IMAX Corporation (IMAX) Earnings Call Transcript & Summary

Hello, and welcome to the IMAX Corporation Annual and Special Meeting of Shareholders. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Richard Gelfond, Chief Executive Officer of IMAX Corporation. Mr. Gelfond, the floor is yours.

Thank you very much, operator. Ladies and gentlemen, I'd like -- I'd ask that this Annual and Special Meeting of Shareholders come to order. My name is Rich Gelfond, Chief Executive Officer of the corporation. On the call with me today is Brad Wechsler, Chairman of the Board; Ken Weissman, Corporate Secretary will act as secretary of the meeting. Brad will chair the formal part of the meeting today, and I will then have some comments on the business and operations of the corporation. The meeting will then be open for questions and comments from registered shareholders and their duly appointed proxyholders. To adhere to government recommendations and ensure the safety of the corporation's shareholders, employees and directors during the ongoing COVID-19 pandemic, the meeting is being conducted in a virtual-only format via live audio webcast. As this meeting is being held virtually, we'd like to set out a few rules for the orderly conduct of the meeting. First, voting on all matters today will be conducted by electronic ballot. Registered shareholders and duly appointed proxyholders will be asked to vote on each item, if they have not already submitted a form of proxy prior to the meeting. Second, when you are asked to vote, you will receive a message on the virtual interface, requesting that you register your votes. You only have a certain amount of time to do so while the polls are open. And third, questions can be submitted by any registered shareholder or duly appointed proxyholder using instant messaging service on the virtual interface. Questions will be addressed during the question period at the end of the meeting. I would now like to turn the meeting over to Brad.

Thank you, Rich. Ladies and gentlemen, before I begin, our lawyers have asked me to read the following forward-looking statement language. So bear with me for a moment, please. Our comments and answers to your questions might include statements that are forward-looking in that they address future results or occurrences. Actual future results and occurrences may differ materially from these forward-looking statements. You should also refer to our SEC and SEDAR filings for a more detailed discussion of some of the factors that could affect our future results and occurrences. I've appointed Roxanne Parsaud of Computershare Investor Services to act as scrutineer. The secretary has received a statutory declaration from Computershare as to the due mailing of the notice of proxy, proxy circular and proxy statement, form of proxy and the annual report, which contains the financial statements of the corporation. I direct that this statutory declaration be kept by the secretary with the records of this meeting. The secretary has also received the scrutineer's report on attendance, which indicates that sufficient shareholders are present by electronic means to constitute a quorum pursuant to the corporation's bylaws. Thus, notice having been given -- duly given and there being a quorum present, I declare this meeting to be properly constituted. The formal agenda for this meeting as set out in the notice is: To receive the consolidated financial statements for the fiscal year ended December 31, 2019, together with the auditors' report; to elect directors; to appoint the auditors of the corporation and to fix the auditors' remuneration; to conduct an advisory vote on the compensation of the corporation's named executive officers; and to approve the corporation's second amended and restated long-term incentive plan. Shareholders will have received a copy of the corporation's financial statements, management's discussion and analysis of financial condition and results of operations and the auditor's report to the shareholders. I now lay these documents before the meeting. I wish to remind you that only shareholders of record on April 9, 2020, the record date for this meeting, are entitled to vote on the matters before the meeting today. In addition, duly appointed proxyholders for such shareholders of record are entitled to vote on their behalf. With respect to voting procedures, as Rich mentioned, voting today will be conducted by electronic ballot. I will now take a moment to ask if the balloting be open to registered holders and duly appointed proxyholders. If you are a shareholder and have already voted your shares ahead of the meeting and you have joined the meeting as a guest, you do not need to vote your shares again. But please note that if you have already voted your shares ahead of the meeting and used a 15-digit control number or user name to log into the meeting and you accepted the terms and conditions you have revoked any and all previously submitted proxies, in such a case, you are able to vote by ballot again on the matters put forth at the meeting now. The polls are now open. And at this point, all registered shareholders and duly appointed proxyholders who have properly logged in with their control numbers or user name and wish to vote will be able to see on the screen all motions brought forth at this meeting. Please register your votes by accessing the voting page and selecting the relevant option next to each proposal. Voting will end after all items have been brought before the meeting. Election of directors. We will now proceed with the first item of business which is the election of directors. Under the articles of the corporation, the Board of Directors may be comprised of a minimum of 1 and a maximum of 15 directors. The Board of Directors have fixed the number of directors at 9. Directors elected at a meeting of shareholders will hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed. At today's meeting, shareholders will be electing 9 directors. The meeting is now open for nominations.

