IMAX Corporation (IMAX) Earnings Call Transcript & Summary

Hello, and welcome to the Annual and Special Meeting of Stockholders of IMAX Corporation. Please note that today's meeting is being recorded. [Operator Instructions]. It is now my pleasure to turn today's meeting over to Rich Gelfond, CEO of IMAX Corporation. Mr. Gelfond, the floor is yours.

Thank you, operator. Ladies and gentlemen, I'd ask that this annual and special meeting of shareholders come to order. I want to welcome all of you to this year's meeting, and thank you for joining us. My name is Rich Gelfond, Chief Executive Officer of IMAX Corporation. Ken Weissman, Corporate Secretary, will act as Secretary of the meeting. Other members of our Board of Directors and management are present on today's webcast as well. I will Chair the formal part of the meeting today, and then we'll have some comments on the business and operations of the corporation. The meeting is being conducted in a virtual-only format via live audio webcast. While the meeting is virtual only, we welcome questions and comments from registered shareholders and duly appointed proxy holders. You can submit questions and comments through the text box located on your screen. We will address questions relating to specific business items when those items are brought before the meeting. We will address questions not related to specific business items of the meeting during the Q&A session at the end. If there are multiple similar questions, we may combine them for efficiency. Although we may not be able to answer every question, we'll do our best to provide a response to as many as possible. I would like to ask Ken to briefly go over some procedural and administrative matters.

Thanks, Rich. I confirm that we have not received any shareholder nominations or proposals for business at today's meeting. Voting on all matters today will be conducted by electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each item, if they have not already submitted a formal proxy prior to the meeting. When it is time to vote, you will receive a message on the virtual interface, requesting that you register your votes. You will only have a certain amount of time to do so while the polls are open. Questions can be submitted by any registered shareholder or duly appointed proxy holder using the instant messaging service of the virtual interface. If you submit a question, please include your name and your affiliation and indicate if the question relates to a specific agenda item or as a general question. Before the formal part of the meeting begins, please keep in mind that 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. Please 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 have received a statutory declaration from Computershare as to the due mailing of the notice of meeting, proxy circular and proxy statement, form of proxy and the annual report that contains the financial statements of the corporation. I have also received a list of the holders of the corporation's common shares as of the close of business on April 12, 2021, the record date for this meeting, as prepared and certified by Computershare and 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.

I direct that this statutory declaration and the list of shareholders be kept by the Secretary with the records of this meeting. The notice of meeting, the proxy circular and proxy statement and the form of proxy are and will remain available for inspection on the meeting platform throughout the meeting. I've appointed Computershare Investor Services Inc. through its representatives to act as Scrutineer. Notice having been 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, 2020, together with the auditor's report; to elect directors; to appoint the auditors of the corporation; and to authorize the directors to fix the auditor's remuneration; to conduct an advisory vote on the compensation of the corporation's named executive officers; and to confirm amendments to the corporation's By-Law No. 1. Ken will now discuss voting procedures.

Thanks, Rich. I wish to remind everyone that only shareholders of record on April 12, 2021, the record date for this meeting, are entitled to vote on the matters before the meeting today. In addition, duly appointed proxy holders for such shareholders of record are entitled to vote on their behalf. As I mentioned earlier, voting today will be conducted by electronic ballot. We now ask that the balloting be opened to registered holders and dually appointed proxy holders. If you are a shareholder and have already voted your shares ahead of the meeting, you do not need to vote your shares again. But please note that if you use a 15-digit control number or username to log into the meeting and you accepted the terms and conditions, you will be provided the opportunity to vote by online ballot. Your previously submitted proxies will be revoked if you vote by online ballot during the meeting. If you do not wish to revoke previously submitted proxies, do not vote again during the meeting. The polls are now open, and at this point, all registered shareholders and duly appointed proxy holders who are properly logged in with their control numbers or username and wish to vote will be able to see on the screen all motions being brought forth at this meeting. If you have not previously submitted proxies, 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. Rich, we are now ready to proceed with the formal business of the meeting.

Thanks, Ken. The first item of business 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. 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 8 directors. Effective upon the election of directors at the meeting, the Board of Directors will fix the number of directors at 8. 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 Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Steve R. Pamon, Dana Settle, Darren D. Throop as directors of IMAX Corporation to hold office until the annual meeting of shareholders in the year 2022 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 be elected directors of the corporation to hold office until the annual meeting of shareholders in the year 2022 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 am 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. If you have not previously submitted proxies or wish to revoke previously submitted proxies, please register your votes by accessing the voting page and selecting the relevant options next to the proposal. Voting will end after all items have been brought before the meeting. Brett Harriss, IMAX's Head of Investor Relations, is receiving any questions that are being submitted by registered shareholders and duly appointed proxy holders during the meeting. Brett, could you please advise if there are any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

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

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. You've heard the motion. If you have not previously submitted proxies or wish to revoke previously submitted proxies, 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. Brett, can you please advise if we have received any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

Thank you, Brett. The next proposal, commonly known as the say-on-pay proposal, gives the corporation shareholders the opportunities 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. May 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?

