Imax China Holding Inc · HKEX:1970
Imax China — IMAX — Investor Day (May 2017)
66 slides from Imax China's investor day presentation, May 11, 2017
Slide 1: Investor Day 2017
Investor Day 2017 Thursday, May 11th
Slide 2: Safe Harbor
Safe Harbor This document is not intended to form the basis of any investment decision in connection with IMAX China Holding, Inc. (the "Company", together with its subsidiaries, hereinafter referred to as the "Group"). It does not constitute an offer or invitation to sell, or any solicitation of an
Slide 3: Logistics for Today's Investor Day
Logistics for Today’s Investor Day 9:00am – 9:45am PT: Opening Remarks from Rich Gelfond, CEO and presentation from Patrick McClymont, CFO 9:45am – 10:30am PT: Fireside chat with Mark Welton, President, IMAX Theatres and Don Savant, President of Global Sales Short Break 10:45am – 11:45am PT: Firesid
Slide 4: The IMAX Network Today
The IMAX Network Today Europe United States 157 China 351 403 1121 Theatres in 75 Countries As of March 31, 2017
Slide 5: Opportunities from a Rapidly Growing Global Network
Opportunities from a Rapidly Growing Global Network Growing Network Enables 1 us to Capture More Box Office Dollars Platform to Launch and 1,200+ Screen Network with Global Brand Awareness 2 Distribute Content in 75 Countries Location-Based Virtual 3 Reality
Slide 6: Logistics for Today's Investor Day
Logistics for Today’s Investor Day 9:00am – 9:45am PT: Opening Remarks from Rich Gelfond, CEO and presentation from Patrick McClymont, CFO 9:45am – 10:30am PT: Fireside chat with Mark Welton, President, IMAX Theatres and Don Savant, President of Global Sales Short Break 10:45am – 11:45am PT: Firesid
Slide 7: Patrick McClymont, CFO
Patrick McClymont, CFO Thursday, May 11th
Slide 8: Opportunities from a Rapidly Growing Global Network
Opportunities from a Rapidly Growing Global Network Growing Network Enables 1 us to Capture More Box Office Dollars Platform to Launch and 1,200+ Screen Network with Global Brand Awareness 2 Distribute Content in 75 Countries Location-Based Virtual 3 Reality
Slide 9: The Core Business
The Core Business Growing Network Driving Earnings Power
Slide 10: 1. Growing Network to Capture More Box Office
1. Growing Network to Capture More Box Office % Penetrated 2855 (Excluding Backlog) 993 32% 1605 1315 1206 498 1108 1262 32% 863 372 397 314 407 265 274 229 198 407 166 215 290 108 150 600 64% 324 353 365 379 386 2012 2013 2014 2015 2016 Estimated Note Zones 1. Excludes Institutional Theaters 2. Est
Slide 11: 1. Growing Network to Capture More Box Office
1. Growing Network to Capture More Box Office Current Q1 2012 Q1 2017 Backlog* Full JV Network 265 535 255 Hybrid JV Network 0 114 133 STL Network 247 472 174 Total 510 1,121 562 % JV 52% 58% 69% **Average JRSA Margin Over Past 3 Years: 75% *Including 40 theatre Omnijoi Hybrid Deal **Excluding Hybri
Slide 12: 1. Growing the Footprint – Network Business
1. Growing the Footprint – Network Business ~10 Years Illustrative Business Model 2016 Future* Installed Commercial Screens 1,107 2,855 Per Screen Average $964K $1.0M Box Office $966M $2.9B Global Take Rate 19% 19% Revenue $185M $542M Gross Margin(1) 70% 78% EBITDA Margin(2) 58% 71% Gross EBITDA (3)
Slide 13: 1. Growing the Footprint – Theatre Business
1. Growing the Footprint – Theatre Business Illustrative Business Model ~10 Years 2016 Future* Annual Install Rate 166 50 Systems Revenue $101M $31M Maintenance Revenue $40M $107M Other Revenue $29M $19M Total Revenue $170M $157M Gross Margin 45% 41% EBITDA Margin(1) 20% 17% Gross EBITDA(2) $33M $27
Slide 14: 1. Sum of the Parts – Core Business
1. Sum of the Parts – Core Business Illustrative Business Model ~10 Years 2016 Future* Network Business EBITDA(1)(2) $107 $387 Multiple 15x 15x Implied Valuation $1,605 $5,805 Theatre Business EBITDA(1)(2) $33 $27 Multiple 15x 10x Implied Valuation $495 $270 Sum of the Parts – Enterprise Value $2,10
