IMAX Earnings: A Deep Dive into What Moved the Needle

The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities. 

IMAX (NYSE:IMAX) Q4 beat from recurring revenues and tax benefit. Revenue was $78 million, versus our estimate and consensus of $74 million. Equipment and product sales, Services, and Rentals were each above our expectations. Adjusted EPS was $0.23, versus our estimate and consensus of $0.16. The EPS beat was driven by better-than-expected gross margin from recurring revenues and a lower-thanexpected tax rate from a tax benefit.

Maintaining our FY:13 estimates for revenue of $324 million and EPS of $1.10. The company once again did not provide forward revenue or earnings guidance. Our estimates reflect EPS growth of 37.5%, with some leverage from approximately 20% growth in footprint.

Conservative FY:13 installation guidance unchanged. After installing roughly 107 systems in 2012, IMAX expects to install 110 – 125 systems in FY:13, implying growth of 18 – 21%. We view this range as conservative given continued theater signings, a large backlog, and underpenetrated nature of many markets.

A continuing disconnect between the backlog and installation guidance. Despite a backlog of 276 theaters, FY:13 installation guidance is for only…