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. You've heard the motion. If you've not previously submitted proxies or wish to revoke previously submitted proxies, 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. Brett, can you please advise if we received any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

Thank you, Brett. Shareholders are being asked to confirm amendments to the corporation's By-Law No. 1 by way of repeal and replacement. On March 4, 2021, the Board of Directors repealed By-Law No. 1 of the company and adopted, amended and restated By-Law No. 1 as set forth in Appendix A to the corporation's proxy circular and proxy statement. May we have a motion to confirm amendments to the corporation's By-Law No. 1 by way of repeal and replacement with the amendment and restated By-Law No. 1?

Mr. Chairman, my name is Robert Lister. I move that the corporation's amendments to By-Law No. 1 by repeal and replacement attached as Appendix A to the corporation's April 27, 2021, proxy circular and proxy statement be confirmed.

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

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. You've heard the motion. If you have not previously submitted proxies or wish to revoke previously submitted proxies, 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 this meeting. Brett, can you please advise if we've received any questions regarding this business item?

I can confirm that we have not received any questions specific to this business item.

Thank you, Brett. We have now completed the motions related to the items to be voted upon at this meeting. Registered shareholders and duly appointed proxy holders will be given 1 final minute to complete their voting. Your votes will automatically be accepted once the balloting closes. I'm going to pause for a moment while you submit any changes. [Voting]

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, I would like to make some comments, and then the meeting will be open for questions or comments not specific to the business items of the meeting from registered shareholders and duly appointed proxy holders. I would like to start by taking a moment to recognize Brad Wechsler, who will officially step down as Chairman of the Board today after nearly 30 years of service to the company. We thank Brad for his long-standing commitment to IMAX, and I'm personally grateful for his partnership and friendship. I'm also grateful to our shareholders who joined us today. I hope you are staying safe and in good health. The past year has been immensely challenging for all of us in so many ways. And the human toll of the COVID-19 pandemic is beyond words. But when we look at our business, we're increasingly optimistic as IMAX helps lead the recovery of the global film industry. When we met this time last year, we expressed full confidence in IMAX's ability to survive the impact of the pandemic. As we meet today, I'm happy to share that we are now fully focused on thriving yet again as the virus recedes in key markets around the world. We've successfully managed through the past year, thanks to the unique strengths of our business. We're the only global out-of-home platform for blockbuster entertainment. We have a flexible, asset-light business model. We're an in demand global brand, and we're well capitalized to benefit from the comeback at hand. Earlier this year, we raised more than $200 million in a convertible debt offering at extremely attractive rates. We now have close to $550 million in available liquidity, ensuring the financial flexibility to take full advantage of growing reopening momentum and momentum at the global box office is building rapidly. We see signs of substantial pent-up demand for movie going. Over Memorial Day, A Quiet Place 2 delivered a pandemic year of best, $57 million in U.S. theaters, leading the domestic box office to its first $100 million weekend in well over a year. A week earlier, the latest installment of the Fast & Furious saga opened to $162 million across select international markets, including China, Korea and Saudi Arabia. These latest positive signs follow months of record-breaking performances across key Asian markets like China and Japan and steadily improving results in the U.S. It is clear that where the virus is under control and people feel safe, they're eager to get back to the movies. And as they do, many of them want the most immersive theatrical experience on the planet, IMAX. We've driven extremely strong market share as theaters open, and this discernible shift to premium is set to benefit IMAX with a formidable slate ahead. Summer blockbuster season continues with the highly anticipated domestic debut of F9, Marvel's Black Widow and DC Comics' The Suicide Squad. The latest bond entry, No Time To Die, as well as Dune and Top Gun: Maverick are all on deck for the second half of the year and all involve some kind of IMAX DNA. And 2022 is shaping up to be an incredibly strong year for IMAX with The Batman, Jurassic World, Avatar 2, Mission Impossible 7 and several other Marvel entities, all scheduled for release. Finally, beyond Hollywood, we're on pace for our biggest year ever in 2021 at the box office for local language films. Even as we strengthened our core business, we've also used the past year to advance our in-home technology initiatives, including IMAX Enhanced, our growing effort to provide premium, blockbuster content for high-end devices and streaming services. We're looking toward a bright future. And across the industry, there is a renewed sense of hope, possibility and collaboration right now. The slate of new releases is firm and holding, Hollywood talent are becoming more vocal and welcoming audiences back to theaters. And the industry is moving to standardize an IMAX friendly 45-day theatrical window. After more than a year of being stuck at home, the signs of recovery are all around us, and no one is better positioned in the entertainment industry than IMAX to benefit. Thank you again for joining us today and your continued support of IMAX. With that, I will take questions from registered shareholders and duly appointed proxy holders. [Operator Instructions] 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 the person represents. Brett, are there any questions?

I can confirm that no questions have been submitted.

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

My name is Robert Lister. Mr. Chairman, I move that the annual and special meeting of the shareholders of IMAX Corporation be concluded.

Thank you, Rob. Do we have a seconder?

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. Thank you all 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.