IMAX Corporation (NYSE:IMAX) Q3 2023 Earnings Call Transcript

Richard Gelfond: So Eric, I mean the first place you start is what’s the box office in the market? So how much of the cost could you amortize through the local language network? Second, you’d look at whether it would also play in other markets, where there’s an interest in, for example — I’m not that familiar with the Malaysia specifics, but I would think that Malaysian movies would probably play in the Middle East and they’d probably play in India and places like that and other Southeast Asian countries. So not just the country of origin but other countries and how they do there. And then I think you obviously look at the movie, the kind of movie, is it an IMAX kind of movie. I mean, you look at your relationship with the filmmaker and with the studio in that country.

And then, of course, you run a model and you look like what your P&L would look like in doing that. And then I would say, one other thing would be, you look at the potential for that market. So in India, as you know, we have been doing a lot more local language films. And the reason is not just because of the other criteria I mentioned, but because it is potentially a much larger market for us and to the extent you can help increase the PSAs in that market, and help the exhibitors do better, it really helps your growth in that market. So those would be pretty much the factors.

Eric Handler : Okay. And then I am curious now, as you look at your backlog, I don’t know sort of what your bottlenecks are in terms of you actually need construction to be completed for theaters. But in terms of theaters that are already in existence, is there any way to maybe accelerate the installation process with these theaters?

Richard Gelfond : I mean, I think it depends mostly obviously on the schedule of our local exhibition partner. And again, obviously with retrofits, it goes a lot faster than with new builds. So as I said on my prepared comments, in Japan, we signed a seven theater deal with AEON, and we have already installed all seven of them this year. I believe the one we have just announced in China with Hengdian, even some of those are being — as a matter of fact, as I recall, it’s six this year, even though we have just signed that deal in October. And those are retrofits, obviously. The new builds has less flexibility, because obviously you have got build a building and put that in there. I would say beyond that, the only thing that would really accelerate it beyond that would be the film slate.

So if there is a film coming out that people want to open for, and also there is a typical seasonality as you know in the fourth quarter. And partly that’s because the fourth quarter before Christmas time tends to be not that busy on a global basis, so they can shut the existing theater down for a little while, and they could put the new one in and then they could open up for Christmas. But if you look at our percentage of installs in the fourth quarter, it has historically always been extremely high.

Operator: And our next question coming from the line of David Karnovsky with JPMorgan. Your line is open.

David Karnovsky: All right. Thank you. For Natasha, your revenue take rate on net box had Content Solutions especially strong in the quarter. Just wondering if you could speak to what drove that and how sustainable it is? And then, Rich, I think last quarter, you spoke to some early conversations with exhibition partners about maybe adding screens and exclusivity zones, wanted to see if there was any update there. And then how much are exclusivity zones of barrier to you getting higher penetration in the domestic market? Thanks.