Slide 15: New Business
New Business Exciting Opportunities that Leverage Our Network and Expertise
Slide 16: 2. Original Content, Sample TV Economics
2. Original Content, Sample TV Economics Illustrative Economics Model for a Television Series over 6 Seasons Season 1 6 Seasons Key Value Drivers 10 Episodes 75 Episodes Revenues Theatrical $ 15.0 $ 15.0 • Growth in licensing revenue per Domestic License fee 20.0 187.5 episode, which more than offse
Slide 17: 3. Illustrative Economic Benefits – Virtual Reality
3. Illustrative Economic Benefits – Virtual Reality One Time Est. Annual REVENUE Upfront Recurring* Implied Weekly Revenue (10 Pods) $15,000 Gross Annual Revenue $780,000 Content Licensing Cost (273,000) Total Admission Margin $507,000 IMAX Split $253,500 IMAX CoS Hardware Depreciation Expense (3 yr
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Slide 19: Fireside Chat with Mark Welton and Don Savant
Fireside Chat with Mark Welton, President IMAX Theatres Don Savant, President Global Sales Thursday, May 11th
Slide 20: The IMAX Value Proposition for Exhibitors
The IMAX Value Proposition for Exhibitors
Slide 21: Why IMAX? Incremental Attendance, Domestic Theatres
Why IMAX? Incremental Attendance, Domestic Theatres ($’s in Millions) Annual Complex GBO Expected DMA(1) Incremental Incremental Case Study: Complex GBO at IMAX GBO Pre-IMAX Post-IMAX Growth GBO(2) Concessions(3) Growth% DMA Rate % IMAX Theatre 1 $5.7 $7.2 3% 27% $5.9 $1.4 $1.3 $0.3 IMAX Theatre 2 $
Slide 22: Why IMAX – IMAX Differentiation
Why IMAX – IMAX Differentiation 1 2 3 4 5 6 IMAX IMAX IMAX IMAX IMAX DMR Hardware & The IMAX Cameras Quality Marketing & Geometry Brand Control Foot Traffic THE DIFFERENCE
Slide 23: Recent Exhibitor Consolidation Accelerating Demand for IMAX
Recent Exhibitor Consolidation Accelerating Demand for IMAX 122 10 359 210 Number of IMAX Theatres inc. Backlog (As of March 31, 2017)
Slide 24: Identified 405 New Zones (+17%) to Grow Our Network
Identified 405 New Zones (+ 17%) to Grow Our Network Previous New Zones Guidance APAC 1,261 1,564 +303 China 1,000 1,262 +262 Japan 83 83 - India 71 100 +29 Americas 684 763 +79 North America 500 600 +100 EMEA 505 528 +23 Western Europe 312 315 +3 World 2,450 2,855 +405
Slide 25: Robust Expansion Opportunities Ahead for IMAX
Robust Expansion Opportunities Ahead for IMAX Worldwide Penetration at 39% Commercial Regional Installed Installed + Backlog Region Backlog Network Installed Capacity Penetration % Penetration % Worldwide 1,121 524 2,855 39% 58% Domestic 388 58 600 65% 74% RoW, ex China 317 110 993 32% 43% Asia 95 3
Slide 26: Asia Pacific – Penetration at 33%
Asia Pacific – Penetration at 33% Commercial Regional Installed Installed + Backlog Region Backlog Network Installed Capacity Penetration % Penetration % Worldwide 1,121 524 2,855 39% 58% Domestic 388 58 600 65% 74% RoW, ex China 317 110 993 32% 43% Asia , ex China 95 31 302 31% 42% EMEA 184 58 528
Slide 27: China in Focus – Significant Network Expansion Opportunity
China in Focus – Significant Network Expansion Opportunity 812 THEATRES 416 Installed 396 BACKLOG (incl. 40 theatre Omnijoi) 149 CITIES 1,262 Zones 33% PENETRATION (INSTALLED) % of Industry Box No. Exhibitor # of Theatres # of Screens # of IMAX Screens IMAX Backlog Office 1 Wanda 17.92% 352 3147 207
Slide 28: China's Evolving Demographics
China’s Evolving Demographics 2015 2016 Source: Euromonitor, Goldman Sachs, NBS, and CEIC 43.0
Slide 29: China Headwinds in 2016
China Headwinds in 2016 Weaker Ticket RMB 40% IMAX Content Pricing Decline Network Growth Network By Install Year 50% of network is younger than 2 years
Slide 30: IMAX is the Clear Leader in China Premium Format
IMAX is the Clear Leader in China Premium Format Dolby PLTs(1) IMAX CGS 4DX MX4D XLAND D-BOX ScreenX LUXE SPHEREX Polymax STARIUM Cinema TOTAL 395 16 190 116 96 51 25 19 15 10 7 4 (1) Source: ENTgroup, data as of April 13, 2017 and reflects Mainland China network only