Mr. Chairman, my name is Robert Lister, and I'm Chief Legal Officer and Senior Executive Vice President of IMAX Corporation and a shareholder. I nominate Neil S. Braun, Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Dana Settle, Darren D. Throop; and Bradley J. Wechsler as Directors of IMAX Corporation to hold office until the Annual Meeting of Shareholders in the year 2021 or until their successors are elected or appointed.

Thank you, Rob. A motion to close the nominations and for the election of those nominated is in order.

Mr. Chairman, my name is Robert Lister. I move that nominations be closed and that the persons nominated as director of be elected directors of the corporation to hold office until the Annual Meeting of Shareholders in the year 2021 or until their successors are elected or appointed.

Thank you, Rob. May we have a seconder, please?

Mr. Chairman, my name is Kenneth Weissman. I'm Senior Vice President Legal Affairs and Corporate Secretary of IMAX Corporation and a shareholder. I second the motion.

Thank you, Ken. You've heard the motion. Please register your votes by accessing the voting page and selecting the relevant option next to this proposal. Voting will end after all items have been brought before the meeting. Our next item is the appointment of auditors. Could we now have a motion reappointing the corporation's auditors, PricewaterhouseCoopers, and authorizing the directors to fix their remuneration?

Mr. Chairman, my name is Robert Lister. I move that PricewaterhouseCoopers LLP be and they are hereby appointed auditors of the corporation to hold office until the close of the next Annual Meeting of Shareholders at such remuneration as the directors may fix.

Thank you, Rob. Maybe we have a seconder, please?

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. You've heard the motion. Please register your votes by accessing the voting page and selecting the relevant option next to this proposal. Voting will end after all items have been brought before the meeting. The next item is the advisory vote on named executive officer compensation. The next proposal commonly known as a say-on-pay proposal gives the corporation's shareholders the opportunity to express their views on the corporation's named executive officers compensation program. Although the vote is advisory and nonbinding in nature, the Board and the compensation committee will review the voting results and will consider shareholders' views in connection with our executive compensation program. Could we have a motion -- could we have a motion to approve the corporation's named executive officer compensation program?

Mr. Chairman, my name is Robert Lister. I move that the corporation's named executive officer compensation program be approved.

Thank you, Rob. May we have a seconder, please? Is there a seconder for this proposal?

Yes, Brad. My name is Kenneth Weissman. I second the motion.

Thank you, Ken. You've heard the motion. Please register your votes by accessing the voting page and selecting the relevant option next to this proposal. Voting will end after all items have been brought before the meeting. The next item of business is the second amended and restated long-term incentive plan. Shareholders are being asked to approve the second amended and restated long-term incentive plan as set forth on Appendix A to the corporation's proxy circular and proxy statement. The plan had initially been approved by the Board and our shareholders at our 2013 and 2016 annual meetings. Can we have a motion to approve the corporation's second amended and restated long-term incentive plan?

Mr. Chairman, my name is Robert Lister. I move that the corporation's second amended and restated long-term incentive plan attached as Appendix A to the corporation's April 29, 2020, proxy circular and proxy statement be approved.

Thank you, Rob. May we have a seconder, please?

My name is Kenneth Weisman. I second the motion.

Thank you, Ken. You've heard the motion. Please register your votes by accessing the voting page and selecting the relevant option next to this proposal. With respect to the voting results, we've now completed the motions related to the items to be voted upon at this meeting. Registered shareholders and duly appointed proxyholders will be given one final minute to complete their voting. Your votes will automatically be accepted once the balloting closes. So I'm going to pause for a minute during which time there will be silence, and people can register their votes. [Voting]

Okay. Thank you. The electronic balloting has now closed. I would ask that the scrutineer compile the results of the votes into a report regarding the results of voting on all business matters. Results will be published on a Form 8-K on EDGAR as well as on SEDAR. This concludes the formal business of the meeting. At this point, Rich would like to make some comments, and then the meeting will be open for questions or comments from registered shareholders and duly appointed proxy holders. Rich?

