IMAX - Earnings Call - Q1 2025

Executive Summary

• Solid Q1 print with revenue $86.7m (+10% YoY) and Adjusted EPS $0.13; Adjusted EBITDA $37.0m at 42.7% margin. Management highlighted record Q1 IMAX global box office ($298m, +12% YoY) and robust system demand (95 signings; 21 installs) as key drivers.
• Results beat S&P Global consensus on revenue ($86.7m vs $84.2m*) and adjusted EPS ($0.13 vs $0.114*); a clean reversal from Q4’s revenue miss (92.7m vs 102.5m*) and slight EPS miss (0.27 vs 0.282*). Values with asterisk from S&P Global.
• Management reaffirmed trajectory toward 2025 targets (record >$1.2B IMAX global box office; 145–160 installations; 40%+ Adjusted EBITDA margin), citing a heavy “Filmed for IMAX” slate and strengthening exhibitor investment pipeline.
• China concerns addressed: management expects any “moderate” import reductions to focus on lower-potential titles; IMAX’s Q1 China outperformance and studio signals underpin confidence. Local language mix reached 68% of Q1 box office, with Ne Zha 2 a standout.

What Went Well and What Went Wrong

What Went Well

• Record Q1 global box office ($298m) and high flow-through: Content Solutions GM +7% YoY on +1% revenue; overall GM 61.4% (+210 bps YoY). CEO: “The fundamentals of our business have never been stronger”.
• Strong system demand: 95 signings (vs 8 LY) and 21 installs (+40% YoY), lifting backlog to 516 systems; balanced installs across U.S., RoW, and China (7 each).
• Local language strategy acceleration: IMAX China delivered record Chinese New Year; Ne Zha 2 indexed ~7.5% on <1% of screens and commands higher take rates than Hollywood releases.

What Went Wrong

• GAAP EPS diluted declined YoY ($0.04 vs $0.06) as non-controlling interest increased with IMAX China strength; adjusted EPS down YoY ($0.13 vs $0.15) despite better revenues.
• Free cash flow negative (-$7.7m) on step-up in growth CapEx for JV screens; management emphasized upfront nature and long-term cash economics of JRSA model.
• Elevated Q1 tax rate (47%) on geographic mix/valuation allowance; management expects normalization over full year, but quarter’s tax drag reduced EPS leverage.

Transcript

Operator (participant)

Thank you for standing by, and welcome to IMAX Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. To remove yourself from the queue, you may press Star 11 again. I would now like to hand the call over to Jennifer Horsley, Head of Investor Relations for IMAX. Please go ahead.

Jennifer Horsley (Head of Investor Relations)

Good afternoon, and thank you for joining us for IMAX's Q1 2025 Earnings Conference Call. On the call today to review the financial results are Rich Gelfond, Chief Executive Officer, and Natasha Fernandes, our Chief Financial Officer. Rob Lister, Chief Legal Officer, is also joining us today. Today's conference call is being webcast in its entirety on our website. A replay of the webcast will be made available shortly after the call. In addition, the full text of our earnings press release and the slide presentation have been posted to the Investor Relations section of our site.

Our historical Excel model is posted to the website as well. I would like to remind you of the following information regarding forward-looking statements. Today's call, as well as the accompanying slide deck, may include statements that are forward-looking and that pertain to future results or outcomes. These forward-looking statements are subject to risks and uncertainties that could cause our actual future results to not occur or occurrences to differ. Please refer to our SEC filings for a more detailed discussion of some of the factors that could affect our future results and outcomes.

Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information, future events, or otherwise. During today's call, references may be made to certain non-GAAP financial measures. Discussion of management's use of these measures and the definition of these measures, as well as the reconciliation to non-GAAP financial measures, are contained in this afternoon's press release and our earnings materials, which are available on the Investor Relations page of our website at imax.com. With that, let me now turn the call over to Mr. Richard Gelfond. Rich.

Rich Gelfond (CEO)

Thanks, Jennifer, and thank you, everyone, for joining today. IMAX got off to an excellent start in the Q1. We banked nearly $300 million in global box office, our best Q1 ever. We've signed agreements for more than 100 new and upgraded systems year to date, compared to 130 in all 2024. We kicked off a great summer slate with a run of eight consecutive Filmed for IMAX releases. The fundamentals of our business have never been stronger. In recent weeks, that fact has been obscured by noise around tariffs, China, and speculation about the potential impact on the Hollywood slate. We've looked deeply at this issue. We've talked to every studio and our industry partners throughout China, cultivated across our 30 years of doing business in the country.