Slide 31: North America – Despite Existing Penetration, Opportunities Remain
North America – Despite Existing Penetration, Opportunities Remain Domestic Penetration at 65% Commercial Regiona Installed Installed + Commercial Regional Installed Installed + Backlog Region Region Network Backlog Backlog l Penetratio Backlog Network Installed Capacity Penetration % Penetration %
Slide 32: Despite Proliferation of Reseating, IMAX is Still Increasing Market Share
Despite Proliferation of Reseating, IMAX is Still Increasing Market Share Exhibitor Re-seating Well Underway IMAX Theatre as a % of the Complex – Last Five Years Year IMAX % of Complex ~2,000 Screens reseated as of Q1 ‘17, targeting 2,650 by year-end 2017 2016 13.8% 2015 14.3% 2014 11.7% 2013 12.7%
Slide 33: Promising Early Results of Plush-Rocker Reseating
Promising Early Results of Plush-Rocker Reseating Performance of Reseated IMAX vs Reseated IMAX DMA(1)(2) IMAX Theatre 1 10/28/2016 7% IMAX Theatre 2 11/18/2016 9% IMAX Theatre 3 11/18/2016 11% IMAX Theatre 4 11/18/2016 7% IMAX Theatre 5 11/18/2016 22% (1) Designated Market Area (DMA) represents a g
Slide 34: EMEA – Significant Opportunities Ahead
EMEA – Significant Opportunities Ahead EMEA Penetration at 35% Commercial Regiona Installed Installed + Commercial Regional Installed Installed + Backlog Region Region Network Backlog Backlog l Penetratio Backlog Network Installed Capacity Penetration % Penetration % Installed Capacit n% Penetration
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Slide 36: Guest Speaker: Richard Lovett
Guest Speaker: Richard Lovett President of Creative Artists Agency Thursday, May 11th
Slide 37: IMAX Entertainment
™ IMAxX ENT ERTAINM ENT
Slide 38: The Network, IMAX-DNA, Original Content
• Growing Network – More Nimble ENTERTAINMENT • $1 billion dollar box office • Deals with every major studio L E V E R A G E • Every major blockbuster The Network • Powerful Global Brand • Highest Quality Cameras D I F F E R E N T I A T E • Hollywood’s best filmmakers IMAX-DNA • Doubling down on DNA
Slide 39: 2017 Domestic Slate
2017 Domestic Slate The Solutrean
Slide 40: 2018 & Beyond
2018 & Beyond
Slide 41: Local Language
LOCAL LANGUAGE • Filling in the gaps R • Meeting market demand J A PA N • Studios/Exhibitors/Filmmakers U • Exporting/Traveling through IMAX S S I INDIA C H I N A A
Slide 42: Disney Partnership
• Partnership has never been stronger • IMAX value recognized from the top-down • Deal extended through 2019 • EVERY blockbuster title included • Titles from Marvel, LucasFilm, Pixar, Disney Live Action, Disney Animation, Pixar • Increased IMAX Focused Marketing Efforts • IMAX DNA (cameras/aspect ra
Slide 43: IMAX DNA
-DNA
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Slide 45: Slide 45
Slide 46: IMAX DNA
-DNA Domestically, the average IMAX title indexes around 10% but when you add DNA… 21.6% 15.1% 17.0% 13.6% 15.9% 31.5% 13.4% 13.2%
Slide 47: IMAX Entertainment
™ IMAxX ENT ERTAINM ENT
Slide 48: IMAX Original Content
IMAX | ORIGINAL CONTENT _
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Slide 50: Estimated Number of Scripted Original Series
Estimated Number of Scripted Original Series” Broadcast, Cable, and O: NETWORKS RESEARCH % Change Distribution 2014 vs. 2002 2016 vs. 2011 "= Online Services = ++ +1,450% ® Broadcast * +7% +25% = Pay Cable +112% +9% Basic Cable* +503% +63% All +150% +% e Services 93 181 mW 125 66 74 30 2002 2009 201
Slide 51: Great Press
Tos Anacles Gimes Che New dork Cimes - Hollywood The boldest move yet to fill more movie REPORTER theaters: Screen TV shows Why ABC's Deal to Bring Marvel's The Fn tertainmen { Inhumans’ to Imax Isa “Quadruple Win" _.Great | FeSS : Ner ist _* series ( We ) D yo x t MARVELS THE PB nsane COMING TO TV
Slide 52: IMAX Original Content: What's Next?
