IMAX Corporation (IMAX) Earnings Call Transcript & Summary

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

Thank you. I'd like to call this Annual and Special Meeting of Shareholders to order. I want to welcome all of you to this year's meeting and to thank you for joining us. 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 I will then have some comments on the business and operations of IMAX. This meeting is being conducted in a virtual format via live audio webcast. While the meeting is virtual, we welcome questions and comments from registered shareholders and duly appointed proxy holders. We will address questions relating to specific business items when those items are brought before the meeting, and we will address other questions during the Q&A session at the end of the meeting. I would now like to ask Ken to briefly go over some procedural and administrative matters.

Thanks, Rich. I have confirmed that we have not received any shareholder nominations or proposals for business at today's meeting. Questions can be submitted by any registered shareholder or duly appointed proxy holder by selecting the Q&A icon on the top right corner of your screen. If you submit a question, please include your name and your affiliation and indicate that the question relates to a specific agenda. If there are multiple similar questions, we may combine them for efficiency. Although we may not be able to answer every question, we will do our best to provide a response to as many as possible. 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 and 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 received from Computershare, a list of the holders of the corporation's common shares as of the close of business on April 10, 2023, the record date for this meeting, as well as the statutory declaration as to the due mailing of the notice of meeting, proxy circular and proxy statement, formal proxy and the annual report that contains the 2022 financial statements of the corporation. I have also received a 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.

Thanks, Ken. The notice of meeting, the proxy circular and proxy statement in the form of proxy will be available for inspection throughout the meeting by selecting the documents icon on the top right corner of your screen. I have appointed Computershare Investor Services Inc. through its representatives to act as scrutineer. I direct that the statutory declaration and the list of shareholders be kept by the secretary with the records of the meeting. Notice having been duly given and there being a quorum present, I declare the 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, 2022, together with the auditor's report, to elect directors, to appoint the auditors of the corporation and to authorize directors to fix the auditor's remuneration, to conduct an advisory vote on the compensation of the corporation's named executive officer to conduct an advisory vote on the frequency of future advisory votes on the compensation of the corporation's named executives and officers to confirm amendments to the corporation's amended and restated bylaw #1 and to approve amendments to the corporation's second amendment -- amended and restated long-term incentive plan. Ken will now discuss the voting procedures.

Thanks, Rich. I wish to remind everyone that voting today is limited to shareholders of record on April 10, 2023, the record date for this meeting as well as duly appointed proxy holders for such shareholders. Voting will be conducted by electronic ballot. We now ask that the balloting be open. If you are a shareholder and you have already voted your shares ahead of the meeting, you do not need to vote your shares again. But if you used a control number or invite code to log into the meeting and you accepted the terms and conditions, you will be provided the opportunity to vote by online ballot. If you vote by online ballot during the meeting, your previously submitted proxies will be revoked. If you do not wish to revoke previously submitted proxies, do not vote again during the meeting. The polls are now open and all registered shareholders and duly appointed proxy holders who wish to vote can click on the vote icon on the top right corner of your screen. You will be able to see all motions being brought forth at the meeting, and you can select a relevant option next to each proposal. Voting will end after all items have been brought forth 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 the office until the close of the next Annual Meeting of Shareholders, until their successors are elected or appointed or until the date of their resignation or termination. At today's meeting, shareholders will be electing 10 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 Gail Berman, Eric A. Demirian, Kevin Douglas, Richard L. Gelfond, David W. Leebron, Michael MacMillan, Steve R. Pamon, Dana Settle, Darren Throop and Jennifer Wong, as Directors of IMAX Corporation to hold office until the close of the Annual Meeting of Shareholders in the year 2024 until their successors are elected or appointed or until the date of their resignation or termination.

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 close of the Annual Meeting of Shareholders in the year 2024 until their successors are elected or appointed or until their resignation or termination.

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

Mr. Chairman, my name is Kenneth Weissman. I am Deputy General Counsel and Corporate Secretary of IMAX Corporation and a shareholder. I second the motion.

Thank you, Ken. Jennifer Horsley, IMAX's Senior Vice President of Investor Relations, is receiving any questions that are submitted during the meeting. Jennifer, can you please advise if there are questions regarding this business item?

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

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. Jennifer, 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.

The next proposal, commonly known as say-on-pay proposal, gives the corporation shareholders the opportunity to express their views on the corporation's named executive officer's 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. Jennifer, 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.

The Dodd-Frank Act requires that shareholders have the opportunity to vote on how often they believe the advisory vote on named executive officer compensation should be held in the future. Although the vote is advisory and nonbinding in nature, the Board and the Compensation Committee will review the voting results in determining the frequency with which advisory votes on named executive officer compensation will be conducted. I will now ask shareholders to express their preference for whether an advisory vote on the compensation of the company's named executive officers should be held annually every 2 years or every 3 years. Jennifer, could 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.

Shareholders are being asked to confirm amendments to the corporation's amended or restated bylaw #1 by way of repeal and replacement on February 7, 2023, and the Board of Directors repealed amended and restated bylaw #1 of the corporation and adopted the second amended and restated bylaw #1, attached as Appendix A to the corporation's proxy circular and proxy statement. May we now have a motion to confirm the repeal and replacement of the corporation's amended and restated bylaw #1, with the second amended and restated bylaw #1?

Mr. Chairman, my name is Robert Lister. I move to the repeal and replacement of the corporation's amended and restated bylaw #1 with the second amendment and restated bylaw #1 attached as Appendix A to the corporation's April 26, 2023, proxy circular and proxy statement be confirmed.