We are highly confident that the "moderate reduction" in Hollywood imports announced by China Film Administration will largely target films with limited box office potential in the market, a smaller-budget kind of fare, not the kind of films that drive IMAX's business. We are not letting the noise distract us from the opportunity ahead. We drove double-digit growth in revenue and adjusted EBITDA in the Q1, an adjusted EBITDA margin of 43%. The Hollywood slate is ramping up, building to the year-end crescendo of Avatar: Fire and Ash in December. We have already seen select footage and are very enthusiastic. We have had many promising new locations set to open across high-PSA markets in Asia, Australia, North America, and the Middle East.

IMAX uniquely benefits from a very positive confluence of trends in global content: the rapid rise of big-budget, high-production-value, local-language blockbusters from around the world, and, two, the continued resurgence of the Hollywood slate, with releases from the biggest filmmakers and tentpole franchises lined up through the end of the decade. We continue to wield our leverage in the industry to provide a diverse, dynamic, truly global programming slate. On the content side, first, 2025 is shaping up to be a watershed year for our growing successful local-language strategy. Chinese New Year exceeded our wildest expectations with $182 million in IMAX box office, triple our previous record. Like Top Gun: Maverick, Oppenheimer, and Dune: Part Two before it, Ne Zha 2 became synonymous with IMAX as we've earned more than $164 million to date with the film.

We indexed 7.5% with the film in China on less than 1% of the screens, about double our average with local animated releases. As a reminder, IMAX collects a higher fee in China with local-language releases than it does with Hollywood releases. We see tremendous opportunities ahead with international films. It is quite possible that IMAX delivers its highest-grossing local-language films of all time in China, Japan, and India this year. In Japan, Demon Slayer: Infinity Castle, the sequel to the highest-grossing Japanese film of all time, arrives in July, followed by a global release in the fall. In India, War 2 has the potential to join the ranks of India's biggest blockbusters when it comes out in August. These well-established markets are building bankable and often exportable franchises to rival Hollywood releases.

We are tapping into fast-growing film industries in priority markets like Saudi Arabia, Vietnam, Indonesia, and Thailand to expand our content portfolio and drive network growth. In 2019, local-language film accounted for 12% of our total global box office. In 2023, that figure rose to 21%, and in the Q1 of 2025, it was 68% of our box office. We have already delivered more local-language box office this year than we did in all of 2024. We remain very bullish on a Hollywood slate that features more IMAX DNA than ever. Every Hollywood release scheduled from now to August was filmed with IMAX cameras. Just this past weekend, we delivered 20% of the domestic opening of Sinners, which was shot in part for IMAX with IMAX 70mm film.

On Monday, Sinners continued its torrid pace in IMAX, dropping off very little from Sunday and delivering $2 million, indicating a great hold is likely for this week. Yet again, when an auteur filmmaker like Ryan Coogler leans into IMAX, audiences heed the call and turn out for the platform in a big way. This outperformance is consistent with what we have seen with the big IMAX 70mm releases like Oppenheimer and Dune: Part Two. Sinners also delivered our biggest domestic opening weekend ever for a horror film. Over the next few months, buzz is building for our Filmed for IMAX slate. Mission: Impossible - The Final Reckoning will make a splashy debut at Cannes in just a few weeks, followed by the London and New York premieres in IMAX. Insiders are high on both Marvel's Thunderbolts and Fantastic Four.

The trailers for Superman have racked up hundreds of millions of views online. How to Train Your Dragon screen to Acclaim at CinemaCon. An early IMAX-exclusive F1 pre-sales are strong, and we have many IMAX-exclusive elements and events throughout its promotional campaign. This year concludes with Zootopia 2 and Avatar: Fire and Ash. The first two Avatar films earned more than $250 million apiece in IMAX. 2026 kicks off with the Avatar carryover and features Christopher Nolan's The Odyssey, as well as Avengers, Star Wars, Super Mario Bros., Toy Story, Greta Gerwig's Narnia, and the Dune sequel from Denis Villeneuve. 2027 already boasts another Avengers and Star Wars, as well as Batman 2 and Frozen 3. Once viewed as a competitive threat, streaming services are leaning into IMAX in a big way.

Whether it's our exclusive window for Greta Gerwig's Narnia for Netflix, the longest theatrical window Netflix has ever granted at 28 days, or Apple prioritizing an IMAX release before securing a studio partner for F1, or Amazon purchasing our original documentary Blue Angels and committing tentpoles like Project Hail Mary and Mercy to the Filmed for IMAX program. As we open our content aperture, we continue to drive incremental box office with our growing slate of events and experiences, including our record-breaking exclusive debut of Becoming Led Zeppelin and this weekend's Pink Floyd, Live at Pompeii. Our exclusive re-release of Studio Ghibli's classic Princess Mononoke, which earned $4 million in its debut, the biggest IMAX domestic opening ever for a local-language film, and our sold-out live sports test in France with the annual Le Classique football match. Global network and technology.

