company stated that its “disappointing film performance” was partly the cause for a plunge in second-quarter profit, Bloomberg reported.
Net income plunged 86 percent to $1.8 million from $13.3 million year-over-year, according to the company statement. Excluding stock compensation and deferred taxes, earnings declined from $8.4 million, or 13 cents in the second quarter of 2010, to $4.6 million, or 7 cents a share.
“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,” according to IMAX Chief Executive Officer, Richard L. Gelfond.
The number of deals signed is up from 98 last year, and Gelfond added that IMAX plans to install 120 to 130 new theaters this year, which is slightly above expectations. However, the company’s expansion heavily relies on box office performance, which has not been strong this year, Reuters reported.
IMAX’s unique theatre experience requires the company to make longer commitments to show films than normal competitors, according to James Marsh, Jr., an analyst at Piper Jaffray & Co. “If the movie isn’t popular among viewers, the company could be stuck with it.”
“The slate of movies for the back half of this year was disappointing, Marsh added in an interview. “It’s hard for investors to get aggressive when you don’t have a good slate of films,” Bloomberg reported.