May we have a seconder, please?

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. Jennifer, 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.

Shareholders are being asked to approve the amendments to the corporation's second amended and restated long-term incentive plan set forth in Appendix B to the corporation's proxy circular and proxy statement. The plan was initially approved by the Board and our shareholders at our 2020 Annual and Special Shareholder Meeting. May we now have a motion to approve the amendments to the second amended and restated long-term incentive plan?

Mr. Chairman, my name is Robert Lister. I move that the amendments to the corporation's second amended and restated long-term incentive plan as set forth in Appendix B to the corporation's April 26, 2023, proxy circular proxy statement be approved.

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

My name is Kenneth Weissman. I second the motion.

Thank you, Ken. Jennifer, 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. We have now completed the motions related to the items to be voted upon at this meeting. We will pause here to provide 1 final minute to allow everyone to complete their voting. Your votes will automatically be accepted once the balloting closes. [Voting]

The electronic balloting has now closed. I ask that the scrutineer compile the results of the votes on all business matters and to report. 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 the meeting will then be open for questions. We've already signed more deals for new and upgraded IMAX systems around the world than we did in all of 2022. We delivered our best first quarter of all time at the global box office, thanks to a diverse slate of Hollywood hits and local language releases and a strong resurgence of the Chinese box office. Audiences continue to post the blockbusters in IMAX as they dominate the global box office landscape. Studios have abandoned the fail day in date streaming distribution experiment and recommitted to exclusive theatrical releases, how we believe the 2023 slates presents an enormous opportunity. With many of the world's biggest franchises, filmmakers and fan favorites returning to IMAX from Marvel to DC Comics, Optimus Prime to Indiana Jones and of course Christopher Nolan and Tom Cruise. Simply put, it's a great time to be in the IMAX business. This year and beyond, we are poised to further establish IMAX as a premier global technology platform for entertainment and events. The all-important summer box office season is off to a strong start for IMAX. Guardians of the Galaxy Vol. 3 rocketed to a $25 million debut, our biggest global opening of the year. The Super Mario Bros movie delivered our highest animated opening weekend of all time. Fast X has delivered more than $32 million in IMAX global box office, thanks to a strong international haul, particularly in China. And last weekend, we captured more than 10% of global market share with our $20 million debut of Spider-Man across the Spider-Verse. We're making particularly strong progress in China. IMAX accounted for 4.3% of the country's box office through April on only 1% of the screens, up significantly over 2022. Hollywood films are routinely gaining entry to the market with significant lead time and a promising slate of local language blockbusters is set for this year as the government continues to demonstrate support for the cinema industry. We've expanded the film for IMAX camera program this year to feature at least 10 releases across Hollywood and local language film with IMAX cameras, including many of the most promising forthcoming titles, including DC's The Flash, which opens next week. Chris Nolan's Oppenheimer on July 21. Denis Villeneuve's, ambitious Dune: Part Two in November, and Aquaman and the Lost Kingdom in December. Increasingly, our slate extends far beyond Hollywood. The first quarter of 2023 was our highest grossing ever below the language box office. Nearly 1/3 of our global box office in the period was generated by international releases from China, Japan and India. This is a strong validation of our strategy to diversify our content portfolio and become a leading platform below the line with blockbusters around the world and we've only begun to tap the potential here. IMAX plans to program 30 to 40 local language films worldwide this year alone. Thanks to our expanding share of the global box office, we are driving strong momentum in signings for new and upgraded IMAX systems worldwide. We've already struck deals for more than 70 new and upgraded systems around the world in '23. Our strategic focus on international markets where we generate high per-screen averages with recent deals in Japan, Indonesia, Thailand, Vietnam, France and more. For example, 2 of the new systems opened this year under a sign and install agreement with AEON in Japan and are already among the top 10% of the highest grossing IMAX locations in the world. We've even signed agreements for new locations in more mature markets like North America including a new partnership with an innovative and growing exhibitor, EVO Entertainment for 8 new IMAX systems across Texas and Florida. As we expand our global footprint, IMAX is also building on its legacy as an innovator in entertainment technology. This includes our acquisition of AI-based streaming technology company SSIMWAVE, the further expansion of our IMAX Enhanced home entertainment initiative to new platforms and technologies and IMAX Live. At this year's National Association of Broadcasters Summit, SSIMWAVE won an NAB Product of the Year Award for the VOD Monitor, a product that allows streamers to optimize video quality and reduce bandwidth costs. And in the first quarter, we announced plans to bring the world's first IMAX enhanced certified PC to market with our partners at HP. In conclusion, we're delivering on a strong promise 2023 holds for IMAX with diverse high-quality new signings in key growth markets, a record-breaking quarter at the box office, continued global market share growth and significant progress in the global diversification of our brand and business. We are confident in our ability to drive further global growth across the IMAX network and box office as we carry our strong momentum through the year and to creating value for our business, our shareholders and the audiences around the world that continue to embrace the IMAX experience. Thank you again for joining us today and for your continued support of IMAX. With that, I will take questions from registered shareholders and duly appointed proxy holders. Please limit your questions to topics related to today's subject matter. We'll answer as many questions as time permits. Due to time constraints, we ask that you limit yourself to 1 question. And assuming we have time remaining at the end, we will take follow-up 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 the person represents. Jennifer, are there any questions?

I can confirm that no questions have been submitted.

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

Mr. Chairman, my name is Robert Lister. I move with 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 for joining us today and for continued interest and support in IMAX. The meeting has now concluded.

You may now disconnect.