Looking at our global network, our system signings and installations are a strong indicator of anticipation among exhibitors and the prevailing sentiment that IMAX will be the preferred choice for consumers worldwide as the slate rolls out. We installed 21 systems worldwide in the Q1, our second-best Q1 ever for installs. We have signed agreements year to date for 101 new and upgraded IMAX systems worldwide. This includes a major agreement with AMC, which will add 12 new IMAX locations and upgrade virtually its entire IMAX footprint in the US to IMAX with Laser.

We also continue to expand our roster of partners in the US. This year alone, we will open at least 11 locations with regional partners that we have signed up in the past 12 months. Internationally, Japan continues to be a priority market for us. Year to date, IMAX has now signed agreements for 11 new and upgraded locations in Japan, including a rare location with two auditoriums in Tokyo. We also expanded across Western Europe with our fast-growing partners at Cinépolis in a multi-territory agreement spanning France, Belgium, Spain, the Netherlands, as well as the US and Canada.

To close, it's a very exciting time at IMAX. Our business has proven to be resilient and able to thrive in many different economic cycles. We have no doubt that will remain true. We have visibility to a more promising slate through the end of the decade than we've ever seen in the future and a strong trajectory for continued network growth. We look forward to seizing the opportunity to deliver results for all of our shareholders. Thank you. With that, I'll turn it over to Natasha.

Natasha Fernandes (CFO)

Thanks, Rich. Good afternoon, everyone. In the Q1, IMAX exceeded its expectations across global box office, system signings, system installations, and adjusted EBITDA. Our results in the quarter were driven by record box office and 40% year-over-year growth in IMAX system installations worldwide. This outperformance again highlighted the operating leverage in our model with a total adjusted EBITDA margin of 42.7%. We are on track to achieve our guidance for the full year, including a record $1.2 billion in global box office. Taking a closer look at our Q1 results, we delivered revenues of $87 million, up 10% from the prior year Q1.

Content Solutions revenues of $34 million grew year-over-year with gross margin of $24 million, up 7%, driven by our record Chinese New Year box office and our overall programming strategy, which featured a mix of content including Hollywood, local-language, re-releases, concert films, and sports. Our best-ever Q1 box office also led to a high Q1 global market share of 3.5% on less than 1% of screens globally and a record of 5.4% in China, both of which reflect IMAX's outperformance in the quarter. Technology products and services revenues of $51 million was up 17% year-over-year with gross margin of $29 million, up 23%, driven in part by growth in global box office. The quarter also saw growth in installations, 21 versus 15 systems in the prior year, which included a higher mix of sales-type arrangements.

The geographic mix of installations was evenly spread with seven systems in each of domestic, rest of world, and China. Exhibitors globally are shifting into investment mode in advance of the strong upcoming IMAX slate. Similarly encouraging was the strength in Q1 signings, which at 95 systems was up 87 from the prior year and included signings in high per-screen average markets such as the US, Europe, and Japan. The strong Q1 signings lift the IMAX backlog to 516 systems, up 74 systems or 17% year-over-year, representing a solid pipeline for future global growth of the IMAX network. The gross margin performance in Q1 of 61% increased 200 basis points year-over-year, reflecting high incremental profit flow-through from the stronger box office performance.

Operating expenditures defined as research and development and selling, general, and administrative expenses, excluding stock-based compensation, was $30 million and increased $950,000 year-over-year, driven primarily by timing of expenses. We continue to take proactive steps to enhance operational efficiency and reduce annual costs while optimizing IMAX's organizational structure, including eliminating redundant roles and centralizing select functions, which positively impacts both margin and OPEX. Overall, Q1 total consolidated adjusted EBITDA of $37 million increased $5 million, or 15% year-over-year, driven by the higher revenues and gross margin. This resulted in an adjusted EBITDA margin of 42.7%, up over 200 basis points year-over-year. Q1 adjusted EPS was $0.13, which includes a higher year-over-year deduction for non-controlling interest associated with the strong IMAX China results.

The tax rate was 47% in the quarter, primarily reflective of the geographic mix of profits that led to a higher tax valuation allowance of $3.2 million, or negative $0.06 impact year-over-year. For the full year, we expect the tax rate to be at a more normalized rate based on the historical trends and our geographic forecast of annualized profits. Turning to cash flow and the balance sheet, cash flow from operations provided $7 million in Q1, which is an $18 million improvement over the prior year period. A good start to the year given seasonally Q1 is generally a lower cash flow quarter based on the timing of revenues and payments such as annual compensation payouts.