Thanks, Brad, and thanks to all of you for attending this year's Annual Shareholder Meeting. This is an extraordinary time as IMAX joins the world in fronting the challenges of COVID-19. We are building on our strong financial position record-breaking 2019 to manage through this crisis and ensure we are ready when theaters can safely be open. At present, most of our 1,616 IMAX theaters across 81 countries and territories are closed in accordance with local public health measures. However, we're beginning to see theaters reopen across the Asia Pacific and in select markets around the world. This process will be measured and rightfully so. Most theaters will open slowly with smaller, older films and limited seating capacity. Essentially, there are 3 factors: one, the theaters, when and how they're able to reopen in accordance with local health guidelines; two, the films, when the studios will be comfortable releasing new blockbuster movies to theaters; and third, the audience, when will moviegoers feel safe returning to theaters. IMAX is well positioned to operate through the transitional period. Thanks to disciplined financial management of our business, the company has a strong cash balance. Our business model is asset-light. Our global workforce is under 750 people. Our primary capital expenditures are growth related and somewhat controllable, and we continue to take incremental cost actions as we manage through this pandemic. Even with limited seating capacity, our theaters can be successful, given that successful multiplexes typically run at 15% to 20% of seating capacity in any given year. When the virus recedes, customers around the world will turn to strong trusted brands like IMAX, and the IMAX brand has never been stronger. In 2019, and we set multiple new box office records across global, international, China and 27 countries worldwide. We delivered solid growth in our theater network, further diversified our global footprint and generate robust demand for our cutting-edge IMAX that plays our projection system. As we look at the film slate ahead, a number of releases were filmed using IMAX cameras, including: No Time to Die, Tenet, Top Gun: Maverick, Wonder Woman 1984 and more. We've continued to grow and thrive as a company for more than 50 years, and we've seen and overcome hard times before. When much of the exhibition industry fell into bankruptcy in 2001, IMAX ushered in a period of innovation in which we invented our proprietary digital remastering process or DMR, developed the joint venture model in our sales business and transitioned our operations from analog to digital. Similarly, we are pursuing new opportunities through this crisis. We are developing new technologies to bring more interactivity to our theaters, fast-tracking a direct-to-consumer strategy and codifying our vast troves of film and theater data from around the world. We remain focused on emerging from COVID-19 as a stronger company and continuing to deliver value to our shareholders. Now more than ever, we are grateful for your support. Thank you, and thank you to our employees, who continue to make IMAX as the most powerful entertainment platforms in the world. With that, I will take questions from registered shareholders and duly appointed proxy holders. I ask that all attendees who would like to ask a question use the instant messaging feature of virtual interface to do so. Please limit your questions to topics relating to today's subject matter. We'll answer as many questions as time permits. [Operator Instructions] We will now give attendees a moment to type in their questions. For each question we answer, we will summarize the question, read out loud the name of the person who asked the question. And if applicable, the entity that, that person represents. Brett Harriss, our Senior Vice President of Investor Relations, has been receiving any submitted question. Because of a time delay in this virtual annual meeting, I will -- it takes 20 seconds to receive the data. I will pause for about 20 seconds before I ask Brett whether there are any questions. Brett, are there any questions?

There are no questions at this time. This concludes the question-and-answer portion of the meeting.

Thank you, Brett. This completes the business of the meeting. A motion to conclude the proceedings is now in order.

Mr. Gelfond, my name is Robert Lister. I move that the Annual and Special Meeting of Shareholders of IMAX Corporation be concluded.

Thank you, Robert. Do we have a seconder?

My name is Kenneth Weissman. I second the motion.

Thank you, Kenneth. Thank you for joining us today and for your continued interest and support in IMAX. The meeting is now concluded.

This concludes the meeting. You may now disconnect.