Imax Surges on Earnings

Imax shares are surging today after the company reports a spike in earnings during the third quarter.
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TORONTO (

TheStreet

) --

Imax

(IMAX) - Get Report

shares are surging today after it reported a spike in earnings during the third quarter.

For the quarter ended September 30, the company saw a triple digit gain in earnings to $6.7 million, or 10 cents per diluted share, compared with earnings of $1.1 million, or 2 cents per diluted share, in the same period a year ago. Adjusted net earnings were up more than 150% to $9.8 million, or 15 cents per diluted share, from $3.9 million, or 6 cents. Diluted earnings were ahead of analyst estimates of 9 cents a share.

Revenue rose 17.5% to $51.1 million from $43.5 million during the quarter as total film revenue surged 68% to $21.0 million from $12.5 million. Production and Imax digital media remastering (DMR) revenue rose 58% to $12.4 million from $7.8 million, driven by a broader range of films and a higher number of operating theaters.

Gross box office from DMR titles increased 70% while the per-screen average, including domestic and international, was up 26%.

"We experienced another strong quarter of box office growth, lead by Christopher Nolan and

Warner Bros.

pictures'

Inception

, which grossed over $50 million in Imax theaters, making it our fourth-highest grossing DMR title of all time," CEO Richard Gelfond said.

As management looks ahead to the fourth quarter, it said it is excited about the line-up of upcoming titles including

DreamWorks Animation's

(DWA)

Megamind

, part one of

Harry Potter and the Deathly Hallows

from Warner Bros. and

Disney's

(DIS) - Get Report

TRON: Legacy

.

>> DreamWorks Sees 'Shrek'-Surge in Quarter

The company continues to expand the number of joint revenue sharing theaters in operation. In the third quarter, revenue from joint revenue sharing arrangements was up 89% to $6.5 million from $3.4 million.

Imax systems revenue fell 26% in the third quarter due to three fewer sales-type lease system installations as well as the lower average revenue per system. Management expects to install 22 to 24 joint revenue sharing systems and 15 to 20 sales-type lease systems in the fourth quarter.

"We are very pleased with our third quarter financial results, which exceeded our expectations and demonstrated the operating leverage that can come with our growing theater network and a diversified film slate," Gelfond said. "Today, our company is uniquely positioned at the intersection of the entertainment industry, innovation, and the digital age, which have come together to reinvent the Imax business in many important ways. We believe the combination of continued consumer enthusiasm for the Imax brand worldwide, increasing demand from our exhibitor partners and film commitments from studios as far out as 2013 is setting the stage for long-term growth."

For the first nine months of the year, earnings skyrocketed to $46.6 million, or 70 cents a share, compared with earnings of $982,000, or 2 cents, in the same period a year ago.

Revenue rose 53.4% to $179.5 million from $117 million. In the first nine months of 2010, the company signed contracts for 198 theater systems, compared with 23 theater systems for the same period in 2009.

"This quarter not only reflected the strong demand for the Imax experience from moviegoers, but also from exhibitors around the globe," Gelfond said. "Our international theaters continue to enjoy significant box office growth, with year-to-date per theater averages that are tracking 25% higher than that of our domestic theaters, even excluding

Avatar

from our results. This is very encouraging as we continue to expand overseas."

Management expects to install between 81 and 88 new theaters in 2010.

Imax shares are up more than 48% in the past year. The stock is surging today, up almost 5% to around $20. In early morning trading the stock spiked towards its 52-week high of $21.30, reaching only 40 cents below it at $20.90.

-- Written by Theresa McCabe in Boston.

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