Similar to total adjusted EBITDA, the dynamics of cash flow are quite positive as box office expands, leading to incrementality, particularly considering the cash flow characteristics of our joint revenue-sharing contracts, where the capital expenditure is at the beginning of an average 10-year contract term. During Q1, we used our available capital to invest in the business, including $12 million spent on growth CAPEX related to partnering with exhibitor customers to grow and upgrade the IMAX network through joint revenue-sharing arrangements. Our capital position remains very strong with cash of $97 million. Debt, excluding deferred financing costs, was $282 million. As a reminder, $230 million of our debt comes from our convertible senior notes due in April 2026 that bear an interest rate of 0.5% per annum, with a capped call leading to a $37 per share conversion price.

With our strong liquidity position and available facilities, we have the ability to be opportunistic as we assess the timing of when to address these notes. Our current available liquidity is over $400 million, which includes over $300 million in available borrowing capacity under the company's various revolving facilities. We are confident about our outlook for 2025 and beyond. While still early in the year, we are ahead of our expectations, and we have started the Q2 off strong with good box office from Minecraft and Sinners, which leads into summer titles with larger potential, including five more Filmed for IMAX titles in Q2 alone. The visibility into IMAX's future slate has never been as good, including a standout 2026, and the significant runway to grow our network further is clear as IMAX location zones are less than 50% penetrated.

Longer term, we are confident in our future as the demand for IMAX increases and we achieve greater network scale, deepen our relationships with exhibitors, studios, and filmmakers, and broaden our content aperture to distribute even more content across our global platform. We believe with the strength of the IMAX brand, our strong balance sheet, and business model, that IMAX is well-positioned to deliver sustainable growth, expanding margins, and increasing cash flows in 2025 and beyond. With that, I will turn the call over to the operator for Q&A.

Operator (participant)

As a reminder, to ask a question, you will need to press Star 11 on your telephone. To remove yourself from the queue, you may press Star 11 again. We ask that you limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please stand by while we compile the Q&A roster. Our first question comes from the line of Eric Wold of Texas Capital Securities. Please go ahead, Eric.

Eric Wold (Executive Director and Equity Research Analyst)

Thank you. Good afternoon, everybody. A couple of questions. I guess one question on China and one on kind of the made-for-IMAX outlook. Rich, you mentioned an expectation that any modest reduction in Hollywood film imports would be focused on the smaller-budget films that would not really impact the IMAX slate. I have to assume then that there has also not been any adverse shift in tone from Chinese exhibitors around kind of in-process signing discussions or the timing of planned installations.

Rich Gelfond (CEO)

Hey, Eric, we're coming off our best quarter in China ever, which we just reported today. That's what affects theater owners and people making movies and things like that. I would say there's not only not a reduction in activity in the market within China, there's an increase. There's more incoming calls. There's more interest in movies. We were just a key member of the Beijing Film Festival this weekend where a panel talked about the future of film, and there was almost no one in the panel who didn't talk about IMAX and how important it was because they're looking at coming off Ne Zha 2 and a record by over three times of any film we've ever done. The narrative in China is completely positive in a very material way.

In terms of the reduction of films, moderate reduction coming in, let's just do a reality check. Thunderbolts opens in a week and a half. That's been approved. It's getting in. Today, they dated Lilo & Stitch in China. There have been three other films submitted in the last couple of weeks. We've talked to almost every Hollywood studio, and they expect all their major films to get in and in discussions with the Chinese government. Our relationships in China have told us that the kind of reductions, if there are any, would be kind of the less financially broad ones than the kinds of films IMAX typically plays. I think I remain very confident about China in a lot of ways, and I don't think that the moderate film reduction will have a material impact on IMAX.

Eric Wold (Executive Director and Equity Research Analyst)

That's perfect. My follow-up on your kind of made-for-IMAX with now the big run of made-for-IMAX films starting, I guess, with Sinners and moving through the summer. What is the primary gating factor to having a larger percentage of the films shot with IMAX cameras in the years ahead? Is it purely the number of IMAX cameras that are available to be used? Do you need broader sign-off from a greater number of studios and producers? What is that right number, do you think, without potentially diluting the kind of the made-for-IMAX cachet?

Rich Gelfond (CEO)

Eric, I'd say it has more to do with slots than anything else. For example, we have eight films in a row coming right now. There just aren't more films we could have done in this period of time. Plus, we really want to be discriminating about it. I don't think you should look at our success as how many we're doing in a particular period of time because I think it needs to be the right kind of film for us to do it. As a matter of fact, in terms of the film camera, that's a little bit different. There is a limiting factor there in the number of cameras. On the digital side, there isn't.

Right now, as you know, the Nolans are shooting Odyssey with a significant number of IMAX cameras, which we're very excited about, obviously, for next summer. We can't really shoot more than two simultaneously with the film cameras. Once they're done shooting, I think you'll see us film some other IMAX-made film cameras once that concludes somewhat later this year. I'd say I don't want you to think too much about supply of cameras. It's much more an issue of the right slots and the right content.