IMAX ORIGINAL CONTENT W h a t ’s N e x t ? • Piqued the interest of the TV Industry • Ongoing meetings with largest TV Networks/Studios
Slide 53: IMAX Original Content: Questions to Consider
IMAX ORIGINAL CONTENT QUESTIONS TO CONSIDER How do we best position the company to build the business -line and plan for success? $ SCHEDULING FINANCIAL RESOURCES ANCILLARIES What revenue streams should we What is the ideal number of What is IMAX’s appetite? What needs will be required to be looking
Slide 54: IMAX Entertainment
™ IMAxX ENT ERTAINM ENT
Slide 55: Fireside Chat with Rob Lister and Mark Welton
Fireside Chat with Rob Lister, Head of Business Development Mark Welton, President IMAX Theatres Thursday, May 11th
Slide 56: What is IMAX VR?
What is IMAX VR? PREMIUM, LOCATION-BASED VIRTUAL REALITY EXPERIENCE CENTRES
Slide 57: Leveraging Who and What We Know
Leveraging Who and What We Know Studio & Exhibitors IMAX filmmaker as distribution CINEMA Cameras relationships partners CAPTURE CONTENT DISTRIBUTION IMAX & Google IMAX VR content IMAX VR cinema-grade fund & relationships Experience Centres IMAX VR camera with studio, filmmakers
Slide 58: Los Angeles Pilot Centre – Initial Results
Los Angeles Pilot Centre – Initial Results 1/6/2017- 4/24/2017 25,000+ $15,000/week 94% TOTAL ADMISSIONS (1) WEEKLY REVENUE RUN RATE (2) SATISFIED OR HIGHLY SATISFIED CUSTOMERS (3) (1) Includes promotional and demonstration tickets (2) As stated on the Q1 2017 earnings call (3) Source: IMAX VR Post
Slide 59: Lessons from Los Angeles
Lessons from Los Angeles 01 VR’s GOT POTENTIAL 02 OPERATIONS EXPERIENCE 03 COMPELLING TECHNOLOGY 04 CURATED CONTENT 05 VR vs LOCATION-BASED VR 06 LEVERAGING RELATIONSHIPS
Slide 60: Pilot Strategy
Pilot Strategy GOALS FOR THE NEXT SIX MONTHS 1.SYSTEMS & 2. CONTENT & 3. SKILLS & 4. STABILIZE THE PROCESSES SLATE RUNWAY RESOURCES TECH PLATFORM 5. DATA, TEST, AND ADAPT
Slide 61: Additional VR Pilots to Open by Year-End
Additional VR Pilots to Open by Year-End Existing Location Anticipated 2017 Opening
Slide 62: Coupling Premium Technology with the Very Best in VR Content
Coupling Premium Technology with the Very Best in VR Content IMAX VR Content Fund HOLLYWOOD STUDIO CONTENT AAA GAMING CONTENT INDEPENDENT CONTENT
Slide 63: Coming Soon– Future VR Centre Experiences
Coming Soon– Future VR Centre Experiences RAISING A RUCKUS MINDSHOW
Slide 64: Conclusion
Conclusion Virtual Reality Discussion Thursday, May 11th
Slide 65: Opportunities from a Rapidly Growing Global Network
Opportunities from a Rapidly Growing Global Network Growing Network Enables 1 us to Capture More Box Office Dollars Platform to Launch and 1,200+ Screen Network with Global Brand Awareness 2 Distribute Content in 75 Countries Location-Based Virtual 3 Reality
Slide 66: Thank You!
THANK YOU! 5/11/2017 IMAX® is a registered trademark of IMAX Corporation. 66