Imax Corp., the operator of giant-screen movie theaters, dropped the most in almost three years after saying its “disappointing film performance” was partly responsible for a plunge in second-quarter profit.
Imax, based in Mississauga, Ontario, fell as much as $4.66, or 19 percent, to $19.76 in New York Stock Exchange composite trading, the biggest one-day drop since October 2008. The shares were down 15 percent to $20.80 at 2:44 p.m.
“While looking back over the last six months, it appears that there were fewer blockbuster titles that are consistent with our brand than in the same period last year,” said Chief Executive Officer Richard L. Gelfond, today in a statement.
Net income plunged 86 percent to $1.8 million from $13.3 million a year earlier, Imax said in the statement. Excluding stock compensation and deferred taxes, earnings dropped to $4.6 million, or 7 cents a share, from $8.4 million, or 13 cents, a year earlier. The result was lower than the 19-cent average estimate of 10 analysts surveyed by Bloomberg.
Imax’s unique theater experience, featuring screens as much as eight stories high, requires the company to make longer commitments to show films than normal theaters, said James Marsh, Jr., an analyst at Piper Jaffray & Co. in New York, who rates the shares “overweight.” If the movie isn’t popular among viewers, the company could be stuck with it, he said.
“The slate of movies for the back half of this year was disappointing,” Marsh said in an interview. “It’s hard for investors to get aggressive when you don’t have a good slate of films.”
Revenue rose 3 percent to $57.2 million, missing the $62.3 million estimate of 13 analysts surveyed by Bloomberg.
Expenses increased 76 percent to $19.5 million as the company spent money to install 41 new theaters. Imax said it has signed 153 theater deals this year and has a record backlog of 300.