Eric Wold (Executive Director and Equity Research Analyst)

Perfect. Thanks, Rich.

Operator (participant)

Thank you. Our next question comes from the line of Chad Beynon of Macquarie. Please go ahead, Chad.

Chad Beynon (Managing Director and Equity Analyst)

Hi, good afternoon. Thanks for taking my question. Rich, another one on China, but focusing on the positive outcome for the Q1. I know, I guess, thinking about the last several quarters, it was your focus to zone in on the tier one and tier two in terms of new distribution zones. As we look at the Q1 outperformance in China, can you talk about where that strength came from and if it did come from tier three to five cities, if that might change kind of the outlook of the aperture of your zones in that market? Thank you.

Rich Gelfond (CEO)

I don't have that data at my fingertips, Chad. However, I believe it was uniform across all markets. I think there are a couple of factors for it. Obviously, the movie itself was very special, and that drove audiences. As you know, I said in my prepared comments that our market share was up significantly, especially in the animation area. The other thing was on the marketing side. We tried a very different marketing approach, and we kind of joint-ventured with a number of entities, including the studio that made the Ne Zha, and we did combine promotions on it. We leaned much more into the right social media. TikTok was a key component of where we placed our marketing.

We're trying to re-examine not only in China, but throughout the world. Historically, films are marketed on billboards and bus stations, and it's transitioned somewhat. We found for this film in particular that social marketing and that our investment in that was extremely successful. I think that had a lot to do with the result.

Chad Beynon (Managing Director and Equity Analyst)

Okay. Great. Thank you. With respect to the signings announced in the quarter and around CinemaCon, has anything changed just in terms of the general terms or how you guys are thinking about JVs versus STLs? Not getting into specific contracts, but just given the weight of the signings in the Q1, if anything changed generally in terms of how you're talking to future partners. Thank you.

Rich Gelfond (CEO)

Thanks. No, not at all. As a matter of fact, our signings were quite diverse. As I said in my script, we have over 100 now. Just to put it in context, we had 130 for the year last year. Demand is very strong. I think what's fueling that is the film slate for this year in 2026 and how far out the backlog of films goes. In terms of our terms, no. I'll tell you kind of something you'll find interesting. Given the success of the Ne Zha, we discussed whether we would want to sign a lot more theaters in China because, obviously, the IMAX brand and market share is going in the right direction.

We said, "No, we want to be as careful as we always were in terms of who the partner is and what the terms are and what the box office is." We are looking at the same ROI calculus that we always have.

Chad Beynon (Managing Director and Equity Analyst)

Thanks, Rich.

Operator (participant)

Thank you. Our next question comes from the line of David Karnovsky of JPMorgan. Your question, please, David.

David Karnovsky (Executive Director and Senior Research Analyst)

Hey, thank you. Rich, the actual windows are a big topic with exhibitors and studios right now. I know it's much less of an issue for IMAX, given you typically carry movies for a week or two, but you have screened films recently with windows to PVOD, I think as short as 17 or 24 days. I'm curious on your view of how you kind of see this issue, whether there's risk now or maybe whether there's any risk to consider down the line.

Rich Gelfond (CEO)

Yeah. We do not really pay attention to what the PVOD windows are because we do not really view that as competitive with IMAX. You are right that exhibitors are really focused on that issue. As you know, at CinemaCon, that was a big subject. I definitely understand windowing being important to exhibitors. We had a very good quarter because we have global diversification. As you know, the North American exhibitors was a very challenging quarter. Again, I know this is going to be controversial, but I think they should really focus on the kind of content and getting more content, which we are trying to do with foreign language films and alternative things, and less on whether the window is 30 or 45 days.

I just do not think that is going to make a material difference to their business at the end of the day. For us, it makes virtually no difference at all. We're sympathetic to not trouncing on their theatrical release, but I think just way too much has been made of it. I don't think that's going to save the industry. I think more good content and more diversified content is much more important.

David Karnovsky (Executive Director and Senior Research Analyst)

Okay. And then just two for Natasha. I guess first, on the higher-end stock activity year over year, how should we interpret this? You highlighted in the deck 40% growth, but maintain the guide. Is it reasonable to assume the higher end at least is more achievable now? Just on the content solutions gross margin, really outsized in the quarter, I'm assuming that had to do with China performance. Can you walk through the drivers here? Did any of that marketing shift that Rich mentioned a few minutes ago to social play a role at all?

Natasha Fernandes (CFO)

For our guidance for the year, we reiterated it's 145 to 160 for installations. It's just simply a timing mix, David, as to exhibitors came to the table and wanted to install sooner than we had originally planned, which is a good thing. I mean, ahead of the slate that's coming up, it is in everyone's best interest to get installed, but it also comes down to timing of capital allocation from their end and what they're able to do. From a mixed perspective and timing, we still believe the back end of the year is going to be the heaviest period of time. Normally, we install 50% of our systems in the last quarter. I would say the same sort of mix as last year with respect to timing. Then mix of JV versus sales as well.

We still reiterate the same guidance we gave where it would be heavier towards JVs this year, which is good as we look towards capturing the incrementality on the box office, which leads into the answer for your second question with respect to the margin and the content solutions. That is a prime example of what we've been talking about on our prior calls with respect to incrementality. When you start to work through the ability of achieving these higher box office levels, it flows mostly to the bottom line without additional costs.

If you look through, we do have a correlation slide in our investor presentation on the website. If you look through that, when you start to see box office levels over $250 million, you can start to see a higher flow-through incrementality of about 85% of every dollar is flowing right through from revenue to EBITDA.

I think that's where you're starting to see that come through on that content margin. Also, coupled with that, Q1, it was heavily driven by Chinese New Year. Local language content does cost us less from an IMAX remastering perspective and also from a marketing perspective. Rich touched on it just now, but marketing through social media channels versus print is obviously less expensive as well. That gave us the opportunity on the margin there too.

David Karnovsky (Executive Director and Senior Research Analyst)

Thanks.

Operator (participant)

Thank you. Our next question comes from the line of Eric Handler of Roth Capital. Please go ahead, Eric.

Eric Handler (Managing Director and Senior Research Analyst)

Thank you very much. Good afternoon. Thanks for the question. Rich, I wonder if you could just give a little insight into how much runway do you have in terms of visibility for what movies are going to be shown in China in Tokyo and maybe talk about some other areas for local language content around the world in Tokyo?

Rich Gelfond (CEO)

Yeah, we have an awful lot of visibility, Eric, into China. As a matter of fact, earlier today, we had our IMAX China board meeting, and we went through the slate for the rest of the year. Natasha can jump in if you want to. I think there are like six or seven local language movies that have already been announced for this year. A number of them filmed with IMAX cameras. A number of them, we've been on set there. We've seen clips. We've interacted with the studios, and we feel pretty good about it. If you look for a trend, Eric, that's gotten more favorable to us over time.

It used to be a little bit more of a black box process, but the China film regulators have gotten better at kind of giving us approvals more in advance for what's coming in the film slate and what the films are about. The studios and the filmmakers have been much more willing to show us footage and put together marketing plans. I know some of the names. I don't know these films well enough to talk about them, but I could say that our CEO of IMAX China is quite optimistic about the slate of local language films for this year.

Natasha Fernandes (CFO)

Eric, if it's helpful, we have added a slide in our deck as well, but there's 10 local languages confirmed in China that we've put on that slide to be a little more helpful to everybody to see visibility into this year. As well, there's the Hollywood slate as well that we expect to come through.

Eric Handler (Managing Director and Senior Research Analyst)

Okay. Just as a follow-up, I wonder if you could talk about Sinners a little bit. I mean, 20% market share is fantastic. I wonder if there's a few things that maybe you could point to how Sinners got to 20% versus other movies that are low to mid-double digits. What sort of worked really well there?

Rich Gelfond (CEO)

I'd say a couple of things. Number one, it's a really good movie and really well shot by an auteur filmmaker. It was close to 100% on Rotten Tomatoes. As you know, IMAX delivers the best when it's a really great filmmaker. It's a really great film, and Cinema Files really want to see it. I think that was kind of the film was the kind of film. Maybe even more importantly, equally or more, is that Ryan Coogler and Michael B. Jordan really leaned into it, Eric. I don't know if you saw the piece that Michael, no, that Ryan created where he went through all the film formats and how people should see it and why they should see it in IMAX.

He did a lot of he kind of followed some of the Chris Nolan playbook, which is to talk about why it was important to him to make it an IMAX film, why people should see it that way, what the benefits are. Throughout the opening weekend, he went to a number of IMAX theaters throughout North America and talked about it and showed up. I understand Michael B. Jordan showed up at the BFI in London over the weekend. When they did talk shows and they talked about the movie, IMAX was an integral part of the movie. We have always thought that was a key point, but this is like a clear demonstration of that.

Eric, also, besides the indexing, a really good thing has happened this week, which is usually for an IMAX release on Monday is typically 10% of the weekend's gross. On Sinners, this Monday was 20% of the weekend's gross. Sinners on Tuesday was 20% of the weekend's gross. Now, I'm not talking about the percentage of box office. That also held at 20%. I'm talking about the gross proceeds. It bodes very well for the run. One of the things we were hoping was that because the movie was so good and so well received by fans and critics, it would broaden out and that IMAX was a tool for it to broaden out.

I'm not saying it's going to do numbers like Oppenheimer and Dune, but it's the same kind of effect we're seeing in very similar numbers where the IMAX film has enabled this broadening out effect.

Eric Handler (Managing Director and Senior Research Analyst)

Thanks, Rich. Appreciate it.

Operator (participant)

Thank you. In the interest of time, we now ask everyone to limit themselves to one question to allow everyone the opportunity to participate. Our next question comes from the line of David Joyce of Seaport Research Partners. Your question, please, David.

David Joyce (Senior Equity Analyst)

Thank you. I wanted to ask about the health of the consumer. Just wondering if you've had conversations anecdotally with the theater owners related to how well Minecraft and Sinners have done. While Captain America overall was soft, I think he still did fine there. Just wondering if the theater owners that also have regular screens have any comments about people skewing more to the IMAX showtimes. You did talk about having a higher share, of course, to that kind of answer to the question, but I'm just wondering, are they also asking for more IMAX showtimes? Are they trying to fit more in? Just wondering if you had any more anecdotes about the consumer. Thanks.

Rich Gelfond (CEO)

Yeah. I mean, David, as you said, you answered the question. I mean, again, go to Ne Zha. I mean, this is in China where the consumers are not as prosperous as they are here. And it's something we've traditionally indexed in the 3% range. And we did 7.5%. At the end of the run, we were at 13%. I think that's kind of a test lab for consumers. It's an affordable luxury. Obviously, there are challenges, as there always are, but going to an IMAX movie is kind of a special thing. Since I've been here, there have probably been three or four recessionary periods. Every year on the box office is up during those periods that I've been here than it was before.

If it's something more expensive like vacation, travel, restaurant, I could see it having much more of an impact. In a way, because this is something special and it does not cost that much more, I have not really seen an effect from that. I have not heard about it from our colleagues.

David Joyce (Senior Equity Analyst)

All right. Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Omar Mejias of Wells Fargo. Please go ahead, Omar.

Omar Mejias (VP and Equity Research Analyst)

Thank you for taking my question. Rich, maybe sticking with China. In the US, historically, the box office has been resilient during recessionary periods as moviegoing remains an affordable form of entertainment. Could you provide any color on how the Chinese box office performs during recessionary periods? If you have any concerns that a potential economic slowdown could pressure consumers in China and limit attendance? Thanks.

Rich Gelfond (CEO)

My first comment, Omar, is during the Q1, it was a pretty slow economic period in China. We set records by multiples. We have some fairly recent data that we can draw on. I just do not think it is going to be different in China. Remember, we are in 90 countries. I do not think the Chinese behavior is different than other countries. I think for a good product and well-marketed, the market will be there. It is too early to say, obviously, but we have not seen any evidence of that.

Omar Mejias (VP and Equity Research Analyst)

Thank you.

Natasha Fernandes (CFO)

I think the other thing to consider, Omar, is government support during recessionary periods as well. Like Chinese New Year, there was government support through there. We saw some last year. They have announced at the Beijing Festival as well that there will be continued support. I think even from that perspective, there is always support during these recessionary periods. When you think about it, the most discretionary part of moviegoing is concessions. They still want to go out and experience something, but there is an opportunity to, if you really need to save money, you are not spending as much on concessions, but you are going to enjoy the experience.

Rich Gelfond (CEO)

IMAX does not make any of its money from concessions.

Omar Mejias (VP and Equity Research Analyst)

Very clear. Thank you, guys. Appreciate it. Super helpful.

Operator (participant)

Thank you. Our next question comes from the line of Steven Frankel of Rosenblatt Securities. Please go ahead, Steven.

Patrick Sholl (Research Analyst)

Thanks. Rich, given the step-up in the number of film for IMAX titles, and traditionally, these were very labor-intensive DMR processes, what are you doing to make sure that featuring more film for IMAX doesn't cause some incremental pressure on gross margin?

Rich Gelfond (CEO)

Yeah. First of all, DMR conversion is not labor-intensive. We've made a lot of progress over the years automating it. Obviously, there are some quality control aspects we have to check and make sure it's right. Second of all, for a lot of our foreign language titles, especially those in Asia, India, China, we outsource and we partner with local firms there that help with the DMR process. That was facilitated by us putting DMR in the cloud. Our margins have gotten better on the DMR side over the years. We continue to look at that aspect of our business. That's a priority for us, continuing to evolve the process and continuing to make it more automated. I don't really see margins being squeezed. Do you want to add anything, Natasha?

Natasha Fernandes (CFO)

I think the only thing, Steve, is the two-week windows. I think what I'm hearing from your question is that if you keep doing film for IMAX and they're back to back, you're going to lose the opportunity for incrementality of playing it longer. I do not see that as something necessarily hindering us in that the first weekend and the second weekend are usually your biggest box office recoupment periods. We have the ability to find time in other spots during the year to bring titles back or to slot things in. I mean, you can go back to Maverick, which was a couple of years ago, but we brought it back four to five times throughout a year. I think, and we've done that with other titles. We brought back re-releases.

Whenever we see something that plays really well across the IMAX network, we look for opportunities to bring it back.

Patrick Sholl (Research Analyst)

Perfect. That's what I was looking for. Thank you.

Operator (participant)

Thank you. At this time, we have time for one last question. Our final question comes from the line of Patrick Sholl of Barrington Research. Please go ahead, Patrick.

Patrick Sholl (Research Analyst)

Hi. Thanks for taking the question. I was just wondering if you could drill in a little bit more on the available dating slots for the Filmed for IMAX and just managing international distribution if that also kind of conflicts with expanding the Filmed for IMAX lineup in international markets.

Rich Gelfond (CEO)

Yeah. We do local language films, as you know. Like in other countries, we use IMAX cameras. You have to look at the slate and look at what the competition is from Hollywood and kind of see where you have open shows and open times and ways to do it. We have been able to balance it. I think that is what you were asking, or am I missing the point of your question?

Patrick Sholl (Research Analyst)

No, that was mostly it. Thank you.

Rich Gelfond (CEO)

By the way, operator, we have time for a few more questions if there are any.

Operator (participant)

Excellent, sir. Our next question comes from the line of Mike Hickey of the Benchmark Company. Please go ahead, Mike.

Mike Hickey (Senior Equity Research Analyst)

Hey, Rich, Natasha, Jennifer. Great Q1, guys. Congratulations. Thanks for squeezing us in, Rich. Appreciate that. Obviously, Rich, very unique environment here we're all sort of operating through. We definitely appreciate your confidence. Very nice to hear in terms of film product getting into China. I guess, how do you think about the risk that Hollywood film studios could delay films until they're 100% confident that the films would be approved for distribution in China? I guess, are you seeing a mirroring in confidence, I guess, from the Hollywood studios in terms of getting film product in? The second question, Rich, do Chinese consumers view IMAX as an American brand? If so, if you sort of encountered, would you expect to encounter any pushback or brand sensitivity as a result?

Obviously, I realize you guys hit the crush the Q1 and have significant market share. I'm just wondering, as this sort of turbulence continues, if there could be some pushback on the brand or not. Thanks, guys.

Rich Gelfond (CEO)

My cousins were buddies. I'm going to be exceptionally blunt, which is I think I answered the question about films getting into China four different times. Maybe I wasn't clear. Thunderbolts is opening in a week. There are five other films that have been submitted. We've been told by the studios that they've been told by the Chinese that the films have been getting in. We've been told that by the Chinese. We're talking to studios about the release patterns of those.

I'm not very concerned about that. Could there be small films that don't get in? There could be. I don't think it's going to have a material impact on our business. Number two, historically, 25% of our profit comes from China. This year, we've already had a Q1 that blew away any expectation we had from the year.

If China suffered from small films, it's a very little concern to me. I don't know, operator, maybe I don't know how many more questions we could have so I could answer more about China. The second part, Mike, was the consumer and the brand. IMAX brand in China is, remember, we have 800 theaters. It's like a local prestige brand. In our brand surveys, people value it more in China than they do anywhere else in the world. This is probably a minor point, but IMAX is a Canadian company, for those of you who don't know that. I don't know what the Canadian backlash is in China. Mike, next time you'll buy me a drink to apologize for too many micromanaging of the China questions.

Mike Hickey (Senior Equity Research Analyst)

All right, Rich. Thank you.

Rich Gelfond (CEO)

Yeah. I'm not even being ambiguous or covering myself. I just couldn't be clearer about it.

Mike Hickey (Senior Equity Research Analyst)

Thanks, Rich.

Operator (participant)

Thank you. I would now like to turn the conference back to Rich Gelfond for closing remarks. Sir?

Rich Gelfond (CEO)

Thank you very much, operator. Thank you all for joining. I mean, the pivot time for IMAX is right now. I mean, we've talked about now for a pretty long time. We've got eight Filmed for IMAX movies in a row coming out. Two of them that we started with, Minecraft and Sinners, both beat our budget. Minecraft has, and Sinners is on a path to beat our budget.

After that, we have Mission: Impossible - The Final Reckoning, How to Train Your Dragon, F1, Superman, Fantastic Four. I mean, there's never been a period of time where that kind of lineup Filmed for IMAX has existed in front of us. This is it. We've talked about it for a long time. Now it's the time to happen. It's all happening in the aftermath, where I have to say we partly got lucky in the Q1.

I mean, we had a Chinese film which beat our previous record by over three times. We have that in the bank. I just feel very good about our business and very confident about the course we're on. Now it's our turn to execute. We believe we will. I thank you all for joining and for your questions.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.